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Gold’s Champions on Wall Street
With gold struggling within a very narrow trading range around $1200 per ounce, it’s cold comfort to most U.S. investors that gold is going up strongly in many other currencies. Gold’s dollar value is the only measuring rod for most Americans, and so gold has very few champions in the U.S. these days.
There are a few notable exceptions among the billionaire hedge fund managers on Wall Street. Every quarter, U.S. hedge funds must declare their holdings to the Securities & Exchange Commission (SEC) 45 days after the close of each quarter, so on May 15 we learned that quite a few institutional investors either held on to their large positions in gold or bought some significant new positions at bargain prices.
Here’s a short list of gold’s current champions on Wall Street:
Billionaire hedge fund manager John Paulson held on to all of his large (10.23 million share) position in the SPDR Gold Trust ETF (GLD) for the seventh straight quarter. GLD is his fourth biggest holding.
We also learned from the May 15 SEC filings that George Soros held on to all of his 761,000 shares in the Market Vectors Gold Miners ETF, valued at nearly $14 million. In addition, the SEC filing shows that Soros Fund Management more than doubled its holdings in SPDR Gold Trust (GLD) to 884,400 shares.
Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, with over $160 billion under management, also likes gold. Dalio currently holds 7.5% of his All Weather Portfolio in gold, plus stock in some major mining stocks. Dalio is personally worth $15 billion and is in the top 30 of Forbes 400 wealthiest people. He is also among Time Magazine’s list of the “100 most influential people.”
In a September 2012 interview with Mario Bartoromo, Dalio laid out the case for gold, regardless of its current price, as an alternative currency: “Gold is very much a currency… we have dollars, we have euros, we have yen, and we have gold. When asked if he owns gold, Dalio replied: “Oh, yeah. I do.… there’s no sensible reason not to have some…as a hedge against what the other parts of your portfolio are, because it’s traditional to hedge financial assets. And so in that context, as a diversifier, as a source of that, there should be a piece of that in gold, is all I’m saying,” adding “too much debt leads to the printing of money to make it easier to service. So all of those things mean that some portion should be in gold.”
In addition bond guru Jeffrey Gundlach, principal at DoubleLine Total Return Bond Fund, gave a talk at the New York Yacht Club last month, in which he reiterated his prediction from earlier this year that gold would reach $1,400 in 2015. To back up what now seems like an impossible prediction, he cited the role gold plays as a currency hedge. Its lack of income is no major impediment these days, since gold is in competition with the negative rates in Europe or the negative “real” rates offered in the U.S. these days.
The Federal Reserve keeps making noise about how they might raise rates this year, but with the first-quarter GDP revised into negative territory and with a litany of other sub-par economic statistics, Gundlach says that such a weak U.S. economy should keep the Fed “dovish” for the foreseeable future.
Some Other Institutional Investors are also turning to Gold
In other quarterly filings, Canadian asset manager CI Investments Inc. was the biggest purchaser of GLD shares in the first quarter, by a large margin. CI added 6,117,900 shares of GLD (representing 611,790 ounces of gold), worth $735 million, or 7.7% of its total portfolio, its second biggest position
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