billionaire's 44% of assets now in gold assets, page-45

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Paulson soothes skittish BofA investors about fund gold holdings

Über hedge fund manager John Paulson has told nervous Bank of America managers and investors that his bets on gold will pay off, according to various news media reports.

Author: Dorothy Kosich
Posted: Wednesday , 29 Aug 2012


During an usual conference call Tuesday with financial advisers from Bank of America's wealth management unit and their clients, über hedge fund founder John Paulson reportedly defended the track record of his gold fund, which he allegedly acknowledged was the worst performing in the Paulson & Co. portfolio this year.

Various news media organizations quoted unidentified sources who participated in the call. The conference call was prompted in part by a decision by Citigroup's private bank to withdraw $410 million from Paulson's two largest funds, Advantage and Advantage Plus.

Paulson's assets under management have reportedly dropped from $36 billion at the start of 2011 to $19.5 billion. Paulson Advantage dropped 36% in 2011 and has declined 13% this year. The Wall Street Journal reported that Paulson Advantage Plus is down about 18% this year after losing more than half its value last year.

In April Morgan Stanley Smith Barney sent a memo to its financial advisors that it would no longer accept investments for Paulson funds through its hedge fund investing platform HedgePremier. At the time it was reported that Morgan Stanley Smith Barney cited gold as an area of concern, claiming the fund seemed far too concentrated in gold-mining equities.

In a June interview with Businessweek, Paulson said, "We view gold as a currency, not a commodity. Its importance as a currency will continue to increase as major central banks around the world continue to print money." He also stressed that demand for gold will stay high and that all of his gold holdings would shoot up in value.

Bank of America executives reportedly began Tuesday's conference call praising Paulson investments in gold miners. Spencer Boggess, chief investment officer for alternative investments, who led the call allegedly described Paulson's funds as a great way to play the "gold miner thesis."
Long bullish on gold, Paulson reiterated during the call that his bets on gold will pay off although current returns are disappointing. Almost a quarter of the Advantage funds were invested in gold this year, as well as in the Paulson Gold Funds, Businessweek reported in June.

Businessweek also observed that during Tuesday's conference call, Paulson discussed various scenarios for gold prices, the euro and the economy during the conference call. Reuters said Paulson observed that his portfolios are not structured to depend on specific economic conditions in order to flourish.

As Mineweb reported on August 15th, during the second quarter Paulson increased his holdings by 26% in the SPDR Gold Trust, the world's largest gold ETF. Among the fund's gold equity holdings are Allied Nevada Gold, AngloGold- Ashanti, Barrick, Gold Fields, NovaGold, Agnico-Eagle, Iamgold and Randgold.