Paul Tudor Jones told his clients that the time to hold gold is now as faster inflation and increased purchases through exchange-traded funds and by central banks boost demand amid stagnant mine output.
“I have never been a gold bug,” Jones told investors in an October 15 letter. “It is just an asset that, like everything else in life, has its time and place. And now is that time.”
“As one would expect, rising inflation suggests higher gold prices, especially when the Fed is perceived to be behind the curve,” according to the letter. “Gold appears to be cheap. In our view, gold’s value should increase as its scarcity relative to printed currencies increases.”
Paul Tudor Jones identified gold, emerging market equities denominated in local currencies and commodity related stocks as among the most likely assets to perform best.
Central banks were net buyers in the second quarter for the first time since at least 2000, according to the World Gold Council. While metal exploration expenditure has increased, mine production has been “stagnant” the past decade and new output is “marginal” in terms of available supplies, according to the letter.
“Any incremental demand for gold must be met through sales from current owners,” the company said in the letter. “They just aren’t making that much of it anymore.”
Related Assets: SPDR Gold Trust (ETF) GLD
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