Gold’s breakout to all-time highs this past week was accompanied by a barrage of bearish commentary by a handful of establishment owned media mouthpieces. Speaking at a Thompson Reuters conference midweek, billionaire hedge fund manager George Soros reiterated his observation that gold is currently in the “ultimate bubble”. Soros, touted as the most successful hedge fund manager in history, has the financial media and associated lemmings hanging on his every word. Soros first made his first “ultimate bubble” call in financial media circles at the Davos World Economic Forum in January 2010. The quote came hot on the heels of Soros Fund Management more than doubling its stake in GLD, the gold exchange-traded fund SPDR, during the three months ending December 31, 2009. Before balking at taking on a position in the metal, savvy investors might like to question this contradiction. Did Soros change his view on gold in the weeks prior to the Davos Forum, or does he play a role in public perception management, so highly regarded by the behavioural economists which currently dominate US Government policy?

Soros’ “ultimate bubble”, appears to be a piece of well crafted sophistry, effectively granting Soros the luxury of having his cake and eating it too - the ability to bum-steer investors, without the pitfalls of putting his reputation at risk.  His comments serve the financial establishment’s now well documented agenda of scaring investors away from the gold market. Still recovering from heavy losses in the aftermath of the internet and real estate bubbles, any mention of another bubble is likely to deter investor interest.  Soros, of course, will eventually be proven to be correct in his observation, but the timing and context in which it has been spoken is premature and misleading.  Gold will be the ultimate bubble – the asset everyone piles into when real estate, stock markets, bond markets and currencies begin to crumble under the weight of increasing global indebtedness. By ultimate bubble, we understand Soros is referring to the last or final bubble which will be part and parcel in the collapse of the dollar and the current monetary system. The “ultimate bubble” is created by a move out of paper and into gold, and this hasn’t happened yet. Even Greenspan came out of the closet this past week, at the Council on Foreign Relations, with the uncharacteristic admission that "Fiat money has no place to go but gold."

“Gold is not safe”? Put your mouth where your money is Mr Soros!


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