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Gold Investors Could Take a Clue from John Paulson

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Much has been said about how gold is slowly rising and could take further direction from interest rates. As the fear of another interest rate hike persists, investors are skeptical about gold.

An idea about gold’s possible direction can be taken from the investment activities of famous hedge fund managers. Billionaire hedge fund manager John Paulson has reduced his holdings in the famous gold-based SPDR Gold Shares ETF (GLD). Though GLD has witnessed a year-to-date (or YTD) rise of 7.2%, it had a rough week last week. It fell ~0.63% on a trailing-five-day basis.

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GLD stake reduced

The funds flowing to gold are likely indicative of the direction of its price. The higher the prospect of a rise in gold, the greater the chances of more investors jumping on gold-based funds.

Paulson has reduced his exposure from 4.8 million shares in GLD to 4.4 million, as shown by government filings. He kept his holdings unchanged at 4.8 million shares throughout the quarter that ended in September 2016. In total, he’s pulled out almost $4.7 billion from GLD.

2016 losses

The last quarter of 2016 was worst for gold since 2013. Another gold-tracking fund, the iShares Gold Trust ETF (IAU), saw a similar loss, as it also tracks gold.

Mining funds have also witnessed falling prices. However, they’ve recovered in 2017. On February 15, 2017, shares of Pan American Silver (PAAS), Yamana Gold (AUY), Randgold Resources (GOLD), and Franco-Nevada (FNV) had a YTD rises of 28.7%, 19.2%, 21.1%, and 13.6%, respectively.

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