Why is George Soros buying gold if it’s in a bubble?
A lot of media outlets have noticed that, despite George Soros’ protestations about the rise in gold prices being excessive, Soros Fund Management have invested a lot more money in gold after he made his apparently gold-bearish calls. What gives?
Apparently, Soros is a market-timing momentum investor because his comments in the Australian demonstrate that he is investing in gold exactly because he believe it is a bubble.
The Australian says:
The "market fundamentalist" belief prevailing in the US that markets correct their own excesses was wrong, Mr Soros said, criticising former Federal Reserve chairman Alan Greenspan for taking that line.
Mr Soros, who said he manages around $US27 billion ($30bn), gave his own investment decisions as an example.
"When I see a bubble, I buy that bubble, because that’s how I make money," the outspoken investor said.
Mr Soros doubled his bet on gold at the end of 2009 amid rising prices, a filing showed this month, a few weeks after Mr Soros made comments calling gold the new asset bubble.
For those of you of a bullish mindset, also see Why You Should Dig Newmont Mining in Barron’s. Personally, I see the gold play as less compelling given the run-up we had to over $1200 an ounce late last year. However, longer-term I am a lot more bullish than Mr. Soros seems to be.