Billionaire Jeffrey Gundlach believes that one asset class has corrected enough, and it is offering a golden opportunity for long-term investors.
In a new CNBC interview, the DoubleLine Capital CEO says the stock market’s volatility index (VIX) hasn’t spiked, despite concerns about surging oil prices and tensions in the Middle East.
According to Gundlach, the relative stability in equities suggests that a major sell-off event is still coming.
“I thought it was really interesting about the decline of the last few weeks in risk assets that the VIX index never really got above 30, which was really strange. I heard a lot of guests on CNBC saying, well, if the VIX gets above 40, maybe that’s your signal that things are washed out and it’s time to buy. But in spite of all of the volatility, we didn’t really see the VIX go up.”
Gundlach says he’s keeping a close watch on one asset class that has been beaten down since late January. The billionaire believes that it is trading at a level that offers a better risk-reward ratio than stocks.
“I really think for the long haul, I still want to be in commodities, and I still want to have a gold position. But my enthusiasm for gold was definitely exceeded last year by the market’s actual action. You might remember that I talked about gold going above $4,000 last year. And we talked about that when it was well below $4,000. Well, I was not enthusiastic enough, I guess, because it went up to almost $5,500.
But now we’re back down at about what I thought would be the target for gold, as a high point for the year. But at this level, I think it’s a very good opportunity to add to gold and to add to commodities. I’m not terribly optimistic about credit or stocks at this point. I don’t think they’re cheap enough. I think I would want to see the VIX go higher to signal a real washout on the stock market.”
At time of writing, gold is trading at $4,419, down over 20% from its peak of $5,602. While gold has strongly bounced from its Monday low of $4,099, it is very rare for an asset to abruptly start a new uptrend after a deep corrective move.
Gundlach appears to be saying that those who accumulate gold at heavily discounted prices while staying patient will likely get rewarded over the long haul. He also suggests that stock investors should wait for a big sell-off before taking on new positions.
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.