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Soros buying gold as record prices seen on stimulus

By Nicholas Larkin and Debarati Roy, Bloomberg

November 20, 2012 • Reprints

Gold’s 12-year rally, the longest in at least nine decades, is poised to continue in 2013 as central bank stimulus spurs investors from John Paulson to George Soros to accumulate the highest combined bullion holdings ever.

The metal will rise every quarter next year and average $1,925 an ounce in the final three months, or 11 percent more than now, according to the median of 16 analyst estimates compiled by Bloomberg. Paulson & Co. has a $3.67 billion bet through the SPDR Gold Trust, the biggest gold-backed exchange- traded product, and Soros Fund Management LLC increased its holdings by 49 percent in the third quarter, U.S. Securities and Exchange Commission filings show.

Central banks from Europe to China are pledging more steps to boost growth, raising concern about inflation and currency devaluation. Investors bought 247.5 metric tons through ETPs this year, exceeding annual U.S. mine output. While both sides said talks Nov. 16 between President Barack Obama and Congress over the so-called fiscal cliff were “constructive,” the Congressional Budget Office has warned the U.S. risks a recession if spending cuts and tax rises aren’t resolved.

“We see gold as a hedge against the follies of politicians,” said Michael Mullaney, who helps manage $9.5 billion of assets as chief investment officer at Fiduciary Trust in Boston. “It’s a good time to garner some protection in portfolios by having some real asset like gold.”

Longest Streak

Gold advanced 11 percent to $1,731.10 in London this year, headed for a 12th consecutive annual gain, the longest streak in data compiled by Bloomberg going back to 1920. Prices reached a record $1,921.15 in September 2011. The Standard & Poor’s GSCI gauge of 24 commodities gained 0.7 percent and the MSCI All-Country World Index of equities climbed 8 percent. Treasuries returned 2.7 percent, a Bank of America Corp. index shows.

Bullion held through ETPs, the first of which listed in 2003, reached a record 2,604.2 tons yesterday, valued at $144.9 billion. That exceeds the official reserves of every nation except the U.S. and Germany, World Gold Council data show. The SPDR Gold Trust alone holds 1,342.2 tons.

Soros increased his investment in the trust to 1.32 million shares in the third quarter, the most since 2010, a Nov. 14 SEC filing showed. The stake, with each share representing about a 10th of an ounce, is valued at $221.7 million. Prices advanced 60 percent since January 2010, when Soros called gold the “ultimate asset bubble.” Michael Vachon, a spokesman for the 82-year-old who made $1 billion breaking the Bank of England’s defense of the pound in 1992, declined to comment.

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Related Terms
US Federal Reserve 8527Gold 7530Bloomberg 5254commodities 3439Metals 3359European Central Bank 3208metal 3075Standard & Poor 2008China 1906Congress 1894International Monetary Fund 1712Bank of England 1529Bank of Japan 1119U.S. Securities and Exchange Commission 958World Gold Council 930Barack Obama 909U.S. Commodity Futures Trading Commission 658Citigroup Inc. 603Bank of America Corp. 596SPDR Gold Trust 436Deutsche Bank AG 426Virginia 354Credit Suisse Group AG 308Barrick Gold Corp. 278QUANTITATIVE EASING 257George Soros 225John Paulson 199Prices 193ETFs 188Newmont Mining Corp. 187Congressional Budget Office 149ETF 131Paulson & Co. 81Gold Fields Ltd. 59UniCredit SpA 45bank stimulus 39Tom Kendall 36Soros Fund Management LLC 31ETPs 30Paulson 27Michael Mullaney 18Daniel Brebner 16Third Point LLC 14Michael Vachon 14Steven Englander 13Alan Gayle 11Fiduciary Trust 10George Soros 8RidgeWorth Capital Management 8Fed Bank of Minneapolis 8Jochen Hitzfeld 7Paul Touradji 6Touradji Capital Management LP 5Lone Pine Capital LLC 4Dan Loeb 4Stephen Mandel Jr. 3SPDR Gold Trust 2Walek & Associates 1Anglogold Ashanti Ltd. 1

Free Newsletter Modern Trader Follow

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