* Paulson increases SPDR Gold Trust by 26.1 pct in Q2
* Gambit results in paper gain of over $580 million
* Eton Park sold out GLD stake
* Soros more than doubled stake, Third Point trimmed
By Frank Tang
NEW YORK, Aug 14 Prominent hedge fund manager
John Paulson raised his stake in gold in the second quarter of
2012, boosting investor confidence that bullion prices have more
room to rise this year, a U.S. regulatory filing showed on
It was the first time Paulson & Co had increased its
position in the SPDR Gold Trust since the first quarter of
2009, when the investment firm initially acquired 31.5 million
shares of the world's No. 1 exchange-traded fund.
"The fact that you have one guy who made the most money in
his gold fund is increasing his holding, you have to feel
confident about that if you are a gold bull," said Mihir Dange,
COMEX gold options floor trader for Arbitrage LLC.
Turnout from other major fund managers with positions in the
gold ETF was mixed. While billionaire financier George Soros
more than doubled his shares in the ETF, Eton Park Capital's
Eric Mindich had dissolved his stake by the end of the second
Paulson & Co owned 21.8 million shares in SPDR Gold by the
end of June, up about 26 percent from 17.3 million shares from
March 31, a regulatory filing with the U.S. Securities &
Exchange Commission showed.
The gamble resulted in a paper gain of nearly $583 million
for the company as the value of its ETF holdings rose to $3.39
billion from $2.81 billion.
Paulson also raised his stake in gold mining companies
including NovaGold Resources Inc and Allied Nevada Gold
Corp. He also established a new position in NovaCopper
In the first quarter, Paulson retained his position in the
gold ETF after slashing his holdings in two previous quarters
due to what analysts suspected were client redemptions.
Paulson has to date been the biggest holder of SPDR shares,
using them to hedge currency exposure, while other managers such
as Greenlight Capital's David Einhorn and Third Point LLC's
Daniel Loeb have favored more discrete investments in physical
Analysts read the second quarter filing by Paulson as a sign
that the hedge fund manager, a well-known gold bull, has not
lost his faith in the precious metal as a long hedge against
Spot gold fell 4 percent in the second quarter, as
prices largely traded in a $150 range following a 7-percent gain
in the first quarter.
After failing to breach resistance at $1,680 an ounce in
early April, bullion prices fell toward $1,525 an ounce several
times in May but held each time. The metal has since pared some
losses to end the second quarter near $1,600.
Disappointment over a lack of more stimulus by the U.S.
Federal Reserve and other central banks has weighed heavily on
gold, a traditional inflation hedge.
Overall physical bullion holdings used to back shares of the
SPDR Gold Trust slipped 7 tonnes, or less than 1 percent, to
about 1,280 tonnes by the end of the second quarter, following
an 8 percent inflow in the first.
SOROS UP, THIRD POINT TRIMMED
Billionaire financier George Soros increased his position in
SPDR Gold to $137 million in the second quarter from $52 million
Last year, Soros, who had called gold "the ultimate bubble,"
largely dumped his stake in the ETF before the metal ran up to a
record peak of $1,920.30 per ounce in September.
Traders said that some hedge fund managers have been putting
their money in other assets such as equities in a bid to get
higher returns as the euro zone debt crisis appeared to
The second quarter was a difficult one for hedge funds as
the equities market's benchmark S&P 500 fell 3.3 percent
in the period, while funds on average lost 2.7 percent in the