Soros and gold: Listen to nothing he says
George Soros just chipped away at his credibility. As noted on this blog, the billionaire trader told folks at the Davos forum in January that gold was "the ultimate asset bubble." But as several readers have pointed out, it turns out that Soros was actually buy gold like a madman through the end of last year.
There are several possible interpretations. 1) Soros really thought in January that there was a gold bubble and was dumping the gold investments he had so recently amassed. 2) Soros really thought in January that there was a gold bubble but also thought that he could profit from it and get out before it collapsed. 3) Soros didn't think gold was a bubble but wanted to talk the price down so he could buy even more.
I would bet on No. 2. Yes, the guy's ego really is that big. However, given the dissonance between the Soros money and the Soros mouth, investors would probably be best served by just ignoring him.
Comments
I've read every book that Mr. Soros has written and I typically follow his media appearances. He has publicly said that he will always buy into bubbles. He's written as much in many of his books. It's no secret of his investment philosophy. Part of his success is exiting bubbles before they burst. So for him to be calling gold the ultimate bubble and buying gold is not a contradiction of his investment style.
Posted by: Mike | March 8, 2010 12:39 PM
Soros's practice is nothing new. Nathan Rothschild perhaps did it best when he received news of Napoleon's defeat at Waterloo a full day ahead of everyone else. He capitalized on this advance notice by publicly selling off his positions in British stocks, signalling to the market that the opposite had happened. The market followed suit and began a huge sell off. In the midst of low prices caused by the panic he had induced, Rothschild surreptitiously bought up much of the market at pennies on the dollar.
Posted by: Josh Dowlut | March 8, 2010 1:07 PM
The untrue story about Rothschild appeared first in an anti-semitic pamphlet in the 1840s. Who said they didn't have urban legends back then...?
Dan: Interesting. I hadn't heard that. I've seen the Rothschild/Waterloo anecdote taken as fact in Rothschild biographies. Wasn't he supposed to have used carrier pigeons? JH
Posted by: Dan | March 8, 2010 2:43 PM
There's a broader principle here.
There are two cable networks that are devoted to covering "finance," meaning the purchase and sale of various financial instruments for investment. The networks present not only their professional staff personalities, but also guests who are employed in various segments of the investment industry.
To a greater or lesser degree, all of the guests are using the pulpit lent to them by either CNBC or Fox to advance their own respective agendas. Either they want to profit if they can induce viewers to sell or they want to profit if they induce viewers to buy. In all cases, however, their advice is primarily self-serving. And, it makes no difference if the guest is George Soros or George Shlibotnick.
Posted by: Stuart Levine | March 8, 2010 7:41 PM