Billionaire investors George Soros and Louis Moore Bacon cut their stakes in exchange-traded products backed by gold as prices dropped the most in more than eight years. John Paulson maintained his holding.
Soros Fund Management reduced its investment in the SPDR Gold Trust, the biggest fund backed by the metal, by 55 percent to 600,000 shares as of Dec. 31 from three months earlier, a U.S. Securities and Exchange Commission filing showed Thursday. Bacon’s Moore Capital Management LP sold its entire stake in the SPDR fund and lowered holdings in the Sprott Physical Gold Trust last quarter. Paulson & Co., the largest investor in the ETP, kept its stake at 21.8 million shares.
Gold prices tumbled 5.5 percent in the fourth quarter, the most since the three months ended June 30, 2004, as signs of improving economic growth reduced the appeal of the previous metal as a haven. Global ETP holdings have slumped 0.9 percent since reaching a record on Dec. 20. UBS AG reduced its one-month target Thursday by 6.8 percent, saying economic optimism “takes the shine off defensive assets,” including bullion.
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“The economy is looking better, and people are moving to more remunerative assets like equities,” Paul Dietrich, the chief executive officer of Foxhall Capital Management Inc., said in a telephone interview from Alexandria, Virginia. “A lot of people have lightened up on gold.”
Hedge funds have cut their bets on a gold rally by 56 percent since reaching a 13-month high in October as manufacturing rebounded from the U.S. to China. It’s increasingly likely that prices peaked in 2011 and “downside risks” are building as the world expands, Tom Kendall, an analyst at Credit Suisse AG in London, said in a report e-mailed Feb. 1.
“The economy is showing strength, and” people would rather invest in “economically-sensitive commodities and equities,” said Adrian Day, who manages about $160 million of assets as president of Adrian Day Asset Management in Annapolis, Maryland. “We may see people come back to gold if troubles in Europe get worse and problems in the U.S. reappear.”
Michael Vachon, a spokesman for Soros, was not immediately available when called for comment and did not reply to an e- mail. Armel Leslie, a spokesman for New York-based Paulson & Co., which manages $18 billion in assets, declined to comment on the returns.
Money managers who oversee more than $100 million in equities must file a Form 13F with the SEC within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.
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