Paulson and other hedge funds rewarded as angst fuels gold – by Luzi Ann Javier(Australian Financial Review – August 15, 2017)

Hedge-fund managers including billionaire John Paulson are being rewarded as investor worries over everything from uneven economic data to US-North Korean tensions fuel a rally in bullion.

At the end of June, Paulson & Co owned 4.36 million shares of SPDR Gold Shares, a US government filing showed on Monday night. That’s unchanged from the three months through March. Bridgewater Associates, the world’s largest hedge fund, added the ETF to its portfolio in the quarter, with the purchase of 577,264 shares valued at $US68.1 million ($86.7 million), a regulatory filing showed on August 10. Templeton Global Advisors boosted its stake in Barrick Gold.

Investors poured $US870 million into SPDR Gold in the second quarter, taking the fund’s total assets to $US34 billion as US inflation continued to undershoot the Federal Reserve’s target, putting at risk policymakers’ projection for rising interest rates. While the prospect of monetary policy tightening remains, investors recently turned their focus on geopolitical strains as North Korea’s Kim Jong-un threatened the US territory of Guam, boosting demand for bullion as a haven.

“Prospective risks are now rising and do not appear appropriately priced in,” billionaire Ray Dalio, who manages Bridgewater, said in a LinkedIn post, as he recommended investors allocate 5 per cent to 10 per cent of their assets to gold.

Mr Dalio also flagged rising odds that the US Congress may fail to raise the debt ceiling, “leading to a technical default, a temporary government shutdown, and increased loss of faith in the effectiveness of our political system.”

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