Paulson, Soros lift gold pile as prices drop most since 2008

Erased Gains

Gold erased its gains this year in May as investors favored sovereign debt and the dollar as economic growth slowed. The U.S. currency gained 3.3 percent against a basket of currencies last quarter.

Hedge funds have cut their net-long position, or bets on higher prices, by 66 percent from a record in August 2011. Their holdings fell to 85,510 futures and options on Aug. 7, according to the U.S. Commodity Futures Trading Commission.

Still, prices have rallied for 11 consecutive years, gaining more than sevenfold, as investors snapped up the metal after government and central bank stimulus programs boosted speculation that inflation would accelerate. The metal is up 2.2 percent this year.

Vinik, Mindich

Vinik Asset Management, the Boston-based hedge fund founded by Jeffrey Vinik, who formerly ran the Fidelity Magellan Fund, cut its entire stake in the gold ETF. On March 30, the fund held 2.3 million shares, SEC data show. Eric Mindich’s Eton Park Capital also sold all of its 739,117 shares last quarter, a filing showed.

Jonathan Gasthalter, a spokesman for Eton Park, declined to comment.

Moore Capital Management LP acquired 120,000 shares of SPDR Gold Trust in the second quarter, a filing showed yesterday. The hedge fund held no shares in the gold fund as of March 31.

Global holdings in exchange-traded products rose to a record 2,417.3 metric tons on Aug. 10, according to data compiled by Bloomberg.

Central banks and the International Monetary Fund are the largest bullion owners with 29,500 tons at the end of last year, or 17 percent of all mined metal, World Gold Council data show. Central banks have been net buyers for two straight years, the council said. Purchases this year will probably exceed the 456 tons added in 2011, the WGC estimates.

Holding On

“People expect prices to rise in the third quarter since historically it has been proved that it’s one of the best periods for gold, and investors who see easing coming in from various central banks are either increasing or holding on to their positions,” Donald Selkin, the New York-based chief market strategist at National Securities Corp., which manages about $3 billion of assets, said by telephone.

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.

Bloomberg News

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