Billionaire investor Mark Cuban says the recent turmoil in global markets that has sent stocks plummeting around the world has him baffled and moving money into gold.
The Shark Tank host revealed Thursday that he bought a good deal of call options on gold as the swings and constant volatility have driven him into areas that are likely to rise when the economy is in crisis. Cuban believes the fundamentals of the U.S. economy are strong, but admitted that with stocks, one can never be sure of what’s going to happen next, reports CNBC.
“I think people are so confused about this market,” Cuban told CNBC. “Nobody really understands what’s happening, including me. So, things that I thought made sense didn’t make sense and weren’t working. When traders don’t know what to do, they go where everybody is. And I thought that would be gold.”
Gold has risen roughly 17 percent since the beginning of the year and had its strongest day in two years Thursday. Cheap oil and deteriorating growth in China are battering global markets this year, the Dow Jones Industrial Average falling to two year lows at Thursday’s close, sending investors to safe havens like precious metals, according to The Wall Street Journal.
Oil, which has fallen roughly 75 percent since June 2014 highs of $108 a barrel, is also wreaking havoc across the financial sector. Prices hit 13 year lows Thursday dropping under $27 a barrel, but recovered slightly Friday on news that OPEC members may discuss cutting output levels, reports CNBC. (RELATED: Stocks Get Burned As Oil Flirts With 13 Year Lows)
Gold futures are slightly down from Thursday afternoon highs. Some investors booked quick profits on the bounce while others are feeling more hopeful about the markets following the news from oil producers. Analysts are warning investors not to waste too much hope on action from OPEC members however, as many previous supply cut talks have failed.
“We think it’s a lot of false hope,” Michael Cohen, Barclays head of energy commodities research told CNBC. “Basically what’s been happening over the last month is, as the market’s gotten increasingly short, anytime that we see these kinds of headlines, they result in this kind of rapid change in the price.”
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