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Soros Buys Gold

Soros Buys Gold

You don’t have to be a fan of George Soros’ politics to know that the guy can make a buck with the best of them. He made a fortune in 1992 by betting against the British pound at a time when the action bordered on the scandalous. A few months back, Soros disclosed what he’s been up to lately, and gold figures prominently in his plans.

The billionaire bought 19 million shares in the world’s largest gold producer, Barrick, in the Q1 of 2016. He also bought call options on 1 million gold-backed exchange-traded fund (ETF) shares, a move that pays off bigtime if gold prices rise. Soros signaled his displeasure with the stock markets by buying put options for 2.1 million shares of S&P 500 Index ETF. Purchased put options only make money if the underlying asset, in this case the S&P 500 basket of stocks, goes down in price.

To summarize Soros’ moves: Gold good, stocks bad.

Soros was no doubt motivated to make his trades after his holdings declined in value from $6.05 billion to $4.53 billion during the first quarter. Old George must have been stung when he realized that gold had made a big move and he wasn’t on board. But that rascal is crafty, and he wouldn’t be betting on gold now if he didn’t think its price was going to continue rising. For once, I agree with him.

Not that Soros is an indiscriminant commodity fiend. For example, he’s unloaded a big investment in oil and gas companies. He’s also been dumping his shares in commodity-related companies such as Dow Chemical and Baker Hughes. So Soros’ deep dive into gold is a focused strategy, not part of an overall commodity play.

What does George see that’s got him so riled up? Maybe it’s the fact that the condition of world’s economies is not as peachy as we were led to believe. His put strategy indicates he sees share prices coming down – perhaps he’s having visions of the bear. He didn’t take on big new positions in bonds, perhaps because their yield is so puny nowadays. No sir, he took the rational course and put his money to work in gold, which will hold its value when everything else is tanking.

Give the devil his due. George Soros says buy gold, and so do I. If you would like to get started, contact Augusta Precious Metals today and we’ll get you set up in our Gold IRA pronto.

Source: http://blogs.wsj.com/moneybeat/2016/05/16/soros0516/

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