Photo: Card Player
Last week Daniel Shak decided to offload his position in $850 million worth of gold contracts.Even though his hedge fund is only tiny – it has ~$10 million AUM – Shak held contracts that accounted for 10% of the main U.S. futures market — the equivalent of South Africa’s annual gold production, according to the Wall Street Journal.
But with gold prices falling since the new year, Shak’s bets started to flail.
He says he abandoned the bet when he was 70% down. Losses totalled about $7 million.
“It was David against Goliath… I just decided to get out; down 70% is better than down 100%,” he said.
On Monday he liquidated his position and returned money to clients: “as a result, the number of gold contracts… plunged more than 81,000, to about 500,000, the biggest single reduction ever.” (FYI, an average daily move is about 3,000 to 5,000 contracts).
The drop caused panic among gold investors. Brokers told the WSJ they had a ton of clients call because they were worried big trader was dumping holdings.He launched his firm, SHK Asset Management, in 2002 after working for years as a floor trader at Comex.
Shak lives in Las Vegas and also had a pad in the Hamptons. Last week he put his Fifth Avenue condo on the market for $7.5 million.
He’s also a star poker player, and last year beat card king Phil Ivey at a poker competition in Australia.
“The skill set you need to succeed in corporate life and the financial world is the same skill set you need to succeed at the poker table,” he said.
After he won the major tournament, called Aussie millions, he told an Aussie publication, “I am one of the very few people willing to sit down and make a market in any spread transaction. It’s a niche market, but it’s my niche.”He also said, ”Never try to pick the price of gold. History shows it takes a year to go up, and three days to go down,” when the reporter asked him for tips.
He maintains that he wasn’t forced to sell-out, but “chose to” and that he “was in the process of closing anyway.”
“This is not career ending. I’m not stopping trading,” he told the WSJ.
Though he just might not trade with other people’s money he said.