Soros Reports Over $239mm In Gold Positions, Buys $25mm In Call Options On Juniors

In a 13-F release issued by the SEC after market close yesterday, it was reported that Soros Fund Management LLC, founded and chaired by billionaire financier George Soros, significantly increased its gold related holdingsmost notably, through the purchase of over $25 million dollars worth of call options on the GDXJ Junior Gold Miners index.

This stunning move by one of the world’s top performing hedge funds, suggests a powerful surge ahead for gold equities. It should be noted, that in the forty years prior to 2010, the Soros Fund averaged a 20% annual rate of return.

A breakdown of the 13-F data indicates that during the first quarter, the Soros Fund:

1. Maintained a $32mm stake in individual miners.

2. Added a staggering 1.1 million shares of GDX to its holdings, at a reported price of $37.84 per shareTotal Soros Fund GDX holdings now stand at 2.666 million shares, at a reported value of over$100,000,000.

3. Reduced it’s long position in the GDXJ Junior Miners Index fund, from1.998 million shares to 1.2 million shares—only to turn around, and purchase 1.510 million call options on the same index, at a reported value of $25,200,000. 

4. Lastly, the fund reduced its stake in the GLD gold fund from 600k shares to 530k shares, for a total reported value of $82,000,000.

In summary, as of May 15th, 2013, Soros Fund Management LLCreported owning over $239.2 million in gold related positioning, with over $25 million dedicated to call options on junior mining stocks.

Bottom Line: While debate continues as to how far gold and gold equities will continue to drop, the Soros Fund is lightening up on physical gold in exchange for gold mining equities and call options on the extremely volatile junior mining stocks. 

There couldn’t be any stronger indication by the fund as to its beliefs about the timing of this bottom (outside of selling everything and going all-in on call options of course). 

It remains to be seen whether these positions will end up in the green or not, but with a forty year track record of 20% annual returns, I’ll be betting on the Soros Fund.