Do What Soros Does, Not What He Says

By Greg Hunter’s  

The Federal Reserve raised the discount rate yesterday to 3/4% from 1/2%.  That’s the interest rate the Fed charges banks in an emergency.  The Fed insisted that rates for consumers and companies would not rise.  So why did the Fed raise rates?  Some say this is an interest rate hike warning shot across the bow.  It could also be because the Fed is looking straight down a double-barreled shotgun of trouble?  In one barrel, it sees a huge amount of debt it must sell this year (as much as $5,000 billion in new and old debt).  In the other barrel, it sees rising inflation.  Could that combination blow the brains out of the economy?  Yes!

Other big financial players are seeing trouble too–that’s why they are buying gold.  John Paulson, the hedge fund manager who made billions shorting the housing sector just as the subprime mortgage crisis got underway, started a gold fund late last year.  David Einhorn, another investment guru who made a mint shorting Lehman Brothers long before it went under, bought thousands of ounces of physical gold for his fund early last year.

So, when I heard George Soros, a hedge fund manager with a net worth exceeding $9 billion, say, “The ultimate asset bubble is gold,” I took notice.  After all, Soros is the ultimate investor who almost broke the Bank of England in the early 90’s.  Soros is so respected he is invited every year to the World Economic Forum in Davos, Switzerland.  While in Davos, Soros also said, “stimulus could not be removed too early”;  otherwise, we risk a double-dip recession in the world, especially in the U.S.

When I heard that, I thought to myself, “Wouldn’t stimulus be positive for gold?”  The money all governments are using for “stimulus” is just printed out of thin air, and that is the very definition of inflation.  Inflation is gold positive.  What was Soros thinking?  Yesterday, I found out when the following story broke from Bloomberg: “Soros More Than Doubled Gold ETF Stake in 4th Quarter.”  (Click here for the complete story.)   

Gold is now the single largest investment in the multi-billion dollar fund George Soros runs.  Why was Soros trashing gold when he just bought more of the yellow metal?  I don’t know, but if you want to buy more of something, you don’t talk the price up, do you?  Soros is supposed to be one of the world’s financial leaders, so why make public statements that are the exact opposite of what he is doing?  The financial press should ask him about his conflicting utterances, but it seems hard questions are not being asked any more.  That is bad for relationships and advertising.  So, what is the moral of this story?  “Do What Soros Does, Not What He Says,” because he is worried about something, and you should be too.

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  1. Dan

    Response to the fail auction and dumping of bonds by China, more accurately it was chinas decision to raise rates.

    • Greg

      Good point. Buying Treasuries was how the Chinees kept a lid on the yuan.

      • Brad Thrasher

        Yes and oil shot up to near or over $80 USD’s as well. Did China just shoot itself in the foot?

  2. Steve

    I heard you for the second time on Coast to Coast AM. I am very happy that George decided to make you a regular on the show. You have a lot to offer to us. I book marked your site and visit it frequently. Keep up the great work!

    • Greg

      Thank you for your support!

  3. Bill

    I feel a little better today knowing that George Soros and I are thinking the same way. I just took a position today in GLD on top of my Au mining company shares.

    Thanks for the report Greg.

    • Greg

      I am not a fan of GLD. I’d rather have real ounces in my control. Thank you for your comment.

  4. Brad Thrasher

    I’m assuming your questions are rhetorical Greg. Your questions do inspire one question of the non-rhetorical variety.

    Why are we so hell bent married to a system that by its nature rewards deception?

    • Greg

      Good question!

  5. BOB

    Greg I think gold is a crazy old idea. Information is the gold of the future. Gold was only use in the old days to transfer information of another persons worth. If I have 20 tons of potatoes an want to send them to a buyer in another country he is going to want to no if I’m a honest business man. Its the information to the buyer that’s is the gold. The reason we are in trouble is because of dishonest people and buying gold won’t change that. I LIKE YOUR REPORTING

    • Greg

      You are wrong. Gold is an insurance policy that never expires. You should have 10 to 15 percent of your net worth in gold for protection. Central banks do not hold potatoes, or copper or oil in their vaults–they hold gold. The super rich are all buying gold. Please consider this because I LIKE YOU AND WANT YOU TO BE PROTECTED. Thank you for your comment.

  6. Sablefish

    “Why was Soros trashing gold when he just bought more of the yellow metal?”

    Because Soros has used his money to enter the realm of the political elites, and it is common practice amongst these people to employ the Hegelian dialectic. Part of this strategy is to own both sides of every argument, in order to control the outcome.

    Soros co-owns Cede & Co., better known as the DTC. The DTC is a branch of the privately-owned Federal Reserve and it manages the short sale certificates for the US stock markets. The DTC is also at the center of the naked short sale controversy, as it is the entity that allows the creation of stock certificates that do not exist, to allow illegal shorting of these same shares. The DTC makes a commission off each of these certificates created.

    The practical approach is to identify those who emply the Hegelian dialectic, since their words are a waste of time and are specifically designed to confuse, distort, and distract. Find other newsworthy individuals who are actually accurate, and completely ignore the remainder — especially those who serve communist fantasies dreamed by men with an extra power-thirsty chromosome (which is also their Achilles heel).

    • Greg

      Thank you for weighing in… comment again please.

      • Brad Thrasher

        G’day Sablefish,

        If, as you post, the Federal Reserve Bank is privately owned, why is it that 100% of the profit is returned to the U.S. Treasury?

        All the Best,

        • Sablefish

          Because you’re wrong about that. If you include the profit these private bankers make from the interest they charge US taxpayers, from lending our government money for war, then they are very profitable.Not to mention that they create the money they lend, out of thin air. Very profitable indeed.

          • Greg

            Ok. Thank you.

  7. mark

    You need more time on Coast.
    What is your take on gold confiscation or taxation. I hold physical but am very nervous about keeping it in the US.

    • Greg

      Hopefully C to C AM will have me back and I’ll get more time. I do not think the U.S. government will confiscate gold but things are so off the charts who knows what will happen. Thank you for your support.

      • Brad Thrasher

        Hey Greg & Mark,

        The trial balloon currently being floated is confiscation of pensions. Pensions are the new gold. Cash is King.

        All or part of 401K’s, IRA’s and other pension types will be invested in Treasury notes or bonds. If the gubbment decides to confiscate all of our pensions we will receive an IOU in the form of an annuity.

        And yes kids, they’re still looking to privatize Social Security. They want it all.

        All the Best,

        • Greg

          Your simple explanation is so true. This scares me because the government has to fund this giant debt some way. The Treasury and Fed do not want to raise intrest rates to attract bond buyers. So, the low hanging fruit is in the Money Markkets!!!

  8. peter connor

    In response to a previous post about gold being somehow “old fashioned”, I have to voice my opinion here.

    Not to detract from the person’s statement that information is the way of the future, but nothing great like this can be done without a rock-solid foundation under-pinning society.

    That person’s information utopia would be destroyed without strong copyright and patent laws for example.

    And without a stable currency, there wouldn’t be the same level of work put into something because of the lack of stability. “Why should I do this because I am not sure if the payout will be there for me”. Large projects will be most hit due to the risk factor of time creeping into the decision making process.

    Has everyone noticed the very short term thinking that has crept into society the past 40 years?

    Is it a fluke that the currency was taken off the gold standard around 40 years ago?

    To describe gold in terms of an old fashioned gold standard, does not do it justice. True times have changed and an “old school” gold standard will not work, but a hybrid system that has been talked about may capture the best of modern finance with stability of gold.

    Mark Twain said history doesn’t repeat but it often rhymes.


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