Paulson, Soros at Odds Over Gold's Direction

Source: The Street, Robert Holmes (5/18/11)

"Hedge fund managers go head-to-head on gold's future."

The Street, Robert Holmes

As the price of gold hovers near an all-time high, hedge fund managers including John Paulson and George Soros differ on the direction of the precious metal. The billionaire investors put their money where their mouths are during the first quarter, alternately buying and selling gold stocks and exchange traded funds.

Gold has been surging for a decade, providing lofty returns compared with equities and other securities. After hitting a low of $1,161.60 an ounce July 27, gold prices have roared back, peaking at $1,577.57 on May 2. Gold has become an attractive bet for investors as inflation is expected to accelerate and the dollar is in the doldrums.

The SPDR Gold Trust ETF has been one of the most popular ways to play the increase in the price of gold, as the fund has rallied more than 20% in the past year. Paulson maintained his bet on gold in the first quarter through the SPDR Gold Trust, even as Soros has pared investments in the precious metal.

Earlier this month, Paulson told investors at a New York meeting that gold could climb as high as $4,000 an ounce from about $1,500 today. Soros, who last year said gold was the ultimate bubble, sold much of his investments in gold during the first quarter.

Soros and Paulson aren't the only managers going head-to-head about gold's future. According to 13F filings made to the Securities and Exchange Commission, several hedge fund managers diverged in their opinion on the SPDR Gold Trust.

Hedge funds that manage more than $100 million are required to disclose their equity holdings, options and convertible debt on a Form 13F filed to the SEC within 45 days of the end of a quarter. Funds aren't required to report short positions betting on declines.

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