Paulson Cut Stake in Top Gold ETF by 37% Before Rally

John Paulson.

Photographer: Jin Lee/Bloomberg

Not even billionaire John Paulson, one of the best-known gold bulls, positioned himself to benefit from this year’s rally.

The hedge-fund manager’s firm, Paulson & Co., cut its stake in the world’s biggest exchange-traded product backed by bullion by 37 percent last quarter. The holding was 5.8 million shares in SPDR Gold Shares at the end of the fourth quarter, compared with 9.23 million in the three months ended September, a government filing showed.

Gold gained more than 13 percent this year, the best performance on the Bloomberg Commodity Index, as investors sought a haven amid a global equities sell-off that wiped more than $16 trillion from a peak in June. The metal also rallied as the dollar weakened amid concern that the global economic slowdown will spill over to the U.S., fueling bets the Federal Reserve may hold off on raising interest rates. Bullion tends to fare well when rates are low, as the metal only delivers returns through price gains.

Gold futures on the Comex fell 4.9 percent in the final three months of 2015 amid a strengthening dollar and bets that U.S. interest rates would rise, capping a sixth straight quarterly loss in the longest slump for the metal since 1984.

The billionaire started his foray into gold in early 2009, betting that prices would rise amid unprecedented monetary stimulus. Bullion climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent. While prices slumped to a five-year low in December before the Fed raised rates, the precious metal has since rebounded as traders price in the odds of another increase in borrowing costs at less than 40 percent in any of the policy makers’ meetings set from March through December.

Paulson uses the SPDR 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.

Armel Leslie, a spokesman of New York-based Paulson & Co. with Peppercomm, declined to comment in an e-mail.

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