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

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


Hedge Funds Swarm Into Palm Beach

Oct 27 2016 | 2:32pm ET

As the first flakes of snow fall on New York's northern suburbs, Dan Weil of South...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...