The metals and mining sector has been the victim of significant volatility as bulls and bears dispute whether precious metals have reached their cyclical peaks or could continue to push higher. This week, billionaire hedge-funder George Soros, let everyone know what side he was on. Soros, an early investor in the bullion backed SPDR Gold Trust (NYSE: GLD) and iShares Gold Trust IAU (NYSE: IAU) by selling the entirety of the 5 million shares his fund held in Gold Trust IAU and the majority of his shares in the bullion-backed SPDR Gold Trust.
The sales of the gold stocks was expected although it came earlier than many might have though. In January, Soros described gold as “the ultimate asset bubble,” but stated that he saw the commodities rise lasting a couple of years into the future.
Despite the statement he’s making by abandoning his positions in gold, Soros isn’t shying away from the sector entirely. Instead, a government filing indicates he’s purchased shares of mining companies Goldcorp Inc. (NYSE: GG) and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX). Soros added 7,600 shares of Goldcorp. And 301,300 shares of Freeport-McMoRan.
Freeport McMoran Copper & Gold is engaged in the exploration and development of copper, gold, silver, molybdenum mines in Indonesia, North and South America. The company is the lowest-cost copper producer in the world as well as being among the top producers of gold.
The companies copper capacity, not its gold, may be what is of interest to Soros right now. The most Chinese real estate data indicates a real estate boom in the country that is unlikely to slow. The increased construction will, in turn push up the demand for copper and other metals used in production. Copper prices reached a five-day high Wednesday that some analysts believe is just the beginning.
Copper for July delivery was ahead by 2.9% to $4.1125 a pound, earlier hitting a five-day high at $4.1155. The copper spot price was at $4.10, up 2.1%.
After a sharp slide earlier, the commodity markets are moving higher again, with copper ahead of the rest of base metals. The property sector in China is being understood as the catalyst. China is the biggest consumer and importer of Copper, meaning a real estate boom indicating home prices rising in 67 out of 70 cities in April and new home prices up as much as 9.3 percent in smaller cities last month year-over-year, is a major indicator of copper’s direction.
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