Based on the November 18th, 2011 Premium Update. Visit our archives for more gold & silver analysis.
45 days after the end of each quarter, the top hedge fund managers are forced to release data on their long positions to the Securities and Exchange Commission. They probably do it with great reluctance, but it does give us a keyhole through which we can peek into their investing philosophy and we, of course, are interested in their attitudes towards precious metals.
According to those filings, Hedge Fund Tycoon John Paulson made some key cuts in his holdings in the third-quarter, including slashing stakes in the SPDR Gold ETF (GLD) for the first time in more than two years. But this is no cause for alarm. According to a Dow Jones Newswire report, the hedge fund manager shifted money into gold futures contracts that didn't show up in the filings. Paulson held 20.3 million shares in the exchange-traded fund backed by gold as of Sept. 30, compared with 31.5 million at the end of June, according to Securities and Exchange Commission filings. The firm remained the largest holderof GLD.
Daniel Loeb, the CEO at hedge fund Third Point, who manages more than $2.4 billion in assets, bought Barrick Gold (ABX) this quarter.
Soros Fund Management LLC increased its stake in GLD to 48,350 shares from 42,800 and added options. Soros had sold most of his GLD holdings of 4.72 million shares in the previous quarter. Paul Touradji had 45,000 shares of GLD and Paul Tudor Jones had 200,000 shares, compared with none on June 30, the filings.
Even those of us who don't hold hundreds of thousands of shares of GLD are interested to know how gold and other precious metals will do in the short term. This week, we will provide you with only one chart, but taking into account its reliability in the past, it should prove to be a valuable addition to your analysis.
The above chart features our in-house developed SP Gold Stock Extreme #2 Indicator, which has recently moved below the dotted line. This normally indicates that we are at a local bottom or quite close to it. Previously, in 7 of the 8 times this has been seen in 2011, the local bottom was seen if not immediately, then still very soon. Seeing this a few days ago meant that additional few days of trading sideways or slightly lower prices are not out of the question, but that the decline is almost complete.
Therefore, higher prices for the precious metals sector appear to be just around the corner.
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Thank you for reading. Have a happy Thanksgiving holiday weekend and a profitable week!