Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Major Hedge Fund Turns to Gold

  by    0   2

Greenlight Capital reported a major increase in its exposure to gold as the hedge fund’s founder worries about the direction of the markets. In a Q3 letter to investors, David Einhorn expressed concern about geopolitical uncertainty, the rising price of oil, and inflation.

Greenlight famously shorted Lehman Brothers before its 2008 failure.

According to third-quarter 13-F filings with the Securities and Exchange Commission, Greenlight plunged $34.9 million into SPDR Gold Trust, the world’s largest gold-backed ETF. That increased the fund’s stake in the ETF by 89.2%, a record exposure to gold for Greenlight.

The hedge fund also reportedly holds a significant amount of physical gold, which is not subject to 13-F reporting.

There’s a difference between investing in gold-backed ETFs and physical gold. Learn more here.

ETFs such as SPDR are backed by physical gold held by the issuer and are traded on the market like stocks. They allow investors to play gold without having to buy full ounces of gold at the spot price. Since their purchase is just a number in a computer, they can trade their investment into another stock or cash pretty much whenever they want, even multiple times on the same day. Many speculative investors appreciate this liquidity.

There are good reasons to invest in ETFs, but they aren’t a substitute for owning physical metal. In an overall investment strategy, SchiffGold recommends buying gold bullion first.

Greenlight’s increased exposure to gold appears to be a shift into a safe haven strategy. The hedge fund also cut exposure to its two biggest holdings, homebuilder Green Brick Partners and Pennsylvania coal miner Consol Energy.

In his Q3 letter, Einhorn said investors are too complacent about geopolitical uncertainty.

The complacent investor view that geopolitics should be ignored might be true, except for the times when it isn’t. We suspect we are in one of those times. If we are right, current extreme levels of geopolitical tension will lead to lower stock prices over a timeframe that lasts more than a couple of hours.”

He also expressed concern about rising oil prices and resulting price inflation.

Higher oil prices would squeeze the consumer and likely cause a recession. The resulting inflation would also put the Federal Reserve in the uncomfortable position of having to fight rising prices at a time of rising unemployment. This leaves the market outlook very concerning.”

Greenlight Capital reported returns of 27.7% through the first nine months of 2023.

Download SchiffGold's Gold vs GLD EFT's Free Guide

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Which Central Banks Are Selling Gold?

Central bank gold buying has been a significant factor in the yellow metal’s spectacular run-up to new record highs. But with its recent small correction downward, it’s a good time to look at which central banks are selling — and why.

READ MORE →

Death of Iranian President Carries Gold, Copper to New Record Highs

Amid ongoing tension in the Middle East, Iranian President Ebrahim Raisi and the foreign minister have been confirmed dead Monday after a helicopter crash. The officials’ shocking demise casts additional investor doubt on a region already plagued by economic upheaval, with supply chain uncertainties fueling record-high metal prices this week.

READ MORE →

South Korea’s New Way to Pursue Safety

While gold bullion is most often sold in bar or 1oz coin form, the Korean retail market is benefitting from gold’s latest success with a very atypical marketing strategy. It has been traditionally thought that investors prefer larger increments of bullion because they simplify calculations and have a lower transaction cost than buying the same amount of gold in smaller increments. Demand for traditional bars and coins in South […]

READ MORE →

What Will CBDCs Mean for Gold?

With the eventual introduction of central bank digital currency (CBDCs) now seemingly inevitable, there are a lot of directions central banks could take with their digital currency projects that would have dramatic implications for the price of gold.

READ MORE →

Will the World’s Most Pro-Bitcoin Politician Embrace Gold?

Since Nayib Bukele became president of El Salvador, El Salvador has been in American media and global political discussion more than ever. While much of the attention focuses on Bukele’s mass incarceration of gang members and a decline in homicide of over 70%, Bukele has also drawn attention to his favoritism towards Bitcoin and how he […]

READ MORE →

About The Author

Michael Maharrey is the managing editor of the SchiffGold blog, and the host of the Friday Gold Wrap Podcast and It's Your Dime interview series.
View all posts by

Comments are closed.

Call Now