Paulson, Greenlight Hit By Gold's Bear Turn

Apr 15 2013 | 11:30am ET

Two of the hedge fund industry's biggest gold bugs have been badly burned by the precious metal's swoon over the past two trading days.

Gold has fallen almost $200 per ounce on Friday and today, and are down 11% over the past week. Friday's drop alone cost Paulson & Co.'s John Paulson more than $300 million; Paulson has some 85% of his $9.5 billion fortune invested in his firm's gold shares.

Paulson's Gold Fund was already down almost 30% in the first quarter.

Greenlight Capital's David Einhorn has also relied heavily on gold, with the metal ranking as the hedge fund's third-largest position.

"The recent decline in gold prices has not changed our long-term thesis," Paulson gold strategist John Reade said. "We started investing in gold at $900 in April 2009 and while it's down from its peak to $1,500, it's up considerably from our cost."

Gold had fallen to $1,404 per troy ounce in midday trading in Europe today.

"Federal governments have been printing money at an unprecedented rate," Reade said. "We expect the strengthening of the economy and stock market to cause money supply to rise more than real growth and eventually lead to inflation. It is this expectation of paper currency debasement which makes gold an attractive long-term investment for us."


In Depth

Bob Doll's Ten Market Predictions For 2016

Jan 7 2016 | 9:37pm ET

Well-known market strategist Robert Doll has published his annual list of ten predictions...

Lifestyle

Citadel's Ken Griffin Donates $40M To New York's Museum of Modern Art

Dec 22 2015 | 9:23pm ET

Citadel founder Ken Griffin has donated $40 million to New York’s Museum of Modern...

Guest Contributor

Hedge Fund Marketing - Making the Most of Your Salesperson

Jan 20 2016 | 8:11pm ET

In this contributed article, Bruce Frumerman of Frumerman & Nemeth takes a close...