Thursday, November 19, 2009

John Paulson Set to Launch Gold (GLD) Hedge Fund

I keep looking for something that marks at least an intermediate term top in gold, i.e. a "magazine cover" indicator aka when everyone is on the same side of the trade and even your barber starts talking up gold stocks.   This doesn't mean the thesis is not correct in the long run, but let's keep an eye out.

The latest bit of "piling on" in the gold trade is infamous hedge fund manager John Paulson - who already holds enormous amounts of gold in his main fund (over 8% of the entire SPRD Gold Shares (GLD) ETF!) - opening a gold specific hedge fund, partially just to find a place to protect his wealth from the ravages of central bankers.  He will be putting $250M of his own money into the fund.

At this point if John Paulson was his own country he'd be somewhere in the 16-20th range in terms of largest gold holdings... I guess he wants to make a run for top 10 status - remarkable.  [Oct 13, 2009: Largest Gold Reserves by Country]

  • Hedge fund manager John Paulson, who raked in $20 billion in 2007 by betting against financials and all things subprime, is looking to grow his gold stash with a new fund, tapping into investor concern about a weak U.S. dollar and inflation.
  • According to the WSJ, the famed money manager will launch in January 1st a fund dedicated to buying up shares of gold miners and other bullion-related investments. The new fund will invest in gold-related shares and gold derivatives and will aim to outperform gold prices.
  • Mr. Paulson, who spoke about the fund at a meeting with his investors in New York, argued that the bull run was only beginning for the precious metal. He said he was starting it in part to give himself more personal exposure to gold.
  • Paulson is already a major holder of gold. For the past year or so he has been building gold positions in the firm’s current funds. His investments include shares of Johannesburg-based gold producer AngloGold Ashanti Ltd (AU). The billionaire manager also has a large stake in Gold Fields (GFI), Kinross Gold (KGC), Market Vectors Gold Miners ETF (GDX) and SPDR Gold EFT (GLD) in which he has over 31 million shares or 8.6%.
  • Mr. Paulson currently has more than 10% of his $30 billion or so under management in gold-related investments, according to his investors. He is estimated to be worth about $6 billion, and plans to invest as much as $250 million of his own money in the new fund.

[Aug 12, 2009: John Paulson Makes Bank of America 2nd Largest Holding after Gold]
[May 16, 2009: John Paulson Continues to Pile Into Gold]
[Mar 17, 2009: John Paulson Joins David Einhorn as Gold Bug with Stake in AngloGold Ashanti (AU)]

Long some gold instruments in fund; no personal position

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