George Soros, famous for breaking the Bank of England in 1992 by taking a $10 billion short position versus the British pound, has precious metal as his primary holding. Mr. Soros does not take the time to buy gold coins, he moves right to investing almost ten percent of his huge assets in the SPDR Gold Trust ETF. This multi-billionaire also owns call options, which he could use to increase his ownership in the fund.
The firm run by Mr. Soros held 5.6 million shares in the SPDR Gold Trust ETF, valued at a whopping $607 million, as of first quarter 2010. This was a decline from its holdings of 6.2 million shares at the end of 2009. The sale of the shares was used to fund investments in different securities during early 2010. As of March 31, the firm had a total of 870 holdings, an increase from the 716 holdings it had as of December 2009.
Mr. Soros has made these investments to hedge his exposure to the floundering economy and devaluation of the U.S. dollar. He believes he will be able to identify when the bubble is about to burst and will sell his shares to make a profit. This is quite a large bet on his part but earning one billion dollars in a single day entitles him to take such risks.
This investor has quite a diverse portfolio, with large stock holdings within the gas and oil sectors. The trend he is following represents higher energy prices, rising inflation, and weaker currencies. It is a rather doom and gloom perspective but if this investor believes strongly enough in it, he will surely find a way to profit from the result.
During the first quarter of 2010, Mr. Soros sold more than 94 million shares of Citigroup. Some of this money may have been used to fund the investment in the SPDR Gold Trust ETF. Despite his claims in January 2010 that gold was the “ultimate bubble,” it is clear that has faith in the asset bubble of gold.