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Eton Park Joins Soros And Paulson In Making GLD Fund's Top Stock Holding
Eton Park, the hedge fund founded and ran by Goldman's youngest partner, Eric Mindich, has just joined Paulson and Soros in making GLD his largest common stock position at $800 million (in addition to owning calls and puts on GLD for another $1.1 billion in gross notional). The fund also owns puts for almost $900 million gross in the MSCI Emerging Markets index, but without having any detail on the strike and duration, this position could be equivalent to a net notional of anything (not to mention possible arbs with non-disclosable CDS and other OTC products). Either way, as Eton Park had no GLD common holdings at March 31, it is now clear where a substantial buying interest in the ETF came from in Q2.
Elsewhere, Soros posted an update on his own holdings, which dropped by over 40%, from $8.8 billion to $5.1 billion, signifying the Hungarian manager may be getting more bearish on the economy. Further confirming his departure from stocks, aside from his top GLD position at 5.2 million shares, Soros' other key top 10 positions were convertible bond positions in Linear (3.125% 2027), Lawson (2.5% 2012), Flextronics (1% 2010), RF Micro (0.75% 2012), Epicor (2.375% 2027), RF Micro (1% 2014), Diodes (2.25% 2026), Cadence (1.375% 2011), Blackboard (1.5% 2027), JDS (1% 2026), and Ceradyne (2035), in order of size.
The problem is that now that most funds have blown their easy money on accumulating GLD stakes, any incremental purchases in GLD will likely not be as easy on the margin. And with some of the biggest hedge funds in the world having made GLD their top position, and the likelihood that at least some of them have made wrong bets in their other holdings, a potential drop in the market, which could incite a flash round of margin calls, will likely see liquidations in GLD which is now liquidity of first resort for many of the top 10 worldwide hedge funds. This indeed foots with Goldman's recent upgrade on gold (PT of $1,300), which we took very skeptically. Our concern was subsequently validated by Robbin Griffiths in the following King World News interview:
Eric King: "I wanted to ask you about gold Robbin. I know you believe that this is a secular bull market in gold. At the same time Goldman Sachs put out a bullish report as reported by ZeroHedge and from a contrarian perspective they were looking at that as quite negative. I wanted to get your comments on that."
Robbin Griffiths: "Yeah I'm absolutely with them, that's a contra-indicator. I'm personally out of my gold at the moment. I do think that the ten year secular uptrend is still in place and it will eventually go to at least two and a half thousand, probably more than that. That's simply the old all-time high adjusted for inflation...And I just think it's one of the assets that people have profits on, so as the equities melt down, people realize they need cash, they will sell whatever they've got profits on and that will include gold."
We see gold going much higher in the long run. That's strategy. The tactics, however, may not be quite as simplistic as there are far too many variables suddenly involved to make a smooth prediction on how one gets from point A to point B. To quote Art Cashin: stay nimble.
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If either of these heavies demanded physical from GLD as large holders have the right to do, we would soon see whether there is any gold in them thar vaults.
Maybe that's the plan. It wouldn't be the first time Soros broke the bank.
Hmm, you mean maybe Soros would profit in other of his investments if GLD crashed and physical gold pricerockets, more than he would lose in his GLD investment, if he uses his weight to force a default? Didn't Soros recently oad up with tons of physical? If this is the case then why would he legitimately buy into GLD? Surely he knows it's a fraud?
Seems to me there might be two scenarios at work here:
1. GLD finds its rightful value (pseudo zero) considering actual metal backing all the shares may indeed be unequal (less gold for delivery than shares outstanding of course)
--AND / OR--
2. GLD needs more money to cover a possible continued fraud and, like Buffett buying paper junk even he said was "weapons of mass financial destruction", as Soros & Cie have been told by the Power That Be to pump a specific item within the market (for whatever purpose that helps to cover).
If Soros is filling up vaults with actual gold, then pumping up GLD short term makes sense. It keeps paper gold idea floating around until GLD starts falling, he bails out very publicly denouncing the GLD fraud, paper gold goes to zero--and his stockpile of actual gold does the moon-shot.
The prospectus provides for loopholes that allow for a substitute to be delivered.
Waht these guys could do, is all dump GLD simutaneously, combined = $5 Billion.
Is this enough to move the market down considerably enough and long enough to allow them to swoop in and buy physical?
Would they be able to line up enough physical at the same time as the sell there GLD?
Is any of this possible and if so worth their time?
Crowded trade, bitchezz?
It's the difference between buying wheat, and buying a piece of paper with a picture of wheat on it.
Paper gold might be getting crowded, but physical gold sure isn't.
"Crowded trade, bitchezz?"
If you trade and all your concerned about is in dollar denominations...yes.
If your aim is only the accumulation of physical...no.
Gold/Silver ratio now is 66:1...hold till over 80 (if it happens) then trade gold for silver. Under 40:1 it flips. I'm only concerned with aquisition of metal...not it's price in a devalued fiat currency. Hope this helps.
Regards.
hope its not Ethiopian gold dust in there
Good thing I'm hedging with my trusty BreX investments.
People might want to find out who's family the Grifflths are connected to in past dealings with Gold in general.
Why would an LP be interested in paying 2/20 to own GLD, especially given the possibility it will not be able to perform in a rush to physical? Or that if the market crashes the gates will go up on these HF's? This is one of those trades that does not sustain scrutiny...
LPs are the dumbest money on the planet. GPs don't care, why should they? It not their money. Blow up, close, start new fund, repeat.
Wise words
First thought on seeing the headline:
Houston, I smell a problem.
Absolutely, another screwing of the fund holder job. 2/20 to hold GLD. For a 2/20 cost structure, those folk should be taking in LBMA good delivery physical at a recognized obscure (Halifax, etc...not NYC, London, etc.) secure LBMA recognized facility only after having assayed every last single bar.
Further proof the smart money knows their GLD investment will be honored.
If they got out of GLD it would be an indictment of the system which made these assholes so rich. Why would the destroy the temple that made them so rich?
The system is rigged end of story:
https://marketforceanalysis.com/articles/latest_article_081310.html
The only question is when it will blow up. No doubt the Comex and GLD would get bailed out with fiat money. Maybe this is why Soros and Paulsen don't care.
GLD is FAUX gold and PRO fractional-reserve gold. I don't consider this a "gold investment".
Exactly. If you don't have it in your hand...
Reminds me of the same nonsense during the Oil run up. Something bad is going to happen to this ETF, just know it from the pit of my guts.
will it mean cheap physical for the little people?
Bwa ha ha ha haaaaa.
Love your blog, fwiw.
these two are Illuminasts...need to say no more...GLD is as Ponzi as you get..
These players are very nimble and doing what they are saying may be true. However, they will never reveal when they start selling into the rally.
Last week I posted my prediction on the gold price after GS upgraded gold.
Click here #516888
That prediction materialized and I sold 50% Yesterday and 50% today from my paper holdings. Gold may still go up more, but GS can not be trusted.
Back in May, I predicted that GS will get away with a slap in the wrist and will make money, the way I predicted.
Click here. #338683
I now predict that GLD will still go up some but the big boys will sell into the rally and everyone else will bite the dust by option or future expiration date. Those will be the hidden puts.
Impressive, Oracle. Now tell me who is going to win the 4th race at Santa Anita tomorrow.
Fat Fingers Mcgee
If there is a race tomorrow the winner will be a horse
Holy Macaroni! This guy got two trades right!
Are you a time-traveler?
That's a pretty easy prediction. When you see paulson and the slimeballs climbing into the clown car you know it's going to go full barnum and baily.
This doesn't tell you much other than there's some serious money in play. Just can't tell if it's bullish, neutral or bearish. No?
Just can't tell if it's bullish, neutral or bearish.
Or crooked?
So, has anyone found Soros' hedge/short/CDS against GLD?
When you do, run for the door, cause when George is ready, he's going to crash it.
I'm sorry but isn't owning paper gold as a hedge against fiat currency a bit of a paradox?
I see no reason why GLD could not plunge due to counterparty risk even as physical gold skies as a matter of fact you could make a case for GLD losing most of it's value. I am not saying that GLD would not rise with gold temporarily and correlate near perfectly but there is a reason PHYS would hold a premium. As a matter of fact the collapse of GLD can occur simultaneously as physical gold goes parabolic because of the realization that GLD and silver paper stocks are mere illusions meant to tame the physical pricing. Once again this all is dependent upon an event or events that would cause a mass panic into gold physical which would make any paper derivatives moot because they are backed by nothing. So whenever a goldbug makes an argument in favor of gold I would have to assume the majority of the move is dependent upon repudiation of even paper holdings.
This first comment has it right. At a certain amount of shares you have the right to your physical gold. All the lemmings with 100 shares will be left holding the bag. As this is either how we are paying China back or our government is taking the rest.
GLD is not for the small investor.
Gold is going to 12000 minimum...probably 30000-75000
America you have been duped.....They have all the gold....Wait till you see gas in the next year....oh thats right the Chevy volt is coming to save america.....good night america
12,000 minimum? Surely you jest. Your valuations are too low to be considered a serious post. Remember, every gold bug here (youre not a gold bug your multiple is too modest) expects gold to be 100,000/oz. So please re-adjust your spreadsheet and get back to us.
http://snipurl.com/10p035
Hinde Capital's attack on gold ETF makes Financial Timeshttp://www.gata.org/node/8922
If you've bought gold (Au), you know it's denser than lead (Pb) by a long shot.
These pussies and their paper games just mystify me.
I Love Gold
+1 for the Gold iPhone :)
Gold's correction is done, and a tiny one for that.
The argument for liquidity is valid if and only if there's a major crash and unwinding of everything, something in the same order of magnitude as Lehman. But major crash needs major triggers which, while always possible without warning, seems "unlikely" at the moment IMO. And I simply don't see a Lehman II happening any time soon.
The only underlying reason capable of driving a Lehman II is USD losing reserve status (ok, if/when it happens, it'd be much worse). While I fully agree the possibility is very real, I just don't see it coming in the short term, at least not before another round (maybe two) of full-blown QE.
On a side note, the great debate of indeflation IMO may turn out to be moot. The most likely outcome is the lost decade. There will be small crashes and dead-cat bounces, but overall just a slow grinding down. I know, not nearly as exciting as big crashes. Sorry.
Does anyone else here keep up w/Eric deCarbonnel? He's written some dynamite shit in the last 2 years, IMO, and yet the econ blog 'circuit," for lack of a better term, seems to ignore him.
That's not to say he's unknown. Mish sure as shit knows who he is, he and EdC got into once over hyperinflation in the comments.
After watching his scarier-than-hell videos on youtube (search on Cedec0), I wondered how a 30 year-old knew so much about banking. Then, last summer, EdC just casually reveals that he's the great grandson of Frank Vanderlip.
Now he's got a new piece up, a big one, but he wants 50 bucks for it. Wtf? I'll probably cough up. He's not asking for metal.
Just wondering if anyone else followed this cat...
If the dollar's debased and inflated,
Then the gold bugs appear to have made it;
But, if like Japan,
Our "lost decade's" at hand,
Then the gilded is quite overrated.
http://www.limericksecon.com
Einhorn got the hell out of GLD a long time ago. He is in his prime, Soros is not.
You know, I am re-thinking Jeff Gundlach’s comment about “counter-party risk” regarding US Treasuries and think it applies to GLD also, perhaps moreso!
Couldn't this simply simply be a gold share class (just like a currency hedge) rather than a directional holding?
I bet Soros et al are into GLD to have access to another avenue of physical. As mentioned, the big boys can demand delivery. so no doubt when they see the moment they will demand delivery, kill GLD and the other ETF's, sit on their newly delivered and watch as the ripples turn to tsunamis as physical skyrockets...hence that bubble comment he made a while back...He obviously thinks it is going to go LARGE or he would not have used "ultimate".
My bet is that this will be Soros' retirement move...he is stocking up on paper gold, he is also trying to buy other physical, then when ready, cash out all paper gold to help crash the gold system so your actual physical rockets in price and then tell everyone you told them it was "the ultimate bubble" , as it chchings past $120,000 an ounce and he/we make trillions...!!!!
Bring it on Georgey boy!!!! (but can you wait another month or two whilst us in the know stock up on Vrenelis and other physical gold!!)
If you are in any doubt check FOFOA'S last post about what physical is REALLY worth!!
http://fofoa.blogspot.com/2010/08/relativity-what-is-physical-gold-reall...
Cheers!
A big GOLD star for the Fredster on this one.
The pins have nearly all been kicked from beneath the GLD and Comex frauds. Soros and pals have been grabbing up all the real gold they can score.
Now it's time to come in and explode the balloon. When it pops, the price of gold is going up faster than a lonely sailor on Viagra.
Interesting post, Fred. You could be right or maybe they just see GLD as a paper profit vehicle. Either way could benefit the little guy.
If funds suddenly dump GLD it could drive the paper price of gold too low. What if you can't buy physical at the COMEX price? Imagine if this decoupled physical and paper. It would be the snap that breaks COMEX. Interesting times.
Anyone else watch the 5 minute chart of Gold starting at 10:45 AM London time. Its great daily entertainment. The Goons slam the price every few minutes and it pops right back. Slam it again - doin my best boss. POP.
Great Fun.
As far as GLD. ts possible the big hedgies see all the possible issues. However if there is a big blowup and the gols in there is umm somewhat lacking - maybe it gives the big hedgies a seat at the head of the table during the discussions on who owns the central banks.
Look - lets assume GLD actually has a whole bunch of gold plated tunfgsten . OK? Now if a group of hedgies own GLD - and collectively decide to not publicize that inconvenient fact - who's to know right? The govts and central banks wont blow the whistle on them because -umm - well .. the govts and central banks would then be implicated in - what in polite company goes by the term "fraud".
So everyone decides to cooperate and the world deems the Hedgie Group as the owners of the largest stash of actual "Money" in the world. That might be worth something - eh?
By the way I own 50 Tons of Gold. Hidden. Cant see it or audit it. But trust me I got it. Now - I demand some RESPECT goddamit!!! hahahahahah
When the "lawmakers" and "enforcers" are discovered by a few to have been involved in a gigantic fraud- what is the smart thing to do? Do you challenge them ? Take them on? Naw- they'd destroy you.
No - the way you deal with this is the way you deal with Vito Corleone if you found out he's gay. You extrort him - very carefully- very politely- being very careful that no face is lost in the process.
maybe thats what the hedgies are up to with GLD.
Vito Corleone gay? Ridiculous.
Extorting Vito because Fredo smokes the pipe? Totally believable.
So - maybe Hedgie Number 1 gets to negotiate himself a job as the head of some important central bank? Or important high level govt position? In exchange for - you know - his erm .. "cooperation". For not demanding Physical and stirring up a shit storm- ya know?
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