In 2011, the price of an ounce of gold was $1,900 an ounce. Then gold prices started to drop, and by 2015 gold was trading for less than $1,100 an ounce. Then something interesting happened. In the first quarter of 2016 gold prices increased by 20 percent and a gold fever developed among investors. Investors like the famous billionaire George Soros and Paul Singer began buying gold. Countries started buying more gold, and now investors around the world are bitten by the gold bug, and it looks like this type of yellow fever could send gold prices past $1,900 an ounce this year. Some investors believe gold will be trading for more than $2,000 an ounce by the end of 2016.
There are several reasons for the resurgence of gold. Billionaire hedge fund investor George Soros thinks that there is a global recession brewing, and it’s about to boil over in 2016. Soros has not been trading as much as he has in the past. But according to an article posted by the Wall Street Journal, Soros is back in action again, and his main investment target is gold. Soros is not dumping all his stocks and replacing them with gold, but his hedge fund, the Soros Management Fund, sold more than 37 percent of its stock holding recently and bought 19 million shares of the giant precious metal miner Barrick Gold. Barrick Gold’s stock gained 44 percent after the Soros investment.
When George Soros makes a move in the investment market, the industry usually follows him. Soros is best known for his ballsy 1992 bet that the UK would have to devalue the pound sterling. The Soros fund made more than $7 billion when the pound was devalued, and Soros picked up a cool $1.4 billion in commissions just on that trade. That’s how Soros rolls. He is not afraid to bet big and then win big. Thanks to his ability to see into the economic future of companies and countries around the world Soros in now worth more than $24 billion, and his family hedge fund manages more than $30 billion in assets. If his theory about gold is right, Soros could add billions more to his net worth in a matter of months not years.
The threat of a global recession is not new news. Soros has been talking about a devastating world recession for the last four years. China is the main culprit in instigating this new economic meltdown. But Europe is playing a role in a worldwide economic downturn as well. Stock markets around the world are not producing what investors expect. Corporate profits continue to decline, and the Federal Reserve is holding interest rates where they are. The signs of a major economic slump are everywhere, and owning gold is the smart investment when those signs appear.
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