Big Gold Bulls burst into billion dollar raid on bullion « Mining Blog

Big Gold Bulls burst into billion dollar raid on bullion

29. November 2012,

What a change a year can make! Or, in this case, just ten months.

In January 2012, the SPDR Gold Trust reported outflows of $534 million during the previous year, even though its competitors, Market Vectors Gold Miners ETF and iShares Gold Trust, recorded inflows of $2.8 billion and $2.7 billion respectively.

At the heart of this gilded wheeling-dealing was John Paulson, the hedge funder manager who’s the most significant player in gold stocks.

At that time, the Financial Times went so far as to call Paulson’s dominant role in the gold market a ‘curse’ and foresaw a “dash for cash” [ 9 January 2012].

And, according to “Knowing that Paulson & Co holds more gold than many central banks, and that it is struggling, it only takes a short leap of imagination to worry that he might be forced to sell it. Indeed, in the third quarter of last year, Paulson & Co sold ETF shares equivalent to roughly 34 tonnes of gold – and in September the gold price fell 11 per cent” [ ibid].

But, barely a year later on 21st November 2012, Bloomberg reports that: “Gold’s 12-year rally, the longest in at least nine decades, is poised to continue in 2013 as central bank stimulus spurs investors from John Paulson to George Soros to accumulate the highest combined bullion holdings ever” [Bloomberg, 21 November 2012].

The news service went on to say that: “The metal will rise every quarter next year and average $1,925 an ounce in the final three months, or 11 percent more than now, according to the median of 16 analyst estimates compiled by Bloomberg”.

Paulson & Co was reported to have a $3.66 billion bet through the SPDR Gold Trust – “the biggest gold-backed exchange- traded product”, while Soros Fund Management had “increased its holdings by 49 percent in the third quarter” [Bloomberg ibid].

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