A Top Performing Hedge Fund In 2018 Says Selling Stocks & Buying Gold Is The “Trade Of Century”

A hedge fund that saw gains of 41% in 2018 has turned bearish on the stock market, and the fund has gone long gold. Here are the details…

It is no longer just a few big name, legendary investors like Ray Dalio who are buying gold.

Lesser known hedge funds are also making a move into gold.

In fact, a top performing hedge fund in 2018 is betting big on the “trade of the century”.

Here’s more from Bloomberg:

One of last year’s best-performing hedge funds says the “trade of the century” is to buy gold and sell stocks as risk assets are due for another meltdown.

It’s only a matter of time until the bearish bet pays off big, according to Crescat Capital LLC. While the Denver-based firm has only about $50 million under management, it has a history of outperforming the S&P 500 Index — with its Global Macro Fund returning 41 percent last year alone. Now the investment company says it’s ready to capitalize on an end of the economic cycle as indicators warn that a recession is imminent in the coming quarters.

The consensus is pointing to a recession in 2020 or 2021, Tavi Costa, a global macro analyst at Crescat, said by phone. “We think it’s a lot closer than that and we have a number of macro timing indicators that we look at.”

 

Going long gold in yuan terms and shorting global equities currently explains three-quarters of the hedge fund’s strategy. While the firm uses the MSCI World Index in models to visualize the trade, it goes a bit deeper with its short position, selecting individual stocks and exchange-traded funds to bet against.

Let’s connect a few of the golden dots:

  • Central banks are on an absolute gold buying frenzy
  • Very prominent billionaires and legendary investors are saying to buy gold
  • Hedge funds are turning bearish on the stock market, bullish on gold

The picture is becoming clear: There looks to be continued solid if not strong demand for the yellow metal.

What’s missing?

Institutional investors and retail investors.

Once institutions and the public at large begins buying gold, with the three dynamics mentioned above already in play, it is possible that gold has an upside surprise that surprises even the gold analysts and experts.