Soros Uses Bullish Gold Bets To Get Back In The Game
New York (Jun 10) Soros Fund Management’slarge bets in the gold market were a direct result of a gloomier outlook from the hedge fund’s creator George Soros, according to an article in the Wall Street Journal, proclaiming the famed investor has returned to the trading desk.
Soros made headlines in the gold market last month after the firm’s Securities Exchange Commission filings showed that he bought 19.4 million shares of Barrick Gold (NYSE: ABX, TSX ABX), valued at $264 million. At the same time, the fund also held call options of 1.05 million shares of the world’s largest gold-backed exchange-traded product SPDR Gold Trust (NYSEARCA: GLD), valued at $123 million. The fund also bought one million shares of Silver Wheaton Corp (NYSE: SLW, TSX: SLW) valued at $16.58 million. Soros
Since the start of the year, Barrick has rallied more than 151% with prices last trading at $19.33 per share, while GLD has risen more than 17%, last trading at 120.85 per share, and Silver Wheaton has gained more than 67.5%, last trading at 21.30 per share.
The Wall Street Journal noted that the firm’s stake in Barrick is its largest equity holding, addinf that after spending the last few years focusing on public policy and philanthropy, Soros is now directly involved in the firm’s trading.
“In recent years, he hasn’t done much investing of his own. That changed earlier this year when Mr. Soros began spending more time in the office directing trades. He has also been in more frequent contact with the executives, the people said,” the WSJ wrote.
Soros’ shift comes as he turns more bearish on the global economy. Although U.S. interest rate expectations have gripped financial markets since the start of the year, in the article, Soros said that he is more concerned about economic growth in China and whether or not it will exert deflationary pressures on the U.S. and global economies.
He is also concerned that the current refugee crisis will eventually cause the collapse of the European Union. He added that the risk increase is if Britain votes to leave the EU in a referendum later this month.
“If Britain leaves, it could unleash a general exodus, and the disintegration of the European Union will become practically unavoidable,” he is quoted saying in the article.
However, he added that he thinks it unlikely the Brexit referendum will pass.
“I’m confident that as we get closer to the Brexit vote, the ‘remain’ camp is getting stronger,” Mr. Soros said. “Markets are not always right, but in this case I agree with them.”
Source: KitcoNews
