Paulson Steps Up Gold Bet to 44% of Firm’s Equity Assets

August 15, 2012 By 3 Comments

Wait till these massive hedge funds start requesting physical delivery of their gold (and soon silver) holdings as counter-party confidence collapses further.  That’s when the musical chairs rehypothecation game will get interesting.

Billionaire John Paulson raised his stake in an exchange-traded fund tracking the price of gold while selling other stocks during the second quarter, leaving his $21 billion hedge fund with more than 44 percent of its U.S. traded equities tied to bullion.

Paulson & Co. purchased an additional 4.53 million shares of the SPDR Gold Trust, the firm’s largest position, and bought more shares of NovaGold Resources Inc. (NG), according to a Form 13F filed yesterday with the U.S. Securities and Exchange Commission. Gold prices posted their biggest declines since 2008 last quarter.

While Paulson trimmed his stake in AngloGold Ashanti Ltd. (ANG)and Gold Fields Ltd. (GFI), sales of energy, financial and auto-parts stocks boosted the relative weighting of gold-related securities in his U.S. stock portfolio to the highest in three years. That’s making the fund more vulnerable to declines in the price of bullion as the hedge-fund manager struggles to reverse record losses last year.

Paulson, 56, has lost 23 percent so far this year in his Gold Fund and 18 percent in the Advantage Plus Fund, in part because of wrong-way bets on mining companies. Advantage Plus, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, declined 51 percent last year….
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Comments

  1. Avatar of TimeForSomeFun TimeForSomeFun says:
    August 15, 2012 at 2:32 PM

    Only difference between today’s financial world, and a two-bit gambling casino is you can still win sometimes in the two-bit casino.

  2. Avatar of Ed_B Ed_B says:
    August 15, 2012 at 5:44 PM

    We can still win in the financial world today too but we have to be incredibly nimble.  Think about the time that mammals first appeared on Earth when it was ruled by huge lizards, birds, and fish.  They survived and then thrived as all those huge creatures died off.  There IS a lesson in this for all of us.  Today’s financial market is not a bit like yesterday’s market.  It is not an investor’s market.  It IS a trader’s market.  So, if you want to succeed in it, learn how to trade and, above all, be quick!  These Wall Street dinos can and will be defeated but it will not be via face to face confrontation.  It will be by subtlety, guile, quickness, and by showing them absolutely no mercy whatever.  We can and will adjust their position on the financial food chain… they just don’t know it yet.  :-)
     

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