BLBG:Billionaires Soros, Bacon Cut Gold Holdings on Decline
Billionaire investors George Soros and Louis Moore Bacon cut their stakes in exchange-traded products backed by gold last quarter as futures dropped the most in more than eight years. John Paulson maintained his holding.
Soros Fund Management LLC reduced its investment in the SPDR Gold Trust, the biggest fund backed by the metal, 55 percent to 600,000 shares as of Dec. 31 from three months earlier, a U.S. Securities and Exchange Commission filing showed yesterday. Bacon’s Moore Capital Management LP sold its entire stake in the SPDR fund and lowered holdings in the Sprott Physical Gold Trust. Paulson & Co., the largest investor in SPDR, kept its stake at 21.8 million shares.
Gold prices tumbled 5.5 percent in the fourth quarter, the most since the three months ended June 30, 2004, as signs of improving economic growth reduced the appeal of the precious metal as a haven. Global ETP holdings have lost 0.9 percent since reaching a record on Dec. 20. UBS AG reduced its one-month price target yesterday by 6.8 percent, saying economic optimism “takes the shine off defensive assets,” including bullion.
“The reduction in holdings by George Soros may unnerve the market a little bit,” said Nick Trevethan, a senior commodities strategist at Australia & New Zealand Banking Group Ltd. “The market may also be watching Paulson and those are steady.”
Gold for April delivery fell as much as 0.3 percent to $1,630.10 an ounce on the Comex, the cheapest since Jan. 4, and was at $1,632.80 at 5:23 a.m. in London. The price, which rallied for a 12th year in 2012, has lost 2.6 percent this year.
‘Downside Risks’
Hedge funds have cut bets on a gold rally by 56 percent since reaching a 13-month high in October as manufacturing rebounded from the U.S. to China. It’s increasingly likely that prices peaked in 2011 and so-called downside risks are building as the world expands, Tom Kendall, an analyst at Credit Suisse Group AG in London, said in a report e-mailed Feb. 1. Futures rallied to $1,923.70 on Sept. 6, 2011.
Growth will accelerate in the U.S. and China, the two largest economies, in the coming quarters, according to more than 100 economists surveyed by Bloomberg. In the U.S., claims for jobless benefits dropped 27,000 to 341,000 in the week to Feb. 9, fewer than any of the 49 economists surveyed by Bloomberg projected, the Labor Department said yesterday.
Lone Pine Capital LLC, the hedge fund run by Stephen Mandel Jr., and Scout Capital Management LLC sold their entire stakes in the SPDR Gold Trust in the quarter, filings showed.
‘Looking Better’
“The economy is looking better, and people are moving to more remunerative assets like equities,” Paul Dietrich, chief executive officer of Foxhall Capital Management Inc., said in a telephone interview from Alexandria, Virginia. “A lot of people have lightened up on gold.”
Global gold investment, including bars, coins and ETPs, dropped 8.3 percent to 424.7 tons in the fourth quarter from a year earlier, the World Gold Council said in a report yesterday. Full-year investment slid 9.8 percent to 1,534.6 tons, it said.
The Standard & Poor’s 500 Index climbed to a five-year high yesterday and has surged 6.7 percent in 2013. The gauge has more than doubled since bottoming in March 2009 as the U.S. Federal Reserve conducted three rounds of bond buying to lower interest rates, boost growth and support the labor market.
“The economy is showing strength,” and people would rather invest in “economically sensitive commodities and equities,” said Adrian Day, who manages about $160 million of assets as president of Adrian Day Asset Management in Annapolis, Maryland. “We may see people come back to gold if troubles in Europe get worse and problems in the U.S. reappear.”
Japan’s Recession
Germany’s economy, the largest in Europe, contracted 0.6 percent in the fourth quarter, and French GDP dropped 0.3 percent, according to data this week. Japan’s economy, the world’s third largest, is in recession after contracting an annualized 0.4 percent in the final quarter of 2012, following a revised 3.8 percent fall in the previous three months.
Michael Vachon, a spokesman for Soros, was not immediately available when called for comment and did not reply to an e-mail. Armel Leslie, a spokesman for New York-based Paulson & Co., which manages $18 billion, declined to comment. Kenny Juarez, a spokesman for Moore Capital, also declined to comment.
Money managers who oversee more than $100 million in equities must file a Form 13F with the SEC within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.
To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editors responsible for this story: Steve Stroth at sstroth@bloomberg.net James Poole at jpoole4@bloomberg.net
