George Soros Dumps Nearly $800 Million In Gold

NEW YORK/BOSTON (By Frank Tang and Aaron Pressman) - Billionaire financier George Soros, who called gold "the ultimate bubble," dumped almost his entire $800 million stake in bullion in the first quarter, well before a commodities slump blamed partly on reports he was liquidating his holdings.

Famed gold bull John Paulson held his ground, but Soros was joined in the retreat by several other big names, including Eric Mindich and Paul Touradji, according to 13-F filings with the U.S. Securities and Exchange Commission that provide the best insight into where hedge funds are placing their bets.

Soros, who has been bullish on gold in the past several years, cut his holdings in the SPDR Gold Trust (GLD.P: Quote, Profile, Research, Stock Buzz) to just $6.9 million by the end of first quarter, compared with $655 million in December, becoming the most high-profile investors to turn his back on one of the market's best-performing assets.

He also liquidated a 5 million share stake in the iShares Gold Trust (IAU.P: Quote, Profile, Research, Stock Buzz), the filings showed. His total holdings in gold-backed ETFs was $774 million as of December.

Gold rose for a tenth consecutive quarter in the three months to March, hitting record highs above $1,400 an ounce, buoyed by political turmoil in the Middle East and North Africa and lingering worries about indebted European countries.

The gains accelerated in April, but peaked at the start of this month, reaching a record $1,575 an ounce on May 2.
Prices have since fallen more than 5 percent amid the biggest commodities slump since late 2008, a move partly triggered by a Wall Street Journal report that Soros' $28 billion fund was selling precious metals -- and felling fears other big funds were also seeing a peak.

Eric Mindich, who runs the Eton Park Capital Management, nearly halved his stake in the SPDR gold trust to $326 million for the first quarter, a filing showed on Monday.

Mindich's fund also owned $839 million worth of call options by the end of first quarter, compared with $1.1 billion worth of put options at the end of the fourth quarter.

Touradji Capital Management, one of the world's largest commodities-oriented hedge funds run by Paul Touradji sold 173,000 shares in the SPDR Gold Trust during the quarter. Those shares would be worth about $25 million at current prices.

But John Paulson, who notched the industry's biggest ever payout last year, kept his 31.5 million share or $4.4 billion stake in the SPDR fund, remaining the biggest shareholder of the world's largest gold-backed exchange traded fund for the quarter, according to regulatory filings.

DEFLATION THREAT RECEDES

The sales make sense given that Soros said he had bought gold because he was worried about deflation, said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Pittsburgh.

"It's pretty hard to make the case for deflation right now so if that was a reason you were buying gold, you should take this signal from Soros," he said.

Inflation is now the greater concern, Luschini said. So most investors should still keep about 3 percent to 5 percent of their assets in gold to protect against inflation and possible further problems in the world financial system.

Soros also slashed stakes in gold and silver mining companies during the first quarter. The firm owned 1.4 million shares of Kinross Gold (K.TO: Quote, Profile, Research, Stock Buzz) at the end of the quarter, down from 4 million shares three months earlier. Holdings in Novagold Resources (NG.TO: Quote, Profile, Research, Stock Buzz) dropped to 3.5 million shares from 12.9 million.

Gold ended the first quarter little changed, as the spot gold prices were only $10 higher to end at $1,430 an ounce on March 31, and the SPDR Gold Trust was up 1.3 percent.
In the second quarter, gold hit a record high $1,575.79 an ounce on May 2 fueled by the outlook of low U.S. interest rates.

So far in the second quarter, SPDR Gold Trust's bullion holdings gained only about 1 percent to 1,229 tonnes as of Friday, well below its record high at 1,320.436 tonnes set on June 29 last year.
Institutional investment managers are required to file form 13-F with the SEC within 45 days after the end of each quarter.

(Reporting by Frank Tang, editing by Andre Grenon)

Copyright 2010 Thomson Reuters. Click for Restrictions.

Comments

[luckycharmz338]

11:05 AM on 06/03/2011

He's dumping paper gold, and holding all his physical holdings - That would normally be a very dumb move considering tax laws

[KitchenCabinet]

12:17 AM on 05/21/2011

I loathe reports that only tell half the story. Where did Mr Soros stash his loot after selling the gold? That would be big news. LinkedIn, perhaps?

[ChasG]

09:46 PM on 05/19/2011

Caveat Emptor.
 
The last time there was a speculative bubble in gold was 1980, when gold surpassed $800 for a brief time, then fell more than 50% within the next 18 months or so.  A lot or sorry gold buyers back in the day had to wait about 27 to 28 years for the price to rebound to $800.  If you bought gold at $800 in 1980, you would have to sell it today for $2,200 just to break even with inflation since that time.  Gold is not for "unsophisticated investors."
 
What I find most strange is that not only does Glenn Beck hawk gold to his audience by instilling in them fears of social anarchy and economic catastrophe, three Progressive Radio pundits (Hartman, Schultz, Rhodes) are also personally endoring buying gold on their radio shows, instilling fears that the dollar will collapse and gold is safe.  Strange bedflellows, and irresponsible ones at that.
 
And if the dollar did collapse what would you do with your gold?  Weigh out a gram of gold dust and use it to buy groceries?  If the dollar collapses and takes the economy down with it, how do you safely take possession of your gold?  And if you took possession, where would you hide it?  Like living dangerously?
 
I'm not buying... fools rush in.

[luckycharmz338]

11:02 AM on 06/03/2011

Glenn Beck may hawk it to his audience, I bought gold at $400 per ounce and ditched it at $1200

[bannorhill]

01:15 PM on 05/19/2011

Is this another one of his insider trading schemes?

[forgetdc]

11:35 AM on 05/19/2011

Guess how much he will pay in cap gains taxes to the us treasury? 0, none, zilch.

His hedge fund is based in a tax free location.

[dayzee10]

09:32 AM on 05/19/2011

Who bought what he sold? The Glenn Beck cult!!!!!!HAHAHAHAHAHAHA!!!!!

[ChasG]

09:31 PM on 05/19/2011

Or the Progressive Radio crowd?  Maybe Soros is sending them a signal to sell?

[dayzee10]

10:46 PM on 05/19/2011

Nobody of that "crowd" was huckstering to the rubes like the Beckster, good for him! as for the cult.......HA!HA!HA!HA!HA!HA!HA!!!!!!

[forgetdc]

02:14 PM on 05/20/2011

You didn't notice that gold prices are up since soros sold out I guess.

[mgrant33301]

07:38 AM on 05/19/2011

watch what goldman does with it's precious metals. that will be the key to the market.

everybody knows goldman designs every bubble and when they get out, everyone should.

[Screed]

07:38 AM on 05/19/2011

and all of Glen Beck's mouth breathers bought it just in time for the crash.

[kriskrinkel]

01:28 PM on 05/19/2011

glen beck said to buy gold when it was $700,now $1500..did you double your money?

[ChasG]

09:32 PM on 05/19/2011

Did you sell at 1500?

[Screed]

08:01 AM on 05/20/2011

I'll do better than that. I bought 6 gold coins in 1984 for $325 each. I sold 3 at $1,400 and still have 3. However, if you look at the return, it sucks. I would have done better with any growth stock. I will however sell the other 3 when the idiotic republicans allow the debt ceiling to expire, causing gold to go to $2,000. I will still not have as good a return as the market though. BTW, if you change gold coins, expect to pay about 20% "handling fee". Glenny boy never tells you that.

[shaitan]

05:11 AM on 05/19/2011

Soros still has a few million in Gold ETF's which is a whale lot more than most of the rest of us ever had. No doubt he has made a lot of profit on his gold and has another investment in mind which he hopes is likely to be more profitable. As good as Gold has been over the past few years AAPLE did better as have some other investments.

[Dhammaflame]

01:08 AM on 05/19/2011

I buy silver and gold as protection against fractional reserve banking. The dollar may crash and become totally useless but my hard assets will always be usable. Silver and gold are easy enough to transfer into other currency as well. Hold onto your hard assets, unless your rich like soros.

[ChasG]

02:04 AM on 05/19/2011

If the world's richest financier of progressive causes announces he's selling all his gold, what will all the progressives who own gold do?  Sit on it and watch it drop to less than half its price like it did after the last gold price bubble in 1980?
 
How many people know that the $800 gold in 1980 would have to be selling for around $2,200 today just to keep up with inflation. 
 
If the dollar became worthless, the entire global monetary system would collapse, not just the US.  If that happens, what's it really going to be like, and what would we really need to survive?  All the gold ever mined in the world is roughly $5 trillion dollars.  That's in the ball park of about one month of the global economy (GDP).  Then what?  How likely is this scenario REALLY?
 
If you have custody of your gold, better not let anyone know.  If you don't have custody, better know exactly how you're going to take custody with out the risk of loss in transit.  Otherwise, if the world economy collapses into a very small amount of commerce conducted with gold and silver, and most of it conducted by barter, our economy would be right back in the year 1840, with a whole lot more mouths to feed, and not enough money to keep food stores stocked or even in existence. 
 
Sorry, I'm not buying.

[Dhammaflame]

09:12 AM on 05/19/2011

Have custody of my gold and silver. But it's not held at home. We all have guns and lots of ammo. I am diversified, gold isn't bought to make a profit. It is bought as protection if paper currency tanks.

[msbeal]

05:05 AM on 05/19/2011

I hope you don't have gold certificates from the over fifty outfits that are being investigated right now. Most of them never bought so much as an ounce of gold with their investor's money.

One of the largest of these crooks was well hyped by Glen Beck.

[Dhammaflame]

09:12 AM on 05/19/2011

I don't trust paper.

[oilfield]

12:56 AM on 05/19/2011

out of gold, probably going in to oil.....energy is the constant that we all have to have...

[ChasG]

02:05 AM on 05/19/2011

What's constant about oil?  Invest in your own solar electric (or wind if you have it) on a household scale and run your meter backwards.

[oilfield]

11:23 AM on 05/19/2011

thats always a good idea...self sustain
30 or so panels on your roof ought to do it along with 40-50k in cash

[Morgantheaxe]

03:04 AM on 05/19/2011

Actually oil is being sold by the big boys also. People are going liquid to prep for a dive back in to the market. Falling gold prices and falling crude prices are two strong signals the folks in the know are seeing a brighter future and are buying back in to stocks. When you see bonds dropping and interest rates start to rise you will know you were to late in getting in.

[oilfield]

11:24 AM on 05/19/2011

i agree with gold as soros can reverse the trend with his activities....but oil stocks are still undervalued....most projections are made with 60-70.00 oil, everything else as we say here in la is lagniappe.

[Tootsie56]

12:41 AM on 05/19/2011

I've heard predictions that Gold would be at $2000 an ounce by end of summer. That seems way high to me. Platinum and Silver are also high and both of those seem over-inflated too. Wasn't it in the early 80's that Gold was about $400/ounce and went to $800+ ??? THIS feels like that did, kinda icky...

[mgrant33301]

07:41 AM on 05/19/2011

bubble=pop!

[LMPE]

12:25 AM on 05/19/2011

Nobody's getting me to buy gold.

[Charles Bryan]

11:44 PM on 05/18/2011

I wish I had a million bucks.

[Tootsie56]

12:43 AM on 05/19/2011

Be careful what you wish! If you get that mil, you'll end up with all the "relatives" and "friends" that always come with it! :-)

[RobertRob]

10:30 PM on 05/18/2011

Soros needs money to Bribe New Order Politicians

[LMPE]

12:28 AM on 05/19/2011

Actually, George Soros is quite progressive. A Hungarian Jew, he lost both his parents to the Nazis. He fled Hungary after the Soviet-backed regime seized power. When George W. Bush said "you're either with us or you're against us", it reminded Soros of what Hungary's Soviet-backed regime said, and so he spent much of the past decade supporting anti-Bush groups.

[Dhammaflame]

01:02 AM on 05/19/2011

George Soros worked for the Nazis and brags about it. He is no more progressive then my big toe. George Soros is for George Soros the only side he is on is profits side. The National Endowment for Democracy (NED), the George Soros Open Society Institute, Freedom House and Gene Sharp's Albert Einstein Institution, a US intelligence asset [are] used to spark "non-violent" regime change around the world on behalf of the US strategic agenda....The NED is a US government-funded "private" entity whose activities are designed to support US foreign policy objectives, doing today what the CIA did during the Cold War. As well, the NED funds Soros' Open Society

[moebalot]

01:04 AM on 05/19/2011

Of course Soros is a progressive; he is one of the rich elites and corporations that are funding the Neo-lib Democratic Party. How about GE, the owners of MSNBC (A Democratic Party Campaign Head Quarters) one of the richest corporations in the world (Making billions in profits), some how GE did not pay any US taxes ($0) last year. Yet the Obama anti-business campaign rhetoric has not been leveled against GE the most egregious corporation thief, gee I wonder why? Got any ideas?

[mgrant33301]

07:42 AM on 05/19/2011

spoken like a righty who watches too much fox news.

i wish we had more people who care about the world like soros. imagine the kochs behaving more responsibly. almost a funny thought.

[mdsman]

12:25 PM on 05/19/2011

Whoa....you really need to do a bit of research
The gentleman cares only about himmself.
Single handedly almost bankrupt the Bank of England.
I am not saying he is good or bad just that, he doesn't care a wit about you, I or society, in general.
Profits are his god