uploads///Gold Outperformed Equity Market During Global Turmoil

Big-Time Fund Managers Are Buying Gold—Why Aren’t You?


Aug. 4 2016, Published 6:31 p.m. ET

Fund managers’ recent steps toward gold

Many billionaire investors and fund managers are putting their money into gold and gold mining stocks because they’re expecting huge global turmoil in the near future.

Stanley Druckenmiller, for example, said at the Sohn Investment Conference in New York on May 4, 2016, that investors should focus on gold (GLD) in this current investment scenario. He also said that he’d done most of his currency allocation in gold because he believes the current equity market (QQQ) (SPY) turmoil will continue.

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Soros and Gundlach

Similarly, billionaire investor George Soros announced in April 2016 that gold was the only asset that could outperform in the current market environment. His firm’s portfolio is heavily tilted toward gold.

In an interview with CNBC on August 1, 2016, Jeffrey Gundlach also repeatedly said that investors should focus on gold and gold mining companies and that this safe-haven asset is the best alternative to Treasuries (TLT) (SHY) in the current market environment.

Einhorn and Gross

Meanwhile, Greenlight Capital President David Einhorn also advised investors to invest in gold. His firm made huge gains in 2Q16 from investments in gold and gold-related stocks and ETFs.

Recently, Bill Gross also said in his August letter to investors that he is more concerned about the economy and the central banks’ prolonged low interest rates. Gross stated, “I don’t like bonds; I don’t like most stocks; I don’t like private equity…real assets such as land, gold, and tangible plant and equipment at a discount are favored asset categories.” Clearly, Gross has a bullish view on gold.

Fund managers’ holdings in gold-tracking ETFs and stocks

According to an institutional ownership report, David Einhorn’s Greenlight Capital is the ninth-largest investor in GDX, holding about 8.24 million shares as of 1Q16. The largest investor in GDX is Credit Suisse AG, with nearly 21.1 million shares. Notably, the VanEck Vectors Gold Miners ETF (GDX) tracks the performance of gold mining companies.

Specifically, Barrick Gold (ABX) is Soros Fund Management’s top holding. It constituted 13.1% of the company’s portfolio in 1Q16. ABX is the biggest gold producer in the world, and Soros Fund Management is the eighth-largest investor in ABX, holding about 19.4 million shares worth $264 million. The largest investor in ABX is VanEck Associates, with 49.7 million shares.

In the next and final part of our series, we’ll discuss Citi’s top stock picks among gold mining companies.


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