Billionaire Paul Tudor Jones Bets on Inflation: Gold, Bitcoin, and Commodities as Safe Havens

Billionaire Paul Tudor Jones Bets on Inflation: Gold, Bitcoin, and Commodities as Safe HavensBillionaire and legendary investor Paul Tudor Jones has increased his exposure to gold and Bitcoin in the lead-up to the upcoming US election, citing inflation as a key concern. He believes that whether Trump or Harris wins the presidency, the US will face inflationary pressures

Billionaire Paul Tudor Jones Bets on Inflation: Gold, Bitcoin, and Commodities as Safe Havens

Billionaire and legendary investor Paul Tudor Jones has increased his exposure to gold and Bitcoin in the lead-up to the upcoming US election, citing inflation as a key concern. He believes that whether Trump or Harris wins the presidency, the US will face inflationary pressures. Both candidates have pledged tax cuts and increased fiscal spending, while turning a blind eye to the country's ballooning deficit.

Jones told CNBC on Tuesday that if the US government does not address its debt issues, it will eventually resort to inflation to solve its problems. He pointed out that US government debt has risen from 40% of GDP to nearly 100% in the past 25 years, putting it on an unsustainable trajectory.

"All roads lead to inflation," Jones said. "I like gold, I like Bitcoin, I think commodities are undervalued, so I like commodities. I think a lot of young people have been looking for an inflation hedge in the Nasdaq, which has been performing well."

Jones is not the only billionaire investor sounding the alarm about the US fiscal situation. Stanley Druckenmiller, earlier this month, said he was shorting bonds, arguing that the two parties' "fiscal recklessness" would have serious consequences.

Economists predict that the US inflation problem will be exacerbated if Trump wins. Trump plans to significantly raise tariffs and continue his 2017 corporate tax cuts. Jones said he has repositioned his portfolio, increasing his exposure to inflation-sensitive assets, as he believes Trump is more likely to win.

Recently, strong US economic data has further increased the risk of a "no-landing" scenario. Coupled with the market's growing expectation of a Trump victory, US bond yields have rapidly risen. On Monday, the US 10-year Treasury yield rose 11 basis points, and on Tuesday, it continued to rise by another 2 basis points to 4.232%.

Jones believes that both candidates are concerning because they don't seem to be taking the country's rising debt seriously. When it comes to the US budget, Trump and Harris are "the least qualified for this job." If the next president does not adjust policies to address the US's rising debt-to-GDP ratio, "the way out is inflation."

Jones added that this would include raising consumption taxes and lowering interest rates as much as possible. According to the Congressional Budget Office, the US debt-to-GDP ratio is expected to reach 122% by 2034. However, Jones has a strongly pessimistic outlook on the US fiscal trajectory, believing this is a very conservative estimate.

Jones believes that the next president must address the massive deficit, or they will face a backlash from the bond market. Last year, some "bond vigilantes" already took action, refusing to buy US debt, causing the 10-year Treasury yield to hit 5% in October last year.

"Under Trump, the deficit has increased by $500 billion each year," Jones said. "Under Harris's plan, the deficit would increase by $600 billion each year. I feel like this is all fantasy, and the bond market won't tolerate it."

Jones's concerns about inflation are not unfounded. The US government's debt level has reached record highs, and the policies proposed by both presidential candidates will further increase the deficit. If the US government does not take steps to address the debt problem, it will eventually have to rely on inflation to get out of trouble.

Therefore, Jones has chosen to invest in gold, Bitcoin, and commodities, which typically perform well during inflationary periods. He believes that these assets will be safe havens in future portfolios.

However, it's important to note that Jones's investment strategy is not without risks. Inflation could be higher or lower than expected, and the market's response to the election outcome could be unexpected. Therefore, investors should carefully evaluate risks and rewards before making investment decisions and seek professional advice.