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US investor Michael Burry makes US$10m bet on gold

Go to Imelda Cotton author's page
By Imelda Cotton - 
Michael Burry gold Sprott investor

Renowned US investor Michael Burry has made a significant bet on the rise of gold with the purchase of 440,000 units in Sprott Physical Gold Trust, valued at US$10 million.

The purchase was made through Mr Burry’s hedge fund Scion Asset Management in the first quarter of this year when the commodity’s price was around US$2,130 an ounce.

The Sprott Physical Gold Trust offers direct exposure to bullion, providing a way to invest in gold without the operational and management risks associated with mining companies.

Mr Burry’s gold bet was worth $7.6m at the end of March, ranking it as Scion’s fifth-largest position with a 7.4% weighting in the firm’s US$103m US stock portfolio.

Gold prices are currently rallying above US$2,448/oz, meaning the units are now valued at around US$8.1m.

Strategic recalibration

Records show Scion made a strategic recalibration to its portfolio in the first quarter towards physical commodities and renewable energy while shifting away from some tech giants.

The total market value of Scion’s 13F securities over that period increased from US$94.6m to US$103.49m.

The fund’s activity included five new purchases, additions to 11 existing positions and the complete sell-off of 14 stocks.

Scion dumped positions in Alphabet and Amazon, while buying an exchange-traded fund that invests in physical gold.

It also offloaded the entirety of its positions in the retail chain Big Lots, the online travel company Booking Holdings, MGM Resorts International, Oracle and Warner Bros Discovery.

It increased its stake in Chinese retail giants Alibaba and JD, both of which trade in the US as American depository receipts.

Gold confidence

The substantial Sprott investment is believed to highlight Mr Burry’s confidence in the commodity as a hedge against economic uncertainty.

The maverick investor is well-known for his ability to accurately predict the economic cycle.

He shot to fame for predicting and profiting from the collapse of the mid-2000s housing bubble, netting US$700m during the 2008 financial crisis by betting against the housing market.

The saga was chronicled in the book and movie The Big Short.