Hedge-fund manager John Paulson’s wager on gold wiped out almost $1 billion of his personal wealth in the past two trading days as the precious metal plummeted 13 percent.
Paulson is sticking with his thesis that gold is the best hedge against inflation and currency debasement as countries pump money into their economies, according to the New York-based firm, which manages about $18 billion. The metal entered a bear market last week after falling more than 20 percent since August 2011, bringing more bad news for 57-year-old Paulson, who has struggled with poor returns for the past two years.
“Federal governments have been printing money at an unprecedented rate creating demand for gold as an alternative currency for individual and institutional savers and central banks alike,” John Reade, a partner and gold strategist at Paulson & Co., said yesterday in an e-mailed statement. “While gold can be volatile in the short term and is going through one of its periodic adjustments, we believe the long-term trend of increasing demand for gold in lieu of paper is intact.”
Gold futures for June delivery closed at $1,361.10 at 1:51 p.m. yesterday on the Comex in New York, the biggest drop for a most-active contract since March 17, 1980. After the settlement, the price touched $1,348.50, the lowest since Feb. 7, 2011.
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