George Soros, John Paulson, and Steve Cohen, who in aggregate control over $60 billion dollars, have been aggressively buying the most speculative vehicles associated with gold: call options on gold mining stocks.
Starting out with, George Soros, billionaire financier and chairman of Soros Fund Manangement LLC, was the target of bearish gold commentary
this week issued by Bloomberg. While Bloomberg journalists correctly
reported that he’s been cutting his stake in gold, what they failed to
mention (which was articulated here on May 16th), was how he reallocated the proceeds.
Soros indeed cut his stake in the GLD gold fund by about $2.5mm—a paltry sum, especially given the fact that he simultaneously purchased a massive $25mm in call options on the GDXJ
Junior Gold Miners Index. This purchase outweighs the physical gold
sale by a factor of 10—suggesting he expects much greater gains ahead to
be had in the junior mining stocks.
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