Soros Joins The Gold Rush
Friday, March 05, 2010
In spite of his view that the rampant price of gold is a bubble that
threatens to burst, George Soros, one of the world's leading hedge fund
managers, is buying into the precious metal on a large scale.
Soros Fund Management LLC, which manages about USD25bn, increased its
position in the SPDR Gold Trust, the world’s largest exchange-traded
fund for the metal, by 152% in the last quarter of 2009, according to
filings with the US Securities and Exchange Commission. The investment
in the globe's biggest physically-backed gold exchange-traded fund was
valued at USD663m.
The price of gold has been in a long-term uptrend; from a low of
about USD250 per ounce in early 2001, the commodity rose to a high of
more than USD1,200 per ounce late last year. While gold is currently
trading 9% lower than that December 3 high, Soros, along with a number
of other large hedge funds and analysts, clearly thinks that the uptrend
is set to continue. Indeed, news of the Soros Hedge Fund's large
position in the gold ETF has driven its price higher in recent days.
According to a survey of 22 analysts by Bloomberg, more than half
(15) expect the uptrend to resume this year, with the median forecast a
17% rise to as much as USD1,300 per ounce.
Soros is not one who often backs a loser, so the bull market in gold
clearly has some legs yet. But, as Soros himself admits, a correction
in the market is, at some point, inevitable.
Speaking at the recent World Economic Forum in Davos, Soros said
that the current low interest rate environment is creating the perfect
conditions for asset bubbles to emerge. And gold, he predicted, is to be the "ultimate asset bubble." |
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