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Eastern demand in buying gold (XAUUSD:CUR) has kept gold prices higher, said David M. Einhorn, founder and president of Greenlight Capital.
In a letter to investors, the American investor and hedge fund manager said that there has been a secular trend of Eastern investors buying gold (XAUUSD:CUR) from the West, and “perhaps the West is running out of gold to sell, and Eastern demand has remained strong enough to force the price higher.”
Gold’s (XAUUSD:CUR) price advanced more than 8% during the first quarter. Einhorn said that the rise was surprising because typical moves in currencies and interest rates would have produced a weaker quarter for it.
“While it’s possible, the advance was related to the market beginning to doubt the sustainability and wisdom of both monetary and fiscal policies.”
Insight into Greenlight Capital’s Investment Strategy
Greenlight Capital also established a medium-sized macro position in Teck Resources (TECK) to take advantage of higher copper (HG1:COM) prices.
“Our thesis was based on a combination of being bullish on copper (HG1:COM) and believing that Teck (TECK) was about to exist the penalty box after a multi-year investment in a new copper mine that was on the brink of finally coming online,” he wrote.
After the mines came online “and the gap between supply and demand will likely open up in the next year,” Greenlight believes that the stock would be undervalued if copper (HG1:COM) prices rise, “but it less undervalued than it once was.”
Predictions on Copper Prices
Einhorn concluded that copper supply is about to fall short of demand, forcing prices substantially higher, and thinks the best way to invest is through options on copper futures (HG1:COM).
Economic Outlook
He also said that the U.S. economy was much stronger than most expected with markets that “largely ignored political and geopolitical concerns.”
Additional Insight:
– Greenlight Capital’s investment strategy seems to be focused on taking advantage of emerging trends and market shifts, such as the increasing demand for copper from Eastern countries.
– Einhorn’s predictions about copper supply and demand highlight the importance of investing in commodities with potential for growth.
– The optimism about the strength of the U.S. economy suggests a positive outlook on potential investment opportunities in the country.
