Billionaire hedge funds manager John Paulson’s net worth eroded by $328 million as gold prices fell 4.1 percent on Friday. The losses widened further as the precious metal declined further on Monday.

In just two sessions, the bullion has fallen about 7 percent, touching its two year low of $1,427.4, and the metal has fallen 23 percent from its September 2011 high of $1,920.30. Holdings in the world’s largest gold-backed ETF’s have also declined to their lowest level since early 2012.

John Paulson

About 85 percent of John Paulson’s $9.5 billion assets in hedge funds are invested in gold share classes. Paulson & Co. is already suffering with poor returns. Last year, John Paulson showed his faith in the precious metal by telling his investors that his $700 million Gold Fund will perform far better than his other strategies over five years.

Paulson said that the yellow metal is a safe haven, especially when major countries around the world are pumping more cash into their economies which would increase inflation. John Paulson’s same gold fund is down 28 percent as of 31st March, according to Bloomberg. Additionally, Paulson lost another $62 million in gold stock as he holds 7.35 percent stake in AngloGold Ashanti Limited (ADR) (NYSE:AU).

But things seem to be turning against Paulson. Last week, Goldman Sachs advised its clients to get out of gold as the precious metal has further downside potential. UBS analyst Tom Price said that gold prices are likely to decline further as concerns over U.S. economic recovery and Eurozone debt crisis have eased. Tom Price estimates that the yellow metal will decline further to $1,100 by 2018.

Adding to John Paulson’s worries, minutes from the Federal Reserve’s meeting held last month indicate that the central bank may reduce or close down its asset purchase program by then end of 2013. That has shaken investors’ confidence in gold. In fact, most of the investors have fled to equity to get better returns. If Paulson follows them by dumping his gold holdings and turning to equity, he would still suffer heavy losses as the prices have fallen to two-year lows.

So, what can save the billionaire hedge fund manager? A war between the North and South Korea. That’s what Hong Kong-based analysts say. There is nothing that can push the metal up as the Fed is planning to pull back the monetary stimulus and concerns over Eurozone crisis have eased. Stocks have touched record highs attracting more and more investors, now the only thing that can push gold up.

Should John Paulson pray for that?