NEW YORK (Reuters) - Jeffrey Gundlach, the chief executive of DoubleLine Capital, said on Wednesday that gold remains the best investment amid fears of instability in the European Union and prolonged global stagnation, as well as concerns over the effectiveness of central bank policies.

Jeffrey Gundlach, Chief Executive Officer, DoubleLine Capital LP., speaks at the Sohn Investment Conference in New York City, U.S. May 4, 2016. REUTERS/Brendan McDermid

“Things are shaky and feeling dangerous,” Gundlach said in a telephone interview. “I am not selling gold.”

Gold hit more than two-year highs on Wednesday as some bond yields slid to record lows in the wake of Britain's vote to leave the European Union, prompting investors to buy bullion as a haven from risk. Spot gold XAU=, which is up almost 30 percent so far this year, was up 0.56 percent at $1,363 per ounce at 2:34 p.m. EDT (1834 GMT)

Gundlach, who has been a staunch supporter of the precious metal and sees gold rising to $1400 an ounce this year, said gold bullion and gold-related stocks are attractive relative to government bonds, which have been hitting record low yields in recent days. The yield on the 10-year Treasury note hit a session high on Wednesday of 1.393 percent after its earlier record low of 1.321 percent.

“You’re seeing people who hated the ‘2 percent’ 10-year suddenly loving it at a 1.38-1.39 percent revisit of the all-time low closing yield,” Gundlach said.

“If you buy 10-year Treasuries now, I would say, it is a terrible trade location. It is the worst trade location in the history of the 10-year Treasury.”

Gundlach, who oversees $100 billion at Los Angeles-based DoubleLine, said gold is attractive against the backdrop of “a banking system in Europe, which is in a state of heading toward insolvency.”

He was referring to Banca Monte dei Paschi di Siena BMPS.MI, Italy's third largest bank, whose pile of bad debts and capital shortfalls are threatening contagion to other European Union nations. Gundlach also cited Deutsche Bank AG, whose shares hit a new record low Wednesday and whose value has halved since the beginning of the year.

“Banks are dying and policymakers don’t know what to do,” Gundlach said. “Watch Deutsche Bank shares go to single digits and people will start to panic... you’ll see someone say, ‘Someone is going to have to do something’.”

Deutsche Bank DBKGn.DE shares were down 5.56 percent on Wednesday to $11.54. Gundlach, known on Wall Street as the 'Bond King,' is one of the first heavyweight investors to recommend gold as a hedge against the credibility of major central banks as countries struggle to manage economic growth.