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Billionaires Soros, Paulson Bet Big on Gold
Key Excerpts from Article on Website of ABC News blog

ABC News blog, August 16, 2012
Posted: August 21st, 2012

Once again John Paulson is choosing to heavily invest in gold and fellow billionaire George Soros is making a similar bet. Paulson & Co. and Soros Fund Management bumped up exposure to SPDR Gold Trust to 21.8 million shares and 884,000 shares, respectively. The decision by Soros is an interesting one. In 2010, Soros called gold the ultimate bubble during an appearance on Reuters television. Paulson & Co. now has 44 percent of its $24 billion fund exposed to bullion. Peter Sorrentino, a senior portfolio manager at Huntington Funds, ... said consumers should not rush out and buy gold. Historically these moves span roughly a decade and while the last phase is typically the most explosive, the risk is getting out before it rolls over. Sorrentino said ... the fundamentals behind gold such as available supply coming to market and end demand have not changed in any material way. In fact, gold purchase by central banks in the pacific rim, India and Russia have reached new highs. So from an investor psychology and supply/demand perspective, this looks like every cycle before it during the last decade. But, despite big bets by two of the nations billionaires, he continued, There is an old saying among Wall Street traders; Its said with a whisper and not with a shout, when the widows and orphans get in, its time to get out.

Note: A Fox News report also shows unusually high purchases of gold from central banks, mostly those of developing nations. Yet the price of gold has remained relatively stable in the last 10 months (between $1,550 and $1,800/oz) after rising from around $250/oz in 2002 up to $1,900/oz in August of 2011. Could these purchases be indicators of rocky financial times in the near future? A gold dealer informed WTK founder Fred Burks that gold prices tend to stabilize in election years, which you can verify using the charts at this link.

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