x Abu Dhabi, UAEMonday 24 July 2017

Soros defies his own warning about volatility of gold

George Soros, the billionaire investor, more than doubled his gold holdings during the fourth quarter of last year, before warning that the precious metal was "the ultimate asset bubble".

George Soros, the billionaire investor, more than doubled his gold holdings during the fourth quarter of last year, before warning that the precious metal was "the ultimate asset bubble". At the end of last year, his company, Soros Fund Management, owned 6.2 million shares of SPDR Gold Trust, an exchange-traded fund that owns bullion. The shares were worth US$663 million (Dh2.43 billion). That was up from 2.5 million shares at the end of the third quarter, according to a filing with the US Securities and Exchange Commission

Mr Soros and other major investors such as John Paulson have touted gold as a hedge against inflation, further economic turmoil or a decline in the value of the US dollar. But last month at the World Economic Forum in Davos, Mr Soros described gold as "the ultimate asset bubble" and declined to say whether he was investing in the metal. News of Mr Soros's holdings came as gold fell for a second day in London in early trading after the IMF announced it was selling bullion from its reserves on the open market.

The IMF has 191.3 metric tonnes left to sell and will conduct the sales in a "phased manner over time". "The psychological effect of mobilisation of IMF gold weighs on the gold price," said Bayram Dincer, a commodity analyst at LGT Capital Management in Switzerland. "The dollar appreciation is an additional effect." Gold for immediate delivery fell as much as $8.66, or 0.8 per cent, to $1,098.15 an ounce in early trading yesterday and was at $1,102.15. It dropped 1.1 per cent after the IMF announcement. Bullion for April delivery was 1.6 per cent lower at $1,102.30 on the New York Mercantile Exchange's Comex unit.

"This could be regarded as negative, as no central bank wants this gold at this market price," Mr Dincer said of the IMF's move. "On the other hand, the 191.3 tons will not distort the physical gold market as buying interest for investment purposes is still intact." * with agencies business@thenational.ae