'Big Short' Michael Burry says this is gold's time, cites crypto 'contagion'
(Kitco News) In a rare comment, "The Big Short" investor Michael Burry has weighed in on gold, stating that this is the time for the precious metal to rally because of the crypto contagion risk post-FTX collapse.
Burry, who runs the hedge fund Scion Asset Management, is known for spotting the mortgage crisis early and making a fortune against the U.S. housing bubble. In 2019, the investor also made millions by purchasing shares of GameStop, which was well before the Reddit frenzy took over the stock.
Burry rarely comments on gold, making this call much more unique for traders. According to him, the crypto chaos caused by the FTX saga sets the stage nicely for gold.
"Long thought that the time for gold would be when crypto scandals merge into contagion," Burry said in a tweet that has since been deleted. Burry is known to delete his tweets shortly after posting them.
November 15, 2022
His Tuesday comment coincided with gold getting a lot of attention from investors after its impressive November gains — up nearly 8%. The move higher comes after seven months of consecutive losses. Analysts cite cooler inflation data, lower U.S. dollar, crypto risk, and a potential slowdown by the Federal Reserve as some of the main reasons behind the price gains.
At the time of writing, spot gold was trading at $1,776 an ounce.
The famous investor also revealed that he has a sizeable short position at the moment. "You have no idea how short I am," Burry said in another tweet Tuesday.
According to the Q3 regulatory filing, Burry had purchased $10 million worth of Qurate Retail, which owns home shopping channels QVC and HSN. In Q2, Burry sold most of his significant holdings, including Meta and Alphabet. However, these quarterly reports do not reveal short positions.
In the meantime, the crypto space is reeling after one of the most chaotic weeks on record. The trigger was last week's FTX collapse, which led to the crypto exchange filing for Chapter 11 bankruptcy protection on Friday and its CEO Sam Bankman-Fried resigning.
Following the FTX explosion, regulators have opened various probes. Ongoing investigations are being conducted by the U.S. Justice Department, the Securities and Exchange Commission, and the Commodity Futures Trading Commission, Reuters reported this week.
Authorities in the U.S. and the Bahamas are now working on potentially bringing Bankman-Fried to the United States for questioning. The former FTX CEO has also been slapped with a class action lawsuit that claims Bankman-Fried and other high-profile individuals, including NFL quarterback Tom Brady and NBA star Stephen Curry, broke Florida law and caused more than $11 billion in damages.