Soros dumps gold while Paulson holds on

Soros dumps gold while Paulson holds on

NEW YORK: Billionaire financier George Soros, who called gold 'the ultimate bubble', dumped almost his entire US$800 million (S$1 billion) stake in bullion in the first quarter, well before a commodities slump blamed partly on reports that he was liquidating his holdings.

Famed gold bull John Paulson held his ground, but Mr Soros was joined in the retreat by other big names, including Mr Eric Mindich and Mr Paul Touradji, according to filings with the US Securities and Exchange Commission that provide the best insight into where hedge funds are placing their bets.

Gold prices barely reacted to the news, with spot gold up 0.3 per cent at US$1,494.29 an ounce by 0327 GMT yesterday. Rising inflation worries and a debt crisis in the euro zone should help prevent any sell-off in the precious metal, analysts said.

Mr Soros had cut his holdings in the SPDR Gold Trust to just US$6.9 million by the end of the first quarter, from US$655 million last December, becoming the most high-profile investor to turn his back on one of the market's best-performing assets.

He also liquidated a 5 million share stake in the iShares Gold Trust, the filings show.

Gold rose for a 10th consecutive quarter in the three months to March, hitting record highs above US$1,400 an ounce, buoyed by political turmoil in the Middle East and North Africa and lingering worries about indebted European countries.

The gains accelerated in April, but peaked at the start of this month, reaching a record US$1,575 an ounce on May 2.

Prices have since fallen over 5 per cent amid the biggest commodities slump since late 2008, a move partly triggered by a Wall Street Journal report that Mr Soros' US$28 billion fund was selling precious metals - and fuelling fears that other big funds were also seeing a peak.

But Mr Paulson kept his 31.5 million shares, or US$4.4 billion stake, in the SPDR fund, remaining the biggest shareholder of the world's largest gold- backed exchange traded fund for the quarter.

REUTERS