“The precautionary demand for gold is not there, and the attraction is sinking,” said Frances Hudson, who helps manage about $272.6 billion of assets as a strategist at Standard Life Investments in London. “The money that has gone out from ETFs has not come back, and it seems people are trading up and migrating to equities.”
Paulson & Co., based in New York with $18 billion in assets, sold 915,000 shares in Barrick Gold Corp., the world’s biggest gold producer by sales, a stake that was valued at $32 million at the end of last year, according to a regulatory filing yesterday.
The firm also sold shares in NovaGold Resources Inc., Iamgold Corp., Randgold Resources Ltd. and Agnico Eagle Mines Ltd.
Paulson maintained his stake in SPDR even after his Gold Fund had declines of about 47% this year, according to two people familiar with the matter this month.
Gold remains the best store of value in an uncertain economy, New York-based Elliott Management Corp. told clients, even as the $21.8 billion hedge-fund firm founded by Paul Singer lost money on its position this year.
Prices have rebounded from a two-year low of $1,321.50 on April 16 as demand for bars, coins and jewelry surged in India and China.
Hedge funds cut bets on a gold rally by 52% this year to 49,260 futures and options, U.S. Commodity Futures Trading Commission data showed on May 7. Speculators held 67,374 so-called short contracts, 6.4% more than a week earlier, the figures showed. Investors pulled a record $21.1 billion from bullion funds this year through May 13, according to Cambridge, Massachusetts-based EPFR Global, which tracks money flows.
Warren Buffett, the third-richest person in the Bloomberg Billionaires Index, said last year in his annual letter to shareholders that investors should avoid gold.
“If it went to $800, I wouldn’t be a buyer,” Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., told reporters in Omaha, Nebraska, on May 2. “It just sits there, and you hope somebody pays you more for it.”