Tags: gold | Paulson | invest | risk

Soros and Paulson Are Buying and Holding Massive Gold Positions

By    |   Monday, 19 May 2014 07:50 AM

Sometimes I hear from people who are worried about the shares of the SPDR Gold Trust (GLD) exchange-traded fund (ETF) that they own. They listen to the media a lot and get worried.

Well, while they're listening to the wrong crowd and getting skittish about their position, billionaire John Paulson holds the largest position in that ETF out of anyone . . . a whopping 10.23 million shares!

Now, you have to have a lot of conviction in your position on gold when you're in that large. But this is a very smart man.

Paulson knows that nothing has changed. He knows that our national debt continues to climb and that there's no real plan in place to turn that around. (Just because the news doesn't report on it all the time doesn't mean it's not still there.)

Those rising debts are good for gold and bad for the dollar.

In addition to this, the Federal Reserve is still printing money and supporting the economy. Oh, some think that "tapering" means that they are not still printing money.

You see, there's a difference in lightening your foot up some from the gas pedal and taking your foot off of the gas pedal and applying the brakes. Many people think that the Fed is doing the latter, but they're simply doing the former.

Well, more money printing is good for gold, because gold can't be printed or diluted. Additionally, this money printing has caused the dollar to make another 52-week low, which the media have been light on reporting.

The money printing and weaker dollar is causing inflation. The CRB Commodity Index recently hit a 52-week high. The media have been light, so far, on reporting on that too. Yet, just because they don't report on it doesn't mean that you're not feeling it in the pocketbook where it hurts.

But, if you own gold, you're not hurting as bad as the one who's just holding dollars and is feeling the brunt of money printing and inflation.

Oh, I know that lately, gold has taken a huge breather and has been almost dormant. But don't confuse that with the fact that you should own some gold.

While, near term we may have a pullback, the next major move in gold will be to the upside. Why? It has to. Inflation is on the rise. The dollar is diving overall. Money is being printed. Debts are rising.

On top of this, there's turmoil in Turkey. Each day that passes we don't have any more resolution on Ukraine/Russia than the day before. China is crashing into Vietnamese ships and reclaiming territory that isn't rightfully theirs. They're beginning to drill for oil in territory that is not rightfully theirs. The Vietnamese are retaliating, etc.

Moreover, food inflation is on the rise again. And that can cause more unrest in emerging market economies where they are the most sensitive to these rises in food prices. That can end up causing riots, etc.

These are all pro-gold events. Now, here's the thing you have to realize about gold. Gold doesn't respond every day, every week or even every month to these things. But during the course of quarters and years gold responds very well to these events. So the gold investor must be patient and not easily rattled when gold doesn't respond near term like they feel it should.

George Soros isn't rattled either. He's on record as buying up more GLD and he's been buying up shares of gold miner Barrick Gold (ABX), which is the largest gold producer in the world.

That tells me that not only does he feel that gold is undervalued (like Paulson), but he also believes some gold stocks are undervalued too. You'll remember I've told you before that gold and gold stocks are undervalued. Well, now you're seeing these guys take action on it too.

And while I'm not a fan of Soros due to his liberal leanings, he's not a stupid man when it comes to his investing. He didn't become a billionaire by being stupid or ill-informed.

In fact, Louis Bacon (another famous fund manager) has increased his position in Barrick Gold too.

These guys wouldn't have these massive positions in the millions of shares if they didn't feel that all the things I've shared with you above are true.

So continue to be patient as a gold investor and you'll reap some huge rewards during time.

Last week, I was on Benny Hinn's show, This is Your Day, and he asked me where I thought gold was headed. I told him I felt that gold's next major target would be its old highs around $1,900, but that ultimately it could end up going much higher than that.

Why? The dollar's overall decline has been happening since the 1980s and it doesn't look like there are any plans for the Fed to change their direction on where they're leading the dollar.

Politicians don't have the political will to do what it will take to correct the massive debt problems. That would take both a decline in the benefits that people receive from the government in addition to higher taxation (not just on the rich, but also the heart of the middle class).

Instituting those isn't going to get anyone elected and it's not going to help them stay in office with that kind of policy either. So you can see why they've avoided this like the plague for as long as they feel they can. They won't face it until there is literally no other choice.

Therefore, today is a still a great day to own gold . . . especially when no one else wants it. That's when the real values present itself. That's why we own metals and gold stocks in the Ultimate Wealth Report and it's why you should too!

God bless!

About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust.
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Sometimes I hear from people who are worried about the shares of the SPDR Gold Trust (GLD) exchange-traded fund (ETF) that they own. They listen to the media a lot and get worried.
gold, Paulson, invest, risk
Monday, 19 May 2014 07:50 AM
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