Paul Tudor Jones: Gold’s Undervalued and Bonds Are a Curve Flattener Play

Market Folly submits:

In his latest letter to investors, hedge fund manager and legendary trader Paul Tudor Jones outlines his firm’s thoughts on the topics of equities, bonds, and currencies. Tudor’s letter is one of those ‘must reads’ as his macro sense is phenomenal and he is one of the greatest traders of all time (performance returns summary here). What’s interesting about his latest letter is the fact that they included a special section addressing the all too talked about precious metal.

Gold

The macro perspective section of their letter notes how gold is not consumed but rather accumulated as a store of value as it has been a ‘medium of exchange for over 5,000 years.’ What’s interesting is that they plot out inflation-adjusted gold prices and note that we are still far off from the highs seen over 2 decades ago. Tudor puts the inflation-adjusted peak price of gold to be between $1,600-$2,400, with the previous high coming in at $2,422. While Tudor says he has never been a gold bug, he says all assets have a time and a place. And conveniently enough, he says now is gold’s time. Tudor joins an army of other prominent hedge fund managers bullish on the precious metal including David Einhorn of Greenlight Capital who has gone as far as storing physical gold. Additionally, John Paulson of Paulson & Co has $4 billion in gold investments, among many other managers.

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