David Einhorn said gold’s stellar rally this year has been more about eroding confidence in U.S. fiscal and monetary policy than inflation alone.

Greenlight Capital founder and president, David Einhorn, has revealed the secret behind his hedge fund far outpacing broader markets this year, with a nearly 12% gain (net of fees): a cautious stance and smart macro bets.

On the sidelines of the Sohn Investment Conference in New York on Wednesday, Einhorn told CNBC that his performance came on the back of three primary drivers: exposure to European equities, a well-timed shift to index protection in February and a long-standing position that’s finally paying off.

“It’s been a fabulous year for gold, which has been a poor holding for us for a long time,” Einhorn said.

“I'd be really happy if it went to $3,500 or $3,800 [per ounce]. I'd be really unhappy if it went to $30,000 or $50,000. So I hope I don't end up being, you know, too unhappy.”

A longtime gold bull, Einhorn said the precious metal’s stellar 21% rally this year has been more about eroding confidence in U.S. fiscal and monetary policy than inflation alone. 

“Gold is about confidence in the fiscal policy and the monetary policy. And since we bought gold in 2008 or so, it's been very clear to me that the US fiscal and monetary policies are both too aggressive and create a risk,” he said.

The SPDR Gold Shares (GLD)and iShares Gold Trust (IAU) ETFs, which track gold prices, are up over 20% this year.

Despite bipartisan concerns about the soaring deficit, Einhorn warned that no serious steps are being taken. “There’s not even the beginning of a plan to do anything about it until there’s an actual crisis,” he said.

Einhorn pointed out that D.C.’s “best cost cutters” — including the Department of Government Efficiency (DOGE) under Elon Musk — have made only superficial trims.

According to the Wall Street Journal, Greenlight Capital’s 2025 playbook has included bullish bets on gold and rate cuts, along with short positions in companies that “cater to liberal tastes.” That helped the fund gain 8.2% in the first quarter.

Einhorn told CNBC that he still believes that inflation pressures will stay elevated due to ongoing policy excesses.

At the Sohn conference, where Einhorn famously pitched Lehman Brothers as a short idea in 2008 months before its collapse, the hedge fund manager unveiled a new idea: German specialty chemicals firm Lanxess.

“Today, I’m presenting a company where management made excellent strategic decisions, but the stock suffered from bad luck,” Einhorn reportedly said during his presentation.

Einhorn said Lanxess, which was founded in 2004 via a Bayer spinoff, had exited its cyclical commodity businesses before pivoting to its current focus. 

Following a string of setbacks through its transition, Einhorn said the worst is over for Lanxess, adding that it was finally poised to deliver stable returns and higher margins.

The German firm — whose stock trades over the counter in the United States (LNXSF, LNXSY) — could also benefit from Trump-era tariffs, Einhorn argued, via price hikes.

According to Einhorn, nearly 30% of Lanxess’ manufacturing base is in the United States, and in some business lines, it’s the last American player standing and mainly faces competition from Chinese firms.

“We think Lanxess is set for success and will surprise the market,” Einhorn said.   

According to Google Finance, LNXSF has gained more than 38% this year, while LNXSY has risen 29.5% — far outpacing the the Invesco QQQ Trust (QQQ) ETF and the SPDR S&P 500 ETF (SPY) ETFs that track the benchmark Nasdaq and S&P 500 indices.

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