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The Soros Effect: The Market’s Clear Rejection of Authority

Politics / Central Banks Jun 09, 2011 - 04:41 AM GMT

By: Dr_Jeff_Lewis


George Soros has broken central banks, built a billion dollar fortune, and awarded himself fans around the world who adore his no-nonsense speculative approach.  While he was once a kingpin of the financial markets, he took a backseat years ago to step away from his Quantum fund, only to return to an audience that has long gone.

Ordinarily, a man of his influence would have the power to sculpt the financial markets as he saw fit.   Empowered with billions of dollars, he could find an emerging trade, announce his stake, and allow the financial followers to make his vision a reality.  This had been the case with many of his investments; they were necessarily part of the playground that is social proof. 

But this time the markets are different – Soros doesn’t matter.

If it were the year 2000, Soros sale of his paper gold positions would have sent the market into a tailspin.  Gold would have dropped precipitously as investors, in for the long haul, began to question whether or not he had a leg-up on their investment thesis.  However, when Soros exited his gold position just weeks ago, no one listened. 

Instead, gold is off only 2% in the wake of his exit.  In culling back his exposure, the market dipped, only to find enough buyers and believers who are in it for the long haul.  We questioned whether or not Soros had been playing the hand of the manipulators, who should value his influence in shaping market dynamics.  He may have played their hand, but individual investors are calling his bluff.

The Biggest Bubble: Optimism

While it may be hard to find an optimist in a world filled with uncertainty, they do certainly exist all around us.  In the mainstream press, politicians voice solutions to the United States’ debt woes with grand plans so great they will take a decade to conquer.  Talking heads eat up the plans, as if they had already been executed.

But in government, there is no execution.  There are only idealists.  There are those who forecast changes in government so large that it should only be months before the American economy experiences a great rebound.  These idealists are the only optimists left.

On the other hand, the realists—the pessimists to traditional thought—are the only traders willing to stake their bets in the future.  They’re doing the executing as the idealists throw up grand plan after grand plan. 

In the metals markets, it is he who puts his money where his mouth is that has real influence in the markets.  Soros had no money where his mouth was—he had only paper bets in a fictitious market and the certainty that he could make a minor profit in a short-term bull run.

It should be come as no surprise that while the stock, bond, and currency markets may bow down to Soros’ wagers, metal investors aren’t so willing.  The widespread rejection of Soros’ brand should be social proof to the rest of us that the metals markets dominated by Wall Street bankers are still financed by every day, average investors who are in metals to own metals, not to own more dollars and cents. 

This is only the beginning of a revolution in modern finance—the individuals still call the shots.

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of and

    Copyright © 2011 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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