Posted on 01/29/2010 1:23:29 PM PST by blam
Why Soros Is Probably Buying Gold Now
by: Peter Cooper
January 29, 2010
Given the moves by rival hedge fund managers like John Paulson into the yellow metal, it would be surprising if that living trading legend George Soros is not buying gold at the moment.
Indeed, you should always buy when this man hints he might be selling. His comments at the World Economic Forum in Davos this week seem classic trader double-speak. What does Soros mean when he says gold is the ‘ultimate bubble’ asset class?
False prophets Newspapers like the normally sensible Daily Telegraph fell for his ruse, immediately jumping the gun to a prediction about a massive tumble for the yellow metal. Yet Soros said no such thing.
He merely pointed out what even the most ardent gold bug would concede, namely, that if you study the history of financial crises, then the credit-induced asset price inflation causes them moves from one asset class to another until it reaches gold as the ‘ultimate bubble’ or the last of the bubbles.
Soros did not say that we are nearing that position with gold around $1,080, having last month touched $1,226 an ounce. What he did create was a buying opportunity, presumably for funds controlled by himself.
For why should gold be running out of steam at this point? Even if credit growth slows, the gold market is still so small that only the tiniest fraction of this money is required to send the price much higher.
[snip]
My wife is heavily invested in gold too.
Fortunately, she bought a lot of it before Soros .. or meeting me.
This was the immediate interpretation and consensus in goldbug land last night. As well as the other point of the article -- that Soros is undoubtedly trying to drive down the price.
Now a little brain homework for the class. On the graph below, for six out of the last seven months:
- What is interesting about the last two trading days of the month?
- How much does the price go up, at some point in the first five trading days of the next month?
All that Soros wants to do is abuse his position to corner the market, mainly by spooking enough gold-holders into selling so that the price drops, allowing him to acquire it on the cheap.
Of course, to the extent that he manages to spook enough of the sheeple into selling their gold and bringing the price down, that presents those of us who know with a good buying opportunity. So, everyone, start your engines and get ready to buy some gold!
Never buy gold on the advice of someone willing to sell you his.
I don’t know who this guy is. Who would till you how to make money? They are more likely to take a “bonus” (bribe) to write a story to they can take your money.
I don’t know who this guy is. Who would till you how to make money? They are more likely to take a “bonus” (bribe) to write a story to they can take your money.
Reading that chart tells me a break of 105 spells falling gold prices. With euros bailing and possibly yuan, I would guess the dollar will do well short term and gold underperform. Just a guess.
The last few trading days of the month are First Notice time periods.
Thats when all the short contract holders have to sell even more shorts to drive the price down so that the longs don’t make them turn over the physical metal, which they ain’t got enough of anyways.
Take the shorter term view. Hint: 1.10^^6 = 1.77
Soros just said a few days ago, Gold is the next bubble...
maybe but it looks like the dollar is rising at the same time as oil is falling and gold is falling, the fed has starting to drain money out of m2 and some of the complex interbank instruments have been rescinded. these were installed back in 2007 to enable countries to swap currencies as needed in the event crises. a post on this was made the other day with the suggestion that there is renewed confidence in paper assets.
Oh well.. Ya can’t take it with ya anyway.
- What is interesting about the last two trading days of the month?
- How much does the price go up, at some point in the first five trading days of the next month?
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I don’t analyze gold that way (I take a fundamental approach with metals) but you’re gapping up and holding strong in the final trading days of each month ... (could someone be buying to balance their books or some other forced reason to buy) ... and yes you do have the same strength early in the month ... I have no “volume” data to give me an idea of the strength of each move but if gold holds above or at current levels it may be forming a cup with handle ,, right down to the handle slightly undercutting the cup which is a great indicator of future strength as the weak hands are greatly diminished.
I take some of that back ... I didn’t realize volume data was there (must be getting late) .. looks like end of year profit capture type trading ... in a thin market someone with substantial “pull” can make $$$$ selling a little down and swooping in to buy a much greater quantity at the new (lower) price if they get the days momentum into a downtrend. A logical pattern if you believe that fundamentally the commodity must go higher.
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