Gold: Druckenmiller is Baaack, Here's Why

 Druckenmiller Has Returned.

“I wanted to own some currency and no country wants its currency to strengthen,” Druckenmiller said Tuesday in an interview. “Gold was down a lot, so I bought it.”

Translation: Noone wins in a competitive devaluation of currency. AKA race to the bottom. The losers in the macro will be emerging markets stuck long dollars. In the micro, it will be US middle class unable to afford anything but 1975 Ford Pintos. Watch.- Soren K. 

  • Billionaire investor cites cautious Yellen, Draghi comments

  • Move pays off quickly as precious metal rebounds almost 10%             

Background: D-Man Puked on Election Night

(BBG) Druckenmiller, who had held a gold position going into the November election, sold it on election night, explaining in a CNBC interview that he was optimistic that President Donald Trump’s administration would bring deregulation and “serious” tax reform that spurs growth. Those benefits, he said, were expected to outweigh concerns about more protectionist trade policies. “All the reasons I owned it for the last couple of years seem to be ending,” he said at the time.

We made it clear that his selling was not because he was bearish Gold. But more because he found lower lying fruit, in this case bonds. He proceeded to short bonds and made a profit there. Now, Gold was in his eyes undervalued again. Druck is not an investor, he is a trader.

From the previous post:

Soros and Druckenmiller Sell Gold

  • Soros just decides to sell and does so. he commonly wants his positions flat going into events and likes to step in on overdone markets in the direction of his bias. And he did that again in Gold.
  • And it is when he is notoriously quiet that he is actually trading position, as he did in GLD
  • Then Druckenmiller on the relief rally and spike on election day sells. smart man
  •  Druckenmiller did make a rather cryptic statement on his reason for the exit. He said “ The reason I was long Gold no longer exists"- What reason was that?
  • The only rationale behind Druckenmiller’s statement we can see are that either
    • BEARISH: He sees the Fed’s policy of accommodating inflation over, and that it will be a hindrance to Trump’s attempts to loosen the fiscal purse strings
    • BETTER WAYS OF EXPRESSING OPINION: He saw lower lying fruit, in the form of shorting bonds as an expression of his inflationary opinion, and/or long equities.[Edit- And we were spot on here. Go back to your candy crush MSM-  S.K.]

Above was from the article Why did Soros and Druckenmiller Sell Gold? (pics may not render)


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D-Man Returns in December

 In December, both U.S. Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi warned that economic growth could be derailed, comments that spurred Druckenmiller to make his purchase. Uncertainty over whether Trump will back the House Republican tax plan is another reason Druckenmiller bought gold, he said. The Republican leadership has proposed a 20 percent border-adjustment tax on imports as a way to encourage more manufacturing in the U.S. 


Why is he Telling us he is Long Now?

You must understand that the man is a trader, not an investor. And that anytime a trader discloses his position it is after he is done buying. It is often disclosed as a marketing plan to show how he was right adn raise more money. And you must be suspiciious of hedge fund managers who make announcements just so they can get enough buying interest to exit their own large positions. For us, an alarm has gone off. But remember, Gold had a 4 week swoon post election night. It is not unreasonable that MOMO lemmings will  now buy into the market and even if D-Man sells, he will sell slowly and into strength. 

And remember, Stan worked under Soros. Soros also sold when D--Man sold. Assume Soros is long if not buying right now.

BBG article here

Want to spec long? Buy call spreads. Sleep at night. Otherwise, buy and look again in 5 years.

Good Luck

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