Billionaire John Paulson, the biggest investor in the SPDR Gold Trust, reduced his holdings by 53 percent as the metal plunged into a bear market. George Soros sold his entire position.
Paulson & Co. reduced its stake to 10.2 million shares in the three months ended June 30 from 21.8 million at the end of the first quarter, and Soros Fund Management LLC sold its 530,900 shares, Securities and Exchange Commission filings showed today. The SPDR fund is the world’s largest exchange- traded product backed by gold.
Gold futures plunged by a record 23 percent in the second quarter, spurring a loss of $44.7 billion in the global value of ETPs. After prices rallied for 12 straight years, some investors lost faith in the metal as a store of value after U.S. equities rallied in the first half 2013 and inflation remained below the Federal Reserve’s target. The central bank probably will reduce monetary stimulus next month after gains in the economy, according to 65 percent of economists surveyed by Bloomberg.
“We saw the Armageddon premium come off sharply in the second quarter, and people prefer stocks as the economic conditions started showing signs of improvement,” said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $340 billion in assets. “There is increasing acceptance that the Fed may announce its plans to taper sometime this year.”
On the Comex in New York, gold futures rose 1 percent to settle at $1,333.40 an ounce today. This year, the price has dropped 20 percent, heading for the first annual decline since 2000. Assets in the SPDR fund have dropped 32 percent in 2013 to the lowest since February 2009.
Gold entered a bear market on April 12, falling more than 20 percent from the record settlement of $1,891.90 in August 2011.
The hedge funds owned by Paulson and Soros are based in New York.
Paulson & Co. said today in an e-mail that the “share reduction was due to a reduced need for hedging.”
Money managers who oversee more than $100 million in equities must file a Form 13F with the SEC within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.