Gold Soars Against The Odds: Eastern Buying Spree Or 1970s Redux? Billionaire Investor David Einhorn Thinks There's A 'Secular Trend'

Gold has been on a remarkable rise in 2024, reaching record highs. The surge is attributed to a combination of factors, including the de-dollarization trend, central bank buying, and increased demand from the East.

What Happened: The price of gold has been soaring, despite the macro environment, which was expected to create challenges for the precious metal. Billionaire investor David Einhorn suggested a “secular trend” of Eastern countries buying gold from the West as a possible explanation for the surge, reported Business Insider.

“Perhaps the West is running out of gold it is willing to sell, while Eastern demand has remained strong enough to force the price higher,” he said. 

China, the second-largest economy globally, has been particularly active in this trend, increasing its gold reserves by 16% over the past 17 months. Other countries, such as India and Singapore, have also been stockpiling gold to hedge against global economic turbulence. This increased demand has driven up the price of gold.

Ed Yardeni, an esteemed market expert, foresees the possibility of gold reaching $3,500 within the upcoming year, indicating a potential 50% increase. He compares today’s inflation patterns to those of the 1970s Great Inflation era, implying that similar conditions could drive gold to unprecedented levels.

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Why It Matters: The surge in gold prices is not an isolated event. Earlier in April, Einhorn, the founder of Greenlight Capital, revealed that he was loading up on gold as a hedge against potential inflation. This move aligns with his recent theory on the surge in gold prices.

Meanwhile, economist Peter Schiff has warned against piling into risk assets like tech stocks and Bitcoin amid inflation concerns, advocating for gold as a safer investment.

Similarly, billionaire investor Ray Dalio has been sticking with gold as a hedge against inflation, citing historical and logical reasons for his stance.

Price Action: Gold prices experienced a slight decline, closing at $2,328.94, down 0.39% from the previous session’s close of $2,337.97. Over the past 52 weeks, gold has fluctuated between a low of $1,810.75 and a high of $2,431.02, with the current price settling near the middle of this range at $2,328.94, according to the data from Benzinga Pro.

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