Why Billionaire George Soros is Back in the Saddle Again

Recently, The Wall Street Journal published an article on the 85-year-old billionaire George Soros, and how he’s recently made what the publication characterizes as “big, bearish investments.” Those of you who read this blog regularly, particularly if you’re gold aficionados, may at first be put off by the word “bearish” once you realize that Soros made a huge investment – to the tune of 19 million shares – in Barrick Gold Corp., the world’s largest gold mining operation.
 
And, in a way, we agree with you. After all, Soros is not bearish on gold. Au contraire! He’s truly bullish on the shiny metal. But that same article eventually goes on to say what it really means – that Soros is “bearish” on the equities markets. It’s for this reason he sold off his stock investments and invested heavily in gold.
 
Under the circumstances, we would have preferred to see the WSJ use the word “contrarian” rather than gold. In doing so, the article would have more effectively called attention to the all-too-familiar market scenario of gold’s negative correlation to the U.S. dollar and stocks.
 
That correlation traditionally has a see-saw effect – gold up, U.S. dollar and stocks down, and vice versa. This is not always the case (never say “always” or “never” in financial matters); but it’s the case often enough for this negative correlation to serve as a useful guideline for investors.
 
But why has George Soros made this decision about gold at this time – after having made money so often in stocks — and, let’s face it, far into what must now be the twilight years of a brilliant investment career?
 
First of all, Soros is no stranger to contrarianism. As founder and head of the Quantum Fund, a hedge fund that earned him his $30 billion dollars of net worth, he’s successfully bucked conventional investing wisdom by selectively shorting stocks for immense profits.
 
He’s also been tagged with the moniker, “The Man Who Broke The Bank of England,” because he sold short $10 Billion dollars’ worth of the English pound during the 1992 Black Wednesday UK currency crisis.
 
When you “go short” on an investment, you speculate that a particular stock, commodity or currency is going to decline in value. You make your money by selling that item at a high price and then buying it back (or “covering” your short) at a lower price.
 
With respect to that 1992 British pound transaction, even though he made himself a cool billion dollars in one day, Soros’s demeaning moniker is unjustified. He perceived a weakness in the British currency, and acted on his judgment in a legal, albeit highly unorthodox, way.
 
In a similar fame of mine, Soros has perceived global economic weakness – particularly in China. Partly because of its devaluation of the yuan, and partly because of its refusal to embrace a truly free capitalist economy which would allow for modernization, that nation stands to suffer a deflationary spiral of declining wages and prices that could easily spill over to the global economy at large.
 
Hence, George Soros is betting big time that gold will go up as stock markets worldwide decline.
 
Do you agree with Mr. Soros? Care to apply his investment outlook to your own portfolio?
 
We strongly recommend you invest in actual physical gold rather than mining stocks. The latter is OK for a professional investor like George Soros. But when you invest in mining stocks, you invest not only in gold, but in the fortunes of a particular mine. Which means your investment is subject to strikes, cash-flow problems and management whim.
 
If you’re concerned about the safety of your retirement funds, you can’t afford those concerns. We recommend, as a private investor, you invest simply in pure gold.
 
You’ll own a hard asset that’s nobody’s debt – one that will protect you against the ups and downs of the US dollar and stocks.
 
For more information, call 800-777-6177 now, and ask to speak to a Fortress Gold Group representative.

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