{"id":21271,"date":"2026-02-12T20:27:24","date_gmt":"2026-02-12T20:27:24","guid":{"rendered":"https:\/\/microvibenews.com\/?p=21271"},"modified":"2026-02-12T20:27:24","modified_gmt":"2026-02-12T20:27:24","slug":"one-of-wall-streets-most-feared-hedge-fund-managers-on-the-decline-of-the-dollar-gold-is-becoming-the-reserve-asset","status":"publish","type":"post","link":"https:\/\/microvibenews.com\/?p=21271","title":{"rendered":"One of Wall Street’s most feared hedge fund managers on the decline of the dollar: gold is ‘becoming the reserve asset’"},"content":{"rendered":"

<\/p>\n

Gold blasted past $5,300 per ounce last month as President Donald Trump\u2019s hawkish foreign policy and tariff threats sent investors to safer assets. At the same time, U.S. deficit spending swelled to what the Congressional Budget Office called an unsustainable $1.9 trillion, a scenario that\u2019s chipping away at the dollar\u2019s standing as the world\u2019s leading reserve currency.<\/p>\n

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The confluence of these factors has some investors predicting the fall of Treasury securities as the only true global reserve. Greenlight Capital founder David Einhorn made that apparent in a recent conversation with CNBC<\/em>. The investing legend forecasts a monumental shift in global reserve assets, predicting that central banks will swap dollars for the yellow metal.<\/p>\n

\u201cThe central banks around the world are buying gold,\u201d Einhorn said. \u201cWhereas a few years ago, it was mostly Treasurys.\u201d He added that it is \u201cbecoming the reserve asset\u201d because U.S. trade policy \u201cis very unstable, and it\u2019s causing other countries to say we want to settle our trade in something other than U.S. dollars.\u201d<\/p>\n

To be sure, the dollar still dominates as the reserve currency of choice. While in the first half of last year, central banks dumped over $48 billion in Treasuries, in July 2025, the dollar still composed roughly a 58% share of all foreign exchange reserves, according to the Philadelphia Federal Reserve Bank. And gold purchases by central banks actually fell in 2025 from a high between 2022 and 2024, according to data from the World Gold Council.<\/p>\n

Also, Einhorn has long predicted the price of gold will rise out of fears around U.S. monetary policy and fiscal policy. In an interview with CNBC<\/em> last year, the hedge fund manager argued that \u201cGold is not about inflation. Gold is about the confidence in the fiscal policy and the monetary policy.\u201d While the investor isn\u2019t quite advocating for a return to the gold standard, he is a strong proponent of holding the metal as a hedge against U.S. fiscal and monetary mismanagement.\u00a0<\/p>\n

On Wednesday, Einhorn added that U.S. trade policy is sending jitters across global markets, fueling the \u201csell America\u201d trend and sending central banks to safer assets like gold. While gold prices have eased since their peak last month, the currency\u2019s value remains high, at around $5,100 per ounce as of Thursday morning.\u00a0<\/p>\n

The Einhorn effect<\/strong><\/h2>\n

Einhorn has made a name for himself spotting financial red flags. The hedge fund manager rose to investing prominence in 2002 after taking a short position on Allied Capital, a mid-cap financial company. After giving a speech about his stance at the Sohn Investment Research Conference, the company\u2019s stock went down 20% as Einhorn accused the company of defrauding the Small Business Administration.<\/p>\n

Einhorn followed a similar playbook in 2007 after shorting Lehman Brothers, sharing his thesis about the financial institution\u2019s overexposure to subprime mortgage-backed securities at the Value Investing Congress. His prescient callouts of major firms via thoroughly researched presentations\u2014and the resulting stock tumbles they initiate\u2014has popularized the phrase \u201cthe Einhorn Effect,\u201d used to highlight the hedge fund manager\u2019s striking influence on investor decisions. (This is not to be confused with the \u201cEinhorn revolving shotgun\u201d from the Call of Duty<\/em> video game.)<\/p>\n

Deficit fears fuel a bet on gold<\/strong><\/h2>\n

Just as his early short calls exposed cracks in major financial institutions, the investor now sees structural vulnerabilities in government fiscal and monetary policies. Einhorn Wednesday highlighted his philosophy on gold, saying \u201cour thesis on gold over the longer term has been that our fiscal policy and our monetary policies don\u2019t make any sense.\u201d At current spending rates, the U.S. deficit-to-GDP ratio is expected to reach 6.7% by 2036, per the CBO. However, Einhorn also noted other major developed currencies maintain high deficit-to-GDP ratios, explaining why gold, as opposed to a foreign currency, could become the preferred global reserve.<\/p>\n

Part of Einhorn\u2019s confidence in gold is predicated on his belief that the Federal Reserve will issue more interest rate cuts than what\u2019s currently anticipated. \u201cI think one of the best trades out there right now is betting on more cuts this year than expected,\u201d he said. \u201cI think by the time we get to the end of the year, it\u2019s going to be substantially more than two cuts.\u201d<\/p>\n

Yet even as January\u2019s better-than-expected jobs report made the reality of another rate cut seem far away, Einhorn is betting that Warsh as Fed chair will be able to persuade the committee to tally up rate cuts.<\/p>\n

\u201cHe\u2019s going to come up with arguments that are going to persuade people,\u201d Einhorn said.<\/p>\n<\/div>\n

#Wall #Streets #feared #hedge #fund #managers #decline #dollar #gold #reserve #asset<\/p>\n","protected":false},"excerpt":{"rendered":"

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