Paulson Continues Gold Strategy

Chidem Kurdas

In January John Paulson started to climb out of the deep pool of red ink he got into last year but in February he went the wrong way, in part because gold prices declined. Despite that Mr. Paulson does not seem have changed his investment strategy.

His gold holdings are less than they were a year ago but substantial nevertheless. Paulson & Co. funds continue to hold $2.63 billion in the exchange-traded SPDR Gold Trust and $1.5 billion in Anglogold Ashanti. The funds still have large positions in Gold Fields Ltd., Iamgold Corp., Novagold and Randgold Resources.

Some of this is probably in the Paulson gold fund or is meant as a hedge for gold-denominated shares.

In the past two years Mr. Paulson has said that he expects inflation in high-single or even double-digit rates. That goes with a bullish outlook on the economy, since higher inflation would be unlikely in a double-dip recession. The large gold holdings suggest he’s still relatively bullish despite the European debt crisis.

In 2011 that outlook lost his investors a lot of money but this January the Paulson funds had big gains, in particular the gold fund but also others—a version of his event-driven strategy returned nearly 6%.

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3 Responses to “Paulson Continues Gold Strategy”

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