Over the weekend, the head of DoubleLine Capital and Bond Guru gave an interview, and Gundlach said what he thought about different factors such as the upcoming US elections and the fallout from Brexit. He maintained his views that gold prices will continue to rise, and that gold miners would have a probability of making 10%, if gold was bought today. He added that a gain of 10% on Treasuries is about 20%.
Last week, gold prices surged to a new one-year high. After experiencing a bit of a pullback, Comex gold futures closed in at just under $1,359 an ounce. It also looks like the price is going to challenge 2014 highs, which were at $1,392.6 an ounce, and it has already gone above 2015 highs of $1,307 per ounce.
Last week, a report was released that showed 287K jobs were added to the US economy, and it seemed like investors ignored that report. The actual estimates were beat, as they were estimated to be at 178K-180K jobs, and bond yields dropped to record lows due to the risk aversion that was prior to the jobs report. On Friday, the US 10-year Treasury hit an all time low when it closed at 1.358%, and this was the case in other parts of developed economies, which means it’s safe to say that investors prefer bonds and gold prices, due to the safe haven they are known for providing.
This year the rally in gold has been amazing, especially when you consider that in December it was only trading at just under $1,061, but it soon skyrocketed. This was because the Fed raised rates by 25bps, and in the months of January and February, gold prices rose to $1,234. Regardless of months of pullbacks, gold prices have enjoyed gains.
A lot of people believe that gold prices could trade at $1,500 per ounce sometime in the future, and Gundlach is one of those who think this. In fact, he said that the S&P500 was a dead-money portfolio, which is a view that George Soros share. A few months ago, Soros spoke and said that he showed preference for gold and that when it came to the S&P500, he was a bit short on it.