Jim,

Here are my comments posted to the Wall St. Journal’s story on Soros’ remarks on gold:

2:46 pm February 17, 2010
hkm wrote:
You misinterpret Mr. Soros’ remarks regarding gold. He meant it is the ultimate asset bubble in the proper sense of the meaning of the word “ultimate”:
ul⋅ti⋅mate /ˈʌltəmɪt/ –adjective 1. last; furthest or farthest; ending a process or series: the ultimate point in a journey.

He means it will be the last asset standing at the denouement of the GFC! Hence, he is a buyer.

CIGA HKM

Jim Sinclair’s Commentary

Three guess who was the gold bear at Davos.

Soros Doubles Down on Gold
CIGA Eric

George Soros’s hedge fund more than doubled its bet on the price of gold during the fourth quarter, as the firm reported total U.S.-listed equity holdings of $8.8 billion at the end of 2009, Reuters reported

Remember Soros’s Davos interview that got everyone’s knickers in a twist?

In comments delivered on the fringe of the World Economic Forum, Mr Soros said: "When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold."

Talking one’s book is standard operating procedure (SOP) in the trading world. The Chinese do it. To the dismay of many (now), Soros obviously does it. Yet, the line to dump gold during the Davos pow-wow was long and fashionable.

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NYSE Composite
CIGA Eric

The equity rally, setup and driven by the brute force of money flows, created some shock and awe yesterday. A closer inspection of the tape, however, revealed weakness. The 2/4 NYSE breakdown gap was filled on -25% contraction of total exchange volume. This large contraction in exchange volume warns of weakening upside force. What cannot break resistance with force, will eventually reverse and attempt to break support with force. This is only something to watch for nominal (U.S. dollar focused) investors/traders.

Generally, the above is nothing more than noise within a dominant negative REAL trend. The Weimar Republic history lesson reminds us that stocks can trade higher despite dire economic conditions. That is why real, not nominal, prices must be the yardstick of the true trend.

NYSE Composite Index with NYSE Volume:

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Notes From Underground: Putin the screws to the U.S.
Yra | February 16, 2010 at 9:52 pm

In a day where the risk on trades were back in vogue, we saw metals, commodities, equities and all currencies except the DOLLAR and YEN stage a rally. With Asia closed for Chinese New Year, all eyes were focused on the European debt situation and the politics that kept negotiations at center stage.

A new ECB vice-president was named, Vitor Constancio of Portugal, considered by ECB watchers to be a dove on money and credit policy as would befit a past socialist leader of the debt-stressed Portugal. Whatever happened to Magellan? It is now conjuctured that Germany will certainly get Axel Weber as the next ECB president, as it will be important to have a hard money man at the helm. The Italians still believe that Mario Draghi, their choice for the top position, still has a prayer but we would go all in on that bet. We remember the Germans being less than lukewarm on the Italians entrance into the EURO on its initial formation. (As the Greeks are taken to task on the manipulation of their books to meet the Massstricht requirements, the Italians will certainly be under the microscope.) In addition, Chancellor Merkel would be viewed as a weak leader if she failed to grab the stop ECB spot for a German. The polls recently taken in Germany on a Greek bailout have been less than supportive and the only possibility of getting voter acceptance is if Merkel brings home some political trophy.

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Jim,

I thought Soros said at Davos that Gold was the ultimate bubble.

Since he can redeem SPDR in "baskets" of 100k shares or more, we can assume he won’t be hung out to dry like the average Joe investor when delivery fails right?

Best,
CIGA Pedro

Pedro,

Yesterday the euro rallied hard against the dark side short and this morning out came the MOPE to both talk up their position and establish a legal defense.

Actually the dark side has some smart attorneys if smart is considered preventing the problem before it hits.

I can’t believe what I see as it is so degraded.

Regards,
Jim

Soros More Than Doubled Gold ETF Stake in 4th Quarter (Update1)
By Katherine Burton and Glenys Sim

Feb. 17 (Bloomberg) — Billionaire George Soros’s Soros Fund Management LLC more than doubled its holding in the biggest gold exchange-traded fund in the fourth quarter after bullion advanced 8.9 percent to a record.

The $25 billion New York-based firm became the fourth- largest holder in the SPDR Gold Trust, adding 3.728 million shares valued at $421 million, according to a filing with the U.S. Securities and Exchange Commission yesterday. Its investment was worth about $663 million, the fund’s largest single investment, as of Dec. 31.

Soros joined China Investment Corp. and central banks including those in China and India in acquiring gold. China Investment, the $300 billion sovereign wealth fund based in Beijing, took a 1.45 million- share stake in the SPDR Gold Trust worth $155.6 million, according to a SEC 13F filing posted on Feb. 5.

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