When a bull sells, the community should stand up and take note, especially when it’s not for the first time. Back in 2011 John Paulson’s New York hedge fund sold a third of its gold exposure. That year gold touched $1,900 an ounce. The circumstances may be different in 2015 as gold flirts with $1,000 now, but if the price reaction is the same, then gold’s safe haven appeal may come under further scrutiny. But if you follow Warren Buffett’s philosophy then this wouldn’t be a concern. He’s famously quoted as saying gold’s worthless and why he wouldn’t invest in a company that has no control over the sale price of its product. Maybe Paulson’s team are starting to see the same picture. – Stuart Lowman
by Marcy Nicholson
NEW YORK (Reuters) – Hedge fund Paulson & Co cut its stake in the world’s biggest gold-backed exchange-traded fund in the second quarter of 2015, after holding it unchanged for six straight quarters, just before prices took a tumble, a filing showed on Friday.
The move came just before spot gold prices tumbled 6.6 percent in July, their weakest monthly performance in more than two years after a steep selloff in Shanghai and New York, and on expectations for the U.S. Federal Reserve to raise rates as early as September.
“It appears Paulson was astute to lighten up some before the July plunge,” said Mike McGlone, director of research for ETF Securities in New York.
“They may have been part of the massive liquidation in July too.”
Bullion prices fell 1 percent in the second quarter.
New York-based Paulson & Co, led by longtime gold bull John Paulson, cut its stake in SPDR Gold Trust by 1 million shares to 9.2 million shares worth $1.04 billion in the quarter ending June 30, according to the 13F-HR filing.
The sharp reduction came as SPDR holdings fell by 3.5 percent in the quarter, with holdings falling another 6 percent from the end of June to the lowest since 2008 this week at 21.5 million ounces.
Also ahead of the steep drop in gold prices, Barry Rosenstein’s Jana Partners LLC liquidated their position in Market Vectors Gold Miner ETF, selling 6.8 million shares by the end of the second quarter.
Paulson & Co also cut its stake in Africa’s top bullion producer AngloGold Ashanti Ltd, and left stakes unchanged in IAMGOLD Corp and NovaGold Resources Inc .
Meanwhile, Soros Fund Management LLC kept its stake unchanged in the Market Vectors Gold Miners exchange-traded fund and added a stake in Barrick Gold Corp, the filing showed.
Soros bought nearly 1.9 million shares in Barrick Gold Corp at a value of $20.1 million, the filing showed.
Caxton Corp, on the other hand, added a new position of 73,274 shares worth $1.3 million in Market Vectors Gold Miner ETF, filings showed.
Gold demand hit a six-year low in the second quarter, a World Gold Council (WGC) report showed, as sluggish price movement and the prospect of better returns in equities curbed interest in the metal.
Demand fell 12 percent to 914.9 tonnes, with declines in China and India accounting for nearly half of the drop, the WGC said.
