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Correction: BlackRock Versus Druckenmiller - Gold Battle Begins

Editor's Note: The article was corrected to reflect that the GLD holdings in Duquesne Family Office LLC during the first quarter were actually call options and not shares.

(Kitco News) - There appears to be a battle of the hedge funds playing out in the gold market as some funds continue to add to their positions while others are exiting the market.

One name that grabbed a lot of attention in the gold space earlier this year was Stanley Druckenmiller, who runs Duquesne Family Office LLC. According to the latest filings with the Securities and Exchange Commission, at the end of the second quarter Druckenmiller completely exited his positions in the world’s largest gold-backed ETF SPDR Gold Shares (NYSE: GLD). At the end of the first quarter the SEC filing showed the fund holding more than 2 million call options for GLD.

Unfortunately, the information in 13F filings are limited. In the three months from April to June, Druckenmiller could have sold his call option, exucted the the options and then sold the shares of GLD or the options could have expired worthless.

In early May, at the Sohn Investment Conference, Druckenmiller recommend investors buy gold as he criticized the Federal Reserve’s monetary policy. He warned that the U.S. central bank has no end game and that its policies are raising the odds of the economic tail risk that it is trying to avoid.

Although Druckenmiller sold all his shares of GLD, he has maintained his more than 1.8 million-share position in Barrick Gold (NYSE: ABX, TSX: ABX).

Tuesday, George Soros, manager of Soros Fund Management LLC and Drunkemiller’s former colleague, revealed that his fund sold more than 18 million Barrick shares in the second quarter.

However, not all firms are so anxious to exit the gold market as prices appeared to have stalled in the second quarter.

The world’s biggest asset management firm Blackrock Inc. continued to add to its gold position in Q2, albeit at a much slower pace compared to the previous quarter.

In the second quarter, Blackrock increased its total exposure in GLD by 54,537 shares to, 199,602. The fund reduced its options positioning by 19,300 contracts and now holds a total of 126,600 call options.

At the same time, BlackRock Advisors, a subsidiary of the firm, also saw an increase in its holding of GLD. The private investment arm boosted its holding to 14.6 million shares, an increase of almost 4.3 million shares. At the end of the second quarter, the value of the firm’s GLD positon was $1.85 billion.

 

By Neils Christensen of Kitco News; nchristensen@kitco.com

 

 

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