Druckenmiller bets on the world’s two largest gold producers

According to updated F-13 regulatory filings, Stanley Druckenmiller’s Duquesne Family Office dumped its holdings in Google’s Alphabet (Nasdaq: GOOGL), Alibaba Group (NYSE: BABA) and Amazon (Nasdaq: AMZN) in the fourth quarter of 2023.

As Druckenmiller has pared back his exposure to the tech and ecommerce sectors, he has placed new, albeit smaller, bets in the mining sector. The filings show the investment office bought 1.76 million shares of Barrick Gold (NYSE: GOLD) and 474,000 shares of Newmont Mining (NYSE: NEM). At the same time, they increased their exposure to Teck Resources (NYSE: TECK), which represents the fifth biggest investment in the portfolio.

Druckenmiller’s renewed focus on the world’s two largest gold producers brings new attention to a mining sector that has struggled since the start of the year. The VanEck Gold Miners ETF (NYSE: GDX) is down nearly 14% so far this year, even as it bounced off its four-week lows earlier this week. GDX last traded at $26.70 an ounce.

Newmont has attracted specific attention as its share price has fallen nearly 20% since Jan. 2. Shares of the world’s largest mining company last traded at $33.12.

Barrick is also down nearly 20% year-to-date, with shares in the second-largest gold miner last trading at $14.41.

The gold equity sector has significantly underperformed the underlying commodity even as gold prices test support near $2,000 an ounce. April gold futures last traded at $2,012.60 an ounce, down roughly 3% so far this year.

Although gold prices have struggled since the start of the year, analysts have noted that historic central bank demand, coupled with financial market uncertainty and ongoing geopolitical turmoil, continues to provide a solid support for the precious metal.

Many analysts expect that gold prices will eventually rally to new all-time highs as the Federal Reserve eventually cuts interest rates and embarks on a new easing cycle. Analysts have noted that in this environment, mining companies should eventually outperform the precious metal.

Although Druckenmiller is testing the precious metals waters, his bets in Barrick and Newmont represent small positions in the portfolio. The firm’s top holding remains Microsoft (Nasdaq: MSFT). The family office also has a significant stake in Nvidia (Nasdaq: NVDA), even after reducing the position by 29% in the fourth quarter.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com