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The FTX Collapse Works Well For Gold, Says Michael Burry

John Galt

Updated: November 17, 2022

gold china
Editor’s Note:

EDITOR'S NOTE: According to Michael Burry of the Big Short fame, the FTX collapse is a bullish event for gold. It reminds us, yet once again, that most innovations fail, and that “movements” driven by techno-fetishistic obsessions often reflect more hype than substance. The crypto space was always a devil’s bargain: to fully reap the benefits of decentralization, you had to be willing to take the risk of operating without regulatory oversight. Any person who’s had it with the fiat system and the government’s monopoly over all things monetary would have jumped at such an opportunity. But crypto has no intrinsic value other than faith in its adoption and market value, making it, in a way, worse than fiat money. Gold, on the other hand, has always had the potential to function in a decentralized, private, and relatively anonymous matter. But to younger investors, real glitter is to be found not in the physical world but in the virtual one; a quality that gold can’t deliver, and for a good reason. 

Burry, who runs the hedge fund Scion Asset Management, said the crypto chaos caused due to FTX collapse works well for gold.

Michael Burry, who bet against the US mortgage market and made millions during the 2008 financial crisis, sees gold rallying on a contagion following the collapse of crypto exchange FTX, according to a report by Kitco.com said.

Burry, who runs hedge fund Scion Asset Management, was featured in the book “The Big Short” and the film by the same name for spotting the US mortgage crisis early on. He also made millions in 2019 by purchasing the shares of GameStop before the Reddit chaos took over the stock.

According to Burry, the crypto chaos caused due to FTX collapse works well for gold, a comment quite rare for the investor to make.

"Long thought that the time for gold would be when crypto scandals merge into contagion," said the investor in a tweet which has now been deleted.

Moneycontrol could not independently verify the news.

In another tweet, Burry revealed his position at the moment. “You have no idea how short I am," he stated on Tuesday.

As per a Q3 regulatory filing, Burry had purchased Qurate retail worth $10 million. It owns home shopping channels QVC and HSN. In Q2, he ended up selling most of his primary holdings like Meta and Alphabet. However, these reports do not give away any short positions.

Meanwhile, the cryptocurrency space is facing one of the most chaotic weeks on record, following the last week’s collapse of FTX. The crypto exchange's CEO resigned after failing to raise funds from investors, leading to the firm filing for Chapter 11 bankruptcy protection on Friday.

Originally published by Money Control.

 

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