Billionaire hedge-fund manager John Paulson, once one of the best known gold bulls, cut his bullion holdings for the first time in two years.
Paulson & Co. reduced its stake in the SPDR Gold Trust, the world’s biggest bullion exchange-traded product, by almost 10 percent last quarter, a U.S. government filing showed Friday. The move came after the firm kept its holdings unchanged for seven straight quarters.
The news is another blow to gold bulls as prices languish near a five-year low. Speculators have stayed bearish on futures after turning net-short in July for the first time in U.S. government records going back to 2006. The prospect for higher U.S. interest rates has prompted most investors to snub precious metals, since they don’t pay interest, unlike competing assets.
“Gold will remain out of favor because investors are expecting the rate hike very soon,” Scott Gardner, who helps manage $450 million at Verdmont Capital SA in Panama City, said in a telephone interview. “It has also become clear that gold has lost its prominence as a safe-haven investment.”
Paulson & Co., the top holder of the SPDR gold fund, owned 9.23 million shares as of June 30, the filing showed. That compares with 10.23 million a quarter earlier.
Armel Leslie, a spokesman of New York-based Paulson & Co. with Peppercomm, didn’t immediately respond to a voice mail and e-mail seeking comment.
Paulson uses the ETP 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.
Global demand for bullion remains lackluster. The appetite for the metal shrank to the lowest in six years last quarter as buying slowed in China and India, the World Gold Council said this week.
Gold has dropped 6 percent this year to $1,112.70 an ounce in New York. Prices touched $1,073.70 on July 24, the lowest since February 2010.