Bond King Jeffrey Gundlach is bullish on gold
The 'new bond king', Jeffrey Gundlach, believes gold has fallen as far as it can go.

The recovery in the US housing market is over, says Jeffrey Gundlach. The head of US investment manager DoubleLine Capital made his reputation as one of the world's leading bond fund managers, with many viewing him as the new bond king', taking the crown of Bill Gross at Pimco.
In a presentation last week, he noted that "virtually all" measures of housing activity have slowed notably since the Federal Reserve started to talk about reducing quantitative easing (QE), says Joshua Brown on The Reformed Broker blog.
It's hardly been a strong recovery compared to the past in any case, which Gundlach puts down to the fact that "millennials" the youth of today are less keen to escape their parents and set up house on their own.
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Gundlach is also concerned about stocks in general. In particular, he highlights the fact that levels of margin debt (using borrowed money to buy shares) are now at record levels, even when adjusted for inflation.
The big problem is that when shares start to fall, this level of leverage is likely to make the decline harder and faster. And given that much of the bull market has been dependent on QE, its steady withdrawal does not bode well either.
He is less bearish on Chinese stocks, noting that "a bottom might be at hand". But that said, he's in no rush to buy in, particularly given the risk of China's economic growth disappointing expectations this year.
However, Gundlach is bullish on gold miners. He believes that gold has fallen as far as it's going to he thinks the yellow metal is now being held by "strong hands" (people who are holding for the long run, rather than short-term gain), so if you still own gold, he says, then "for god's sake don't sell it here!", notes Brown.
And if this is the case, then gold mining stocks look undervalued relative to their reserves, particularly if the gold price starts rising strongly again.
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Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.
After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.
His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.
Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.
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