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The 'ultimate bubble' meets the ultimate speculator

Section: Daily Dispatches

Soros Increased Bet on Gold Last Year

By Devon Maylie
The Wall Street Journal
Wednesday, February 17, 2010

LONDON -- Investor George Soros doubled his bet on gold at the end of 2009 amid rising prices, a filing with the U.S. Securities and Exchange Commission showed.

The filing, made late Tuesday for the financial period ended Dec. 31, comes after Mr. Soros made comments during the World Economic Forum in Davos, Switzerland, in late January calling gold an asset bubble. He told media at the time that the low-interest-rate environment creates a condition for bubbles to develop and that gold is the ultimate bubble.

Mr. Soros has said in the past that when he sees a bubble he buys and the gold holdings at the end of 2009 seem to indicate that is what he did. A spokesman for Mr. Soros declined to comment on the filing.

Soros Fund Management reported total holdings of $8.8 billion at the end of the year, up from $6.2 billion on Sept. 30.

As part of that, he increased shares held of the SPDR Gold Trust to 6.2 million, valued at $663 million, as of the end of 2009. That was up from 2.5 million shares at the end of the third quarter.

Gold prices during the final three months of 2009 rose about 22% to a record high of $1,226.30 a troy ounce on the spot market.

The SPDR Gold Trust is an exchange-traded fund that owns physical gold and has become popular with investors because it makes it easier to invest in bullion itself.

Mr. Soros's SPDR shares account for about 1.7% of SPDR's 364.1 million outstanding shares.

The Soros fund also held 11,000 call options that would allow it to buy further shares. Soros Fund Management became the fourth-largest institutional holder of the SPDR Gold Trust, surpassed by hedge-fund manager John Paulson's Paulson & Co., Bank of America Corp. and BlackRock Advisors, said gold-market tracker Goldessential. Paulson & Co. at the end of 2009 held 31.5 million SPDR shares valued at $3.38 billion. The quantity of shares held were unchanged from the end of the third quarter.

The Soros fund also reported holdings in several gold equities. It sold its holdings in AngloGold Ashanti Ltd. of 10,300 shares valued at $420,000. It added 18,300 shares of Barrick Gold Corp. valued at $721,000. It also added 61,500 shares of Freeport-McMoRan Copper & Gold Inc. valued at $4.938 million and 2.78 million shares of Kinross Gold Corp. valued at $51.097 million.

The fund increased holdings in Yamana Gold Inc. to 85,880 shares from 25,000 shares at the end of September.

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