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CORRECTED-UPDATE 2-Paulson slashed bullish gold bets before prices rocketed

Published 2016-02-17, 08:55 a/m
© Reuters.  CORRECTED-UPDATE 2-Paulson slashed bullish gold bets before prices rocketed
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(Correcting 5th para to show the Fed raised rates, not cut
them)
By Marcy Nicholson
NEW YORK, Feb 16 (Reuters) - John Paulson, one of the
world's most influential gold investors, slashed his bullish
bets on bullion at the end of last year, just before the
beleaguered market took off for its biggest rally in years, a
federal filing showed on Tuesday.
The New York-based hedge fund Paulson & Co, led by the
longtime gold bull, cut its stake in SPDR Gold Trust GLD.P ,
the world's biggest gold exchange-traded fund (ETF), by 37
percent in the fourth quarter. It was Paulson's third cut to its
SPDR stake in 2-1/2 years.
The recent cut brought the stake to 5.78 million shares
worth $585.9 million on Dec. 31, the U.S. Securities and
Exchange Commission filing showed.
It followed a heftier cut in the second quarter 2013 when
Paulson almost halved his stake from 21.8 million shares, during
gold's historic sell-off.
The move by the single largest SPDR gold shareholder
highlights how investors shunned gold as the U.S. Federal
Reserve prepared to raise interest rates in December for the
first time in a decade.
Paulson's view on gold has been closely followed since he
earned roughly $5 billion on a bet on the metal in 2010,
following a similarly successful $4 billion payday on his bet
against the overheated housing market in 2007.
Others, like Soros Fund Management LLC and Jana Partners
LLC, which had already eliminated large stakes from Market
Vectors Gold Miners ETF earlier in the year, stayed out.

Also in the quarter ended Dec. 31, Caxton Corp eliminated
its stake in Market Vectors Gold Miners ETF (N:GDX) GDX.P , having held
31,733 shares worth $436,000 in the third quarter, the filing
showed.

OUTFLOWS AND SINKING PRICES
Prices have fallen each year since 2013, after the Fed first
indicated it would start reining in stimulus spending and
signaled the end a low interest-rate era.
In December, the price of spot gold XAU= fell to the
lowest level in nearly six years at $1,045.85 per ounce, as
investors rushed to riskier assets, like equities, ahead of the
hike.
Since then, gold has rallied just over 20 percent, hitting
$1,260.60 an ounce last Thursday, a one-year high for the
biggest surge since September 2011, as concern about global
economic growth helped revive gold's safe-haven appeal.
In contrast to Paulson, CI Investments Inc CIXCI.UL , an
investment manager of Toronto-based CI Financial Corp CIX.TO ,
raised its stake in SPDR to 944,579 shares worth $95.8 million,
according to a filing earlier this month.

(Editing by Tom Brown and Matthew Lewis)

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