Michael Burry and John Paulson hit the jackpot when they called the housing crash. Now they're betting on gold.
Michael Burry bought about $8 million worth of a trust that owns physical gold bullion. John Paulson has been betting big on gold for years.
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- Michael Burry of "The Big Short" fame revealed an $8 million wager on gold this week.
- The renowned investor bought into a trust that owns physical gold bullion.
- John Paulson, who also called the mid-2000s housing crash, continues to bet big on gold.
It turns out Michael Burry isn't only a metalhead when it comes to music.
The investor of "The Big Short" fame purchased about 441,000 units of the Sprott Physical Gold Trust last quarter. The trust holds virtually all of its assets in physical gold bullion.
Burry's Scion Asset Management revealed its first-quarter holdings in a regulatory filing this week. The gold bet was worth $7.6 million at the end of March, ranking it as Scion's fifth-largest position with a 7.4% weighting in the firm's $103 million US stock portfolio.
If the wager remains intact, it was valued at $8.1 million as of Friday, per Sprott's bullion calculator.
Buying gold is a surprising move from Burry, a value investor known for sniffing out dirt-cheap stocks — including GameStop years before it became a meme stock.
He's also bet against high flyers like Elon Musk's Tesla, Cathie Wood's Ark Innovation ETF , and a microchip ETF that counts Nvidia as its top holding.
Burry shot to fame for predicting and profiting from the collapse of the mid-2000s housing bubble. The saga was chronicled in the book and movie "The Big Short."
John Paulson made his name with a similar wager, immortalized in a book titled "The Greatest Trade Ever." Like Burry, the Paulson & Co. chief appears to be bullish on gold and other precious metals.
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Paulson's firm counted AngloGold Ashanti, Agnico Eagle Mines, Equinox Gold, Iamgold, International Tower Hill Mines, Novagold, Perpetua Resources, Seabridge Gold, and Trilogy Metals among its 18 holdings at the end of March, a SEC filing showed this week.
Back in 2021, the veteran investor predicted stubborn inflation would force the Federal Reserve to hike interest rates, spurring investors to dump their cash and other assets for gold. He argued the double whammy of surging demand and limited supply would cause the yellow metal's price to soar.
Paulson's call proved prescient. The Fed has raised its benchmark rate from nearly zero to north of 5% in a bid to bring down inflation, and the price of gold has jumped from about $1,800 per troy ounce when Paulson touted it in 2021 to record levels above $2,400 in recent weeks.
Burry correctly predicted inflation and rising rates as well, and appears to share Paulson's view that gold stands to benefit.
However, it's worth pointing out that portfolio updates are only a snapshot of an investor's holdings on a single day, and may have changed by the time they're made public.
They also exclude shares sold short, private investments, overseas holdings, and non-stock assets like bonds and real estate.
Still, Burry's relatively large and uncharacteristic gold purchase is certainly notable — especially when one of the few other winners from the housing crash is also betting big on bullion.