Paulson Stays with Gold

That is, NovaGold, the Canadian gold mining company that Paulson & Co. bought into early this year while launching a gold fund. Despite widespread talk of an expanding gold bubble, Paulson & Co. continues to own between 9% to 10% of NovaGold.

It would be remarkable if Mr. Paulson were to be waylaid by a gold bubble after making a huge fortune betting against the real estate bubble. In addition to NovaGold and other gold businesses, Paulson & Co. parked several billion dollars in the SPDR Gold Trust exchange-traded fund.  This ETF is up more than 16% year-to-date.

Paulson holds SPDR Gold  reportedly as a hedge for fund shares denominated in gold.  By contrast, NovaGold is clearly an active investment play. Not everybody is positive on the company, in part because its mines are not expected to produce the metal for several years.  On the other hand, there are few other new gold mines anywhere in the world.

George Soros was another NovaGold investor but he appears to subscribe to the gold bubble argument, as did Rick Bookstaber, at least back in March

David Einhorn of Greenlight Capital is among the hedgies who advocate gold as protection against future inflation—an eventual near-certainty because of rocketing US government debt, which is also Mr. Paulson’s point.

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One Response to “Paulson Stays with Gold”

  1. Soros in Platinum: Will Gold Dim? « HedgeFundSmarts Says:

    […] like other hedge funds, did buy gold businesses like NovaGold, but more recently he’s argued that a bubble is forming in the metal.  By contrast, one does not […]

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