George Soros Sees Economic Crisis Coming
George Soros is best known for “breaking the Bank of England” but now he’s betting on a U.S. economic crisis. Wall Street and its mouthpieces in the financial media don’t want to talk about it, but another stock market crash is clearly on the horizon.
George Soros is not swayed by the fluffy optimism surrounding recent data points, nor is he blinded by his Democrat friends telling him Obama’s economy is working.
His politics don’t infect his skill at making boatloads of cash. The guy literally made $1.0 billion ($1.7 billion by today’s standards) when he wagered against the British pound back in 1992. It was one of the best trades of all time.
What George Soros understood is the difference between reality and the stock market. They can drift apart from each other, leaving room for investors to bet on a correction. That’s why Soros is shifting his holdings to profit off a U.S. economic crisis.
The billionaire doubled his “put” options for exchange-traded funds (ETFs) that track the S&P 500. If another financial crisis hits and the U.S. stock market crashes, he’ll make a fortune. George Soros also built up a pretty strong position on gold. (Source: “Soros Increases Bet Against the S&P 500,” The Wall Street Journal, May 16, 2016.)
His fund bought 19 million shares of Barrick Gold Corp., as well as call options for one million shares in a gold-backed ETF. Shares of Barrick Gold are up 134% this year.
There’s only one reason to buy gold while going short on the S&P.
Soros thinks the stock market crash will have lasting effects. Gold prices usually skyrocket after currencies are weighed down by a recession, so he must envision a full-blown financial crisis or an economic collapse.
In fact, he’s been warning that 2008 can happen again, but few are willing to listen. That is the trouble with investing…no one wants to believe the worst is possible.
Although some economists like to believe people are rational all the time, stock market bubbles prove this isn’t true. Investors get swept up in unwarranted enthusiasm, leading them to make irrational decisions.
The sum of those mistakes is what leads to a bubble and, ultimately, an economic crisis. George Soros has been around long enough to know this is true. Even though he’ll keep fundraising for the Democrats, his investments show he doesn’t trust the Obama economy.