Is Smart Money Moving to Gold?



Hedge fund bets

The man who broke the Bank of England, as George Soros is popularly known, has made big bets on gold. On the one hand, he’s shorting the US equity market (SPY), and on the other hand, he’s buying gold and gold stocks.

Soros’s dive into gold reiterates his bearish view on the economy and a dash for safe-haven assets. During 1Q16, he purchased shares of Barrick Gold (ABX), the world’s largest gold miner, acquiring 1.7% of the company. He also disclosed that he owns call options on 1.1 million shares in the SPDR Gold Trust (GLD), an ETF that closely tracks gold prices.

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Singer is bullish on gold

Paul Singer, another billionaire hedge fund manager, also believes the gold rally has just begun. He wrote in a letter to clients, “It makes a great deal of sense to own gold.” He added, “Investors have increasingly started processing the fact that the world’s central bankers are completely focused on debasing their currencies.”

Druckenmiller stays positive on gold

Stanley Druckenmiller, yet another billionaire investor, believes the bull market in stocks is exhausted. He announced that gold is his largest currency allocation.

Druckenmiller seems to believe that central banks throughout the world may not be fully in control of their monetary policies. He told Sohn Investment Conference attendees to sell their equity holdings. He also remains skeptical about the current financial market scenario due to the Federal Reserve’s easy monetary policy. In addition, he’s concerned over the negative outcome of the Chinese and other Asian markets.

Miners such as Alamos Gold (AGI), Hecla Mining (HL), and First Majestic Silver (AG) have exhibited leverages to precious metal prices. These should see higher up moves compared to gold in case of a further upside.

For investing in gold, many investors often prefer mining-based funds such as the VanEck Vectors Gold Miners ETF (GDX) and the iShares MSCI Global Gold Miners (RING).


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