Gold Bug Hedge Funds Collectively Report Over $183mm In New Call Option Positions On Miners

By Tekoa Da Silva — While mainstream news sources continue the war against gold and gold-related investments, three of the world’s top performing hedge fund managers have been busy at work building speculative gold positions during the first quarter.

George Soros, John Paulson, and Steve Cohen, who in aggregate control over $60 billion dollars, have been aggressively buying the most speculative vehicles associated with gold: call options on gold mining stocks.

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If three of the top performing hedge fund managers are buying up a great deal of call options on the gold miners, they must know the bottom is close at hand.

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11 Comments on "Gold Bug Hedge Funds Collectively Report Over $183mm In New Call Option Positions On Miners"

  1. john mc dermott | May 18, 2013 at 7:58 pm |

    Please let me know when you have new posts.Thanks John

    • John… at the bottom of comments section you will see a place where you can select “Notify me of new posts by email.” If you select that option you will get my new posts automatically by email. At any time, you can cancel these automatic posts. There is a place at the bottom of the email that allows you to cancel this option.


  2. Very useful blog, thanks SRSrocco!

  3. interesting to say the least … in the meantime there is all this talk about nationalization of miners … yeah well, expected otherwise you cant find cheap call options

  4. this is a good website – congratulations!

  5. Farmer & art… thanks for visiting and leaving a comment. I plan on putting out some very interesting data and information about the precious metals, miners and energy on the site.


  6. Great Blog ,many thanks !!

  7. Panafrican Funktron Robot | May 19, 2013 at 6:31 am |

    Great site, thank you for this information. I’ve been ascribing to the view that gold is a pretty clear buy in general, but especially when the USD price of gold drops below $1400, which I understand to be roughly the total cost breakeven for the miners. A significant reversal upwards in the dollar price of gold (which to me seems very likely in light of Japan going off the rails and the ratcheting up of war in the M.E. and East Asia) would have an outsized effect on miners, so buying calls here seems a reasonable way to express this position.

  8. cathal… thanks for the reply and visiting the site.

    Panafrican.. yes you are correct. I had a very interesting email exchange with an ex-CFO of a gold mining company who let me know that using a break-even cost approach by using net income (adjusted works good too), made perfect sense. He said it made such perfect sense, that’s why mining companies don’t use it.

    According to my Q3 2012 analysis on the top 5 gold miners, they made approximately $349 net income per ounce of gold. However, these top 5 gold companies had by-product credits that were approximately 15% of their revenue. I took this 15% and subtracted it from that $349 to get an estimated $295 pure gold net income per oz.

    I do realize this method is an act of treason to those in the profession using by-product accounting, but I believe it is a more reasonable way to get to a pure gold net income — although it is an estimation.

    So, according to my calculations as of Q3 2012, estimated pure gold break-even was $1,360 an oz. From my initial look at the most recent Q1 2013 results, it looks as if that break even is a bit higher now.


  9. Hi Steve Just popped in from Silver Doctor to say howdy. With silver down ticker and GSR at 63 to 1 Monday should get interesting

  10. Panafrican Funktron Robot | May 19, 2013 at 9:31 pm |

    The other thing I tend to ascribe to is that age old wisdom:

    1. Buy low, sell high.
    2. Buy when there’s blood in the streets..

    The extreme bearish sentiment in gold, and the frankly humorously low price, makes this a pretty obvious trade, even if you’re more of a short term guy and aren’t holding for reasons such as long term wealth preservation.

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