Billionaire investor Paul Tudor Jones must be rolling in bullion right now.
The famed hedge-fund investor made a notable call last week, citing a cocktail of a dovish Federal Reserve and heightened geopolitical tensions as a perfect time to buy bullion and stocks.
Here's what the macro trader told Bloomberg Markets in an interview on June 12.
"I think one of the best trades is gonna be gold. If I had to pick my favorite [bet] for the next 12 to 24 months, it'd probably be gold," he said.
Fast forward to June 20, and gold prices for August deliveryGCQ19, +0.10% , the most active contract on Comex, notched its highest settlement since September of 2013, after the Federal Reserve shifted away from its "patient" stance on monetary policy and signaled that a rate cut could warranted if economic conditions worsen amid the protracted trade tussle between the U.S. and China that has shaken global markets.
Combined with dovish rhetoric from other central banks, signaling that further stimulus could be needed, about a decade removed from the 2008 financial crisis, the intensifying tensions between Iran and the Trump administration added to the search for havens for investors.
Gold soared $48.10, or 3.6%, to settle at $1,396.90 an ounce on Thursday. The 10-year Treasury note also fell below 2%, as investors jumped into the perceived safety of bonds.
Tudor Jones told Bloomberg last week that if gold "goes to 1400, its goes to 1700 rather quickly," referring the potential for bullion prices to catapult sharply higher.
"It has everything going for it in a world where rates are conceivably going down in the United States and going to zero, it has everything going for it."
The hedge-fund investor continued:
| Remember, we've had 75 years of expanding globalization and trade, and we built the machine around the belief that was the way the world was gonna be. Now, all of a sudden it stopped and now we're reversing that. And so, when you do something like that, when you break something like that, a lot of times the consequences won't be seen at first. It might be seen one year, two years, three years later. That would make one think that it's possible that we go into a recession. It would make one think that rates in the United States go back towards the zero bound and of course in that situation gold is a screamer. |
In a separate interview, around the same time, Jones also reasoned that buying stocks in tandem with gold would be a smart bet, given that the Fed set the stage for a rate cut, which would stock-market investors might see as bullish, at least in the near term.
"We're long stocks right now. We're probably going to make a new high, my guess is that we will go beyond the rate cut and continue into higher ground," he said.
He was right on that count as well.
The S&P 500 index SPX, +0.95%booked its first record close since April 30, after earlier touching a new intraday peak of 2,956.20, while the Dow Jones Industrial Average DJIA, +0.94% was trading at its best level since Oct. 3, and the Nasdaq Composite Index COMP, +0.80% was a little over 1% short of its May 3 record close.
To be sure, Jones hasn't always been spot on, but it's worth noting a call that has played out so rapidly.
Jones is widely credited with predicting, and profiting, from the stock-market crash on Oct. 19, 1987, which saw the Dow lose nearly 23% of its value, marking the largest one-day percentage decline for the blue-chip benchmark in its history. Jones became known for trading everything from currencies to commodities. His record has featured middling returns and an exodus of billions from his hedge fund in more recent years. According to a Forbes list of billionaires, Jones boasts a net worth of $5.1 billion