Is This Keeping George Soros Up at Night?
A self-styled philanthropist, billionaire, and disruptor of legitimately elected governments, George Soros has returned to the trading game after having taken a long break. George Soros, who enjoys spreading unnecessary market turmoil and unhappiness in markets and politics, has decided that the world needs some more economic collapse stories.
Hint: It may be time to get into gold soon, because even if Soros is wrong on economic collapse, he has the financial firepower to make it happen if he needs it.
He’s happy to oblige and he’s coming in like the Russian bear that he dislikes so much. As an image, picture the swift Russian invasion of Georgia in 2008 in the wake of the Rose Revolution, funded in part through Soros’ Open Society Institute (OSI). Indeed, treat the very name “Soros” as a warning. Something bad—political or financial—is about to happen somewhere that will make the markets crash. After all, Soros loves economic collapse narratives; they are his favorite.
George Soros, who once made more than a billion pounds (a lot of money then) betting against the GBP and “breaking” the Bank of England, conceded that, being a creature of pure greed, his actions had benefited no one but himself. (Source: “Billionaire who broke the Bank of England,” The Telegraph, September 13, 2002.)
Now, it seems he’s getting ready to break something else and it could affect you.
Shorting is the Soros investing strategy par excellence. George Soros thrives on weaknesses, which he has an uncanny ability to recognize before anyone else. If he’s getting back in the trading game, be afraid. He has noticed a flaw in the global horizon and is betting on economic collapse. Because he has seen this before anyone else, Soros is confident he can profit handsomely from it.
George Soros told the Wall Street Journal, which recently interviewed him, that he plans to trade from his Soros Management LLC’s $30.0-billion fund, doubling his bets against the S&P 500. Soros has been buying gold. Not surprisingly, the yellow metal has gained some 19% this year. Soros’ hedge fund also bought gold and securities of mining groups anticipating weakness in various markets, one of which is China. (Source: “A Bearish George Soros Is Trading Again,” The Wall Street Journal, June 8, 2016.)
So, George Soros is buying put options against the S&P 500, expecting to generate profits in light of the problems he glimpsed. Nobody knows when Soros actually bought those options, but as the S&P 500 is up by three percent, Soros is probably trading at a loss…for now.
In 2007–2008, Soros smelled trouble in real estate, when the sector was reaching peak valuations and when few others sensed any problems. He then made billions in profits for himself. Soros typically trades—or enjoys trading—amid hysteria.
His outlook is grimmer than that of others on Wall Street. Soros says that China continues to suffer a flight of capital and that its foreign exchange reserves are running out. (Source: “Now Betting on China’s Collapse: George Soros,” Gawker, June 9, 2016.) China’s popular People’s Daily accused Soros of speculating on the yuan, the Chinese currency, last January. (Source: “Op-ed: Think twice before declaring war on Chinese currency,” People’s Daily, January 27, 2016.)
George Soros also sees political leadership problems worldwide that will compromise the markets and the ability of regulators to manage the markets. (He has also been raising funds to support the now official Democratic candidate for the presidency of the United States, Hillary Rodham Clinton.) Soros also fears the rise of a deflationary spiral that could affect the United States and global economy in general.
Indeed, Soros, has not ruled out a collapse of the European Union due to the region’s migrant crisis, the continuing challenges coming from Greece, and the strong Brexit potential.
In fact, George Soros’ Brexit fears are a hint. He may be betting in favor of Britain leaving the eurozone at the June 23 referendum, which is widely expected to bring down the GBP to USD exchange and also weaken the euro.
You have been forewarned. When George Soros senses a weakness, he bites like a shark on a steak.