George Soros switches gears: prepares for lean global economy

Jun 10, 2016 12:00 AM

After some time away, George Soros has returned to active trading, hoping to cash in on what he perceives to be an impending global economic crisis. In anticipation of a down market, the billionaire has made some bearish investments, selling stocks and buying shares of gold mining corporations.

These trades, made through Soros Fund Management LLC, signal a significant change for the hedge fund titan, who first gained notoriety in 1992 when he anticipated a breakdown of European currency, and made some $1.5 billion in the process. Some claim his investments broke the Bank of England.

The financier sees trouble on the horizon for the Chinese economy, even though that country’s market has stabilized, believing that the Chinese government cannot sustain economic reconditioning. "China continues to suffer from capital flight and has been depleting its foreign currency reserves while other Asian countries have been accumulating foreign currency," Soros said, "China is facing internal conflict within its political leadership, and over the coming year this will complicate its ability to deal with financial issues."

Soros was almost universally panned in Chinese state-owned media for his comments. China’s Commerce Ministry in an article in The People’s Daily, stated derisively, "Declaring war on China’s currency? Ha."

European migration issues, unrest in Greece and the possible departure of Britain from the European union are also said to be driving Soros’ change in strategy. Soros was quoted as saying, "If Britain leaves, it could unleash a general exodus, and the disintegration of the European Union will become practically unavoidable."

When he’s not kicking up dust in the world of high stakes trading, Soros has been donating huge sums to a Super PAC in support of Hillary Clinton’s presidential campaign. He supplied almost half of a $15 million Wall Street PAC, and gave to other Democrat supporting organizations, including $7 million to Priorities USA Action.

After top investor Scott Bessent left the Soros firm to found his or hedge fund operation, Soros picked up Ted Burdick as his chief investment officer. This is significant, as Burdick’s background is in arbitrage and distressed debt, as opposed to Soros’ former focus on macro investing.

The Soros firm purchased 19 million shares of Barrick Gold Corp., a move which gained $90 million in the first quarter. His investment in Silver Wheaton Corp. has increased 28% to date.

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