‘Bond King’ Jeffery Gundlach predicts the dollar will dive — which means these 3 assets could shine

‘Bond King’ Jeffery Gundlach predicts the dollar will dive — which means these 3 assets could shine

‘Bond King’ Jeffery Gundlach forecasts the dollar will dive — which suggests these 3 properties might shine

Expectations of a more hawkish Fed have actually enhanced the U.S. dollar — however according to one billionaire financier, the greenback’s future won’t have plenty of sunlight and rainbows.

“My long-term view on the dollar remains strongly bearish,” DoubleLine Capital creator Jeffrey Gundlach states in his business’s newest webcast.

“We’re looking at a weaker dollar in the second half of next year, maybe 2023. The dollar is going to go down, thanks to the twin-deficit problem [fiscal debt and trade balance] in the U.S. It’s going to slip pretty mightily.”

The “Bond King” includes that a weaker U.S. dollar might cause the increase of numerous properties. Here’s a take a look at 3 of them — plus a more unique property in Gundlach’s collection.

Gold

Stack of gold bars, Financial concepts

Pixfiction/Shutterstock

Gundlach states this essential safe house has actually been “shockingly stable” when compared to the inflation-fueled rally in other products.

Furthermore, he forecasts the failure of the U.S. dollar might make the rare-earth element shine once again.

“The dollar being firm this year has been a cap on gold, but when it heads down, gold will go up,” states the Bond King.

And since gold can’t be printed out of thin air like fiat cash, it can likewise function as a hedge versus inflation. Gundlach jobs that inflation might increase to 7% in the coming months.

To profit from a possible gold cost rally, financiers can constantly select to purchase gold bullion itself. However mining stocks can likewise benefit in such a situation: Barrick Gold, Newmont and Freeport-McMoRan must supply a great beginning point for some research study.

Silver

Stack of gold bars, Financial concepts

RHJPhtotoandilustration/Shutterstock

Gold isn’t the only precious metal Gundlach feels has been ignored, calling gold and silver together “the orphans in the commodity market.”

Silver currently trades at around $22.10 per ounce, which is more than 50% below its all-time high.

Like gold, silver can be a store of value. But it’s likewise more than a safe haven asset.

The highly conductive metal is widely used in the production of solar panels and is a critical component in many vehicles’ electrical control units. The industrial demand — plus the hedging properties — make silver a very interesting asset class for investors.

You can buy silver coins and bars at your local bullion shop. Meanwhile, companies like Pan American Silver, Wheaton Precious Metals and First Majestic Silver have the potential to outperform in a rising silver price environment.

Emerging market equities

Globe sphere orb model effigy. (vintage style)

Aris-Tect Group / Shutterstock

The U.S. stock market has performed extremely well, with the S&P 500 more than doubling over the past five years.

But Gundlach suggests looking internationally.

“When the dollar starts to go down, you’re going to see tremendous outperformance by non-U.S. stocks. Emerging markets will be a very strong performer when that happens,” he says.

He even notes that after the dot-com bust, the outperformance of U.S. equities in the middle of the 1990s “was completely reversed” and the situation “could very well happen again.”

You don’t need to travel to a foreign country to add international exposure to your portfolio. Exchange-traded funds (ETFs) such as Vanguard FTSE Emerging Markets ETF (VWO) and iShares Core MSCI Emerging Markets ETF (IEMG) provide a convenient way for American investors to diversify.

Fine art

Gundlach is a noted collector of modern and contemporary art, with pieces by Andy Warhol and other famous names gracing his collection.

While he didn’t highlight art investing during his recent comments on the dollar, fine art is becoming a popular way to diversify because it’s a real asset with little correlation to the stock market.

Contemporary artwork has outperformed the S&P 500 by 174% over the past 25 years, according to the Citi Global Art Market chart.

And on a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

This article provides information only and must not be interpreted as guidance. It is supplied without guarantee of any kind.

Jobber Wiki author Frank Long contributed to this report.