Jeff Gundlach suggests bitcoin, not gold, may be better bet amid government spending surge

Published Thu, Feb 18 202110:30 AM EST

DoubleLine Capital CEO Jeffrey Gundlach suggested that the digital currency bitcoin may be a better investment than the classic inflation hedge gold this time around as fears rise about surging government spending. In a tweet, Gundlach said he's had a lukewarm outlook for both gold and the U.S. dollar over the last six months and instead is now wondering if bitcoin offers better protection against currency depreciation at the hands of inflation. "I am a long term dollar bear and gold bull but have been neutral on both for over six months," he said in a Twitter post Wednesday evening. "Lots of liquid poured into a funnel creates a torrent. Bitcoin maybe The Stimulus Asset. Doesn't look like gold is." The investor's comments came as Democratic lawmakers work to pass President Joe Biden's $1.9 trillion stimulus proposal without Republican support. Biden, who campaigned on another round of fiscal support and another round of stimulus checks, has repeatedly stressed that it's important to flood the U.S. economy with cash to protect workers and small businesses until the threat of the Covid-19 pandemic is gone. But Republicans have argued that any additional stimulus should be far smaller and targeted to those industries that need it most, like travel, food service and hospitality. GOP lawmakers further claim that it may be helpful to wait until Congress' most-recent stimulus package, a $900 billion bill passed in December, has had time to fully juice demand. Lawmakers passed a $2.2 trillion package in March known as the CARES Act. A growing group of economists and investors, including Gundlach, have warned that the deluge of fiscal support could spark long-dormant inflation as the Covid-19 vaccine is deployed and businesses start to reopen. Conventional wisdom on Wall Street suggests that investors who expect inflation should swap their cash for precious metals like gold as a way of protecting the value of their wealth. Inflation, which erodes the purchasing power of U.S. dollar, more often appears when an economy is expanding and businesses and consumers demand more goods and services. But gold, unlike bitcoin, has actually declined over the last three months and the most actively traded futures contract was last seen trading at $1,777 an ounce , down from around $1,860 in mid-November. Bitcoin is up 193% over the same period. As recently as last month, Gundlach said he thought the digital currency could be overheating . "I don't like bitcoin here. I don't like things that are up on a stilt like that," the so-called Bond King said on CNBC Jan. 11. "Bitcoin, to me, is now sort of in bubble territory in terms of the way it's been acting." The day Gundlach made those comments, the price of the cryptocurrency had fallen below $33,000 per coin after a sharp rally in late 2020. Bitcoin is now worth $51,650 , according to Coin Metrics.

Jeffrey Gundlach

Adam Jeffery | CNBC