David Einhorn, founder of Greenlight Capital, said on Thursday that the Fed was bluffing, pretending that it could tame inflation and that gold prices could rise sharply in the current environment of rising prices.

"the question is whether there is enough gold to support foreign exchange reserves," Mr Einhorn said at the Thorne Investment Conference (Sohn Investment Conference). The answer is that the price of gold will go higher, maybe significantly higher. "

Einhorn has always believed that gold is a very important asset in the portfolio. His fund is up 20.9% this year, thanks to investments in gold, macro trading and bets that the shares of some unnamed companies will fall.

Mr Einhorn said the Fed's tools to control inflation were limited, mainly because of the US deficit. When interest rates rise, so does America's debt.

"the Fed is bluffing," he said, not fighting inflation, and the Fed may choose to support Treasuries. "just wait until they are forced to relax and let inflation soar to support government bonds. At this time, you'd better have some gold. That's what Grandpa Ben (former Federal Reserve Chairman Ben Bernanke) taught me. "

He also said some countries may decide to sell their dollar reserves after the United States froze Russia's central bank's foreign exchange reserves earlier this year.