Gold sales from Soros reveal 12-year bull run decay

‘Asset Bubble’

Soros Fund Management LLC, founded by the 82-year-old who called bullion the “ultimate asset bubble” in 2010, owned about $97 million of metal through the SPDR Gold Trust as of Dec. 31, a regulatory filing showed last month. Louis Moore Bacon’s Moore Capital Management LP sold its stake in the SPDR fund, valued then at $16 million, and cut holdings in the Sprott Physical Gold Trust by 53% to $12.1 million in the fourth quarter. Spokesmen for both investors declined to comment.

John Paulson, the largest SPDR investor, kept his holding unchanged last quarter, his filing showed. The stake is now valued at $3.3 billion. New York-based Paulson & Co.’s investors can choose between gold-and dollar-denominated versions of most of its funds. The 57-year-old told clients March 6 that his Gold Fund fell 26% this year. Stefan Prelog, a spokesman, declined to comment.

Mario Draghi

Central bank asset buying won’t end any time soon and concern about currency debasement combined with rising expectations for inflation will spur demand for gold, Morgan Stanley said in a Feb. 25 report. The median estimate of the 13 analysts surveyed by Bloomberg is for a record annual average of $1,700 in 2013, falling to $1,638 in 2014.

Bank of Japan Governor-designate Haruhiko Kuroda said last week the central bank should bring forward open-ended asset purchases scheduled to start next year. European Central Bank President Mario Draghi said March 7 that officials discussed cutting borrowing costs further. Gold usually earns returns only through price gains, increasing its allure at a time of record- low interest rates.

“Just because it feels that the economy is improving does not necessarily mean that is actually happening,” said Michael Cuggino, who manages $17 billion of assets at Permanent Portfolio Family of Funds Inc. in San Francisco. “We could continue to see governments trying to boost growth.”

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