Paulson’s Midas Touch Fails On New Gold Fund

Feb 5 2010 | 3:57pm ET

It seems everything that John Paulson touches does not turn to gold, even if it is gold.

Paulson & Co.’s new gold hedge fund had a rough first month, dropping 14% in January, Bloomberg News reports. Paulson launched the fund at the beginning of the year to take advantage of a long-term rally in gold that pushed the value of the precious metal up 24% last year.

Paulson himself invested $250 million in the gold fund, which invests both in gold mining and production and bullion-related derivatives. The fund features a hefty $10 million minimum investment, as well as a three-year lockup, so skittish investors will have to live with their buyer’s remorse for some time.

It is not clear how gold’s decline in January affected the $32 billion hedge fund’s other products. Paulson had moved some 10% of the firm’s assets into gold last year.


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