Gold bull Paulson cuts SPDR stake by half amid bear market

Stimulus Probability

The central bank probably will reduce monetary stimulus next month after gains in the economy, according to 65% of economists surveyed by Bloomberg.

Paulson posted gains in all four of his hedge-fund firm’s main strategies in July as his Recovery fund recouped losses incurred in 2011, a person familiar with the matter said on Aug. 6. Last month, gold jumped 7.3%, the most since January 2012, partly on demand for bars and jewelry in Asia. The bear market dragged down Paulson’s Advantage funds and PFR Gold Fund.

Money managers cut their bullish gold bets by 27% to 48,103 futures and options in the week ended Aug. 6, U.S. Commodity Futures Trading Commission data show on Aug. 9. The net-long positions dropped 76% since early October.

David Einhorn’s Greenlight Capital Inc. sold its entire stake of 1.97 million shares in Barrick in the second quarter, a government filing showed yesterday. Jonathan Gasthalter, a spokesman, declined to comment.

Einhorn has said stimulus by central banks will fuel inflation and increase gold’s value.

Livelihoods Roiled

Gold’s plunge, including two days in April when the price plummeted the most since 1980, roiled livelihoods from the 1 million miners in Ghana who scour in the dirt for the metal to thousands of executives and geologists at mining exploration firms that are running out of cash in Vancouver. Gone are jobs for auditors, bankers and analysts in the finance capitals of Toronto and London. Some investors who bet big and lost are scaling back retirement plans.

Yesterday, Harmony Gold Mining Co., based in Randfontein, South Africa, suspended its dividend after its quarterly loss almost quadrupled, joining AngloGold Ashanti Ltd. and Sibanye Gold Ltd. in scrapping the payout in the bear market.

“Confidence in gold is rattled over the short term, and we saw rotation of funds out of gold into equities that continue to march higher,” Scott Gardner, who helps manage $400 million at Verdmont Capital SA in Panama City, said in a telephone interview.

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