By Frank Tang
NEW YORK Feb 14 Hedge fund Paulson & Co
maintained its stake in the world's biggest gold-backed
exchange-traded fund, SPDR Gold Trust, in the fourth
quarter, even as others exited when bullion prices posted their
biggest annual loss in 32 years.
Well-known manager George Soros bought shares in Barrick
Gold Corp, one of the world's top gold mining
producers, while other institutional investors, including PIMCO,
continued to cut their exposure to gold investments.
News that notable hedge funds held onto their gold holdings
is expected to boost confidence among bullion investors, which
has been shaken as the Federal Reserve began to trim its
monetary stimulus amid a better economic outlook.
"The fact that hedge fund managers continue to hold gold
bode well for investor sentiment towards the metal, especially
since we've had such a strong start to the year," said Jeffrey
Sica, chief investment officer of New Jersey-based Sica Wealth
Management, which has over $1 billion in client assets.
Investors pay close attention to the quarterly filings by
Paulson and other notable hedge fund managers because they
provide the best insight into whether the so-called "smart
money" has lost faith in gold as a hedge against inflation and
Since the beginning of the year, gold has gained nearly 9
percent, thanks to an equities retreat after last year's record
run on doubts over the U.S. economic recovery and as
emerging-market turmoil cast a shadow on global growth. In 2013,
gold was down 28 percent.
"I am glad that Paulson is recognizing gold's fundamentals
and (is) not influenced by these price movements," said Axel
Merk, portfolio manager of California-based Merk Funds, which
has more than $400 million in currency mutual fund assets.
SOROS ADDS BARRICK SHARES, PIMCO CUTS AGAIN
New York-based Paulson & Co, led by longtime gold bull John
Paulson, owned 10.2 million shares in the ETF worth $1.19
billion on December 31, unchanged from its holdings on September
30, a filing with the U.S. Securities and Exchange Commission
showed on Friday.
That represents a loss of $123 million as the price of gold
tumbled in the fourth quarter.
Paulson, which shot to fame in 2007 with a prescient bet
against subprime mortgages, sharply cut its stake to 10.2
million shares in Q2 from 21.8 million in Q1, marking the first
time the firm cut its gold ETF stake since the fourth quarter of
Soros Fund Management, run by billionaire financier George
Soros, added 6.3 million shares of Barrick Gold worth $111
million to its holdings. The firm also boosted its stake in the
Canadian miner's call options.
Boston-based Baupost Group, one of the industry's most
revered hedge funds run by Seth Klarman, sticked with its 21.7
million stake in NovaGold Resources Inc, valued at $55
Among large institutional investors, PIMCO has now cut its
stake in SPDR Gold Trust for a fifth consecutive quarter to just
0.8 million shares by Q4, down sharply from 6.3 million shares
in the second quarter of 2012.
SPDR Gold Trust held about 800 tonnes of gold at the end of
the fourth quarter, a 12 percent decline from the 906 tonnes in
the third quarter. The pace of selling appeared to slow after a
nearly 400-tonne outflow, or 30 percent drop, in the first half
of the year.
Institutional investors' massive stakes in SPDR Gold Trust
have tremendous influence in gold prices as redemptions of their
massive ETF mean dumping the metal in the open market.