Soros may have SAID gold was in a bubble, but he was doubling his holdings when he said it!

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Erik T.'s picture
Erik T.
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Soros may have SAID gold was in a bubble, but he was doubling his holdings when he said it!

When it was first reported that George Soros made an ambiguous statement about gold being in a bubble at Davos, my first suspicion was that he was trying to use disinformation to discourage others from the market while he was secretly buying. That has now been confirmed per the following story.

Erik

p.s. I am putting this in a new thread in keeping with the recent trend on the site of new threads for everything, but I liked it a lot better when we had one definitive gold thread. I wish the moderators/administrators would take a policy stand on this issue.

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BOSTON (Reuters)—Billionaire investor George Soros' hedge fund more than doubled its bet on the price of gold during the fourth quarter, a portion of the firm's total U.S.-listed equity holdings of $8.8 billion at the end of 2009.

The New York-based firm also disclosed in a filing on Tuesday [Feb. 16] with the U.S. Securities and Exchange Commission that it bought almost 95 million shares of Citigroup Inc. during the quarter, worth $313 million by the end of the year. Mr. Soros reported no holdings of the troubled bank's shares at the end of the third quarter.

Soros Fund Management owned 6.2 million shares of SPDR Gold Trust—an exchange-traded fund that owns gold bullion—at the end of the year worth $663 million. That was up from 2.5 million shares at the end of the third quarter.

Mr. Soros and other noted investors like John Paulson have previously touted gold as a hedge against inflation, further economic turmoil or a decline in the value of the U.S. dollar. Last month at the World Economic Forum in Davos, Mr. Soros said "the ultimate asset bubble is gold," but he declined to say whether he was investing in the precious metal.

The filing for the end of the fourth quarter revealed no listing for Canadian chemicals manufacturer Potash Corp. of Saskatchewan, Soros' largest holding at the end of the third quarter. That could indicate that the almost 3 million-share investment was sold during the fourth quarter. But large investors occasionally leave off major holdings when they are trading the position and disclose their investment in a confidential filing with the SEC or in a subsequent amendment to their public report.

The firm does not comment on its holdings, a spokesman said.

Mr. Soros' most recent SEC filing also revealed large bets on seed producer Monsanto and Brazilian gas and oil giant Petroleo Brasileiro SA, also known as Petrobras. The firm held 3.9 million shares of Monsanto at the end of the fourth quarter, up from 1.1 million three months earlier.

Mr. Soros also reported a stake of 7.7 million shares of Petrobras's U.S. ADRs, worth $369 million, and a slight increase from the 7.4 million receipts held at the end of the third quarter. Soros had another 5.9 million shares of nonvoting ADRs worth $249 million, virtually unchanged from his holding three months earlier.

Mr. Soros also reported raising his holdings in oil company Hess Corp. and telecommunications company AT&T Inc., among others.

According to the regulatory filing, Soros Fund Management raised its holding in carmaker Ford Motor Co. to 10.9 million shares from 7.3 million shares at the end of the third quarter, when Mr. Soros started to accumulate his position.

Mr. Soros also raised his holdings of AT&T for the second straight quarter to 4.7 million shares at the end of the fourth quarter from 4.2 million shares at the end of the third quarter.

Large investors such as Mr. Soros are required to report holdings of U.S.-listed equities at the end of each quarter, but not short positions or holdings of other securities like bonds and over-the-counter derivatives contracts. Investors are also allowed to file some holdings on confidential reports if they are trading into or out of a position at the end of a quarter.

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pinecarr
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Re: Soros may have SAID gold was in a bubble, but he was ...

Interesting news, Erik!  Good call!

-pinecarr

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Re: Soros may have SAID gold was in a bubble, but he was ...

Hate to burn books - but his is on it's way to the wood stove right now. I used to respect that man and when he said that about gold it shook me and made no sense to me and I thought he was above that.

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Johnny Oxygen
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Re: Soros may have SAID gold was in a bubble, but he was ...

I dunno. I think some books are OK to burn..like Mein Kampf and Chicken Soup for the Soul...stuff like that. Wink

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Re: Soros may have SAID gold was in a bubble, but he was ...

you thought "he was above that" Davos?  before this gold comment, what about pitting himself against millions of poor peasants in the rice paddies of SE Asia, stripping their country's wealth and sending them into chaos and starvation?  he should be prosecuted for crimes against humanity, but our free market jihadis call what he did just "maximizing value on a fair playing field." he is one of those predatory sociopaths gold investor Jim Sinclair was referring to.

 

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Re: Soros may have SAID gold was in a bubble, but he was ...
strabes wrote:

you thought "he was above that" Davos?  before this gold comment, what about pitting himself against millions of poor peasants in the rice paddies of SE Asia, stripping their country's wealth and sending them into chaos and starvation?  he should be prosecuted for crimes against humanity, but our free market jihadis call what he did just "maximizing value on a fair playing field." he is one of those predatory sociopaths gold investor Jim Sinclair was referring to.

 

I didn't know Soros's history as well as you do.

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Re: Soros may have SAID gold was in a bubble, but he was ...

Lets not take this information out of context.  Soros does way more than play long equities - and many of those plays do not need to be disclosed.  The bottom of the article says it all:

"Large investors such as Mr. Soros are required to report holdings of U.S.-listed equities at the end of each quarter, but not short positions or holdings of other securities like bonds and over-the-counter derivatives contracts"

He is a very quick trader, and involved in global macro strategies that use multiple asset classes to capitalzie on his forecasts.  Dont for a second think that he is long, intendes to be long, or is short based on his filings.  He is far better than that and knows dang well what these required reporting releases do to prices in the short term.  Also, he could be long physical gold or GLD, and short the same or greater amounts of Gold futures looking out longer term.  He could still beleive that gold is a huge bubble.  We have no idea

 

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IMF to Start Sales of 191.3 Metric Tons of Gold

Since we're talking about gold today...this just came across(emphasis mine):

Quote:

The International Monetary Fund on Wednesday said it will shortly begin selling 191.3 metric tons of gold in the open market under a program launched last year to boost its resources.

To avoid disruptions of the gold market, the IMF said the sales "will be conducted in a phased manner over time." The fund kept open the possibility that central banks could still purchase some of the gold directly.

Disruptions? What kind of disruptions???

Quote:

Phillip Swagel, economics professor at McDonough School of Business at Georgetown University in Washington, said IMF gold stockpiles were not generating any income and the gold sales was one way of diversifying its assets.

HAHAHAHAHAHA! Philip - You may want to check in with the Prime Minister of Great Britain, Gordon Brown, who was the culprit behind the sale of Britain's gold in 1999 at the lowest possible price. How did that work out Mr. Devalued Prime Minister?!? Money mouth

http://www.cnbc.com/id/35447221

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Erik T.
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Re: Soros may have SAID gold was in a bubble, but he was ...
Davos wrote:
strabes wrote:

you thought "he was above that" Davos?  before this gold comment, what about pitting himself against millions of poor peasants in the rice paddies of SE Asia, stripping their country's wealth and sending them into chaos and starvation?  he should be prosecuted for crimes against humanity, but our free market jihadis call what he did just "maximizing value on a fair playing field." he is one of those predatory sociopaths gold investor Jim Sinclair was referring to.

 

I didn't know Soros's history as well as you do.

I know a bit about Soros' history, and I'm afraid my understanding differs completely from Strabes'.

While most people believe that Soros was the [actively engaged] manager of the famously successful Quantum Fund during the '70s and '80s, the truth is that Jim Rogers and Stan Druckenmiller were running the fund for the most part. Soros spent most of his time in Europe, creating his open society foundations and working to promote democracy in eastern Europe. He's a strongly opinionated idealist and some of his views might not be for everyone, but my general sense is that he has spent much of his life working hard on the mission of trying to do what he believes is right for the world. Not everyone would agree with his views on what's right, but my strong sense is that he acts with a clear conscience and does things he sincerely believes are for the betterment of humanity.

He's certainly a ruthless investor, and is perhaps best known for "breaking the Bank of England". One of the principles he's written about in his books is the propensity for central banks to try to use their weight to defy the laws of economics in order to implement a social policy that free markets would not support. A rule he embraces is that if you have the capital to do battle with them, betting against the central bank and in favor of the laws of economics is usually a winning trade. The Bank of England certainly learned that lesson the hard way, and Soros made a fortune.

I don't know what Strabes is referring to, but my guess is that he's talking about indirect consequences of Soros' trading operations. While I personally understand the sentiment, Soros is certainly not alone if the allegation is that he engaged in legal and profitable trading operations that indirectly resulted in economic distress in countries whose governments were doing a poor job of managing their economies, creating opportunity for Soros.

On the recent "gold bubble" stuff, I think that the media is more to blame that Soros himself. He never said that gold was "in a bubble" or at risk of collapsing. What he said was that gold is "the ultimate bubble". It appears to me that the media did their audience a disservice by paraphrasing Soros' statement it into a catchy headline that [appears to me to have] changed the meaning completely. A better approach might have been the quote him accurately then offer thoughful and careful analysis of what he might have meant by the statement, but American "journalism" doesn't work that way. It's the same MSM phenomonon that brings us quotes like "The storm is a Nor'Easter, so named because it moves North along the East coast..." (actual quote from a Weather Channel "meteorologist").

My impression is that what Soros meant was actually quite accurate: Through reckelss monetary policy, governments have created a bubble economy where the boom-bust cycle is exaggerated to the point that asset bubbles blow up to enormous proportions, then collapse catastrophically and the capital finds its way into yet another bubble. This will continue until the last bubble to pop is U.S. Treasury debt, which is still [astonishingly] thought of as the safest investment on earth by most institutional investors. When that bubble bursts (and it will), the ultimate bubble is gold. It will be discovered as the only true and safe store of value, and all the flight capital will flow into gold, hence the moniker "ultimate bubble". Soros didn't say that bubble had started yet, nor did he say it was going to burst. All he said is that in the overall succession of bubbles, the ultimate, end-game bubble has to be gold. I believe his rationale was that it's the only asset proven to survive monetary regime changes and currency collapses and serve through them as an effective store of value.

I certainly wouldn't put it past Soros to allow his audience to misinterpret his statement or even to intentionally make it ambiguously knowing that such misinterpretation was likely. But face it folks, that's standard operating procedure in this game, and in contrast to the antics of Goldman Sachs, it's boy scout behavior. Soros didn't even lie! He just said something in a way that people not paying close attention might tend to misinterpret it. Getting all up in arms and burning books over it is just silly, in my never-humble opinion.

Erik

 

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Re: Soros may have SAID gold was in a bubble, but he was ...
ErikTownsend wrote:

Getting all up in arms and burning books over it is just silly, in my never-humble opinion.

Erik

 

Spent kindling. Written him off, he tries to talk like a philosopher and is now starting to sound like Alan I can be taken both ways Greenspan. 

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ao
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Re: Soros may have SAID gold was in a bubble, but he was ...

Sorry Erik but I'd have to disagree with you and side with strabes.  Certainly, in Soro's defense, although his statement was ambiguous, those who jumped to conclusions were not careful in reading exactly what he said and he's not to blame for that.  But the deeper you dig into the actions of most of these billionaires, the more stink you unearth.  Most of them didn't accumulate those kinds of assets without leaving considerable carnage in their wake.  Even down home, folksy Warren Buffet who, on the surface, appears to be the kindly old uncle type, has all the conscience of a great white cruising for a meal.  If you notice, he's become a shill for the feds as of late.  Ask yourself, if you were in a lifeboat with one of these guys and there was limited food and water, would you sleep soundly?  I know I wouldn't.  I don't know if you've ever read The Book of Daniel Drew but it gives many insights into how they function.  They may be more sophisticated nowadays but they're just as immoral.  I'll personally take a pass on worshipping the god of profit at any cost and hang onto my soul. 

 

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