According to 13-F filings with the SEC, billionaire George Soros dumped nearly all his holdings in gold in the first quarter of 2011, after calling it "the ultimate bubble." However, on Wednesday gold halted three days of losses to head back up, as investors sought to buy on the dips.
Reuters reported that, while Soros had earlier been bullish on gold, in Q1 he sold nearly all of his $800 million holdings in bullion. He was followed by Eric Mindich and Paul Touradji, although John Paulson held firm and retained his $4.4 billion stake in the SPDR Gold Trust; he remains the biggest shareholder in the ETF for the quarter.
Mindich, of Eton Park Capital Management, slashed his stake in the ETF by almost half, retaining $326 million for the quarter. Touradji, of Touradji Capital Management, dropped 173,000 shares in the ETF during the quarter.
While gold prices are down almost 5% for the week, the fall of the dollar stimulated buying as gold bars and coins priced in dollars became more affordable. Afshin Nabavi, head of trading at MKS Finance, said, "The demand for physical is rather interesting again. Gold could not break $1,470 yesterday, and so a bit of short covering overnight, as well as this demand, has taken us higher."
Soros’ exit from the gold market is not surprising, considering that his worries over deflation had prompted the original investment, according to Mark Luschini, chief investment strategist at Janney Montgomery Scott in Pittsburgh. He was quoted in the report saying, "It's pretty hard to make the case for deflation right now so if that was a reason you were buying gold, you should take this signal from Soros."