NEW YORK (Reuters) – Greenlight Capital hedge fund manager David Einhorn said on Thursday the Federal Reserve claims it can keep inflation under control and the price of gold is likely to rise amid the current rising price environment.
“The question is whether there is enough gold to support foreign exchange reserves. The answer is that the price of gold is going up, maybe much higher,” Einhorn said, speaking at the of the Sohn Investment Conference, which is being held virtually. Einhorn has long been betting that gold is a critically important asset in portfolios.
Einhorn’s fund has risen 20.9% this year, driven by gold investments, macro trades and bets on falling shares of some limited companies.
The investor said the Fed’s tools to control inflation are limited, mainly due to the US deficit. When rates go up, the country’s debt also goes up.
“The Fed is bluffing,” not fighting inflation, he said, saying it might choose to back the Treasury. “Just wait until they’re forced to loosen in an inflationary spike to prop up the Treasury. At this point it’s better to have gold. That’s what Grandpa Ben taught me.”
He added that some countries could also decide to sell their reserves in dollars, after the United States froze the Russian Central Bank’s reserves as a sanction earlier this year.
(Reporting by Carolina Mandl; Editing by Leslie Adler)
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