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John Paulson Was Liquidating GLD Holdings in the Third Quarter

November 15, 2011 | About:
matsandalex

matsandalex

9 followers
Hedge fund manager John Paulson was liquidating a significant percentage of his SPDR Gold Trust (GLD) holdings last quarter. Paulson trimmed his stake by over 10 million shares from 31.5 million shares.

Paulson most likely was forced to sell due to losses at his hedge funds in 2011. Many of Paulson's hedge funds were down over 20% due to poor stock picks in BAC, HPQ and Sino-Forest bonds.

The other explanation for Paulson's liquidation is that Paulson's gold exposure was too high versus his assets under management. Gold has outperformed the market in 2011 and the percentage of gold in his fund might have been too high relative to his other assets.

Paulson's liquidation is significant because Paulson is the largest holder of GLD. Investors have commonly worried that gold prices would be punished due to a Paulson liquidation. Fortunately, for GLD holders, Paulson's liquidation did not impact the price of gold.

Paulson is most likely still bullish on gold. He recently gave a speech where he said that a gold bubble was impossible.

Rating: 3.2/5 (6 votes)

Comments

DfiinancialH
DfiinancialH - 2 years ago
Paulson just reduced Gold(commodity+miners) still make a huge part of his portfolio,I think he's just worried of an impending liquidation of gold positions by european banks and governments(for example Italy has more than 150billions in gold and is the third holder among Sovereigns) so that's why he reduced to buy more later.At the same time he didn't sell out cause he's still bullish of fundamentals and he's not sure(just like everibody) of where the gold is headed in a financial collapse since it's at the same time a safe heaven.

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