Are central banks “increasingly aggressive and counterproductive” policies causing gold to continue to brighten? Here’s why the metal’s shine is likely just getting started.
Einhorn's comments to Bloomberg echo sentiment from a letter that Greenlight sent to investors yesterday. "The Fed’s 'data dependency' doesn't appear to relate to employment, which continues to improve, or core inflation, which is now running above its two percent target," said the letter. "We believe the increasingly adventurous monetary policy is bullish for gold."
Those familiar with Einhorn and his Greenlight Capital Re Ltd reinsurance company know that they have traditionally held gold in high regard: the metal accounts for nearly 10% of Greenlight's portfolio and Einhorn has long believed that central banking stimulus will fuel inflation and boost gold. Furthermore, Greenlight named gold as one of their five largest disclosed long positions at the end of the first quarter or 2016.
At any rate, the company's faith in the yellow metal seems to be paying off: their stock has maintained stability and their shares have gained 15% this year, helping alleviate the losses from investing in Japanese lender Resona Holdings Inc. which dropped 32% in the first quarter due to the Bank of Japan's negative-rate strategy.
Is China trying to shape the gold market?