Speaking of demonstrated preference or actual choice revealed through actions taken, billionaire fund managers-investors George Soros and John Paulson have reportedly been escalating on their gold positions.
From the Bloomberg,
Billionaire investors George Soros and John Paulson increased their stakes in the biggest exchange- traded fund backed by gold as prices posted the largest quarterly drop since 2008.
Soros Fund Management more than doubled its investment in the SPDR Gold Trust to 884,400 shares as of June 30, compared with three months earlier, a U.S. Securities and Exchange Commission filing for second-quarter holdings showed yesterday. Paulson & Co. increased its holdings by 26 percent to 21.8 million shares…
Paulson, 56, who became a billionaire in 2007 by betting against the U.S. subprime mortgage market, lost 23 percent in his Gold Fund through July as lower bullion prices and slumping mining stocks contributed to declines.
Holdings in the SPDR Gold Trust are Paulson’s largest position. He also bought shares of NovaGold Resources Inc. (NG) last quarter and sold other stocks, leaving his $21 billion hedge fund with more than 44 percent of its U.S. traded equities tied to bullion.
Paulson’s U.S.-listed holdings peaked at $34.3 billion at the end of March 2011, with about $7.7 billion of that amount, or 23 percent, invested in gold related stocks. He had 33 percent of his U.S. stock holdings in gold-related securities at the end of the first quarter and 25 percent a year ago.
What has piqued my interests me has not just been Mr. Paulson or Mr. Soros’ gold buying spree, but of the apparent shifting made by Mr. Soros, who seem to be emptying his stock market exposure, particularly on the financials, and repositioning them all into gold ETFs.
Analyst Mac Slavo at the Shtfplan.com notes,
Soros, who manages funds through various accounts in the US and the Cayman Islands, has reportedly unloaded over one million shares of stock in financial companies and banks that include Citigroup (420,000 shares), JP Morgan (701,400 shares) and Goldman Sachs (120,000 shares). The total value of the stock sales amounts to nearly $50 million.
What’s equally as interesting as his sale of major financials is where Soros has shifted his money. At the same time he was selling bank stocks, he was acquiring some 884,000 shares (approx. $130 million) of Gold via the SPDR Gold Trust.
When a major global player with direct ties to the White House, Wall Street, and the banking system starts off-loading stocks and starts stacking gold, it suggests a very serious market move is set to happen.
And this hasn’t been just about Messrs. Soros and Paulson; emerging market central banks, including the Philippines, the ultimate insiders, seem to be joining the ranks of gold hoarders.
The Mineweb reports,
perhaps one of the most interesting findings of this latest analysis is that gold buying by the world's Central Banks hit a new record of 157.5 tonnes , more than double the level of Q2 2011 and accounting for 16% of overall global demand. This, by our reckoning is also around 22.5% of total gold supply over the period extrapolating from the WGC's own annual figures for 2011. Central banks that significantly bolstered their holdings during the quarter included the National Bank of Kazakhstan, and the central banks of the Philippines, Russia and Ukraine.
The irony of this is that all these insider buying comes amidst dampened demand for gold in terms of investment and jewelry.
Chart from Forexpros.com
Yet part of the current slowdown in the conventional demand for gold can be traced to the ongoing weakness in the global economy.
A sign of this can be seen in Lisbon Portugal where residents may have already depleted their jewelries for cash.
From Bloomberg,
In Portugal, the historical home of some of Europe’s biggest gold reserves, the number of jewelry stores, which include cash-for-gold shops, increased 29 percent in 2011 from a year earlier, a study commissioned by parliament found. In the first quarter, an average of two new stores opened every day, the report said. Now some of them are closing.
“Business has gone from great to terrible in a matter of months,” Luis Almeida, whose family has owned a gold store near Lisbon’s Rossio Square for more than 40 years, said in an interview. “The sad truth is that most of my clients have already sold all of their gold rings.”
Selling gold for cash exhibits that gold barely functions as hedges against deflation.
Technically speaking, gold prices has been in a two year consolidation phase.
A seeming trend-continuing pennant or wedge-neutral formation could suggest that a breakout of the 1,650 resistance level could incite a test on the previous highs at the 1900 level.
Nonetheless, could (White house insider) Mr. Soros, Mr. Paulson and emerging market central bankers (ultimate insiders), such as Bangko Sentral ng Pilipinas’ Amando Tetangco, Jr. be anticipating something big soon?
Does the current environment represent proverbial calm before the storm?
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