Wednesday, 23 July 2014
Last updated 11 hours ago
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."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…