Paulson Hit With $2 Billion In Redemption Requests, Likely Source Of Recent Gold Market Liquidations

Tyler Durden's picture

Absolute Return+Alpha reports that John Paulson's $33 billion hedge fund is now substantially lighter in AUM courtesy of scared investors pulling $2 billion in redemptions by the end of June. Whether this was driven by the disclosures of the fund's participation in the allegedly illegal Abacus transaction, or the fund's deplorable performance in June is unknown and irrelevant. What is relevant is that this confirms our suspicions regarding volatile moves in gold in recent days, are driven primarily by liquidations, most likely those emanating from John Paulson's gold portfolio, which as of the most recent 13F, accounted for 30% of the fund's total assets via ETFs (GLD), miners and other secondary exposure.

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Instant Karma's picture

But is that enough selling to move the market?

Ripped Chunk's picture

Ouch! That's gonna leave a mark

unwashedmass's picture

 

already did. looks like they worked to take out Paulson. smart move. they have to get gold down before whatever the horrendous news they are prepping us for comes out.

unwashedmass's picture

 

already did. looks like they worked to take out Paulson. smart move. they have to get gold down before whatever the horrendous news they are prepping us for comes out.

Iam_Silverman's picture

That's funny!

Double post - the second one is junked twice as much as the first!

IrrationalMan's picture

i am amazed that people are willing to pay him 2 & 20 for investing in GLD and GDX and a couple other securities. 

drwells's picture

I always liked TGLDX, back when I tolerated paper.

http://stockcharts.com/charts/performance/perf.html?$GOLD,TGLDX

2008 would have been a bit painful however.

traderjoe's picture

So true. Because people want to be able to mention at a cocktail party (until now) that they are invested with him. 

goldfreak's picture

so Paulson only sells when the Comex is open?

Snidley Whipsnae's picture

'Paulson's gold portfolio, which as of the most recent 13F, accounted for 30% of the fund's total assets via ETFs (GLD), miners and other secondary exposure.'

GARBAGE IN = GARBAGE OUT

Some day physical will disconnect from the garbage. I am very patient.

thesapein's picture

Is there any good fight in ETFs? I mean, don't the longs just provide counter bets, without which, there would be no one betting in ETFs. So even people who are long gold but use ETFs are screwing themselves, no?

DosZap's picture

thesapien,

folks who participate in ETF's(for 98% part) are simply looking to book a profit........

Get rid of the Fkin ETF's, man up,take physical, price's GO thru the roof, on ALL PM's.............esp G & S.

PLUS, the dagger thru the heart of JPM, and the Squidsters.

You start having to provide REAL metals.............and watch the flames.

So, yes, ETF folks are screwing themselves, and keeping this Seven headed hydra  bitch alive, while taking real value from real believers/holders of MONEY.

thesapein's picture

Let's kill the beast with a silver bullet.

DoChenRollingBearing's picture

I don't know if I have ever gotten around to mentioning that you are SPOT-ON a lot DosZap.

They took the Gold down, makes me hungry for more, again.

Physical.

RockyRacoon's picture

Is anyone really surprised at Nadler's view?  This is worth a read for no other reason than keeping abreast of the movement in the enemy camp:

Jon Nadler On Gold's Current Highs Not Sustainable

Gold should go down to $800 soon
"We're really looking for an eventual evaporation of the fear and greed premium..."

Spitzer's picture

He owns lot of Kinross, who owns lots of gold reserves.

People are so stupid, Casey Research has been saying all year that buying season for gold and gold miners will be in June/July. It looks like they are right

Paulson should be gaining gold interest right now

thesapein's picture

Does that mean a lot of people who typically have money to trade aren't able to hold out, so to speak? Gold needs a few big players who can handle the turbulence or a lot of up and coming traders while the old ones fall, no?

Those gold fleas who fall off are only thinking month to month, if that long, because they're only living month to month, if not day to day.

drwells's picture

This is why I keep harping that we're overdue for a good gut-check, not necessarily like 2008, but like $100 or $200 over the course of a week, to get rid of people who heard about gold on Mad Money or wherever and free some up for those who actually know why they're in it.

thesapein's picture

So true. The last thing I want is for people to start thinking that gold is easy money. If it were easy, it wouldn't be gold.

SDRII's picture

Well it is good to know that greenspan is sticking with his meme that asset values drive fundamentals and consequently a 401Ker doesn't differentiate between a dollar of cap gain and a dollar earned. Of course what he doesn't mention without another asset bubble to creat a liquidity sponge  , that dollar will instead of buying less house dor the dollar will buy less bread. Greenspan hinting that the excess reserves and the equity market are two additional stimulus programs. Put 1 +1 together, as if it is not already obvious where crazy Al would be taking policy

Duffminster's picture

If Paulson sold all of his paper holdings in paper GLD it probably would account for less than 1/50th of 1 percent of global gold derivatives trades.

Normal summer consolidation and the pattern of the PPT and affilliated Bullion banks slamming gold just before the jobs report is what took the market down and recent revelation in regard to BIS being blatantly involved in the Bullion manipulation game and now bailing out a massive "commercial" read "bullion" bank are probably an indication that we are seeing some large financial entities that are taking off take of physical metals and there is a consequent commercial signal failure. 

BIS will step into put out that flame but given the growing clarifity of the unavoidable defaults in sovereign debt by major western entities that lies ahead and the increasing hunger for real money by the non-allied financial enties and central banks, it seems clear that whatever BIS is planning on dumping on the market will be absorbed quickly and the news is extremely gold bullish.

Silver is the Long Lever on Gold

Physical Silver is a Tiny Market

Physical Silver off take is the Long Lever on Paper Silver

Gold is at around 1/2 its inflation adjusted high

Silver is less than 1/6th of its inflation adjusted high

Someone will eventually put these facts together and do something constructive I would think.

 

thesapein's picture

Some of us already have, my friend (friend of a friend (silver)).

Instant Karma's picture

Am I the only one who remembers that the old high in silver was the result of a massive short squeeze engineered by the Hunts?

In 1973, the Hunt family of Texas, possibly the richest family in America at the time, decided to buy precious metals as a hedge against inflation. Gold could not be held by private citizens at that time, so the Hunts began to buy silver in enormous quantity.

In 1979 the sons of patriarch H.L. Hunt, Nelson Bunker and William Herbert, together with some wealthy Arabs, formed a silver pool. In a short period of time they had amassed more than 200 million ounces of silver, equivalent to half the world's deliverable supply.

When the Hunt's had begun accumulating silver back in 1973 the price was in the $1.95 / ounce range. Early in '79, the price was about $5. Late '79 / early '80 the price was in the $50's, peaking at $54.

Once the silver market was cornered, outsiders joined the chase but a combination of changed trading rules on the New York Metals Market (COMEX) and the intervention of the Federal Reserve put an end to the game. The price began to slide, culminating in a 50% one-day decline on March 27, 1980 as the price plummeted from $21.62 to $10.80.

The collapse of the silver market meant countless losses for speculators. The Hunt brothers declared bankruptcy. By 1987 their liabilities had grown to nearly $2.5 billion against assets of $1.5 billion. In August of 1988 the Hunts were convicted of conspiring to manipulate the market.

Spitzer's picture

You don't think that slide had something to do with Volker running Fed ?

RockyRacoon's picture

It's different this time?  The Hunt Bros. are not JPM and Scotiabank.

The former being an enemy of the gov't and the latter being friends.

Top_Kill's picture

John Paulson sells 2 billion of pretend gold and the pretend price tanks. When the day of reckoning comes I can guarantee you that GLD will not be T.B.T.F!!!

Pladizow's picture

It's quite obvious when someone like Paulson owns the GLD, that he is in on the scam.

There is no reason not to own physical and many not to own the GLD.

 

thesapein's picture

Who knows how much physical gold he personally owns? But when you have that much wealth, good luck trying to preserve it all. No one is going to sell you that much physical gold. So he might not have much choice in that he can only buy so much physical and has to use paper in order to gain more exposer to gold.

Pladizow's picture

When David Einhorn and GreenLight Capital went from GLD to Physical, what $ amount was involved?

SteveNYC's picture

Right. Paulson strikes me as a one-trick pony, and that "trick" may have had some real "trickery" to it, from what we've heard. Time will tell, too early to judge yet. But behind every great fortune......

Mr Lennon Hendrix's picture

Well that worked out for everybody....as if on que and right on some timeline....

johngaltfla's picture

At least now we know one of them. Who was the Euro Hedge selling a lot of the rest is what I want to know....

MGA_1's picture

I don't know, looked to be like gold was specifically taken down when it was back at $1260...

AxiosAdv's picture

People really pay 2k a year to access that site?  Seriously?

drwells's picture

Beats the hell out of me.

  • - Frequently updated news feeds
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  • I guess if you're already a billionaire, $2K is cheap to satisfy your need to measure your dick against other billionaires.

    werewolf34's picture

    Paulson had $32Bn in AUM in March. 2% of 32 is 640mm in annual mgmt fee.  Imagine how much he cares about performance

    AimlowJoe's picture

    GLD is down 3% in a month and there is some conspiracy? It's just the ebb and flow nothing more.

    Aimlow Joe was here.

    http://www.aimlow.com

    tmosley's picture

    No, 4% in a day, at the same time of day that it very nearly always goes into a waterfall pattern.

    pragmatic hobo's picture

    tell me again ... why do people buy GOLD?

    thesapein's picture

    when they should be buying more iPads.

    tmosley's picture

    We don't want to become hobos, however pragmatic they may be.

    RockyRacoon's picture

    Is that a rhetorical question?  If so, try this one on for size.

    Why does a person NOT buy gold?

    Wheatman's picture

    Tyler, we are in a deflationary suckout. Of course there will be liquidations. There will be hundreds more. Sell gold into this deflationary suckout over the next 6 months, and stop talking up gold which is about to get whacked. WFT !

    JLee2027's picture

    Phony Paper Gold you mean. Physical is not decreasing but it does get rarer every day.  Tick, tick, tick.

    Gordon_Gekko's picture

    Perhaps they've realized its time to get the real physical metal and that there's no sense paying someone a "management fee" when really there is only one place to put your money and you can do it yourself.

    Hephasteus's picture

    Na. It's better to join up with all the hedge fund gangs and go BOOM I"M BROKE.

    http://www.youtube.com/watch?v=W0ffzVqh5H4

    Chip's picture

    Good shit right there. House of Pain on roids 

    godfader's picture

    So let me get this straight. Every minor downtick in gold in the past four weeks has been met with sharp criticism of "downright manipulation" in ZH articles. Now all of a sudden it's Paulson & Co. gold class redemptions/liquidiation?

    That is a hilarious turn of events.