Soros Down on Gold?

Chidem Kurdas

Nowadays you don’t hear talk of a gold bubble, even though the metal is still at the near-record highs reached this week. The notion that the steep rise of the past year is sign of a bubble was a hot topic just  months ago.

But between political unrest in the Middle East and the earthquake-tsunami-nuclear threat in Japan, gold once more looked like a safe haven. Of course, it will likely take a downward correction once the geopolitical events appear less threatening. How good an investment is gold now?

George Soros and his Quantum Fund were among the big hedge funds buying gold-related companies. He has been selling some of those shares. About a year ago Soros reportedly had a 8.5% ownership stake in NovaGold Resources. Now, he owns less than 5% of NovaGold stock.

It is a contrarian move to reduce gold exposure at a time when many people are still buying. Soros is not necessarily a contrarian investor and although he’s talked of a bubble he may or may not think there is a lot of air in the price of the metal. But almost certainly he does not see great potential for gain from here on.

This past November I wrote about Soros’ increased holdings in Platinum Group Metals. Chinese carmakers stoked the demand for platinum, which as an industrial metal is vulnerable to economic slowdown.

Gold as safe haven versus platinum as in-demand industrial resource—the two commodities have different roles and risks.

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One Response to “Soros Down on Gold?”

  1. Gold May Pan Out, Silver Doubtful « HedgeFundSmarts Says:

    […] year. A bubble has been suspected in gold, too.  George Soros’s funds reduced gold exposure—as we at HedgeFundSmarts were the first to report, back in March.  But many hedge funds continue to hold precious metals companies or […]

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