After having said on TV that gold is “his favorite investment” over the next 12–24 months, Paul Tudor Jones bought $82 million in gold shares, as reported by Bloomberg. Earlier in June, Jeffrey Gundlach, known as the “Bond King,” said, “I am certainly long gold.” Gundlach sees a recession on the horizon, and he expects the Fed to lower interest rates.
Now, another lesser-known stock market commentator – actually a “trader” with a daily blog – sees gold’s breakout as “generational.” Writing on 6/21/19, Jared Dillian declared in his Daily Dirtnap:
“This is a generational breakout. My conviction is high. All of you should be excited about it, but nobody is excited about it. I did not get one email about gold yesterday, even after gapping above resistance. This is the trade of a lifetime and there’s literally zero excitement about it. That’s because everyone has taken nothing but abuse for the last eight years.”
He’s certainly right about all the abuse gold investors have taken over the last eight years. Often gold investors were ashamed to say that they owned gold. But things are changing. And, Dillian notes that there is no “excitement about it.” I’ve often said the time to buy any investment is when it is ignored.
With the Fed concerned about a recession, lower interest rates are expected. Some analysts are even talking about negative interest rates on US bonds. Actually, when you consider the rate of inflation, which lowers the purchasing power of the money received when a bond matures, we’ve already had negative interest rates many years.
Such a climate sends people into gold and silver because there is no way to know how far down the Fed will force interest rates into negative territory and how long they will keep them there. Meanwhile, gold is up $120 in less than 30 days, and silver is up $1. At this level, there may be some fluctuations in the metals, but there’s still a lot of upside left in this run. Paul Tudor Jones said that if gold breaks $1400 “it goes to $1700 rather quickly.”