June 11, 2011
George Soros has broken central banks, built a billion
dollar fortune, and awarded himself fans around the world who adore his
no-nonsense speculative approach. While he was once a kingpin of the financial
markets, he took a backseat years ago to step away from his Quantum fund, only
to return to an audience that has long gone.
Ordinarily, a man of his influence would have the power
to sculpt the financial markets as he saw fit. Empowered with billions of
dollars, he could find an emerging trade, announce his stake, and allow the
financial followers to make his vision a reality. This had been the case with
many of his investments; they were necessarily part of the playground that is
social proof.
But this time the markets are different – Soros doesn’t
matter.
If it were the year 2000, Soros sale of his paper gold
positions would have sent the market into a tailspin. Gold would have dropped
precipitously as investors, in for the long haul, began to question whether or
not he had a leg-up on their investment thesis. However, when Soros exited his
gold position just weeks ago, no one listened.
Instead, gold is off only 2% in the wake of his exit.
In culling back his exposure, the market dipped, only to find enough buyers and
believers who are in it for the long haul. We questioned whether or not Soros
had been playing the hand of the manipulators, who should value his influence in
shaping market dynamics. He may have played their hand, but individual
investors are calling his bluff.
The Biggest Bubble: Optimism
While it may be hard to find an optimist in a world
filled with uncertainty, they do certainly exist all around us. In the
mainstream press, politicians voice solutions to the United States’ debt woes
with grand plans so great they will take a decade to conquer. Talking heads eat
up the plans, as if they had already been executed.
But in government, there is no execution. There are
only idealists. There are those who forecast changes in government so large
that it should only be months before the American economy experiences a great
rebound. These idealists are the only optimists left.
On the other hand, the realists—the pessimists to
traditional thought—are the only traders willing to stake their bets in the
future. They’re doing the executing as the idealists throw up grand plan after
grand plan.
In the metals markets, it is he who puts his money
where his mouth is that has real influence in the markets. Soros had no money
where his mouth was—he had only paper bets in a fictitious market and the
certainty that he could make a minor profit in a short-term bull run.
It should be come as no surprise that while the stock,
bond, and currency markets may bow down to Soros’ wagers, metal investors aren’t
so willing. The widespread rejection of Soros’ brand should be social proof to
the rest of us that the metals markets dominated by Wall Street bankers are
still financed by every day, average investors who are in metals to own metals,
not to own more dollars and cents.
This is only the beginning of a revolution in modern
finance—the individuals still call the shots.
Dr. Jeff Lewis
No comments:
Post a Comment