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Hedge fund kings Soros and Paulson again increase their gold holdings

Posted on 20 November 2012 with 1 comment from readers

Two of the giants of the hedge fund industry, George Soros and John Paulson continued to raise their gold investments in the third quarter. Mr. Soros raised his gold holdings by 49 per cent to 1.32 tonnes worth $219 million while John Paulson has $3.6 billion invested in the yellow metal.

Mr. Paulson became a billionaire in 2007 by betting against the subprime mortgage market in the ‘trade of the century’. His personal holdings in the SPDR Gold Trust of some 66 tons is higher than the national gold reserves of Brazil.

Ultimate asset bubble

In January 2010 Mr. Soros confused observers saying that gold was the ‘ultimate asset bubble’. Some commentators thought that was a death knell for gold but he probably meant that gold would become the ultimate bubble rather than it was already in a bubble. The gold price is up 60 per cent since then.

Gold prices have a decade long record of consistently outperforming price forecasts. These currently range from $1,850 to $2,300 an ounce for the next 12 months.

One day gold will surely become the ‘ultimate asset bubble’ that is to say the last major asset class to see a price spike. The graph shows no sign of it yet, indeed the price has still to recover the all-time high of $1,923 reached September 6th a year ago.

More likely we will see a catch-up phase for the gold price and then a sudden break above $2,000. Gold took three attempts to clear $1,000 an ounce, and then soared upwards. Many analysts called a top at $1,000 only to stand in amazement as the metal surged ahead.

Billionaire bet

How high and when the gold price will take off is really anybody’s guess. But two of the brightest and richest, self-made billionaires of the investment world simply choose to hold gold and wait for the better prices to come.

Gold is a hedge against inflation caused by money printing by central banks, themselves the largest hoarders of gold. The paper money fraudsters know how to protect their own interests and so do the giants of the hedge fund world.

Then again India and China are the world’s biggest buyers of gold and not the other central banks, nor the global hedge funds, many of which have gotten the gold trade hopelessly wrong.

Posted on 20 November 2012 Categories: Gold & Silver, Hedge Funds, Investment Gurus

1 Comment posted by readers:

Comment by Bernard M.A.Doff - 20 November 2012

“His [John Paulsen's] personal holdings in the SPDR Gold Trust of some 66 tons is higher than the national gold reserves of Brazil.”

Gasp. What a stat.

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