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Why Doug Kass Bought Gold

Doug Kass has long been a bear on gold. In fact the founder of Seabreeze Partners Management engaged in a heated debate about gold with Euro Pacific Capital's Peter Schiff on the April 16 episode of "Futures Now," telling the ultrabullish Schiff that gold has "no intrinsic worth" and is "purchased by buyers in the hope that someone else—who knows that gold will forever be unproductive—will pay more for it in the future."

(Read More: Kass and Schiff Feud About Gold)

But now, Kass has become one of those very buyers. And why not—after all, he believes that someone else will pay more for it in the future!

"There's a time and a place and a price for everything," Kass said on Thursday's episode of "Futures Now." For Kass, this is now the time to buy gold.

As Kass wrote earlier this week, "Negative sentiment in gold has become extreme." So for Kass, gold now "provides a contrarian's appeal."

Indeed, Kass sees bearishness everywhere he looks. "The sharp price drop in gold has brought on a growing short position," he wrote. And "Credit Suisse, JPMorgan and Goldman Sachs have recently slashed their gold price projections. I view this surrender as consistent with a possible contrarian signal."

AP

That said, Kass has not turned into a major gold bug. He still admits that "the intrinsic value of gold is difficult to evaluate." However, his gold call is part and parcel of his bearish view on stocks.

"There is probably no better time to consider diversifying one's portfolio into a depressed asset class like gold than when the crowd is optimistic about a vigorous and self-sustaining economic recovery and when the world's stock markets are at record high prices," Kass wrote

(Read More: Gold Climbs 1.5% as Dollar Buckles on Soft US Data)

What Kass is specifically trying to capitalize on is the divergence between massive gold bearishness and overextended stock bullishness. "Investor sentiment toward gold probably can't get much worse," Kass said, "and the growing optimism regarding the trajectory of global economic recovery may not get much better in the weeks and months ahead."

Schiff, for his part, was glad that Kass came around to the bullish side. "I agree with him! I think he's going to make money if he buys gold," Schiff told CNBC.com in a telephone interview.

Schiff added: "But it's going a lot higher than he thinks it is."

_ By CNBC's Alex Rosenberg. Follow him on Twitter: @LilRosenberg

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