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“The FED is Bluffing” says Greenlight Capital’s David Einhorn | Sees Safe Haven Gold Price Climbing Amidst Record Inflation 40-Year High 8.6%

Despite seemingly spirited efforts and plans to curb Inflation, the FED is being criticized for doing too little, too late.

As you’ll see in Greenlight Capital’s Founder, David Einhorn’s comments below, it’s like frantically scooping water out of a sinking ship with a friggin’ baby bucket! SERIOUSLY?! C’Mon, Man!

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HIGHLIGHTS:

  • Greenlight Capital’s David Einhorn told investors that gold’s price will likely continue to rise.
  • The Federal Reserve is only “bluffing” as it tightens monetary policy to curb inflation, Einhorn said.
  • Gold is up 1.8% this year and currently trades at just under $1,850 an ounce.

David Einhorn believes that the current market environment will cause gold prices to run up, and that the Federal Reserve will fail in its battle to tame soaring prices.

The Greenlight Capital founder told the Sohn Conference that Fed policymakers are likely just “bluffing” when they say they’ll tighten monetary policy to curb inflation – which eased slightly to 8.3% last month. [And is now at a Record 40-Year High 8.6%!]

David Einhorn believes that the current market environment will cause gold prices to run up, and that the  Federal Reserve  will fail in its battle to tame soaring prices.  The Greenlight Capital founder told the Sohn Conference that Fed policymakers are likely just "bluffing" when they say they'll tighten monetary policy to curb inflation - which eased slightly to 8.3% last month.  Gold has climbed steadily this year with investors favoring risk-off assets as stock market  volatility  surges. It is up 1.8% to $1,847.80 an ounce, although it had slipped 0.26% in early-morning Friday trading.  Einhorn is bullish on the precious metal because he believes inflation will prove long-lasting. Investors often see gold as a 'safe haven' asset because it maintains its value during periods of volatility.

Gold has climbed steadily this year with investors favoring risk-off assets as stock market volatility surges. It is up 1.8% to $1,847.80 an ounce, although it had slipped 0.26% in early-morning Friday trading.

Einhorn is bullish on the precious metal because he believes inflation will prove long-lasting. Investors often see gold as a safe haven‘ asset because it maintains its value during periods of volatility.


“It’s best to have some gold” right now, Einhorn said, adding that the price will rise “higher, perhaps much higher”.

The Fed has started hiking interest rates to try to bring inflation under control. But Einhorn warned there’s a possibility that this only drives prices up even further because of the high level of US debt, which will increase when rates go up.

“The Fed is bluffing,” Einhorn told the conference. “[Raising interest rates is like] clearing off your snowed-in driveway with an ice cream scooper.”

“Just wait until they’re forced to loosen into an inflationary spike to support the Treasury,” he added. “At that point, it’s best to have some gold.”


Investors have typically viewed gold as a safe haven in times of rising prices. It offers no yield of its own, but it generally appreciates in value in line with other assets, thereby offering its holders a store of value. 


U.S. Inflation Rates

At the time of writing, inflation in the US has increased to 8.6% (7% referenced in original article), which is the highest recorded hike since June 1982. The country aims to maintain an inflationary level of 2%, since this helps to maintain stable prices and employment rates and therefore, this has caused significant disturbance to the country’s economy. Over the course of the pandemic, the US government dedicated $1.9 trillion to national relief. Though this helped individuals to ride the turbulent wave that the virus created, it crippled the economy and has been the biggest contributor to the rise in inflation.

Interest Rate Hikes

When inflation rates rise in the US, the country typically responds by increasing their Federal Funds Rate. This is the rate that banks lend excess reserves and capital to one another and is set and adjusted by the Federal Reserve Bank. An alteration to this rate collaterally increases interest rates, which is the amount that the consumer must pay to borrow money from the bank. Increased interest rates mean that its more expensive to acquire a loan or pay your mortgage, which in turn will prompt people to save. When individuals save their capital, they will have less money to put back into the economy, which will result in inflation levels falling. 

Einhorn’s Greenlight Capital fund is up just under 21% this year, despite the ongoing market volatility.

-Excerpts via two sources:
Billionaire Investor David Einhorn sees Gold Rising Much Higher – And Says the FED is Bluffing About its Ability to Tame Inflation
US Reaches Record Inflation Levels – What Does This Mean for the Dollar?


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