(Adds gold and bitcoin remarks)
By Sam Forgione
April 10 (Reuters) - Jeffrey Gundlach, chief executive and chief investment officer of DoubleLine Capital, said on Thursday the global economy could potentially see a “deflationary scare” again and added that he likes gold as a diversifier.
Speaking at an annual DoubleLine event in New York, Gundlach said: “In Europe, the inflation rate is falling. In the United States ... the inflation rate is lower than it was in 2011.”
“I continue to believe that there is more deflation in the world than most people appreciate,” Gundlach, who helps manage approximately $49 billion in assets, said. “We will see potentially a deflationary scare again,” he added.
Gundlach said that the economy will likely face deflation once central banks remove their stimulus programs. The Federal Reserve last month said it would reduce its monthly bond purchases, which have been implemented to spur hiring and economic growth, to $55 billion. The Fed started its stimulus program in 2012 and continued until December 2013 at an $85-billion pace.
The central bank has also kept its short-term policy rate between 0-0.25 percent since the depths of the recession in late 2008 to help the U.S. economy recover. The European Central Bank, meanwhile, opened the door on April 3 to turning on its money-printing presses to boost the euro zone economy and keep inflation from staying too low.
Gundlach also said that he liked gold and that it was held in good strong hands. “I‘m actually sort of fond of gold as a diversifier now,” he said, adding however that he isn’t convinced gold will reach $10,000 an ounce.
He reiterated he favored dollar-denominated emerging market bonds, and specified that he preferred longer-dated bonds given positive long-term economic indicators for emerging market countries.
Gundlach again sounded the alarm on China, which he said could see a significant decline in economic growth. “A 23-fold increase in the economy has got to be due for not just a plus 7 - how about a minus 7”, he said in reference to Chinese economic growth.
As for bitcoin, he said the currency is a “failure” now, dogged by scandals, security issues as well as volatility. He said he isn’t sure it will ultimately be a failure in “version 4.0.” Gundlach said with bitcoin, it’s hard to control, but if it finds its way to being non-replicatable and truly accepted, “it would have really a seismic shock in terms of geopolitics around the world.”
He added: “If you can’t control the money, it’s hard to control the economy.” (Additional reporting by Jennifer Ablan; Editing by Meredith Mazzilli, Bernard Orr)