Paulson’s PFR Gold Fund posted a 23% decline last month, according to a letter to investors. The drop brings the loss to 65% since the start of the year, the firm said in a July 3 letter, a copy of which was obtained by Bloomberg News. The fund, with about $300 million in assets, consists mostly of Paulson’s own money and is the smallest at the firm, which manages $19 billion.
Goldman Sachs Group Inc. cut its price target for the end of 2013 to $1,300 from $1,435 and expects ETP holdings to decline by about 1 million ounces a month, it said in June. The bank joins analysts from Morgan Stanley to Credit Suisse Group AG in trimming forecasts.
“The real story for owning gold from a kind of an inflation protection perspective has just not materialized,” Jeffrey Sherman, who helps manage more than $57 billion of assets for DoubleLine Capital in Los Angeles, said in a telephone interview. “You’ve got to think about why you own the precious metal to begin with and right now it’s hard to make a very bullish case for it.”
Sales of coins and jewelry surged around the world after bullion plunged in April, spurring a 13% rebound in prices in less than three weeks. There are now signs interest has slowed, with the U.S. Mint selling 57,000 ounces of American Eagle gold coins in June from 209,500 ounces in April, according to data on its website. Sales from Australia’s Perth Mint declined for a second month in June, it said last week
U.S. President Richard Nixon severed the dollar peg to gold in 1971 and the government lifted curbs on citizens owning gold at the end of 1974.