A piece on Bloomberg earlier today asserted that John Paulson’s Gold Fund lost 27 percent in April after the gold market crash. The article, which sources two people familiar with the matter says that the total losses for the fund so far in 2013 have amounted to 47 percent adding to pressure on the manager after two years of poor returns.
John Paulson’s Gold Fund Investments In Gold
After the gold market suffered its biggest two day crash in April, gold stocks and other assets related to the yellow metal began to lose value, though some of the loss in gold value was recovered. Paulson’s Gold Fund tends to be heavily invested in gold producers and other assets related to gold, predicting that developed world inflation would cause a large increase in the value of the metal in the coming years.
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According to the piece, Paulson managed about $700 million in his Gold Fund at the end of March. At the end of April that number had fallen considerably to $500 million. Across Paulson’s funds his firm Paulson & Co., manages total assets of around $18 billion.
One of the more interesting options that John Paulson offers his investors, and one that Paulson himself has taken considerable advantage of, is the ability to hold shares in the hedge fund denominated in gold rather than in currency. The crash in gold last month caused a large decline for investors who had availed of that option, and doubly damaged those invested in Paulson’s Gold fund.
According to the Bloomberg report, the gold class shares offered by Paulson have gained 48 percent more than those invested in dollar sums since inception. Paulson began offering shares denominated in gold for the first time in April 2009. Paulson has been one of the biggest proponents of gold as an investment in recent years, and it worked up until 2013.
Investors in favor of gold as an investment usually rely on the actions of central banks as justification for a future rise in the value of the metal. Recent studies, particularly those carried out since the April crash, have found that the price of gold depends more on demand in emerging markets, which is far from predictable.
According to the report, the Gold Fund at Paulson & Co. is mostly made up of Paulson’s personal money and shares denominated in gold are mostly held by employees of the firm.