July 5, 2022

“Gold and Silver Heading Lower” – Classic Sign Of A Market Bottom

Yahoo Finance ran a story today entitled “Gold, Silver & Copper Are All Heading Lower.”  Nothing worth discussing about the specifics of the article – the real story here is that this a classic contrary headline seen at market bottoms, not tops.

What is the really smart money doing in the gold market as the mainstream press encourages John Q. Public to sell off his gold holdings?  Here’s a nice recap from The Economic Collapse:

When men like John Paulson and George Soros start pouring huge amounts of money into gold, it is time to start becoming alarmed about the state of the global financial system.

The amount of money that these men are investing in gold is staggering….

And the central banks of the world are certainly buying gold at an unprecedented rate as well.  According to the World Gold Council, the central banks of the world added 157.5 metric tons of gold last quarter.  That was the biggest move into gold by the central banks of the globe that we have seen in modern financial history.

But that might just be the beginning.

According to a recent Marketwatch article, there are persistent rumors that China has plans to buy thousands of metric tons of gold….

The gold bull market is far from over when two of the world’s most successful investors are increasing their gold holdings.  The price correction in gold since last summer has provided another excellent buying opportunity for long term investors.

More on this topic:

Why There Is No Upside Limit For Gold and Silver

Why Higher Inflation and $5,ooo Gold Are Inevitable

The Federal Reserve Can’t Produce Oil, Food or Jobs But They Will Continue To Produce Dollars

Ultimate Price of Gold Will Shock The World As Loss Of Global Confidence Leads To Economic Collapse

Gold Bull Market Could Last Another 20 Years With $12,000 Price Target

Buy The SPDR Gold Trust – You Don’t Argue With Paulson and Soros

Despite the correction in gold prices since last summer, investors in gold ETFs have increased their stakes.  Worldwide holdings of gold ETFs are now at a record 2,417 metric tons according to Bloomberg News.

The SPDR Gold Trust (GLD) is the largest gold ETF and has returned a lustrous annual return of 18.4% since the fund’s inception on November 18, 2004.  The GLD currently holds 1,258.15 tonnes (40.45 million ounces) of gold in trust valued at $64.8 billion.  The all time record high holdings of the SPDR Gold Trust was 1,320.47 tonnes on June 29, 2010.

The slight decline from record gold holdings of the GLD do not represent a lessening of gold demand by investors.  Numerous competing gold trusts such as the iShares Gold Trust (IAU) which holds $9.3 billion of gold bullion have simply given investors a wider choice of options and expanded the overall market for gold ETFs.

Word that two of the world’s most successful investors have increased their stakes in the SPDR Gold Trust highlight the fact that the bull market in gold is far from over.   Billionaires John Paulson and George Soros, both long time investors in the GLD , both recently increased their holdings.

Courtesy yahoo finance

While Paulson has increased his massive stake in the GLD over time, Soros attempted to time the market.  In the first quarter of 2011, Soros sold 4.7 million shares of the GLD which brought his holdings down to a token 49,400 shares.  Subsequent to his sale, gold soared about $500 per ounce higher to $1,900 during August 2011.  Short term trading is difficult for anyone, including one of the world’s most successful investors.  Since the fundamental reasons for owning gold have only become more compelling, small investors would be best advised to hold long term instead of trying to trade a temporary price pullback.

Courtesy kitco.com

According to Bloomberg, Paulson and Soros Add Gold As Price Declines Most Since 2008.

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.

Still, prices have rallied for 11 consecutive years, gaining more than sevenfold, as investors snapped up the metal after government and central bank stimulus programs boosted speculation that inflation would accelerate. The metal is up 2.4 percent this year.

“People expect prices to rise in the third quarter since historically it has been proved that it’s one of the best periods for gold, and investors who see easing coming in from various central banks are either increasing or holding on to their positions,” Donald Selkin, the New York-based chief market strategist at National Securities Corp., which manages about $3 billion of assets, said by telephone.

Paulson’s increased stake in the GLD should come as no surprise.  In a previous post during July, it was noted that Paulson remained steadfastly bullish on gold with a $4,000 target.