Wily George Soros is dumping physical gold for gold stocks
Posted on 20 May 2011 with 9 comments from readers
Legendary hedge fund investor George Soros again threw the cat among the pigeons this week when it was revealed that he had sold his gold holdings.
But remember his deception of a little over a year ago when Soros said gold was the ‘ultimate bubble’ and people also took that as a sell signal (click here). At the time ArabianMoney rumbled him and said this was nonsense and that Soros was a buyer not a seller of gold.
Gold buyer or seller?
And indeed, so that proved to be the case. Now what is he up to, seemingly again turning his back on the yellow metal that looks far from finished in its ‘ultimate bubble’ phase?
The clue is in the parallel revelation that Soros has bought Freeport-McMoRan Copper & Gold and Goldcorp. Why would anybody who thought the gold bubble done go out and buy such stocks? They will go down in price when gold does, and you don’t need to be the man who broke the Bank of England to know that.
However, as the gold bubble grows the place to be invested to get the best from the bubble shifts from physical metal to large gold stocks and ultimately to the now despised junior exploration stocks.
Mr. Soros is merely moving up the hierarchy, and after the best gains for the next phase of the gold bubble. Expect him to buy some gold juniors after that.
Market correction?
His timing is still a little strange for the stock market looks overdue for a correction, which seems to have started over the past couple of weeks and will also knock gold stocks down. But then Soros may not have invested much in Freeport-McMoRan Copper & Gold and Goldcorp.
He is likely sat on cash from the profits of his gold hoards that can be reinvested when gold equity prices are on the floor. Will this prove more profitable that sitting tight and riding out this storm?
Well Soros did not become the king of the hedge fund managers by not turning his book!
9 Comments posted by readers:
Interesting commentary, Peter.
There have been many occasions here on ArabianMoney when I’ve commented on the so-called world-class investment gurus, like George Soros, Marc Faber, James Rogers, Eric Sprott, etc.
The small time investor needs to understand that Soros has a terrible “track record” when comparing what he says, vs. what he does. As the Ed. has stated, Soros has deceived the masses in the past (on numerous occasions!!!), and is not to be trusted.
It doesn’t take a genius to realize that the gold and silver mining stocks represent bargain prices; they have been suppressed in 2011, when compared to the price of the underlying metal. My best guess is that Soros has sold off a portion of his gold hoard in exchange for a greater share of the mining stocks. That’s a very good business model!
I would believe Soros as far as I could push my Ford Expedition in the Louisiana July heat. If he did sell it, he will buy it back when it goes down a few percent and make a couple of million. He doesn’t pay retail.
It is amazing at the number of people that actually believe that the USA potentially defaulting on its’ debt is no big deal. At least I will be able to make some easy money on my cash when interest rates zoom up. I should probably get a new pick-up (that is a ute, for you Australians. It took me days to figure out that those steel pipe edifices on the front of your vehicles weren’t placed there in anticipation of societal melt down, but were instead put there to prevent ‘roo’ damage. I’m trying to learn as much as I can, in case I have to flee to somewhere the paper money is actually worth something, should QE 3 materialize in a few months.) before the price of everything explodes.
Prince Alwaleed was on CNBC saying that S.A. had enough oil to keep exporting it for a hundred years. Sure they do!
Here is a true story for your weekend amusement. At 11 P.M. on Wednesday night I decided that I needed an ice cream fix, so I headed for Winn Dixie for some ‘cookies and cream’ (stay away from the stuff, it is addictive). I had 2 gas cans in my SUV intending to stop at the Exxon at Gause Blvd. and Military Rd. on the way home. Upon arriving at Exxon, I began filling my 2 cans and was soon approached by a young guy who asked for some money to buy enough gas to ‘get home’. Not wanting to be left behind in the coming rapture, and remembering the biblical quote of how it was more difficult for a rich man to enter heaven than for a camel to pass through the eye of a needle, I gave the guy, and his young female companion, $5. At the same time, I told him that he was the third person that had hit me up for money at that gas station, and that I don’t go there that often. (The silver Expedition still looks new, so they must figure I have money or something? It sure isn’t the cheap jeans from Bangladesh. The thick fabric on normal jeans is too hot for down here, and you can ask that lady in Australia how much I love China.) He profusely thanked me and walked away. I resumed my careful can filling, not wanting to inhale a lot of spilled gasoline fumes on the 3 mile trip home. About a minute later, his girl friend walks up to me and hands me TWO DOLLARS CHANGE !!! saying that her companion had told her about my previous encounters with people asking for money, and that $3 would buy enough gas to get them home. And wouldn’t you know it, no people from the Guinness Book of World Records were there to record what I suspect has never happened before, so I missed my chance at immortality. They laughed when I told them that what they had just done had probably never happened before in all of human history.
Someone told me that I should have used those dollars to buy a lottery ticket. I need to find another gas station, since ALL the brands are now polluted with ethanol. Or maybe I should remember the camel parable and go there, even when I only need one gallon? Naw. But you can understand how Jesus got in trouble with the ruling class, going around saying stuff like that. Some things never change.
Jefferson Parish is holding a public ‘hurricane rally’ Saturday. Any excuse for a party in the New Orleans area is a good one.
looks early on the juniors call all right.
this guy is as creepy as they get.
goes into brazilian oil big and month or two later obama is in brazil saying ‘drill baby drill’…………heyy-oooo
while i do enjoy your parables bill….really….i’m an old codger w/bunch of em’ too….you would hear more of them from me if i could type as fast as you….
the US, being the printer of the world’s reserve currency (currently) can not default on debts…….the govmint is not revenue constrained like me n you….what they can do is inflate(devalue) the currency(what they are actually trying to do to bring home values up to their loan values), but this takes time and it will ultimately raise wages and the price of everything…YES it will screw people like me on socsecurety(maybe u too)…CPI they use to compute COLA does not include food n fuel(what the hell else do me n you buy?)
we do not fund the govmint thru taxes(they only make the unbacked since 1971 dollar valuable because u HAVE to use dollars to pay them w/) OR bonds(a relic left over from the gold backed days-bernanke been walkin in n writing a ‘reader’(a check-printing money) for them for while now)…..just think about that—we print money to buy our own bonds…..now if thats not a house of cards n toothpicks.
first time i heard this i laughed at it, but i kept thinking about it and finally got my mind around it.
of course, all this fiat money printing is going to be the end of something pretty soon…..thats why i’m long gold.
the prescient control/use of fiat currency will never be accomplished by flawed human beings…….and thats the only kind we are.
hope ya’ll stayin dry over there….really man.
“……..it will ultimately raise wages……..”
Don’t count on it. Workers will have little leverage – where are all these jobs you can walk into after leaving one with below inflation pay rises? The small man will be hammered, the middle class cleaned out. Soros and his ilk will prosper for a while. Ever thus.
How much will the masses take before they scream for the gallows and the wealthy must run to stay alive?
Give it another 2-3 years and see the Arab spring arrive in LA.
The first chapter is drawing to a close.
The hedges have been shorting miners against longs in the yellow metal. He appears to be saying the gold longs are off for awhile. I have the same bet only expressed in silver.
Soros the way i see it, is the stable boy of his class. Not a bad job if you can get it.
James M said: “Soros the way i see it, is the stable boy of his class.”
Perhaps so, James. But his actions consistently have spoken louder than his words. Whenever he makes “a pronouncement”, he has but one objective, and that is to deceive and mislead the investment class, so that he can profit by confusing them.
So if he is the “stable boy”, he’s likely one of the most conniving, most deceitful, and the most selfish of all “stable boys.”
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Soros, Buffett, Gross, etc. all have the same “problem”. They each invest such
large lumps of money at any time that they move markets against themselves.
One way to hedge that is to say one thing but do another. Simple, really.
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It is my understanding that the sales were in GLD ETF gold-tinted paper.
The move to mining shares is one step closer to the goal of physical gold.
The swapping of shares for bars will be done in the future. This is round
about but just think what the price move would be if he redeemed his
GLD shares directly for bullion bars. The minor detail that GLD could not
deliver what they do not have is another reason for Soros doing that swap.
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As far as stable boys go, just remember who
is last to wisper into the ear of the racehorse.
What goes up, must come down. I lived through the gold and silver rampage when Carter (a Liberal) was President, and the prime rate was at 21%, and the Hunt Brothers were trying to corner the silver market. Gold has to come tumbling down one day, and I would hate to be betting the rent money at these levels, but people never listen, just like everyone HAD to own stocks back in 1929, albeit on margin, but when everyone heads for the door, there’s no one left to buy. I wouldn’t even be looking at a 50 or 100 day moving average for gold, more like 200 and 300, and don’t buy if it looks overbought. In fact I like to use 50, 100, and 200 simple moving averages as my basic investing philosophy as it smooths out the roller coaster.