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Paulson Hedge Fund Keeps Hold on Gold
Paulson & Co., the largest investor in SPDR Gold Trust, kept its stake in the gold-backed exchange-traded fund.
Amid dipping prices, SPDR showed a modest increase as the holdings in the fund rose by 1.79 tonnes to 782.25 tonnes last Thursday.
Reuters said the increase was a notable rebound from its annual loss in 2013, considered the biggest loss in the last 32 y ears.
A report from Bloomberg said Paulson & Co. kept its 10.25 million shares as of March 31, according to a government filing.
The fund’s holdings remained unchanged for the third straight quarter.
Paulson is among the most famous names in high finance today for being able to earn billions through his money management skills.
His company started specializing in “event-driven” investments such as stocks with potential mergers or acquisitions. He became known mostly because of his investment strategies during the subprime housing market crash.
By making $15 million in 2007 alone while the rest of the lost badly to the crash, his prediction of the subprime mortgage crisis and decision to bet against it earned him the title of having executed the “greatest trade of all time.”
Bloomberg said that since 2009, Paulson had been banking on the theory that gold prices would rise amid unprecedented monetary stimulus. However, the report pointed out that Paulson’s “tone changed” when annual price declined for the first time since 2000.
Nevertheless, many are looking to gold, which has long been used as a hedge on inflation and economic instability, as tensions escalate in Ukraine.
Goldman Sachs Group Inc. was quoted saying, “While we remain bearish on gold, escalating geopolitical tensions in Ukraine have offset stronger…We continue to expect a sequential acceleration in U.S. economic activity, and hence for gold prices to decline.”
At the same time, Peter Sorrentino of Huntington Asset Advisors told Bloomberg, “Central banks across the globe have pumped in a lot of money into the system, and that at some point will trigger inflation.”
“We probably could see some momentum players return to the gold market,” he said.
His view was shared by Premium Exploration CEO John Ryan back in March.
"The Federal Reserve is leading the largest money creation binge in history. That naturally results in concerns about inflation and the long-term value of paper currency as an asset. Many investors are ignoring signals about the viability of quantitative easing. But not the Chinese, which is why they are buying up so much gold in an effort to diversify their asset base,” he said, pointing out that the Chinese bought the most gold in history.
Premium Exploration, Inc. (OTC: PMMEF; http://finance.yahoo.com/q?s=PMMEF&ql=1) is a mining company that has projects in Idaho and Montana.
Premium exploration’s Idaho Gold Project, located in Elk City, Idaho Country, is a re-emerging mining district that is believed to have several bulk tones of hold deposits. Its Friday Zone has a 629,000 indicated and 146,000 inferred gold ounces while Buffalo Gulch Zone has 111,000 indicated gold ounces.