'Big Short' investor Michael Burry touts gold as a winner from the FTX fiasco - and hints he's betting against the stock market
Michael Burry suggested the FTX fiasco and other crypto scandals could be good news for gold.
The "Big Short" investor teased a bet against the market, despite his recent stock purchases.
Burry has warned the S&P 500 could halve in value, and predicted a Fed pivot in the spring.
Michael Burry has trumpeted gold as a likely winner from the crypto meltdown, and hinted he's betting on stocks to tumble.
Golden opportunity
"Long thought that the time for gold would be when crypto scandals merge into contagion," Burry said in a now-deleted tweet on Tuesday.
The investor of "The Big Short" fame was almost certainly referring to the financial pressures spreading across the crypto industry that have hit Sam Bankman-Fried's collapsed crypto exchange FTX. They've also weighed on the likes of Celsius, Voyager, the Winklevoss twins' Genesis, and BlockFi in recent weeks.
Crypto proponents have pitched bitcoin and other tokens as "digital gold". Their argument is crypto is superior to the yellow metal as a haven asset and store of value during periods of inflation, currency depreciation, and economic turmoil.
Yet crypto prices have plunged this year, slashing the overall market capitalization from $2.2 trillion to around $830 billion. In contrast, gold has dipped only 3% to around $1,765 per ounce — well ahead of the benchmark S&P 500 stock index's 17% decline.
Burry is likely suggesting that a cascade of crypto fiascos will undercut demand for tokens and could spread to other asset classes, making gold an attractive holding for investors scrambling to protect their wealth.
More pain to come
"You have no idea how short I am," Burry said in a since-deleted tweet on Wednesday.
The Scion Asset Management boss was likely warning investors not to read too much into his fund's third-quarter portfolio update on Monday. Scion expanded its holdings from a single stock on June 30 to six at the end of September, boosting the value of its portfolio from around $3 million to $41 million.
Fund managers only have to disclose US-listed stocks in their 13F filings with the Securities and Exchange Commission each quarter. They exclude shares sold short, overseas-listed stocks, and other assets such as commodities.
In other words, Burry's stock purchases might signal a bullish turn, but he may have hedged or totally offset those bets with short positions and other wagers that aren't shown in his latest portfolio update.
After all, the investor warned in May that the S&P 500 might bottom at around 1,900 points — a 52% decline from its current level — and cautioned investors not to be duped by rallies in the interim. He also eviscerated his $165 million portfolio in the second quarter of this year.
Moreover, Burry reiterated his bearish stance in late October, after stocks rebounded. "Did you all just mishear a death knell as a starting gun?" he joked.
On the other hand, Burry has suggested the Federal Reserve's interest-rate hikes, which have pulled down asset prices in recent months, could end in the spring. "Still think the Fed back off on QT early next year," he tweeted on October 24.
Burry has a reputation for issuing dire, and often correct, predictions. He shot to fame for his monster bet against the mid-2000s housing bubble, which was immortalized in the book and the movie "The Big Short."
The Scion chief is also known for investing in GameStop before it became a meme stock, diagnosing the "greatest speculative bubble of all time in all things" last summer, and warning meme stocks and cryptocurrencies would suffer the "mother of all crashes."
He also flagged the risk of inflation as early as April 2020, and bet against Elon Musk's Tesla and Cathie Wood's flagship Ark Innovation fund last year.
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