Hedge funds slash bullish wagers on gold over Trump election win
Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
The SPDR Gold Trust, whose largest shareholder is legendary investor John Paulson, saw outflows of $534 million last year, which is in stark contrast to strong inflows at its competitors. Market Vectors Gold Miners ETF and iShares Gold Trust recorded inflows of $2.8 billion and $2.7 billion respectively.
Paulson, who made billions betting on the sub-prime mortgage crisis and in 2010 had a record pay day of $5 billion, experienced the worst year of his career in 2011. Bloomberg reports:
Paulson’s $28 billion firm, Paulson & Co., will need to generate a 104 percent return to recoup a 51 percent drop in one of his largest funds after wagers on a U.S. recovery went awry.
The FT goes so far as to call Paulson’s dominant role in the gold market a ‘curse’ and foresees a dash for cash:
Knowing that Paulson & Co holds more gold than many central banks, and that it is struggling, it only takes a short leap of imagination to worry that he might be forced to sell it. Indeed, in the third quarter of last year, Paulson & Co sold ETF shares equivalent to roughly 34 tonnes of gold – and in September the gold price fell 11 per cent.
2 Comments
Yelets1
We watch closley the options saddle on GLD (this friday) as it seems to be the significant driver in recent months for 3rd Friday closings – 150 on Friday ??
Brianbobke
greedy