Billionaire Stanley Druckenmiller Loads Up On Gold, Makes It His Largest Position For First Time Ever

Tyler Durden's picture

Over the past several years, one of the biggest critics of the Fed's ruinous monetary policy has been billionaire investor Stanley Druckenmiller, who in 2010 announced he would be shutting down his legendary Duquesne Capital Management, and convert it to a family office. Yet, despite his constant drumbeat of warnings that the period of ZIRP/QE/NIPR will end in tears, he had yet to put money where his mouth was (aside for a brief period in mid-2012 when we bought a lot of GLD calls, only to unwind the almost instantly).

This ended on June 30, when following Friday's filing by the Duquesne Family Office, we learned that as of the end of Q2, the largest position for Stanley Druckenmiller was none other than gold, following the purchase of 2.9 million shares of the GLD ETF shares. In other words, as of this moment, gold amount to over 20% of Druckenmiller's total holdings.

In a world in which starved for ideas alpha-chasers do anything and everything that billionaires report they did a month and a half ago, we wonder if this marks the end of the relentless liquidation in the GLD, which recently hit a multi-year low, as a result driving the price of paper gold to multi-year lows even as physical demand has approached record levels.

So with Druckenmiller now back and strapped in for the ride, we wonder which other prominent investor will promptly follow?

h/t Shane Obata

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CitizenPete's picture

He loaded up on paper.  Not gold. 

USisCorrupt's picture

So TRUE, he holds ONLY a Promise to Gold, GOOD LUCK SUCKER !

Manthong's picture

“the purchase of 2.9 million shares of the GLD ETF shares. In other words, as of this moment, gold amount to over 20% of Druckenmiller's total holdings.”

 

Correction: “as of this moment, fractional digital wood pulp amounts to over 20% of Druckenmiller's total holdings.”

 

Wary Hanger's picture

< Yellen printing machine + infinite naked paper shorts

< DruNkenmiller

Soul Glow's picture

Yellen's printing machine is running on fumes.  Printing funny money only works for so long.  A reversion to the mean will happen when the dollar's diminishing returns come home to roost.

BaBaBouy's picture

Loaded Up On GOLD Paper ETF ??????

Come On Guys, We All Know That When The HAMMER HITS, All That "GOLD Paper" Will Easily Be Converted Into Physical, I Mean, Do We Not Trust The FED....

Soul Glow's picture

The SPDR Gold Trust is owned by its five largest shareholders.  The agreement in the trust is that only the five largest shareholders are paid out in physical.  Everyone else gets a paper claim.

The five largest shareholders are JPM, GS, BAC, WFC, and MS.

FL_Conservative's picture

Come on, everyone.  It's the thought that counts! /s

Pool Shark's picture

 

 

He should do okay;... as long as Gartman doesn't go long...

 

Santini Air's picture

People like this Drunkenmiller ho could not even buh Bitcoin if fhey wanted to.  It would create a legal nightmare for their accountants, and they would make someone's "to whack" list pretty fast.

38BWD22's picture

 

 

Good readin' on Bitcoin and financial topics in general (some of you might be surprised) can be found at:

http://bitcointalk.org

Soul Glow's picture

Bitcoin is just another shitty fiat currency.

Santini Air's picture

For the nth time Bitcoin is NOT a fiat currency!!

If a government forced you to use gold in transactions, that would make gold A FIAT CURRENCY (in that country)!

Santini Air's picture

Gotta love how the derps here pretend to be some type of "alternative" to the current system.... don't even understand basic terminology.

BarkingCat's picture

Sorry, but you are the one that does not understand terminology.

Fiat - an official order given by someone who has power

Fiat Money - money (as paper currency) not convertible into coin or specie of equivalent value

In reality there is also a difference between currency and money.

Gold is considered a specie, so even if an order was given to use it, it would still not be fiat money.

Bitcoin is a virtual currency. Only advantage it has, over government issued paper fiat currencies, is that there is a theoretical limit of how much of it can be created. The downside is that there is nothing to prevent competition from anothe virtual currency.
It is about as useful as Second Life money..

Santini Air's picture

YES!  FIAT - "by order of" (or see legal tender)

NOT the ZH definition of "FIAT" ~ "Something we do not understand and do not like"

And BTC does not have a "theoretical" limit.  It has an actual, defined limit in the objective reality we all share. 

Pickleton's picture

Oh ok. So without the govt force, then it's just fiat bullshit.  LOL!

messymerry's picture

MIght as well keep the chain going here:  Look you guys, Drunkenmiller's not stupid.  He's expecting a pop at which time he will jump right back out of GLD.  I expect he's accumulating physical on the side and doesn't want anyone to know about that. 

;-D

giggler321's picture

Well having an ETF lets you click the sell button just when you want to.  Physical no matter if you could sell it to a dealer or high street jeweler it's a pain the arse, leaves paper trail and may (certainly in UK) involve various proofs, id's, bank transfers (not cash) etc.  If you're a trader, ETF is your game and I'd bet most of these pilfer's on ZH buy ETF paper gold, selling on the up after pimping physical ownership to smocks.

Schaublin's picture

Wrong, wrong and wrong. Jewelery Quarter in Birmingham and also in London - walk in, ask their buy/sell price then buy or sell for cash and walk out. Why are you trying to misinform the ZH readers who are mostly US based?

chairman of the bored's picture

You must have missed it Shark,Fartman went long gold on MSNBC middle of last week...

gmrpeabody's picture

Theoretically..., he could take physical possession if he chose. It's just the rest of us sheep that can't.

SWRichmond's picture

If I understand the rules correctly, he would need to become an "authorized Participant" in order to be able to redeem "baskets" of GLD into physical.  GLD was created as a gold pool to facilitate the member banks' manipulation of the market, with the assistance of suckers....er, investors.  Authorized Participants can redeem their shares for physical when they need it in order, say, to keep COMEX from declaring "force".  The money to buy actual gold is provided by the lumpenproletariat (how do you say "muppets" in German?).

Excursionist's picture

FCX, EOG, NEM and AA could be causing Stan a world hurt, unless he got into the names just recently (in which case the positioning would be brilliant IMHO).

And ladies... ease up on Stan's GLD holding.

He doesn't have to convert it to physical to derive value from the position.  All he has to do is have GLD be equal to more and more of this funny money called the 'greenback'.

He can convert GLD into more greenbacks, with which he can purchase you via the time you willingly give up for this funny money when employed.

Trey Parker and Matt Stone should cobble together a South Park episode about the "smug" among gold bugs...

Soul Glow's picture

Fuck mining companies.  They're corporate whores like the rest of them.  And for trading the shares in for greenbacks, well, the whole point of holding physical is to not be relient on a promise to pay, which is all a dollar is.

PT's picture

I was just gonna ask, "So when's he taking delivery?"

Does he really believe that being paid out will be better than taking delivery?
Why does it feel like I've only read half a story here?

Captain Debtcrash's picture

For him it likely a trade not an investment, security or insurance, as it is for many of us. 

This just in's picture

To take delivery from GLD, he would need 100,000 shares, or a little more than $10.5 million worth.  100,000 shares is the size of a "basket," the redeemable quantity.

TheEndIsNear's picture

Druckenmiller bought 2.9 million shares of GLD ETF.  That's quite enough to request physical delivery -- if there were enough physical in the GLD ETF fund, which there isn't or won't be if/when he were to request delivery.

 

Tall Tom's picture

Soon to be a millionaire instead of a billionaire.

 

The price of Gold on the GLD will decline to ZERO. That is what an unenforcable contract is worth...NOTHING.

 

Force majuere sucker.

TheRideNeverEnds's picture

He must know this and I am sure he is permissioned for futures.  Wonder why he didn't go directly to the gold futures?   They settle to physical metal if that's what you want and they allow for more leverage if you are just holding the position and don't want to deal with the physical stuff plus I feel there is less counter party risk in the future vs an ETF for sure.  

There is really no good reason that I can think of to buy GLD over the future if you can trade the future so maybe its against his charter? (CME website GC contract info)

38BWD22's picture

 

 

What Stan does not appear to appreciate is that paper gold <> physical gold.  This would become a problem if FOFOA's predictions turn out to be even remotely correct.

$55,000 physical gold <> $400 paper gold

Perimetr's picture

Stanley Dumbshitmiller just handed his money over to the crooks who will first use it to suppress gold pricces

 

and then steal it when the COMEX and GLD go BOOM!!

PT's picture

He gets fiat or rock, whatever is worth the least at the time.  Errr, he gets fiat.

Is he really that dumb?  What's the real story here?

Oh regional Indian's picture

Precisely, as stated above....he bought paper, his largest position is golden paper.

In fact, given the sleight of hand that is the FED and Fiat, paper gold is the untimate sleight of hand.

Hair today, gone tomorrow....the true story of gold is probably beyond bizarre....

https://aadivaahan.wordpress.com/2012/01/19/shattering-midass-curse-gold...

keremetski's picture

Next idiot. Paulson is previous one. They all be fleeced. Must be PhD to enter paper gold or it is latest desperate Cartel attempt to divert puplic attention from physical "pet rocks". LOL

Bokkenrijder's picture

So it's basically nothing more than a short term trade.

The only real suckers here are the ZH-ers who get a hard on from anything that might be bullish for gold, of course after having missed an epic stock market rally and after getting clobbered over the last 3 years on precious metals.

Bendromeda Strain's picture

Maybe if you pull your head out of your ass and actually read the comments...

Dame Ednas Possum's picture

...and then please FUCK OFF you nob jockey.

Question to believers in free gold:

Could Stanley request delivery of physical from this ETF position and cause the bullion bank to default?

Spigot's picture

Dame, its pretty obvious that ol' Dreck is not interested in physical. He sees this as a trading opportunity, since that is what the ETFs are for. So, unless he is playing a straddle, his opinion is that gold price will rise from here. He will sell when his target prices are met.

With regard to you question, if any ETF holder stands for delivery there will be huge resistance and delays to the request, possibly months and months of delays. Any request for delivery which could be construed as "disruptive" by the managers of the fund, can simply be denied.

If Dreck wanted physical gold in quantity he'd do better to simply buy a gold mine or negotiate a deal with a mine such that his "loans" are paid back in physical. His current ETF position is close to a third of a billion, so he should have no problem finding a productive venture to siphon physical off of the stream.

Dame Ednas Possum's picture

Hi Spig - Thanks for taking the time to provide this clear and useful explanation.

I'm a barbarous phyzz man through and through. I've not delved into the machinations of GLD/ SLV ETFs simply as it just feels ethically wrong.

Thanks too Mr. Peabody

38BWD22's picture

 

 

My understanding is that GLD and COMEX can deliver paper in extremis.  Not gold, but they'll give you a check!  For the paper gold price...

Spigot's picture

Me too on the phyz. But this one position is quite interesting in terms of a relatively radical departure from prior holdings and shows some light on the inner thunking of these types, and their assessment of where there will be positive price action.

gmrpeabody's picture

Yes..., he can ask. No, they may not have to default.

eddiebe's picture

Nob jockey? I've never heard that one before, I love it!  Good one!

Dame Ednas Possum's picture

Australians...masters at getting our mouth around cunning linguistics.