In early 2024, Michael Burry’s Scion Asset Management made a move into precious metals, as revealed in the March 2024 13F regulatory filings.
Burry purchased 444,000 units of the Sprott Physical Gold Trust (PHYS), a bet valued at over $10 million at the time. The significant stake represented more than 7% of Scion’s entire holdings at the time.
The ‘Big Short’, famed for accurately predicting the U.S. housing market crash in 2008, made his gold bet just as prices began to surge, averaging around $2,130 per ounce in the first quarter of 2024.
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While the exact purchase date wasn’t disclosed in the 13F filing, market conditions suggest his timing was impeccable. Inflation fears, economic uncertainty, and concerns about currency devaluation were driving investors toward gold, and Burry positioned himself to benefit from these trends.
He positioned himself just as inflation fears, economic uncertainty, and concerns about currency devaluation were driving investors to seek refuge in gold.
Burry exited his position too soon
However, in August 2024, Burry exited his gold position in the Sprott Physical Gold Trust. This decision followed a significant 23% increase in PHYS over the previous six months, driven by rising gold prices.
After selling his gold holdings, Burry shifted his strategy, placing substantial bets on consumer-related stocks, like Shift4 Payments, and real estate, signaling his belief in the strength of the U.S. economy.
As of September 20, 2024, gold is trading at $2,608.34 per ounce.
If Burry had held onto his initial $10 million investment in PHYS, he would now be sitting on an estimated $2.25 million profit. Since Burry seemingly sold his gold position on August 15, 2024, when the price was around $2,457.55, gold has risen by $150.79, or 6.14%.
Had he held on, he would have gained an additional $613,578.
Hedge Funds’ Interest in Gold
Burry wasn’t alone in betting big on gold. Billionaire investor Ray Dalio has long advocated holding gold, calling it “good money” in an era where fiat currencies are being devalued by inflation. Dalio sees gold as a necessary portfolio diversifier, a sentiment echoed by many in the financial world.
David Einhorn, founder of Greenlight Capital, has also been consistently bullish on gold. In the fourth quarter of 2023, SEC filings revealed that Greenlight Capital purchased $74 million worth of SPDR Gold Shares (GLD), the world’s largest gold-backed ETF.
Across the hedge fund landscape, optimism about gold is high. As of August 20, 2024, hedge funds ramped up their bullish positions to the highest level in over four years, increasing their net-long contracts on gold by 7.8%, reaching 236,749 contracts.
Finally, adding to this sentiment is Mike McGlone, senior commodity strategist at Bloomberg, who suggests that gold’s ascent could push the broader commodities index higher, even as other commodities struggle.
McGlone believes that the Federal Reserve’s much-anticipated easing cycle may result in rising gold prices while other assets falter.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
