Billionaire Ken Griffin Buys an Index Fund That's Crushing Bitcoin, Nvidia, and the S&P 500 in 2025

Ken Griffin's Citadel initiated a small position in the SPDR Gold Shares ETF (GLD) in Q3 and holds call options on GLD that represent the fund's fourth-largest position; GLD has returned ~60% year-to-date versus Nvidia +32%, Bitcoin -2% and the S&P 500 +16%. Goldman Sachs projects gold at $4,745/oz (~13% upside from $4,200), while J.P. Morgan warns momentum-driven demand may fade; the article cites tariffs and attacks on Fed independence as drivers of safe-haven demand. For allocators, the trade signals notable hedge-fund positioning into gold but warrants a small, cautious exposure given the rapid appreciation and risk of a drawdown.

Analysis

Market structure: Large hedge funds adding GLD and buying call options benefits bullion custodians, ETF issuers (State Street) and volatility sellers who collect premium; physical miners (GDX) are leveraged beneficiaries if price rise persists. Limited annual above‑ground supply growth (1.5–2.5%) means marginal demand moves price nonlinearly, and concentrated call positioning creates gamma risk that can amplify intraday moves and spikes in implied vols.

Risk assessment: Tail-upside (low prob, high impact) includes a Fed‑independence shock or tariff escalation that collapses USD and drives gold >+25% in weeks; tail-downside is abrupt momentum unwind — a 20–40% drawdown is plausible if macro fears abate (historical 2011 parallel). Near term (days) watch option gamma and flows; medium (1–6 months) watch CPI/Fed minutes and election headlines; long term (quarters) watch miner capex and central bank buying. Hidden dependencies include ETF redemption mechanics, option counterparty concentration, and correlations with real yields.

Trade implications: Tactical convexity favored — small funded options or modest physical ETF exposure rather than large unhedged positions. Expect cross‑asset: falling real yields lift gold and TIPS, while weaker USD boosts EM assets; equities (NVDA) may underperform during risk‑off but can decouple on earnings/AI strength. Catalysts to monitor: next two CPI prints, Fed commentary, DXY moves >±2% in 30 days, and large 10y real yield moves (>50bp).

Contrarian angles: Consensus may be overplaying political risk — momentum bets can exhaust and produce violent mean reversion; crowded GLD calls risk cliff losses if flows reverse. Historical parallels (2011–2015) show miners can lag in a protracted unwind, so favor staged entries and explicit tail hedges rather than full-size buys now.

Key Decisions for Investors

• Establish a tactical 2% portfolio long in GLD (NYSE:GLD) today; use a 12% trailing stop and a take‑profit plan to realize at +15–20% within 3–6 months. Reassess after next two CPI prints.
• Allocate 0.5% of portfolio to GLD 6‑month 5% OTM call options (buy calls) to capture convex upside; if implied vol drops below 12% on purchase, roll or close to preserve cost basis. Size each roll to keep max option exposure <1% of portfolio.
• Add 1.5% long exposure to GDX (gold miners ETF) as a leveraged play on a sustained gold rally; implement a 25% hard stop to limit beta to gold and avoid the post‑bubble miner lag seen in 2012–2015.
• Hedge tail‑risk: buy 1 month GLD puts equal to 0.25% notional or purchase a 3‑month put on DXY (or short DXY futures) sized to offset 50% of GLD position if DXY falls >2% in 30 days; monitor Fed/Election headlines daily.
• Reduce offensive growth exposure (example: trim NVDA position by 5–10% if gold rises >10% in 30 days or 10y real yields fall >50bp) and redeploy proceeds into GLD/GDX per rules above.