Did George Soros try to game the gold market by calling it "the ultimate bubble"...?

"HE WHO HAS a Hungarian friend has no need of an enemy," runs the old saying – a nice racial slur that gold investors might feel true of George Soros right now.

The billionaire hedge-fund legend declared Gold Investment to be "the ultimate bubble" at January's World Economic Forum in Davis, Switzerland.

Yet the latest US filings show that Soros Fund Management LLC more than doubled its stake in the SPDR Gold Trust – a near-proxy for gold ownership – between Oct. and Dec. last year, taking its stake to nearly 2% of the ETF's total stock in issue.

What's going on?

Soros may have less day-to-day control over the fund than its name suggests, of course. And that holding of 6.2 million shares in the world's largest Gold ETF, worth some $663 million by Dec. 31st, may have been sold before Soros spoke to CNBC four weeks later.

But if you actually hear what George Soros said – rather than taking headline writers for gospel – gold's Hungarian friend is less of an enemy than he appears.

"When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold."

"I don't know what was in the great man's head when he said this," confessed Paul Tustain, founder & CEO of BullionVault after newspapers and finance sites worldwide screamed how "Soros Says Gold is Now Ultimate Bubble" last month.

"But it's just possible he was making rather more accurate use of the English language than [British journalists]..."

"Ultimate" means final. So does the Hungarian translation, végs?. It does not mean "mother-of-all"...not outside what was once called Fleet Street, that rat-run of hacks now scattered along the Thames but still a very long way from the language schools of Budapest.

It's also worth noting, perhaps, that after escaping Nazi deportation in 1944, and fighting the occupation a year later, Soros is reputed to have begun his financial career trading currencies and jewelry amid the hyperinflation which then swept Hungary as its war-time economy and fascist puppet-government collapsed.

By July 1946, the "ultimate" stage of that currency event – the worst-ever recorded inflation in history – shop prices were doubling every 15 hours. One gold Pengo coin, minted in 1931, was worth 130 trillion paper Pengos...

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