Gundlach Sees $1,000 Move, “Massive Base Building in Gold”

Many investors see gold as one of the safest assets that you can add to a portfolio, but is it now poised to make an epic run higher?

Bond king Jeffrey Gundlach says “Yes.”

The bond fund manager, who runs $100 billion at DoubleLine Capital, is extra bullish on gold now. Once it breaks its resistance at $1,360 an ounce, gold will push $1,000 higher, he predicts.

“Gold is negatively correlated with the dollar. We see that gold broke above its downtrend line. But now we see a massive base building in gold. Massive,” he recently told investors at a conference.

“It’s a four-year, five-year base in gold. If we break above this resistance line one can expect gold to go up by, like, a thousand dollars.”

Timing the move is impossible, Gundlach admits, but the charts suggest that timing won’t matter to investors who are holding gold as a safety play or who are investing in options that pay if gold moves up or down, know as “straddles.”

Gold holders are likely to buy if gold falls, or enjoy the surprise returns if it shoots much higher. What gold won’t do is sit still, Gundlach believes.

“Will it happen? Well it’s not happening right now but it’s a very interesting juncture. It’s a great time to be buying gold straddles. Because one way or the other this baby’s got to break in a big way,” he says.

Recently, gold prices faded following a decrease in tensions on the Korean Peninsula. At the same time, the dollar pushed higher.

A stronger U.S. currency makes dollar-denominated gold more expensive for overseas buyers.

Gundlach’s claims come as the market is at the bottom range of a one-month low. June gold futures are at $1,323.10 an ounce.

While bullish on gold, Gundlach is considerably more sanguine regarding U.S. Treasuries.

Bond gloom

The bond guru believes that 10-year yields can continue to move higher, driving down price. These comments came a day before the yields pushed passed 3% for the first time since 2014.

While this is positive for gold investors, higher bond yields could eventually impact gold. Gundlach believes that rising inflation will put increased pressure on government-issued debt.

Gold, because it is a non-yielding asset, does well in an environment where interest rates are negative, which results from when inflation is above bond yields.

Gundlach’s bold comments came shortly after a major presentation at the Sohn Investment Conference.

At the conference he said he was “extremely bullish” on commodities because of rising inflation. Moreover, inflation tends to rise before heading into a recession, even a mild one.

Recommended Articles

5 Franchises You Can Buy for Less Than $80K

A convenient way to start a business is through a franchise. There is an already built-in business model, consumer base, and operational supply chain. However, if you join a globally-known

How to Encourage Loved Ones to Adopt Healthy Eating

It’s painful to watch loved ones suffering with chronic health problems, such as food intolerances, headaches, allergies, digestive pain and menstrual issues. We wish there was something we could do

How to Retire 15 Years from Today

Retirement planning should ideally begin from the day you have your first job. However, even if you have made no special financial preparations for your retirement, you could still start

The Cost of Owning a Pet Can Be Surprising, So Plan Ahead

A cat or dog can be cute, cuddly, and great for companionship. Yet the cost of owning a pet can be surprising. Pets are living beings that must be taken

Dump Growth Stocks for Value? Market Weighing Options

In this article I make a brief comparison of growth stocks versus value stocks, a topic often addressed by the mainstream financial media.Growth stocks typically offer a substantially higher growth

7 Countries Where You’ll Find Bugs On the Menu

Creepy, crawly, gross, slimy. There are several ways to describe bugs, but here in the United States, few of us would use the words “delicious” or “yummy” when talking about

Get Rich Slowly with a Slick Dividend Reinvestment Strategy

The time-tested wisdom from leading value investors has always been that if you want to make money in the stock market, invest in high quality stocks and do not sell

A Surprising Way to Get Health Benefits from Coffee

You may have heard of green coffee bean extract for weight loss, but this potent natural remedy offers other important benefits, too. Read on to discover how green coffee bean

4 Ways to Make Extra Cash Using Your Car

Owning a car does not necessarily have to be an expensive proposition. While you cannot avoid paying the auto loan installments or the car insurance and maintenance costs, you can

Paid Not to Work: How Universal Basic Income Might Compensate for Coming Job Losses

The unemployment rate for the United States represents only the amount of people who are unemployed and also actively looking for work. Separately, the workforce participation rate includes Americans were unemployed

Meet the People Who Built or Inherited Fortunes — Then Lost It All

It’s amazing how much money rules our lives. The average person will barely make $1 million over the course of a working lifetime. Meanwhile, in the United States and all

Luxury Used Cars You Can Buy Cheap and Almost New

Looking for a luxury used car you can buy cheap? Careful what you wish for. First-time owners of luxury vehicles don’t always appreciate maintenance and repair costs. Uninformed buyers may