Legendary Investor David Einhorn: “The Central Banks Around the World Are Buying Gold”
The world is turning to gold as protection in an era of record debt and monetary uncertainty
Gold is up more than 70% over the last year, as investors have responded to growing global uncertainty, rising U.S. deficits, and renewed concerns about long-term currency stability. President Donald Trump’s aggressive foreign policy stance and tariff threats pushed many market participants toward traditional safe-haven assets, while federal spending continued to expand at an unsustainable pace.
According to the Congressional Budget Office, U.S. deficit spending has climbed toward $1.9 trillion, intensifying pressure on the dollar’s role as the world’s primary reserve currency. As borrowing accelerates and interest costs mount, confidence in long-term fiscal discipline continues to erode.
These conditions have caught the attention of some of the world’s most respected investors, including legendary investor David Einhorn. In a recent interview with CNBC, Einhorn suggested that the global reserve system may be undergoing a major shift, with central banks increasingly favoring gold over U.S. Treasury securities.
“The central banks around the world are buying gold,” Einhorn said. “Whereas a few years ago, it was mostly Treasuries.” He added that unstable trade policy has encouraged nations to seek alternatives to settling transactions in U.S. dollars.
In July 2025, the U.S. dollar still accounted for about 58% of global foreign exchange reserves, according to the Philadelphia Federal Reserve Bank. However, central banks sold more than $48 billion in Treasuries during the first half of last year, reflecting growing caution toward U.S. debt. This comes after the U.S. dollar just posted its worst year in almost a decade.
Einhorn has consistently argued that gold’s appeal extends beyond inflation concerns. In earlier interviews, he emphasized that gold reflects confidence in government policy. “Gold is not about inflation,” he said. “Gold is about the confidence in the fiscal policy and the monetary policy.” When that confidence weakens, demand for physical metal tends to rise.
Recently, Einhorn reiterated that U.S. trade and fiscal policies are contributing to what he described as a growing “sell America” trend. Einhorn’s reputation lends weight to his views. He rose to prominence in the early 2000s after uncovering accounting irregularities at Allied Capital.
Einhorn later gained recognition for warning about Lehman Brothers’ exposure to risky mortgage assets before the 2008 financial crisis. These well-timed calls established what many investors now refer to as the “Einhorn effect.”
Today, Einhorn sees similar structural risks emerging in government finances. He recently noted that current fiscal and monetary policies lack long-term sustainability. The CBO projects that the U.S. deficit-to-GDP ratio could reach 6.7% by 2036, further complicating debt management.
Rather than shifting to another currency, Einhorn believes gold may remain the preferred alternative. Many developed nations also carry high deficits, limiting the appeal of foreign currencies as reserve substitutes.
His outlook is also shaped by expectations of additional interest rate cuts. Einhorn believes the Federal Reserve is likely to ease more aggressively than markets anticipate. He has suggested that Kevin Warsh, if appointed as Fed chair, could play a key role in encouraging lower rates.
Lower rates, rising debt, and weakening confidence in fiscal discipline all strengthen the case for tangible assets. For long-term investors, these trends reinforce gold’s role as both a hedge and a strategic store of value.
Reagan Gold Group: Helping Americans Protect Their Financial Future
Reagan Gold Group helps individuals safeguard their retirement savings through physical gold and silver ownership. In an era of rising debt, expanding deficits, and currency uncertainty, tangible assets provide essential diversification and long-term stability. Our experienced team works one-on-one with clients to explore precious metals IRAs and direct bullion ownership.
