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George Soros boosts gold ETF stake despite 'ultimate bubble' claim
Source: BI-ME , Author: BI-ME staff
Posted: Wed February 17, 2010 10:58 pm
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INTERNATIONAl.  Renowned billionaire financier George Soros more than doubled his fund's holding in the biggest gold exchange-traded fund (GLD) in the fourth quarter, according to a filing with the US Securities and Exchange Commission.

Soros Fund Management LLC held nearly 6.2 million shares of GLD valued at about US$663 million as of December 31, adding 3.728 million shares valued at US$421 million That’s up from roughly 2.5 million shares at the end September.

Soros was one of the latest investor to enter the gold bubble debate in January, warning that with interest rates low around the world, policymakers are risking generating new bubbles which could cause crashes in the future.

Speaking last month to The Daily Telegraph, on the fringe of the World Economic Forum, Soros said: "When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment".

The ultimate asset bubble is gold," he added.

Investors are piling into the metal amid fears both of potential inflation and fading faith about the stability of previously-assumed safe assets such as government debt, Soros told the newspaper.

GLD has managed a year-to-date gain of about 2% through Tuesday’s close, according to FactSet Research.

The ETF is down about 8% from its all-time high set in early December 2009 and holds more than 1,000 metric tons of gold, and the assets of just under US$40 billion.

The gold fund had net outflows of US$776 million in January, according to the National Stock Exchange.

"Still, it is the second-largest ETF and has been gaining ground on SPDR S&P 500 ETF (SPY), which has US$65.3 billion," wrote John Spence in his MarketWatch Blog.

"Some have speculated that the SPY outflows show investors are nervous about stocks after the big rally that kicked off in March, while economic and credit problems linger".

"SPY remains the clear ETF leader in assets, but it would be big news indeed if it was overtaken by GLD," Spencer added.

SEC filings are done quarterly, with a 45-day lag, so Soros could have sold some or all of the position since then.

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MIDDLE EAST BUSINESS COMMENT & ANALYSIS

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