Druckenmiller Loves Gold, Hates Fed

Hedge fund master Stanley Druckenmiller has had one of the strongest performances in stock market history, generating a return of about 30 percent over a 30-year period. That is in line with another legendary investor, Peter Lynch, who produced an annual return of 29 percent.

Interestingly, Druckenmiller and Lynch both quit because of the toll it took on them to maintain those type of returns. Sorry. If we want to live longer, we'll just have to settle for a piddly 20 percent annual return or so.

For some time Druckenmiller has blasted the Federal Reserve for keeping interest rates near zero, saying it has changed the behavior of companies, which instead of using cash to build the businesses, they are using it for leveraged buyouts, mergers and stock repurchase schemes.

Interpreting this as a negative, Druckenmiller has taken a huge stake in SPDR Gold Shares (GLD), investing $323,626,000, which comes to 2.8 million shares. That's more than double any of his other holdings at this time.

when asked about why he put such a large portion of his investment portfolio in GLD, Druckenmiller said when he sees something that gets him excited, he's willing to take that step.

Talking a lot about risk/reward ratio over the years, he obviously sees something in gold that has a lot of potential at this time. I agree with him.

Gold ETFs (UGL) (GLD) (GDX) (GDXJ) (GTU) Trading Down

Shares of gold ETFs ProShares Ultra Gold (NYSE:UGL), SPDR Gold Shares (NYSE:GLD), Market Vectors Gold Miners ETF (NYSEArca:GDX), Market Vectors Junior Gold Mine (NYSEArca:GDXJ) and Central Gold Trust (AMEX:GTU) are under pressure today, as commodities are getting hammered, dragging precious metals down with them.

The most actively traded gold contract, for June delivery, was recently down $14.60, or 1%, at $1,502.30 per troy ounce.

Silver futures prices were down 7.3 percent $35.660 per troy ounce on the Comex division of the New York Mercantile Exchange.

PowerShares DB Gold Double Short ETN (NYSE:DZZ), ProShares UltraShort Gold (NYSE:GLL) and PowerShares DB Gold Short ETN (NYSE:DGZ) were all trading up because of their gold-shorting strategy.

ProShares Ultra Gold (UGL) was trading at $77.48, dropping $1.67, or 2.12 percent, as of 2:31 PM EDT. SPDR Gold Shares (NYSE:GLD) was at $146.29, losing $1.61, or 1.09 percent. Market Vectors Gold Miners ETF (NYSE:GDX) was trading at $54.67, down $2.09, or 3.68 percent. Market Vectors Junior Gold Mine (NYSE:GDXJ) was at $35.53, falling $2.02, or 5.38 percent. Central Gold Trust (AMEX:GTU) was at $56.78, down $0.57, or 0.99 percent.

Why SPDR (GLD) (AGQ) (UGL) (SLV) Will Remain Strong

Forget about the clueless mainstream media as it pertains to gold and silver and their relationship to the economy and political process, as there is absolutely nothing in the works which will be able to turn around the plunge toward insolvency of the United States, because there isn't the will to make the necessary changes to financially save the country, giving investments like iShares Silver Trust (SLV), SPDR Gold Shares (GLD), Proshares Ultra Silver (AGQ) and Proshares Ultra Gold (UGL) sustainability and viability for some time to come.

Cutting back on the size of the government and its entitlement programs and military expansionism is the only answer, but neither political party (outside a few individual exceptions) are willing to make the tough decisions, and so will continue to drive the country toward bankrupcty in order to keep themselves in political office.

Even socialist Europe understands they must cut spending and implement austeriy measures, while increasingly socialist America refuses to admit even that. Taxes can't be raised because it's impossible to keep up with the growing liabilities associated with out of control spending. In other words, the American people can't support the outrageous debt being forced upon them, and no amount of taxes can either, as only slashing the budget and the size of government can deal with the issue.

So as the Federal Reserve and Ben Bernanke continue to print money and destroy the collapsing U.S. dollar, gold and silver will enjoy unprecedented support as investors seek safe haven from the monstrous government eating away our spending power, capital and freedoms in order to spend its way to political favor at the cost of the nation.

This guarantees over the long term gold and silver will continue to hold and rise, as there's simply nothing to change that outlook, other possibly than a significant rise in interest rates, which the Federal Reserve, at this time, refuses to do.

SPDR (GLD), iShares Silver Trust (SLV) Jump on S&P Downgrade

After Standard & Poor’s lowered the credit rating outlook on the U.S., shares of SPDR Gold Shares (NYSEArca:GLD) and iShares Silver Trust (NYSEArca:SLV) both rose, with SPDR soaring to a new record, hitting above the $146 a share mark, although pulling slightly back as the trading day has advanced.

John Kilduff, a partner at Again Capital, said, “Only precious metals will be seen as attractive in the aftermath of the outlook downgrade,” John Kilduff, a partner at Again Capital, said to Reuters. “The overall economic outlook becomes more opaque with this; equities and energies will be very much under pressure now.”

Also noteworthy today is the yield of Greek bonds, which soared today, bringing the sovereign debt crisis back into the eye of investors, which is helping push up the price of precious metals in general.

SPDR was trading at $145.83, gaining $0.78, or 0.54 percent, as of 2:51 PM EDT. iShares Silver Trust was trading at $42.18, up $0.34, or 0.81 percent.

ETF (SPY) (GLD) (XRT) (IWM) (EWJ) (XOP) Movement

Investors pulled about $3 billion out of the SPDR S&P 500 ETF (NYSEArca:SPY) on Monday, but stocks rose amid rising appetite for riskier stocks, helping total assets in U.S.-listed exchange-traded products.

Among other noteworthy redemptions yesterday included the $488.8 million that came out of the SPDR Gold Shares (NYSEArca:GLD), though rising gold prices kept assets in the world’s second-biggest ETF after SPY at just shy of $56 billion.

The SPDR S&P Retail ETF (NYSEArca:XRT) also had sizable redemptions, of $236.7 million, or 44 percent of the fund. The heavily traded and shorted ETF ended Monday’s trading session with assets of $307.4 million.

Creations

The small-cap iShares Russell 2000 Index Fund (NYSEArca:IWM) meanwhile topped IndexUniverse’s inflows list, with creations of $325 million. IWM now has $15.14 billion in assets.

The iShares MSCI Japan Index Fund (NYSEArca:EWJ) gathered another $115.3 million, as investors looked to buy Japanese assets on the cheap in the wake of the calamitous earthquake and tsunami there 11 days ago that badly damaged a nuclear power plant, causing it to leak dangerous amounts of radiation.

The SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca:XOP) gathered $77.2 million in new assets, while the Energy Select SPDR ETF (NYSEArca:XLE) suffered redemptions of $314.7 million.




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SPDR Gold Shares (NYSEArca:GLD) Divests of 70 Tons of Gold

A lot has been made of the selloff of 80 tons of gold by gold ETFs in January and February, but of the 80 tons sold, 70 tons of that was sold by SPDR Gold Shares (NYSEArca:GLD), narrowing the event to them alone.

Most of the change in SPDR came about from portofolios being balanced, and expectations are investment will continue to grow in the longer term.

80 tons of gold were sold out of gold ETFs in the first two months of 2011 but, there is no need to worry yet that investors in these products are beginning to get cold feet about the yellow metal.

Speaking on Mineweb.com's Gold Weekly podcast, Jason Toussaint, MD for the US and Investment at the World Gold Council said that of the 80 tons sold in January and February, 67 of those tons were sold in January and 70 were sold specifically out of the SPDR gold trust.

"We need to remember that gold had a tremendous return in 2010. It was up 29% and what we were told directly from investors and their trading partners was that many investors took the opportunity to rebalance their portfolios because gold, whilst it may have been a fairly moderate position initially, because of its return relative to other assets, had suddenly become an outsized position," he said.

The other primary reason for the sale, according to Toussaint was a decision by some of the larger institutional investors (which account for roughly 47% of the SPDR holdings) to redeem their GLD shares in favor of holding bullion directly in their own names.

SPDR Gold Shares closed Wednesday at $136.24, dropping $0.03, or 0.02 percent.




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Commodity ETFs (SLV), (SIL), (GLD), (GDX) Jump On Safety Concerns

Shares of iShares Silver Trust (NYSEArca:SLV), Global X Silver Miners (NYSEArca:SIL), SPDR Gold Shares (NYSEArca:GLD) and Market Vectors Gold Miners (NYSEArca:GDX) are all up Friday, as investors flee to safety and stability in light of the poor jobs report and ongoing Middle East crisis.

Silver prices were soaring again today, reaching as high as $53.30 an ounce, the highest level in over 30 years.

The Dow Jones Industrial Average plummeted over 150 points in mid-day trading, also affected to the potential negative impact of rising oil prices.

iShares Silver Trust was trading at $34.50, gaining $1.08, or 3.25 percent, as of 2:27 PM EST. Global X Silver Miners rose to $28.09, up $0.57, or 2.07 percent. Market Vectors Gold Miners was trading at $60.24, up $0.37, or 0.62 percent. SPDR Gold Shares rose to $139.22, up $1.13, or 0.82 percent.

SPDR Gold (NYSE:GLD), Market Vectors Junior Gold (NYSE:GDXJ), Market Vectors Gold Miners (NYSE:GDX) Down after Friday's Gold Slaughter

China is emerging as the greatest economic influence in the global markets, as evidenced on Friday when just speculation they may raise interest rates drove Market Vectors Junior Gold Miners ETF (NYSE:GDXJ), SPDR Gold Shares (NYSE:GLD) and Market Vectors Gold Miners ETF (NYSE:GDX) down, among most gold and diversified miners.

The gold market was driven on Friday primarily by the news the consumer price index in China had risen 4.4 percent. That generated the rumors, speculation and panic which led to the price of gold plummeting by about $40 an ounce.

Very few companies with any significant gold exposure survived the carnage, although much of the fallout was from traders who had to sell off their long positions in gold in order to cover margin calls.

Long-term gold investors aren't concerned about this at all, as they understand a correction will happen off and on, and they're nothing less than buying opportunities to invest in more gold assets.

Market Vectors Gold Miners ETF closed Friday at $60.07, dropping $1.71, or 2.77 percent. Market Vectors Junior Gold Miners ETF ended the week at $39.18, falling Friday by $1.57, or 3.85 percent. SPDR Gold Shares closed Friday's session at $133.69, losing $3.97, or 2.88 percent.

SPDR Gold Trust (NYSE:GLD) Continues Record Amount of Gold Held

The SPDR Gold Trust (NYSEArca:GLD) reached record levels of gold they hold again, as on their website they show they've increased their gold holdings to 1,313.13 metric tons as the close of the trading session on Tuesday. It rose slightly to 1,313.14 metric tons about 12:30 PM EDT on Wednesday.

So far in 2010, the gold ETF has increased by 13.2 percent, and is valued at $52.2 billion, while holding assets worth $38.54 billion.

Since the latter part of 2009, the fund has added close to 180 metric tons of gold to its holdings.

SPDR Gold Trust (NYSE:GLD) Offering 239 Million More Shares

SPDR Gold Trust (NYSE:GLD) has filed with the SEC for a follow-on offering of 239.3 million shares, a huge 57.5 percent increase in shares of the gold ETF.

Shares available now are 416.4 million, and after the offering, would increase to 655.7 million.

This could temporarily dilute the share value in the company, but the extraordinary demand for gold should help balance that off and overall increase the value of the company, and it shouldn't take long for the added number of shares to retain and increase in value.

SPDR ended Thursday session at $118.69, up $0.22, or 0.19 percent.

SPDR Gold Trust (NYSE:GLD) Record Holdings, Increased Short Interest

SPDR Gold Trust (NYSE:GLD) continues to increase their holdings at a record level, as each time the add to their physical holdings, they are now breaking a record, although occasionally they do divest of gold for a variety of reasons.

I doubt if we'll see much of that going forward though, as demand for physical gold continues to go up in the face of the devaluing of currencies around the world and potential social unrest, which has already begun in some nations.

For SPDR, they continue to move in step with gold prices, and there was also an increased short interest in the gold ETF in the first half of May, with close to 29 million shares being shorted, up from around 14 million shares from the last reporting period.

Physical holdings in gold as of about 6:50 p.m. EST, stood at 1,267.32 tons, or 40,745,654.26, another all-time record.

The value of the gold at today's gold prices is $48,806,853,742.68.

Novagold (AMEX:NG) Iamgold (TSE:IMO) Barrick Gold (NYSE:ABX) (TSE:ABX) Randgold Resources (Nasdaq:GOLD) Added by Paulson & Co

John Paulson continues to like the gold market, and he backed that up with four new positions for his Paulson & Co. hedge fund, adding Novagold (AMEX:NG), Iamgold (TSE:IMO), Barrick Gold (NYSE:ABX) (TSE:ABX) and Randgold Resources (Nasdaq:GOLD), growing the number of gold investments to his already-significant gold positions in SPDR Gold Shares (NYSE:GLD), which is the largest holding in the fund, Kinross Gold Corp. (NYSE:KGC), and AngloGold Ashanti Ltd. (NYSE:AU).

Competitor George Soros, in my opinion, wrongly, reduced his stake in SPDR Gold Shares (NYSE:GLD) by just under 10 percent.

I believe we are far from any type of gold bubble as Soros has stated in the past, and think he's misreading the market by only measuring the idea of a bubble by the price of gold going up, rather than who it is that is investing in it.

There won't be a gold bubble until a huge number of non-institutional investors enter the gold market, and then the underlying fundamentals will have to had reached their full play before a bubble can be formed, let alone burst.

A bubble happens when there is no reason for the price of something going up. If there is a reason, it doesn't matter if the price is bid up, as it is based on fundamentals, whether or not the investors know it or not.

Not only is there very little to cheer about in the global economy, including the U.S., but there is more pressure and danger now than there ever was with the housing bubble and banking bailouts.

Now we're talking of entire countries being bailed out, and inflation in China being a real threat to demand for raw materials, which many around the world have been counting on for growth and an eventual and sustainable economic recovery.

All that may be off the table, and consequently, gold and gold mining companies should continue to go up in value and price as people continue to look for a safe haven outside of paper currencies.

George Soros' SPDR Gold (NYSE:GLD) Stake Lowered

Earlier in the year George Soros had mentioned gold was a bubble ready to burst, although he failed to include the idea that he had made a huge investment in gold interests, including SPDR Gold Trust (NYSE:GLD).

In a recent required 13F filing, Soros revealed that his Soros Fund Management had cut back on his position in SPDR Gold by 9.6 percent, probably from concerns over the high rise in price of the safe haven metal.

This is probably a mistake on Soros part, but we'll wait and see.

I think the thing that Soros misses is the regular guy on the street hasn't entered the gold bull market yet, and that should protect the upward movement in the gold prices from being a bubble.

A bubble usually occurs in any investment sector when those that don't understand the fundamentals of an investment finally decide to invest in it when it is already full priced.

This normally shoots the price of an investment up, when the support for it isn't there, ultimately creating a bubble. That's what happened in the housing market, as people continued to bid the price of homes up thinking there's no such thing as a ceiling on value.

It doesn't seem that gold has entered this phase at all yet, and even if it did, the fundamentals are there to justify it. There will of course be many corrections on the gold bull market journey, but that won't be a bubble.

Market conditions and the unprecedented spending of money and budget deficits ensure gold will continue rising in price for years to come, with the occasional correction along the way.

Eventually there will be a bubble in gold, just like anything else that has gained favor over a period of time before those that are clueless enter into the fray.

Gold is probably years away from that happening, and the economic conditions will ensure it won't be bursting for any time soon, and will continue on its upward climb.

SPDR Gold Trust (NYSE:GLD) Performing Great for Investors

The SPDR Gold Trust (NYSE:GLD) was created to move in step with the price of gold bullion, and it continues to do that, moving in step with the increasing price of gold, starting the year at about $88 a share, and now over $121 a share as I write.

Now that sPDR has broke through the $120 mark, and with the sovereign debt crisis in Europe and China inflation, gold is sure to continue up its upwards trajectory, and SPDR Gold Trust will respond accordingly.

Gold ETFs continue to be an important part of investors' portfolios, and SPDR is extremely simple, inexpensive and in the right place at the right time for those wanting to protect their assets from the enormous risks in the market.

Is SPDR Gold Shares (NYSE:GLD) Still Good Investment?

SPDR Gold Shares Good Investment?

With many well-known investors continuing to put a large amount of their money in gold, the question becomes whether or not an ETF like SPDR Gold Shares (NYSE:GLD) is still a good investment.

I bring it up like that because many of the major investors with a large position in gold bought it at lower prices, and now gold seems to be remaining tight around the $1,100 level, seeming to imply it's going to move forward incrementally rather than in huge swings. That is probably a good thing for most investors.

But as far as SPDR Gold Shares, it can really be simplified as to the answer to the question if it's still a good investment for you. The think to ask is this: Is gold still a good investment? If the answer for you is yes, the answer for SPDR Gold Shares should also be yes.

I think in the current gold environment we'll have to take a longer time-frame than possibly in the past with SPDR, but again, I think that's more healthy than the huge gains it made in a relatively short time.

From November 2008, when the gold ETF dropped as low as $70 a share till now, it has gained almost $40 a share, a nice move by any metric used.