Hedge fund chief loses big on gold
ISTANBULThe fund manager, who famously made billions forecasting the implosion of the U.S. subprime lending market, has had an estimated $973 million wiped off the value of his investments in the past few days, according to analysis by Bloomberg.
Paulson has bet heavily on gold arguing that the precious metal is the best hedge against inflation and currency debasement which he says is the obvious result of the money printing policies being persued by central banks around the world. According to Bloomberg, Mr Paulson had 85 percent of his $9.5 billion assets invested in gold share classes at the start of the year.
“Ever since he made $15 billion in 2007 for investors by predicting the tumble in the U.S. housing market, Paulson has stumbled from one losing macro trade to another, chipping away at gains that are still among the largest in hedge-fund history,” said Bloomberg. He has been too optimistic about the U.S. economic recovery and overly bearish about the European debt crisis. Gold, which Paulson forecast would strengthen as investors sought a hedge against inflation, instead entered a bear market this year.