A recent article on Bloomberg discusses the latest investment decisions by one of the largest investors, George Soros. In March this year, George Soros reduced his US stock investments by 37%. The billionaire from Hungary made this move while betting on gold. His stock holdings had reduced to $3.5 billion by the end of March. Soros added bullish options contracts from SPDR Gold Trust for 1.05 million shares and a stake of $264 million in Barrick Gold Corp. The stake is equivalent to 1.7% of Barrick. Soros has built his $24 billion net worth with his market analysis. In this latest move, he predicted that China’s debt-fueled economy would cause the global financial crisis.
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According to the philanthropist, the US market cannot avoid the effects of the Chinese economy. Investors should expect a decline in stock prices and an increase in government bonds. Stan Druckenmiller supports the bet on gold as well. Stan is the former chief strategist to Soros. He indicated that he allocated the largest proportion of his currency to gold. According to Bloomberg’s general pricing estimates, the 16% quarterly increase in gold this year is the biggest since 1986. Barrick’s shares have more than doubled as it reduces its debts and costs. The miner has grown by 39 % since the end of March.
Soros Fund Management returned all funds to other investors and now focuses on the managing the billionaire’s wealth. At the end of the year 2015, Soros sold his holding in Dow Chemical Co. worth $161 million and his stake in Level 3 Communications Inc. worth $173. He also sold his stake in Delta Air Lines Inc and Endo International PLC on http://www.georgesoros.com/. Other investors seem to have followed Soros’ move. Glenview Capital Management reduced its US equity holdings by 22% to 13.6% while Millennium Management reduced its hold by 17% to $36.5 billion. Citadel Advisors reduced its listed stocks by 29% to $13.6 billion.
George Soros’ view on the EU could have influenced his investment decision. He indicated recently that EU is about to collapse. His best on gold seems to be a bet against the Euro. George Soros argues that the prices of currencies and securities in the financial market are influenced by traders’ emotions and not logical considerations. The traders influence one another, and his focus is to lead the herd of traders. George Soros became famous around the world in 1992 when he invested $10 billion on the British pound and caused a shortage in the Bank of England.
Soros has donated about $7 billion through the Open Society Foundation. The Foundation advocates for democratic and human rights. George Soros is right about his predictions on the Chinese currency and its influence on US stocks. A report by CLSA indicates that the currency could fall to as much as 25%. The decline will affect the US economy because of the significant trade volume with China. Raul Moreno, the co-founder, and CEO of iBillionaire thinks Soros is just protecting his investments.