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Hedge funds bet on gold as Paulson holds onto bullion

By   /   February 18, 2014  /   No Comments

As economic growth in America slowed recently, investors have looked to so-called haven bets in order to shore up investments, as such movement in gold markets reached a three month high with John Paulson reportedly keeping hold of his bullion holdings.

The net-long position climbed 17 percent to 69,291 futures and options in the week ended Feb. 11, U.S. Commodity Futures Trading Commission data show. Long wagers rose 8.8 percent, the most since March. Net-bullish holdings across 18 U.S.-traded commodities rose 18 percent to 1.07 million contracts, the highest since October 2012, led by silver and coffee.

This is the longest sustained growth in the gold markets since 2011 due to American factory outputs falling bellowed expected levels in January, meaning weaker equities and currencies markets.

Paulson chose to leave his bullion holdings unchanged towards the end of last year according to governmental filings, a positive sign by the largest exchange-traded gold-backed product.

Hedge funds bet on gold as Paulson holds onto bullion

Hedge funds bet on gold as Paulson holds onto bullion

John Rutledge, chief investment strategist at New York-based Safanad, attributed the gold prices to economic downturns. He said: “It’s still probably too soon to say the trend in gold market has fully turned. You’ve got people who are bears because they see inflation as under control, and others looking further ahead seeing inflation.”

Over the course of 2013, prices dropped by their highest rate (28%) since 1981 after investors became unsure of value of metal to retain its worth. In November, Paulson promised he personally wouldn’t invest more money in his bullion fund because it was unclear when inflation would quicken. Gold held in global ETPs tumbled 33 percent in 2013, and the value of the assets dropped $73 billion.

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