Tuesday, May 15, 2012

Soros Quadruples His Investment In Gold

Everyone in the precious metals/mining stock sector is looking for anything to grab onto for optimism.  Nothwithstanding that this type of sentiment always demarcates a bottom, and notwithstanding the fact that the basic fundamentals underpinning the precious metals - like catastrophic Government deficit spending and disastrous Central Bank negative interest rate policies - get stronger by the day, here's an excellent harbinger of a potential bottom/upturn in the metals/miners:  Soros has quadrupled his exposure to gold via GLD:  LINK.

This sell-off in the miners has become silly.  One particular stock AUMN (which acquired ECU Silver) is now selling at a little over 20 cents per old ECU-equivalent share.  At one time in 2007, ECU was over $3.30/share.  This valuation implies that AUMN's silver in ground is valued at 30 cents/ounce.  That is retarded.  A couple years ago silver miners were selling for $1/oz in the ground.  The price of silver is higher now and margins have exploded.

I don't know when this sell-off in the sector will end and the next move up will commence, but I just got off the phone with a longtime friend in NYC who told me that he just spoke to a very plugged-in "insider" (i.e. politically connected) type who told my friend that a massive QE in Europe and in the U.S. is coming and that this is the flush in precious metals that you want to use to back up the dump truck and buy because there might not be another opportunity like this going forward.

Back to Soros, I've noticed over the years that he has had good success as a market-timer in gold and mining stocks.  As a matter of fact, he was the largest shareholder at one point in the predecessor company (Apex Silver) that became Golden Minerals that took over ECU.  He sold Apex almost at its apex.  At any rate, it is my strong belief that he uses GLD to index the price of gold for trading purposes.  He's smarter than me and must know the potential Enron-type legal structure that belies the GLD trust structure.  I would also bet a lot of money that Soros, given that he is a Holocaust survivor and Nazi occupation escapee, has accumulated a massive personal holding of physical gold.

For what it's all worth...


  1. I still feel that Gold will "plunge further" in terms of the paper price discovery system - much further. I believe the timing will be different for everyone based on their source of physical. At some point during the plunge your source of physical will look at his computer screen and say, "I'm not selling at that price" and the best time to buy is just before that moment. I'm just a pipsqueek and I don't have the truck to back up or the cash to fill it with. I know my supplier will hold fast before the paper price goes to, say, $500? Or maybe he'll stick at $1,000? Who can say?

    But either way, I can't fill a truck bed with $500 eagles.

    Luckily, I won't have to.

    To live by the paper is to die by it. No form of paper "wealth" will survive the coming inferno.


    -Wil (letthemfail)

  2. A very "plugged in insider" ??? Are you serious? Stop with this bullshit. of someone-who is a friend of someone- who knows someone- heard-someone-say blahblahblahblah. Fucking ridiculous

    1. Umm, ya. I am serious and the contact is real. The dude gave my buddy the heads up on how Greece would unfold way before any blogo-analysts had it figured out...

    2. Can you elaborate further on how Greece will unfold. I can't remember you posting details before but I could have missed it.

  3. I like your post very much but I've heard over the internet too much about insider information that turned out to be wrong. I wish this time is different.

    1. I wouldn't call this insider info per se. My friend happens to know someone who lives in DC who's "plugged in" as he describes it. He won't give anymore color on the identity. Based on my buddy's background and who he's worked with over the years, I have no doubt this guy is plugged. I know he used to work with one of David Rockefeller's son, but I doubt this source is him. This guy told my buddy about the next LTRO and the relative size of it well before the news hit the press. That's about all I know other than this dude told my buddy that the ECB and the Fed are getting ready to hit the "print" button in a major way...

  4. one thing I have observed--in 2008 before the original QE around Nov 25:

    Gold started October at around 925--sold off to under 700 momentarily and pre Nov 25 was 740ish-give or take 20%-painful

    Off to the races since--

    Now here we are in 2012 and gold has sold off--pick a number --the 1922, or 1675 two/three weeks ago.

    And we are pretty sure QE is coming--if not forget about the market and economy.

    So this feels like before-pre-announcement selloffs so PM start their next rise from a lower level -and the "conundrum" for PM investors is what type of position do you have--PM very likely will be much higher down the road. When, we certainly do not know. So how much portfolio pain can you handle--or do you sell off and just say you give up the first move up.

    I would think everybody is different-and should be regarding risk tolerance.

    The next QE is coming--its moot kind of since the deficits continue--its down to who buys the debt (not many can-they need their own money). And who gets the proceeds--normal people probably not--banks--probably.In any event the dollar gets printed into oblivion and has been saved so far since the other currencies are bigger losers.

    Looks like Spain takes another step backwards.

    Enough for now

    Thanks DD

  5. Dave,
    It was always in the cards to "print away" from the many fiat currency failures of the past.

    "Just like a fiat currency, modern gold currency is only credible until prices start rising against it. It will start out with a settling of contracts with only a percentage of physical and the rest in cash. Then, in the same way as prices rise against a currency during an inflation, physical gold prices begin to rise against paper gold. Slowly but surely, less and less gold is supplied against contracts until we end up with total cash settlement. All along, the physical "free gold" market trades at a higher and higher currency price. This, my friends is what dollar hyper - inflation may look like in our modern paper gold markets. The selling of paper gold "into the dirt" even as all prices run away. It may last for an hour, a week, six months or several years, but it will unfold this way.

    **As long as investors believe in paper gold, their wealth will be slowly absorbed by physical gold buyers until trading breaks down.**

    Eventually we have the super failure that locks up the entire paper gold arena and ends it for good as everyone's holdings are marked to the real market."

    EVERYTHING I have seen since 2008 supports this scenario, including the front lawn dump. They will buy the debt at any cost, and dump it you know where.
    To print or not to print ? ... that is NOT the question. They WILL FUCKING PRINT, right into the dirt.
    As for Larry Summers comment that "gold is financial creationism" my reply is "derivatives are financial blasphemy" with the dollar as the original derivative of its former gold collateralized self.

    Perhaps the most humane view comes from Brodsky here:
    It's the best read lately on the path all captured market central planning leads to.

    As long as the people agree to live by the standard of the corrupt dollar reserve system, CONfidence sustains it. But the standard itself is unsustainable.

    No pain ... no change.


  6. "given that he is a Holocaust survivor and concentration camp escapee"
    He is a jew but he never was any near to a concentration camp.
    If your friend's friend's insider information is this accurate as well than we are fu..ed...

    1. Technically you are right, but his family would have been on their way to a concentration camp if they hadn't changed their name and Soros lived under cover with a Hungarian Govt official

  7. Hi Dave! Is it true that if the FED allows long term rates to rise, the FED itself will be toast?

  8. I'm not a traditional gold supporter and I don't believe in the tinfoil hat collapse. But...I do believe it's quite easy to see that the fundamental forces underpinning Gold's rise haven't gone away in the last 6 months. They've actually now gotten stronger. No gov't reform, massive gov't spending in the US and Euro. China beginning to loosen(slightly) again. And with the latest drop in US equities and Euro situation it will only cause the fed to extend the current rate policy which is already scheduled through 2014.

    If Greece exits, we're in for a painful few months at the least. Spain and Italy will be tested by the credit markets and there will be massive capital/bank deposit outflows from these countries. End result, more and more backstops from governments.

    1. The paper billionaires in Germany in 1923 were not traditional gold holders either. When they woke up on November 14, 1923, their paper billion marks was worth 1 mark per billion. If they had their wealth invested in gold, they would have completely preserved their wealth.

      Those who forget the past are condemned to repeat it (Santayana)

  9. RE: credibility of my friend's "deep throat:" I got the heads up yesterday that the ECB was going to push the "print" button soon, which means my friend's source had this information for at least a few days. Now we get this story about rumored LTRO3 from the ECB:


    Usually, where there's smoke, there's fire....

    1. Isnt this supposed to be negative for the euro? Why is it "surging"?

    2. LOL. I may do a post showing the chart of the dollar over the last year. Amazingly, the press keeps talking about how strong the dollar is. But the fact is that the dollar has gone sideways in a wide band for the last year. Amazing considering the EU is supposedly collapsing and the euro is 58% of the USDX.

  10. Dave, I saw Jim Rogers on CNBC the other day, and he seemed somewhat concerned that new Indian regulation could reduce consumer demand for gold in that country. He said the government wants the economy to be supported through consumption of other goods, so they are trying to reduce or even stop the purchasing of gold jewelry in India to increase disposable income for other items. He seemed to think this was a bearish development for gold in the near-term worth monitoring.

    What do you think of this issue? Could it be one of the proximate causes for gold's weakness, and is it a serious overhang?

    1. No. Jim Rogers knows a lot about a lot of markets, but he is not on top of his game when it comes to gold. He was referring to the tax imposed on jewelers by the Govt that had increased the cost of gold for users/investors. That tax has been revoked.

  11. Collapse and dollar revaluation coming. Best prepare!!!!!

    1. 40% if I remember what the Bernak stated? The last box to check off on his anti-depressionary to-do list. I too think this is coming. Why else sign all the executive orders, FEMA camps, drones over the homeland, and other government intrusions? Also for it to be effective, you have to drive everyone into the dollars or treasuries, you know herd the sheep up for the fleeceing, which is exactly what is happening now!

  12. Today fixed max 50,00 € per day from atm and bank in Greece by law.....

    Il Folletto

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  17. "Everyone in the precious metals/mining stock sector is looking for anything to grab onto for optimism."

    - yeah right. I do agree with you too.