Legendary hedge fund manager Stanley Druckenmiller, who runs Duquesne Capital, says that “the bull market has exhausted itself” after eight years of a “radical monetary experiment.”
He’s now invested in gold (GLD).
Speaking to a room of nearly 3,000 investors at the 21st annual Sohn Investment Conference, Druckenmiller said that policymakers have no “end game” for ending years of ultra easy monetary policy, which central bankers unleashed during the financial crisis.
“I have argued that the myopic policymakers have no end game,” Druckenmiller said. "They stumble from one short-term fiscal or monetary stimulus to the next despite overwhelming evidence that they only produce a sugar high and grow unproductive debt that impedes long-term growth. Moreover, the continued decline of global growth despite unprecedented stimulus the past decade suggest we have borrowed so much from our future and for so long that the chickens are now coming home to roost."
Markets do have an end game though.
While Druckenmiller didn’t explicitly give an investment recommendation, he did strongly hint at buying gold.
“Let me throw this one at you," he said. "My hint is what is the one asset you did not want to own when I started Duquesne in 1981? It’s traded for 5,000 years and for the first time has a positive carry in many parts of the globe as bankers are now experimenting with the absurd notion of negative interest rates. Some regard it was a metal. We regard it was a currency, and it remains our largest currency allocation.”
Duquesne’s largest position is in SPDR Gold Trust (GLD) shares. The fund has held 2.88 million shares since the second quarter of 2015, regulatory filings show.
Druckenmiller launched Duquesne in 1981. He converted his fund into a family office in 2010. During his career, he’s amassed one of the best long-term track records on Wall Street.
Julia La Roche is a finance reporter at Yahoo Finance.