The risk of “high inflation in the future” makes gold a desirable long-term investment, Paulson & Co. wrote in the report. The view contrasts with Goldman Sachs Group Inc.’s Jeffrey Currie, who has said bullion is a “slam dunk” sell in 2014. In an Oct. 18 report, the bank forecast prices at $1,100 in 12 months. The metal climbed 8.4 percent in the third quarter, the first gain in a year.

“Physical demand helped prices rise, but that has not made gold attractive enough for investors to rush back,” Lance Roberts, who oversees $600 million as chief executive officer of STA Wealth in Houston, said in a telephone interview. “Unless something dramatic and drastic happens, the tide is unlikely to change.”

In the third quarter, Soros Fund Management LLC bought 1.1 million shares of the Market Vectors Gold Miners ETF. The purchases come after the New York-based hedge fund sold its entire stake of 2.67 million shares in the miners ETF in the three months through June 30, along with dumping all of its 530,900 SPDR shares.

Gold Miners

Michael Vachon, a spokesman for Soros, could not be reached by telephone at his office after regular business hours or on his mobile phone.

The world’s largest gold miners were forced to take at least $26 billion of writedowns this year even as they lowered spending plans and fired workers. The Market Vectors Gold Miners ETF fell 47 percent this year.

ETP holdings “need to stabilize to offer better support to prices,” Barclays Plc said in a report yesterday. “In addition to Fed tapering expectations weighing upon investor sentiment, the performance of alternative assets has exacerbated this weakness despite tapering expectations being delayed.”

The metal jumped 70 percent from the end of 2008 through June 2011 as the U.S. central bank bought more than $2 trillion of debt. Fed Chairman Ben S. Bernanke is contemplating how to finish a third round of so-called quantitative easing that has swelled the central bank’s balance sheet toward $4 trillion.

Yellen Testimony

Janet Yellen, the nominee to replace Bernanke in 2014 as chairman, said that the U.S. economy and job market are performing “far short of their potential” and she will ensure monetary stimulus isn’t removed too soon. She commented during testimony yesterday to the Senate Banking Committee in Washington.