Jeff Gundlach: Gold To $1,400 As Faith In Central Banks Is Lost

Tyler Durden's picture

It's a day ending in -day, which means it is time for another Jeff Gundlach fire sermon, as transcribed by Reuters. And while in his most recent address to the mortals the new bond king from DoubleLine focused on tremors in the bond market, predicting that "credit fund bankruptcies are coming," and that "the VIX needs to surge above 40 before a bottom can be made in the high-yield junk bond market", today he focused on a topic we have been covering all day, namely the collapse of faith in central bankers and the ascent of gold as a preferred asset class to paper money and bank deposits.

In his latest communication with the outside world, Gundlach said that gold prices are likely to reach $1400 an ounce "as investors lose faith in central banks", Reuters reported.

"The evidence that negative rates are harmful and not helpful has piled up to the point that the 'In Central Banks We Trust' mantra has finally been laid bare as a hoax," Gundlach said.

Well, yes, even Bloomberg finally admitted it.

But the question is why does Gundlach see gold rising to only $1400. After all if, as JPM calculated the ECB, BOJ and Fed will cut rates to as low at -4.5%, then gold - as the only form of currency that will remain in physical form and is not taxable (at least until the government confiscates it) - will end up far, far higher than just $1,400, which is less than 15% from the current price.

Indeed, if the Chinese population decides to reallocate just a tiny fraction of their $25 trillion in deposits away from cash and into gold ahead of the inevitable massive Chinese devaluation, the question is how many zeroes Gundlach's forecast will be off by.

Anyway, back to Gundlach who said that negative rates are highly correlated with equities, particularly with banks and financials. Their stocks have come under severe selling pressure as negative rates would hurt their balance sheets.

"What's scaring people is the '12 rate hikes in three years' in the dots. When are they going to change the dots? They are still there," Gundlach said about the Fed's dot plot.

He repeeated that "the market is going to humiliate the Fed. It's bizarro to have rate hike projections while at the same time, Yellen is talking about negative rates. What a mess."

Gundlach's predictive track record speaks for itself:  last year, Gundlach correctly predicted that oil prices would plunge, junk bonds would live up to their name and China's slowing economy would pressure emerging markets. In 2014, Gundlach correctly also forecast U.S. Treasury yields would fall, not rise as many others had expected.

"The Fed raising rates in this environment is unthinkable," Gundlach said. Gundlach also told Reuters that he purchased more Puerto Rico general obligation bonds at around 70 cents on the dollar. He added: "You make money on the short side. The market is moving too fast for the Fed to keep up."

Or, if one wants to avoid the threat of idiotic short squeezes driven by idiotic headlines such as the recurring "OPEC is cutting production" hoax (note: the Saudis aren't cutting anything until the US shale sector lies in a rubble of chapter 11s and 7s), one can just buy gold.

Yes, the BIS will do its best to slam it down with naked shorting, but that only provides lower entry points to accumulate positions in a commodity which as even the Amazon Post's Keynesian lackey correctly put it, is "a bet that the people in charge don't know what they're doing." 

If by now it is not clear that the people in charge are idiots - and the US 2016 presidential race should have sealed it - it never will be.

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Soul Glow's picture

Gold to $1,400 by the end of March and it will be in the face of a stock market collapse, so given that the ratio of gold vs equity will double.

Where is you chief asset?


Our all in number is $3765.

Tao 4 the Show's picture

Armstrong tripping over himself to maintain his status as chief know it all. Of course, he knew it all along - that is, him and Soc-i-doody.

Bay of Pigs's picture

When this farce of a market blows, there is no telling how high gold will go.

A double or triple is likely, and probably much higher if the Central Banks have to revalue their gold reserves to extinguish the massive debt overhang.

zeronetwork's picture

What's wrong with him, why don't he say $2400. If no faith in banks than what's wrong in saying $6500?

JonNadler's picture

yeah, no faith in central banks who are seen as the omnipotent saviors of mankind = gold 1400  HA HA HA HA

freak of nature's picture

I remember when this was a bearish headline, a few years ago.

Anopheles's picture

"Central bank will have to revalue their gold".   

Hahahahhahahaha   You sure are ignorant of how things work.  

Why don't you just "revalue" your house?  or car? 

Bay of Pigs's picture

Look fuckhead, if you cant discuss things rationally, maybe just STFU?

Anopheles's picture

Rational?  That's hilarious.   You're the one who just said that someone can magically price a commodity to whatever they want.... 

Central banks only hold 17% of all gold.   You can't reprice anything unless you control all of it, or are willing to BUY every bit of gold that's put up for sale.  

JonNadler's picture

maybe ZH is out of your league, try Yahoo Finance and Jim Cramer

Anopheles's picture

You're right, I'm not stupid and paranoid enough to be on here. 

detached.amusement's picture

you got your own currency, a printing press, and a whole shit ton of people who "have faith" in that printing?


no?  then stfu.

ThroxxOfVron's picture

Gold has no measurable value.   It is a proxy for fractionalized fiat.   -The oldest, in fact.

The 'Revaluing' of Gold under FDR was just another sleazy back-assed-ward fiat devaluation tactic.

The currency was debased.  That is all.


For the sake of the argument here: I agree with Anopeles.

-Kindly move the horse back around in front of the cart, please..

38BWD22's picture



$55,000 or more in non-hyperinlfated 2016 dollars.

Gambit's picture

Gundlach is one of the few people on wall street (although he is in LA) that I respect. 

Tao 4 the Show's picture

All these Fiat-a-holics falling off the wagon, ans jumping on the gold wagon.
What can it mean? The sudden unity is disturbing unless it is just time to admit the obvious.

Alea Iactaest's picture

Gold took a hit in April 2013 but it looks like the gold market broke in 4Q2012. That's when the disconnect started between the POG and the Fed balance sheet. This correlation suggests that POG may fall when the Fed introduces the next round of QE/QQE. It may also suggest there is some room to the upside before then (maybe Glodman's new $1500 target?)


Citxmech's picture

All these f'n market whores make me sick.  1 month of bad news and they can't jump ship fast enough after YEARS of promising us that "stocks always go up," "btfd" and "this time its different."

. . . aaaaand it's gone. 

Jump you fuckers!

johngaltfla's picture

Gold is just reflecting what happens when every piece of shit fiat currency is realized to have the same distinct smell.

Like shit.

Toonces McGraw's picture

What about our red headed bastard step child silver? Popped 3% today, still looks undervalued. Been waiting for it to bust out for awhile but it still seems repressed. I wonder if it will see some love when the gold gets bought up.

Bay of Pigs's picture

GSR at 79:1

At sub $16 USD, silver is the most undervalued asset on the planet. Some call that a "no brainer".

slaughterer's picture

I would not count on the path to $1400 being a very straight one, or a trail that even reaches its end point.  

Hayabusa's picture

I've frequented this forum for many years now and have come to the conclusion that "TylerS" are paid to "push" precious metals.  Everytime there's a disruption in the economy it's always the same "solution" gold, silver... snooze.  Like PMs are the only alternative to the stock market casino.  Comon Tylers, give us more credit and kick out the PM trolls who propagandize us with years of promises of riches via PM appreciation... which has proven to be a bunch of crap over the last few years.... people who bought into gold/silver the last 5 years got hosed!!

Citxmech's picture

Er, what do you suggest to protect your wealth smart-guy?

And for what it's worth - All the goldbugs here that I'm aware of push holding a percentage in PMs regardless of any economic "disruption."  Fuck, the whole system is structurally unsound and just looking for an excuse to blow-up.

BTW - my PM investments, as of today, are up 50% over my dollar-cost average price.  I think that averages out to 7% per year.

I'd call that decent performance.  Not good enough for you?

Bay of Pigs's picture

If you bought gold in USD the last 5 years, yes you are down a little. But over the last 10, gold is up 128%. A decent return.

If you bought gold last five years in Rubles, Real, and South African Rand, you have doubled your money. That currency debasement and contagion is spreading, not getting better worldwide.

Mark of Zerro's picture

Just $1400?  That's kind of boring.


Tejano's picture

Consider the source. What was he saying this time last year? Just fuck off, Gundlach.

Richard Head's picture

He's been calling for $1400 for years. 

Hongcha's picture

Congratulations to those who stomached the last five years.  Hopefully we start to really move here.  If bitchez in China get on it, then we will soar.

johngaltfla's picture

The last 5 years were perfectly normal. The next 5 years will make people cry like a bitch, unless they loaded up on the correct stocks and lots of precious metals. This is the era similar to the late 1830's when the 2nd US National Bank went tits up and only PMs held their value.

SuperRay's picture

Well, well, I guess all those marginalized 'conspiracy theorists' who don't trust the government, wall street, the media and the ivy league sociopaths, were right all along.  Who'da thunk?  Time for some serious SHADENFREUDEN!!


offwirenews's picture

I believe he may have misplaced the comma and left out some zeros

skinwalker's picture

I sure hope silver goes up in proportion, as I've got a tidy amount of silver and not one atom of gold. 

aliki's picture

$1,400 on its way to $14,000

just convinced a few family members to get on-board the gold train

msmith9962's picture

Congrats.  I just made a pitch.  It's up to them now, my conscience is clean.

aliki's picture

all u can - showed the horses where the oasis is - up to them to drink

but seriously tho, if japan just got waxed over 1,000 points in a week + lost control of their currency, WTF do people think is gonna happen here in the states when our money-markets go ape-shit, the sheep go check on a bank account that had $1,000 that now has $999 (to start), & they have no f'n choice but to slap on the cash ban (which the idiot millenials think is cool since they can swipe their iphone to pay for a starbucks)???

Ignorance is bliss's picture

Better drink up fast, cause your account is being bled dry whether your drinking coffee or not. Even retard millennials won't think that is cool.

22winmag's picture

At that point in time a loaf of bread will also be $14,000.


I'm all-in with Gold, however I expect to be long since dead before there is a real reset and Gold is faily valued for my heirs to enjoy.

skinwalker's picture

The average loaf of bread costs about 2 bucks, or about 0.15% the cost of an ounce of gold. While the ratio may decrease due to food shortages, I doubt the two will ever reach parity. 


Bread being worth an ounce of silver? Possible, but still unlikely. 

22winmag's picture

I'd say $4 for something edible- around 312 loves of bread at present.


No amount of Gold could buy you bread in post-war Japan or post-war Germany, and if the U.S. and Europe slide into WWIV, who is to say?


Let's not have WWIV!

Not My Real Name's picture

No amount of Gold could buy you bread in post-war Japan or post-war Germany.

Actually, yes. Gold did buy bread in post-war Germany -- read When Money Dies, by Fergusson. It also bought bread in Zimbabwe just a few years ago when the Z$ went tits up. There are YouTube videos showing people panning for it to avoid starving; 0.1 grams bought a loaf of bread.

Precious metals' true value have been supressed for years by the world's central banks. When the fiat illusion finally breaks, I think you'll find that the purchasing power of precious metals will be much higher than what it can buy today -- no matter what price it is assigned in US dollars.

Tejano's picture

I don't eat bread. Haven't for years.


Actually not true.

Cigarettes was used as money in the cities but I can tell you that gold and silver were in fact used as monies by the country folk. My mother lived in a small village in the Rhineland Palatinate and was 8 years old in 1945 and she survived better than most because my grandfather had a acre where he grew a garden, grapes for wine, and had small amounts of gold and silver to buy things through a quasi barter/pm system.

MrSteve's picture

Historically, one pound of copper has bought one loaf of bread, a trade that has gone on for thousands of years.

NikoBellick's picture

Loaf of bread analogy is what I tell myself everytime I can't decide whether to buy more ammo or more silver that month.

Latitude25's picture

This clown and big banks trying to set and manage upside gold prices.  Just more psychological warfare against exponential price rises.

alexcojones's picture

"Gold to go to $1900"

Alex Z CoJones 

(Just don't know exactly when)

cpnscarlet's picture

Well, that's the trick, isn't it?

Am I right? Mr. Sinclair? Mr. Butler? Mr. Maguire?