February 24th, 2010 
Elisheva Wiriaatmadja
On Jan 28, just last month, George Soros, in an interview with Davos Man, said that gold is due for a fall. At the World Economic Forum in Switzerland he said, “When interest rates are low we have conditions for asset bubbles to develop and they are developing at the moment. The ultimate asset bubble is gold.” His quote immediately hit the headlines and people believed.
George Soros made over one billion dollars in 1992 from short-selling the UK pound sterling, outwitting the UK government. When Soros speaks people listen. The moment George Soros said that gold is now the current and ultimate asset bubble, inept fund managers and inexperienced investors went crazy and traded down their gold within a week to a very low level. The gold price went down to almost the same level as in October 2009, which is $1,050 an ounce.
I have been writing posts about gold and encouraged friends and families to start buying gold here and there whenever they can but many have been very skeptic and even ignorant as, unlike Asians, many fail to see the real money value of this precious metal. Others just don’t understand what to do with physical gold once they buy it. When they read of George Soros quote, it not only gave them great confidence of not buying gold, some even sold the gold that they had already had and was proud about it.
But despite all the gold bubble talk, there was one shrewd investor who still bought gold and in fact even doubled his gold investment – George Soros!
Many investors have been in the gold bubble debate since last year but Soros was one of the latest investor to enter the discussion in January 2010. The moment he entered the debate, he made a one-sentence statement enough to drive the world to do exactly as any investor would wanted – a decrease in gold price because of all the gold-selling. As soon as gold price went down, Soros bought.
Now he has more than doubled his shares from 2.5 million to 6.5 million, which is $680 million worth, in SPDR Gold Shares ETF, the US-listed gold exchange traded fund. His company, Soros Fund Management, also increased its holding in a gold miner Kinross Gold, Yamana Gold, Barrick Gold, and Freeport-McMoRan.
Many astute investors such as George Soros and Jim Rogers know one thing about gold price – it is not going to go down. Around the same time that Soros made his statement at the World Economic Forum in Switzerland, Jim Rogers reaffirmed his view that gold price will continue rising to over US$2,000 an ounce over the next decade. As the US government keep printing money out of nothing, it will consequently push the gold price up.
In contrast to Soros’ statement last month, Jim Rogers does not think it is a gold bubble. His definition of a bubble is “when everybody is buying everything every day, and people can hardly wait to get more.” Currently the average investor has not really begun to invest in gold which makes the idea of a bubble largely irrelevant.
In the end, although it had looked as if Soros and Rogers disagreed about the gold bubble, Soros proved that actually does not sincerely believed what he had said. His statement was merely an old market trick to talk the gold market down so he can jump into the wagon and back up his wealth with gold.
Both know gold price is not going to go down and so should you by now.
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This just shows how information is misinterpreted…often blatantly. This article says “Soros…said that gold is due for a fall.” Whoa…What?!?! When? That is false.
He said that gold is “in” the “ultimate bubble”. Warren Buffet is a long term investor and avoids bubble stocks. He notoriously avoided tech stocks during the 90s (to much criticism, and later praise). Soros, however, hypothesizes about bubbles. When he finds one, he goes all in with the crowd. He spent his whole lifetime studying boom and bust cycles and the psychology of crowds. He coined the term reflexivity. Even in his books he has written that he goes with the crowds and swings with the pendulum. He just jumps off before it falls back where it came from.
Dan is right, many people have had a big misunderstanding of the entire George Soros philosophy, he has always admitted that he goes where everybody goes, and even he has tried to explain how he does the things most of his success cant be explained (he even have said that he feels some “stiches” in his back when the time is right)
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[...] back up his wealth with gold. Both know gold price is not going to go down and so should you by now.LinkRelated posts:Gold Bubble? Valuing Gold Relative to Other AssetsGold Prices Settle Up on U.K. [...]