- Firstly, as it was reported this week that George Soros (the palindrome, not me…) more than doubled his Gold position at the end of last year, by 3.7m shares to 6.2m of the SPDR ETF, plus is long of 11,000 call options and increased his stake in the gold producer Yamaha Gold. I’ve seen some debates among the journalists, notably on FT Alphaville, whether he puts his money where his mouth is or not as the old chap declared at the World Economic forum in Davos end of Jan. that the Gold was the “ultimate bubble”. I’d say that as far as I understand it (it’s not that easy… try to read this), Soros uses his “Theory of Reflexivity” precisely to profit from the Bubbles and Busts, so to me no contradiction in Soros’ mouth between long position and bubble, quite the opposite.
- Secondly, as it hit an historical high on Feb. 17th. Wait, an historical high? Yep, a high (as I write) in EUR at 827.88. This said, I find amusing to speak about historical data comparing an 11-year old currency to a metal that has always existed.- Thirdly, as the IMF announced that very same day that it plans to sell “shortly” 191 tons (remainder of the 13% set out in September). That weighted on the market and Gold dropped more than $14 in a couple of hours further to the announcement.
I’d tend to agree with JS Mineset Trader Dan’s opinion on the timing of the IMF announcement in a deliberate effort to bring the price down and stem the increasing bullish sentiment that showed up lately. China missed the purchase of 200 tons last year one-upped by India (remember?), there’s likely still a strong bid from it along with other (Asian) Central banks and I like the argument that the IMF would definitely love to sell its 191 tons one-shot. I’m happy with this explanation.
The link between Soros and the IMF is they both fully appreciate the impact on the markets their rhetoric can have and try to use it for their purpose. The famous investor seems definitely much better at that game (would it mean he wants to purchase more at a lower price?) than the organization : as I write, one day after the announcement the price is heading back to where it was before it. It looks like nobody bought the story but people bought Gold instead, as I did below the 1100 mark...
If you are following this blog, you should know how Bullish I am on the precious metal in the long term and that I’ve been heavily long for a while (since the bottom actually ;))) and that I spend my time waiting for opportunities to put on more. My purchase today could seem slightly impulsive as I’ve not been talking about it here or in the forums for a while, but actually it’s not (that much…). I’ve been meaning to put on more for some time as in the medium term, in addition to my same old usual arguments on gold, I think the dollar weakness will resume and the thing is the EUR role as an alternate currency faded dramatically with the recent pressure... The IMF story probably triggered my purchase sooner than expected as in the short term I think the strength of the USD could have still some room (technical reasons) and I may have jumped the gun in the execution but I just couldn’t resist to the opportunity offered by the IMF. Thanks for the dip guys.
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