Our current economic state seems to have a number of investors worried. Despite the fact that markets are near a four year high, there are still plenty of issues looming that have the general public fearful for the future. Of those who fear an economic collapse, there are a number of big-name investors, worth billions, who have already prepared themselves for such an event. Though it may not be time to run for the hills, investors would be wise to consider the investments of three of the wealthiest men in the world [see also Doomsday Special: 7 Hard Asset Investments You Can Hold in Your Hand].
Billion Dollar Bets
Perhaps the biggest stir came from George Soros. “The man who broke the bank of England” has been famous for his bold calls that have worked out to bring him gargantuan profits. This time, Soros has made a bet on gold. After dumping the majority of his SPDR Gold Trust (GLD) holdings when gold was at much lower levels, Soros sat on the sidelines and watched the precious metal skyrocket to new highs. After watching the commodity make a slight pull-back, he made his move.
Soros not only doubled down his gold holdings, but nearly tripled his investment in the ultra popular GLD. The last time Soros reported what was in his portfolio, he held 319,550 shares of the fund, or about $52 million worth at the time of the release. Now, it has been reported that his GLD stake has jumped to a total of 884,400 shares, worth roughly $137.3 million [for more gold news and analysis subscribe to our free newsletter].
But Soros is not the only one making a big bet on this ETF, as John Paulson has also thrown his hat into the ring. Paulson increased his GLD stake by 26% to hold 21.8 million shares of the world’s second largest ETF. That means that Paulson has approximately 44% of his company’s assets in this singular fund; a big bet that could be a make or break investment depending on the future of gold. The big gold allocations of these two heavy hitters suggests a lack of confidence in overall markets, as gold is a safe haven asset that typically performs well during economic struggles.
Another big bet came from Jacob Rothschild, though he ventured outside of the realm of gold. Rather than take a long position in an asset that is favorable during a collapse, Rothschild took a much bolder stance by investing nearly $200 million into shorting the euro. While it is true that the euro is currently at a low level, a Grexit or even money printing from the ECB could turn this bet into a goldmine. It in fact was George Soros who made over $1 billion in a single day when he shorted the pound, perhaps Rothschild is next up?
What Will You Do?
Just because these men have bet against the economy does not mean that investors should begin to fear the future. Big name players have been wrong before, and they will certainly be wrong again. However, it is also difficult to justify other investments when some of the brightest, richest men in the world are all preparing for an economic collapse. The choice is yours, will you bet like a billionaire, or are these worries blown out of proportion?
Disclosure: No positions at time of writing.