Billionaire hedge fund manager John Paulson seems to be unphased by gold’s rocky ride.
The investor kept his stake in the world’s biggest exchange-traded fund backed by bullion unchanged as of March 31, maintaining his holding for a seventh straight quarter, a government filing showed Friday.
Paulson is sticking with gold even though it’s proven to be a fickle asset. The metal swung between gains and losses more than 10 times in 2015, gyrating as traders tried to nail down the timing of U.S. interest-rate increases. Other investors have stayed away. Holdings in the SPDR Gold Trust that the billionaire prefers are down about 7 percent in the past 12 months, and tumbled 31 percent in two years.
“Gold is being neglected since everyone is waiting for news on the timing of the rate hike, and also as equities are doing so well,” Lance Roberts, who helps oversee $600 million as chief strategist for STA Wealth Management in Houston, said in a telephone interview. “There is very little interest since people don’t see the need to hedge against inflation or any fear.”
Paulson & Co., the largest holder of the SPDR Gold Trust, owned 10.23 million shares in the three months ended March 31, the filing showed. Paulson uses the ETF to back his funds’ gold share classes, which offer holdings denominated in bullion for investors interested in decoupling their assets from the value of the dollar.
Gold futures for June delivery climbed 10 cents on Friday to settle at $1,225.30 an ounce on the Comex in New York. The precious metal rose 3.1 percent for the week.
May Rebound
Prices have climbed 3.6 percent in May, recovering from three straight monthly declines. The metal’s rebound has been spurred by signs of a cooling U.S. economy. Weaker growth in a boon for gold because it’s often sought as a haven and because slower expansion could push the Federal Reserve to wait longer before raising rates.
Futures dropped 29 percent in the previous two years as the dollar surged and inflation remained muted. The outlook for higher borrowing costs has also prompted investors to favor assets with better yield prospects, such as equities. The Fed is watching for signs that the economy can sustain higher interest rates for the first time since 2006.
Armel Leslie, a spokesman of New York-based Paulson & Co. with Peppercomm, declined to comment on the filing.
