Einhorn: Gold Will Benefit From Political Uncertainty, Inflation

Venerable hedge fund manager David Einhorn made some key updates to his fund’s holdings recently, which included bets against sovereign bonds and continued belief that gold will benefit from ongoing political uncertainty, along with inflation.

Einhorn detailed the moves in a conference call this week with investors. From Bloomberg:

“We made several changes to the macro portfolio in response to the election,” Einhorn said Thursday in a conference call discussing results for Greenlight Capital Re Ltd., the Cayman Islands-based reinsurer where he is chairman. “It was various long positions in sovereign fixed income that we eliminated. We added some additional shorts in sovereign fixed income, and we added to our long equity exposure.” He didn’t specify which nations’ debt he was betting against.

While his fund’s gold holdings may have been a weak spot in its portfolio as of late, the fund manager believes there’s still plenty of upside ahead:

“Our long-term outlook remains bullish,” for the metal, Einhorn said. “The new administration comes with a high degree of uncertainty, and its policy initiatives appear to be focused on stimulating growth and, with it, inflation.”

Among other investments Einhorn likes right now is General Motors, whose shares have jumped nearly 28% in the trailing twelve months.

The SPDR Gold Trust ETF (NYSE:GLD) was trading at $119.02 per share on Thursday afternoon, up $1.11 (+0.94%). Year-to-date, GLD has gained 8.58%, versus a 5.72% rise in the benchmark S&P 500 index during the same period.

GLD currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #6 of 33 ETFs in the Precious Metals ETFs category.

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