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Ray Dalio runs the world’s largest hedge fund: Bridgewater Associates.
Stanley Druckenmiller ran one of the most successful hedge funds ever, Duquesne Capital which he closed in 2010.
Jeffrey Gundlach (the bond god) runs Doubleline Capital, one of the largest bond funds in the world.
Paul Singer runs Elliott Management, one of the longest running hedge funds in the world.
These aren’t the only billionaires out there with critiques about bonds or a position in gold… but they’ve been the most vocal about the major issues with US Treasurys. And they’ve all been bullish on gold.
Dalio and Gundlach recommend that people have up to 15% of their assets in gold.
Now maybe you think these guys are just talking their book – which you should always assume from everyone (including myself.)
And it’s true – these guys all have gold exposure.
Consider that Paul Singer made a single gold investment that now makes up ~20% of his fund’s entire portfolio. They’re all long gold for a very simple and unified reason: they see no other outlet to protect wealth from what’s happening with the US dollar and the US bond market.
Druckenmiller penned an op-ed in The Wall Street Journal yesterday warning that the US is making a terrible mistake with regard to its bond policy… He also owns gold.
Druckenmiller’s piece is the latest in a series of warnings from the world’s best investors – who are all seeing the same problems with US debt.
He writes:
“I have spent five decades trading on a simple premise: Markets aggregate information no committee possesses, and prices are how that information reaches decision makers. The long-term Treasury yield is the most important price in the world. It is also the only fiscal disciplinarian the U.S. has left.”
Now, Treasury Secretary Scott Bessent is doing everything possible to manage the long term Treasury yield with a variety of stop-gap, ad-hoc strategies. The latest is the suggestion he will use the Treasury’s remaining dry powder (about $1 trillion in cash on hand) to continue to manage long dated Treasury yields.
Reminder that the Treasury is traditionally in the business of selling long dated US Treasuries, not buying them.
We’re not entering a bond crisis. We’re in one. And Druckenmiller wouldn’t write this kind of op-ed for fun or on a lark. He’s basically retired. He’s writing this piece because he’s serious about what is happening with the bond market and the US dollar.
As he wrote yesterday:
“Debt management that even appears to follow the political calendar spends the one asset that took two centuries to accumulate: the credibility of the Treasury market. That asset doesn’t regain its value so easily.”
There’s no other shoe to drop here. The US Treasury is running headfirst into a brickwall of monetary comeuppance that’s been 50+ years in the making.
For some real context, consider Druckenmiller’s advice to truly fix the US debt problem:
“do the only thing that durably lowers long-term yields: address the primary deficit. Reform entitlements gradually and honestly, through means testing, indexing changes, eligibility adjustments phased in over decades—so that the burden is shared across generations instead of dumped on the youngest.”
Consider the likelihood the Trump Administration, Congress, the Federal Reserve, the US Treasury or anyone close to these levers of power is even thinking about entitlement reform.
The very idea is ballot box poison. No one wants to be the politician or bureaucrat who tells Social Security and Medicare recipients they’re going to have to take a haircut.
Not remotely likely.
Right now, the world’s best investors are shooting their flare guns. Gold is soaring.
If that’s not a signal to get long gold and gold stocks, I don’t know what would be.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio
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