Matthew Lynn's London Eye
June 6, 2011, 12:00 a.m. EDT
Soros is selling his gold — should you too?
Commentary: He thinks he timed the bubble, but real bugs know better
By Matthew Lynn
Gold bars weighing 190 grams apiece at a jewelry store in Hong Kong.
LONDON (MarketWatch) — It could be brains. Or it might be intuition. Or it could just be luck. But whatever it is, it has allowed George Soros to read the market right over a long period of time. So when an investor of such legendary ability calls the top of the greatest bull market of our times, it is no great surprise that the world sits up to listen to what the man has to say.
In the first quarter of this year, Soros dumped around $800 million of gold. Should you follow his lead?
Not this time.
Gold is getting close to bubble territory. The price has rocketed upwards, and any asset that has been on a 12-year bull run has to be getting close to its top. The peak will come one day.
And yet every bubble has a blow-out phase — a moment when the price goes through the roof. Gold hasn’t gotten there yet. The core function of the metal in the financial markets is to offer protection against inflation. And while plenty of people think spiralling prices are right ahead of us, that isn’t the consensus view yet. That means the price still has some way to go.
More: http://www.marketwatch.com/story/soros-is-selling-his-gold-should-you-too-2011-06-06?link=mw_home_kiosk
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