Gold Gives John Paulson Largest One-Year Haul in History

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"Billionaire John Paulson multiplies wealth on gold's rally."

Billionaire John Paulson, who placed the bulk of his personal fortune in funds that bought securities linked to gold, made $5 billion in 2010 as gold climbed almost 30% last year.

The gold investments are primarily conducted through one of the largest ETFs in the world, SPDR Gold Shares, which is believed to hold near 1,230 tons of gold bullion. SEC filings reveal Paulson's hedge funds own 31.5 billion shares in the SPDR Gold Trust, worth an estimated $4 billion.

Citing a "person familiar with the matter," the Wall Street Journal said Paulson earned $1 billion in performance fees last year, normally a 20% cut of his funds' profits. The New York Times quoted unidentified investors in the Paulson Advantage fund who noted the gold-class shares of the Advantage fund surged 30.8% last year.

Paulson placed much of his own fortune in gold-denominated funds and a separate gold-focused fund. "Because gold rose sharply in value last year, the gold-denominated versions of his funds rose as much as 45%," the WSJ reported.

Last September Mineweb reported that Paulson told a crowd at New York's University Club that 80% of his assets are in gold. His investment is spread out among ETFs, physical bullion, and shares of gold mining stocks. Among his equity holdings at the time were AngloGold Ashanti, Barrick, Gold Fields Limited, IAMGOLD, Kinross, NovaGold, Randgold Resources and the SPDR Gold Trust.

"The secret to the spectacular returns Paulson and his employees reported for 2010 is due to their keeping much of their personal moneyŚ$14.9 billion or 42% of the total assets under management ($35 billion)-in the funds," Lenzer observed. "That's called putting your money to work alongside your clients."

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