George Soros, who once called gold “the ultimate bubble,” has resumed buying the gold ETF and shares after a three-year hiatus.
The billionaire investor yesterday disclosed that in the first quarter he bought 1.05 million shares in SPDR Gold Trust, the world’s biggest gold exchanged-traded fund, valued at about $123.5 million.
Soros cut his firm’s investments in U.S. stocks by more than a third in the first quarter and bought a $264 million stake in the world’s biggest bullion producer Barrick Gold Corp.
Soros allocation to the Gold ETF and nearly a quarter of a billion to just one gold mining share – Barrick – shows he is clearly now bullish on gold and no longer views gold as the “ultimate bubble.”
This seems likely as he has warned that there is a real risk of a euro break up and is on record regarding having deep concerns regarding the US fiscal situation – both of which are of course bullish for gold. He had also publicly declared concerns about a collapse of the Chinese economy and issued very vocal warnings that we are on the “threshold of a Third World War” a year ago in May 2015.
Not surprisingly he is bearish on stocks. Soros Fund Management doubled its bet against the S&P 500 stock index according to its filing to the Securities and Exchange Commission yesterday.
Soros is the man who nearly “broke the Bank of England” when the self-styled philosopher-economist and political activist manipulated the price of the pound pushing it sharply lower on international markets and badly impacting the UK economy. Five years later, he exacerbated the Asian economic crisis by betting against Thai and Malaysian currencies which almost led to a global financial crisis.
This is yet another positive development for the gold market and Soros follows in the footsteps of other many other leading hedge funds managers and billionaire investors such as Singer, Dalio and Druckenmiller and indeed institutions such as Blackrock and Munich Re.
Most hedge and institutional funds were buyers of gold in Q1. A notable exception was gold bull John Paulson who further reduced his allocation to the gold ETF by 17 percent to 4.8 million shares. It was Paulson’s third cut to his SPDR stake in a year and saw him drop to the third largest investor in the fund from second, behind BlackRock and First Eagle Investment Management. Some speculated that Paulson may have been taking profits. There is also the possibility that he quietly diversifying into physical gold in allocated accounts.
Given Soros awareness of financial, geo-political and indeed systemic risk, it is likely that he also owns physical gold bars in allocated accounts and not just ‘paper gold assets’ in form of the more visible, publicly filed and high risk mining shares and gold SPDR trust.
Gold and Silver News
Funds allocate back to gold as prices surged in Q1 (GoldCore via Reuters)
China’s ICBC To Buy Giant London Gold Vault (GoldCore via WSJ)
Platinum stockpiles to fall 19% to 2 million oz in 2016 (Mining MX)
WPIC lifts platinum market deficit in 2016 by three-fold to 455k ounces (Bullion Desk)
Gold edges up but dollar strength, stocks recovery cap gains (Reuters)
What “Lured” Soros to Boost His Gold Holding? (Bloomberg Video)
Make America Gold Again: Calls for Everyone’s Favorite Standard Are Back (Bloomberg)
University of Michigan to Invest in Gold, Copper Mining Fund (Bloomberg)
Libya’s Central Bank Needs Money Stashed in a Safe; Problem Is, Officials Don’t Have the Code (WSJ)
Gold depository could soon be on its way to Texas (Star Telegram)
Gold Prices (LBMA)
17 May: USD 1,270.10, EUR 1,121.43 and GBP 877.50 per ounce
16 May: USD 1,281.00, EUR 1,132.04 and GBP 892.87 per ounce
13 May: USD 1,275.15, EUR 1,123.51 and GBP 885.16 per ounce
12 May: USD 1,268.30, EUR 1,111.30 and GBP 878.28 per ounce
11 May: USD 1,271.80, EUR 1,116.19 and GBP 882.45 per ounce
Silver Prices (LBMA)
17 May: USD 17.08, EUR 15.09 and GBP 11.80 per ounce
16 May: USD 17.32, EUR 15.30 and GBP 12.07 per ounce
13 May: USD 17.09, EUR 15.06 and GBP 11.85 per ounce
12 May: USD 17.23, EUR 15.12 and GBP 11.91 per ounce
11 May: USD 17.51, EUR 15.36 and GBP 12.14 per ounce