Tags: Soros | Paulson | bulk | gold

Big-Time Players Soros, John Paulson and Pimco Bulk Up on Gold

By    |   Thursday, 17 May 2012 07:01 AM

Several investment heavyweights maintained or increased their gold holdings through exchange-traded fund SPDR Gold Shares in the first quarter, Securities and Exchange Commission filings show.

The luminaries include George Soros, John Paulson and Eton Park Capital Management's Eric Mindich. Pimco and the Teacher Retirement System of Texas also purchased shares of the ETF.

Gold’s 8 percent drop this quarter raises the question of whether these investors have sold any of their holdings. Or perhaps they see gold resuming its 11-year upswing and have either maintained their positions or added to them.

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Some gold investors have said in recent days that the decline represents a buying opportunity. Continued central bank easing around the world will buoy the precious metal, they maintain.

"If gold isn't working right now, you have to look at that as a buying opportunity, unless you can somehow believe that governments can print trillions of new currency and it won’t matter," Louis James, chief metals strategist at Casey Research, tells Yahoo.

Paul Dietrich, CEO of Foxhall Capital Management, says strong gains could be in store. “I would not be surprised if gold starts racing and touches its peak either at the end of this year, or maybe in 2013,” he tells Bloomberg.

Gold hit a record high of $1,924 last September. It recently traded at $1,540.

As for the investors, Soros Fund Management increased its holdings in SPDR Gold Shares by 274 percent to 319,550 shares. That would now be worth about $47.8 million.

Paulson & Co. left its investment at 17.3 million shares, now worth $2.6 billion. Mindich’s Eton Park Capital Management bought 739,117 shares after holding none before.

For Paulson, this was the first quarter it didn’t cut its SPDR Gold Shares holdings since the second quarter of 2011.

Analysts speculate that the prior reductions resulted from client redemptions, Reuters reports. The firm’s decision to maintain its holdings through the first quarter shows John Paulson remains bullish on the metal, they say.

On the other side of the gold trade, Vinik Asset Management, founded by Jeffrey Vinik, former manager of Fidelity Magellan Fund, sold 300,000 shares of SPDR Gold in the quarter, leaving its stake at 2.3 million shares.

Steven Cohen’s SAC Capital slashed its holdings by 63 percent to 66,700 shares.

So clearly views are mixed on the precious metal. Star investor Jim Rogers thinks weak demand for gold in India and possible selling by European central banks could lead to a substantial correction.

There’s even a chance that India, one of the world’s biggest gold consumers and investors, will ban imports of the metal, Rogers tells Business Insider. “If they did that, it would be devastating for gold. Gold would certainly go down 40 percent to 50 percent from its top.”

Among other bearish signs, the total of hedge fund holdings in SPDR Gold Shares fell 3 percent, or $190.1 million, in the first quarter, to $6.35 billion, according to Bloomberg. And overall global holdings of exchanged-traded products backed by gold are headed for a third straight monthly decrease.

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

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Thursday, 17 May 2012 07:01 AM
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