Don't Take John Paulson's $1.5 Billion Gold Dump The Wrong Way

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He still loves the stuff. He just doesn't need to hedge it quite so much anymore, because really, how much lower can it go?

Billionaire hedge fund manager John Paulson, who told investors as recently as last month that they should own gold, cut his holdings in the metal by more than half as prices plunged into a bear market.

Paulson & Co., the largest investor in the SPDR Gold Trust, the biggest exchange-traded product for the metal, pared its stake to 10.2 million shares in the three months ended June 30 from 21.8 million at the end of the first quarter, according to a government filing yesterday. The New York-based firm, which manages $18 billion, cut its ownership for the first time since 2011 “due to a reduced need for hedging,” according to an e-mailed response to questions. It also sold options to buy shares in Barrick Gold Corp….

At an investor conference on July 17, Paulson affirmed a commitment to investing in the metal and stocks of producers to hedge against currency debasement as central banks pump money into economies. The firm didn’t provide additional comment yesterday on its SPDR stake. The hedge fund made $15 billion for investors in 2007 by betting against subprime mortgages before the housing collapse.

Paulson sold call options to buy 360,000 shares in Toronto-based Barrick, the biggest gold producer.

Gold Bull Paulson Cuts SPDR Stake by Half in Bear Market [Bloomberg]
Hedge funds cut gold holdings more in second quarter [Reuters]

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