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And Scene: Paulson Gold Fund Down 65% In 2013
With spot gold prices down 28% year-to-date, it appears John Paulson's Gold Fund has managed to create some epic high-beta losses.
In a letter to investors, Paulson explains his fund fell 23% in June, is down 65% in 2013; but do not fear - as he concludes time and time again, the gold fund will "produce outsized returns in the long-run".
From Bloomberg:
John Paulson, the billionaire hedge-fund manager seeking to rebound from losses tied to bullion, posted a 23 percent decline in his PFR Gold Fund last month, according to a letter to investors.
The drop brings losses in the strategy, formerly known as the Paulson Gold Fund, to 65 percent since the start of the year, the firm said in the July 3 letter, a copy of which was obtained by Bloomberg News. The fund, which consists mostly of Paulson’s own money, is the smallest strategy of the $19 billion money manager and the only one to post losses this year.
The firm reiterated its commitment to investing in bullion and stocks of gold producers for protection against currency debasement as central banks pump money into the global economy. Gold dropped 12 percent in June, the most since October 2008, after Federal Reserve Chairman Ben S. Bernanke said he may start reducing bond purchases that have fueled gains in financial markets globally.
“Although the timing is uncertain, if you have a long-term view we believe the funds offer the potential for outsized returns,” the firm wrote in the letter.
Armel Leslie, a spokesman for Paulson & Co. at Walek & Associates, declined to comment on the letter.
What is there to say.
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yeah... but when you're in leveraged paper the future better happen now...
Perhaps he's been seeking capital losses to of set his questionable abacus gains?
Paulson should just sell his fund and buy lots of COMEX contracts and stand for delivery - registered gold only at 1.4 million ounces left - close to a mere $2 billion and COMEX is empty
http://seekingalpha.com/article/1537442-comex-registered-gold-inventories-have-never-been-lower
You, me, and Dupree could do that
This is just my crazy conspiracy theorist mind talking, but I think Paulson and Soros both "did some things" starting around 3Q 2011 regarding GLD that will come to light a little bit down the road, specifically regarding share redemption for actual metal. I'm thinking Paulson doesn't give two shits about the paper losses in this fund.
Either that or else Paulson is not a connected guy, and no one told him about the gold supression scheme operated out of the BIS by the Governors.
First up on jail list: Mr. Caruana http://www.bis.org/press/p130623a.htm
...aaaaaand, it's gone!
whoops
"... outsized returns for me!!!"
All those net unrealised gains with their outsized returns on gold they do not actually hold. It's all been discussed with the imaginary friend review panel for approval. The unicorn courier should be by to drop off the invisible papers soon.
I'm sure there are those that are getting great delight in seeing him immitating road kill.
How is advantage plus doing?
Here is an empty sack with all the earnings so far.
Didn't Paulson have the same "problem" in 2007?
His Business card:
Big Daddy Smokescreenez Paulson, President uv DA BlinG and Lord uv DA BlIng!
...bitchez, trees, muny. Fail to deliver again? No problem we can do it faster.
phone: 1-lolgturmny
IM: paulieboy43@yahoo.com
Email: dont read, so dont need yo. IM's only.
Seems legit, everyone should give him more money.
The world is cruel to he who laughs second to last.
One. Hit. Wonder.
http://www.youtube.com/watch?v=NHozn0YXAeE
MMBop...indeed.
http://www.youtube.com/watch?v=sCNrK-n68CM
It will.
The gold stock run in the 80s started in the same rut
Roll 'em daddy!
Paulson = one trick pony. If Goldman did not allow him to structure the MBS he was shorting, then he would have been a zero trick pony.
I don't totally disagree with the larger point but he'd have still won huge with his shorts even against the average 2005-7 subprime pools. Largely anything not senior was decimated. Paulson happened on the right timing, right vehicle (very low cost to carry at that point so can hold for a long time vs. shorting homebuilders which killed people with the same theme for years), and went big accross his funds with very little downside given how tight things were.
Love the negatives. You do realize that MANY other managers were short similar securities that weren't custom structured like Paulson's and cleaned the hell up on them - basic short ABS as a general economic hedge worked wonders.
What they didn't have was enough size as they were mainly hedge positions against long books and not mega speculative trades (or not big enough to save the entire long books anyway so no recognition and deservedly so as this wasn't uncommon).
Not that a custom structure didn't help Paulson or others generate an additional and potentially unfair level of protection (although some numbskull took the long side of those too with full visibility to contents) but when everything goes from $1 to <20 cents and you are levered with an option-like payout, you print money on moves like that. I don't know the specific securities he shorted but I doubt it made much difference until late in the game as there was little differentiation from mid-2007 to mid-2009 and its only really mattered much in mid-2011 to present.
This is common knowledge. Sorry if sharing the truth bothered a few but it is what it is.
"If Goldman did not allow him to structure the MBS he was shorting, then he would have been a zero trick pony."
Spend some time thinking about this. Specifically:
1. How does he have that kind of relationship with Goldman? Did that relationship magically disappear?
2. Is he actually losing, or does it merely appear that way "on paper"?
Or just a pony ?
Based on the previous story about Cohen's $115M apartment with no terrace, his real estate recovery fund will be the next to blow up...
I hope he is right.
Bummer...too bad there is no gold in his "gold fund". If there was he would at least have something to show for it.
NEXT TIME HE WILL THINK IT TWICE BEFORE TELLING ALL THE HEDGIES/BANKS WHO COULD GO AGAISNT HIM WHAT HIS POSITIONS ARE...
Yep, I do get the feeling the last couple months has seen a bit of cannibalization by the elites, trying to bully not only the small guy into selling his bullion, but trying to scare out some of their 'buddies' out of their positions as well.
And, to the shock of precisely nobody, Corzine is "off the hook" for criminal prosecution: http://minx.cc/?post=341485
The Justice Department’s decision to drop the case is sure to come as a relief to Corzine, who has been widely blamed for MFG’s bankruptcy — as well as the misuse of some $1.6 billion in customers’ funds.
Two-tiered legal system! Stole a loaf of bread? Go to jail.
Stole 1.6 billion? Give me 10m and I forget I saw anything.
This is a HUGE blow for the credibility of the Justice Department and the legal system itself. Of course they won't see it that way... And there's not much credibility left to speak of, regardless.
Madoff can now use the same defense, it's as crooked and ponzi as it gets. Come again...so can a lot of other players now. This is nearly a free prison break card for anyone that's laundered money, formed a pyramid scheme or completely white washed their investors.
Because the DoJ dropped it sort of leaves the door wide open.
Who said that Marc Rich's passing just a few hours before the signing of the CFTC complaint against Corzine are connected? What could MFGlobal possibly have to do with Glencore and the US/JPM? Relax... Chilton's on the case.
http://tradewithdave.com/?p=17163
Well, buying physical and mining stocks is a long term play for anyone who is in it; certainly not for rotater's or day traders.
If you have lost 65% you may as well stay in until sovereign defaults are underway.
he'll look like a superstar when they get started on destoying the stock market.
Got phyzz? Just keep stacking folks! I hope the paper charade continues to drag phyzz prices down. There isn't much of a phyzz shortage in my neck of the woods and premiums are nomial still. So keep cost averaging into more ounces the best you all can now while they continue to play their paper games.
Theory: Have "they" been smashing gold prices down in order to quietly give Germany all their gold back that they asked for? Is that why the vaults are being raided and inventories are at record lows? Did Germany tell them 7 years wasn't gonna work for them, so they're being given all this gold quietly? I mean, where other than maybe China is all that phyzz going?
I agree with this theory - this smash down probably has a bit to do with giving Germany's gold back, and allowing China to accumulate enough to become a global player - thus giving their currency enough backing with physical to take center stage and replace the dollar as global reserve. The Chinese, Russians, and all western central banks are accumulating - that should be enough of a tell right there.
However, what would Germany do if they were told to pound sand? Absolutely nothing - getting stiffed on your physical gold redemption is a justifiable act of war, but on whom would they declare as such? The US? No chance.
The big boys have to keep the price of physical down to keep the plates spinning a while longer - the dollar has to be the reserve currency for just a bit longer - or else all of the commodity markets denominated in dollars goes haywire and the global economies crash along with it - all of them. When they are ready ( i.e. when the nation states playing the game with the central banks have all of the gold they need) they will pull the cord and replace the dollar with something else.
Wasn't it just to squeeze ppl like Paulson out of the playground?
One question I would have for him: What do I need you for?
Is there something he's doing I couldn't do myself without paying 2-and-20 to infinity?
I am down almost as much but have sold nothing. And I agree we will be fine. But you cannot be on margin. That is a game killer.
Time value of assets.
Important concept.
Time to act , GOFO negative for 1m , 2monts and 3 months never seen that for ages,
GOFO is basically the interest rate for borrowing money using gold as collateral. For example, a central bank will enter a swap position with a bank by swapping its gold for US dollars with the bank. At the end of the period, the swap has to be reversed with the central bank paying an additional certain percentage above the original amount of US dollars. That “certain percentage” is the GOFO rate. The GOFO rate is related to the gold futures price. This is because if the GOFO rate is too much higher than the gold futures price, then the central bank will be better off selling the gold in the spot market and simultaneously buy gold futures.
http://cij.inspiriting.com/?p=530#
So if you want dollars. And you have gold. They will pay you interest money to take their money in exchange for gold? Am I reading that right? If that is the case, someone needs some gold pretty bad.
All attempts at dissent must first be crushed, then the overlords will drop the hammer.
And the dollar has lost how much purchasing power since 2000?
"if you have a long-term view we believe the funds offer the potential for outsized returns,"
Oh, buy I do have a positive long-term view.....for physical.
Aw, shucks.
And he did so great on his bets against the Euro last year as well.
Gold was previously way too expensive for me to afford, however the Bernanke has fixed that, thanks Ben! Now all we need is for him to "plunge" the price of oil, ground beef, milk, child care, postsecondary education, medical insurance, new cars, aftershave, bathroom tissue, Jack Daniels, etc...
Leave it to Tyler Durden to endlessly tout PMs as the only thing that matters--then mock and deride a fund that invests in that very asset class...
TD=tool
Call me Mr. Tool. By the way, most folks here don't care about Precious Paper. We want the heavy physical stuff that sinks boats.
trololololo.
Trololo... The Full Original Version
http://www.youtube.com/watch?v=sTSA_sWGM44
The voice on that guy is amazing. Could sing the phone book and people would listen to it.
I think TD was mocking the fact that a 'gold fund' is down 65% when gold is down 28%. Whoops.
You're the tool here son. You think that Ol' John has much physical stocked away? He might, but not with that fund - those guys trade in paper GLD. They accumulate bullion in private fund vehicles that neither you nor I have access to ( save your local coin shop ).
Aside from that, the tone here is not mocking - if he has taken a bath on any physical he owns, be sure he's not crying over it - they know the game and how it's played. Losses on paper are meaningless and can be absorbed....
LOL My thoughts exactly. I thought gold could only go up because of all the money printing?? What happened, ZeroHedge?
I'm a hardcore libertarian/anarcho-capitalist, but I can't stand bullshit investment advice. And telling people to buy gold in a severely deflationary environment (where every asset class is leveraged to the hilt and there's plenty of room for cascading defaults) is incredibly irresponsible.
just think of all the idiots that were pushing invisable 'bitcoins'........hahahah
Bitcoin is up 800% in the last 6 months.
And their invisibility means I can transport them anywhere in the world, while you can't take your gold through airports or government checkpoints.
Paper is an asset class? Man ya learn sumpin' every day here.
Paulson's a fucking idiot and his clients should start lining up to sue his dumb ass.
And a final note. Paulson was at a closed-door meeting with Jack Lew and Jamie Dimon on May 2.
http://www.reuters.com/article/2013/05/02/us-usa-treasury-lew-idUSBRE9411CV20130502
If you track physical gold, it's hard to conclude that that meeting was about anything other than the orchestrated "Gold Sucks!" propagand blitz now in progress. Paulson served up his own clients, putting him below Jamie D on the scumbag scale (and that ain't easy).
Gold can go down" Who'd have thunk?
Shoulda bought some puts
Fizz is the Bizz !
Here's one exploration company that Paulson has a significant holding, and Goldcorp recently topped up their percentage.
They have a spectacular gold deposit in the James Bay area, and had already sold one property to Goldcorp.
ER.TO
I don't own ER.TO shares, but have long been fascinated with Eastmain's story.
Hedge-Fund managers are rich becuase they provide value............
It must be so difficult for the brain trust of jealous maggots here at zeroclue to want so badly to feel good about a self made tycoon's losses while snowballing their way down Mt. Everest of losses with him on the sucker gold trade. What's the proper expression for that? Cognitive Dissonance? You should have all listened to me and bought prime income producing real estate at the bottom instead of pathetic yellow metal that has no use. Now I am richer and you are all just worth absolutely nothing instead of next to nothing.
I must conclude that spewing such copious quantities of shit is de rigeur when one is speaking with one's head up one's ass.
Please, tell me again how a 30% decline in the price of the yellow metal is good for you fools? hahahahahahaha.
It's agreat time to buy you fool. Oh and by the way I also went into real estate at the bottom and it has been a real winner to date. I fully expect gold bought at this bottom to appreciate significantly. Try not to be so emotionally biased against gold.
Because I buy cheaper.
The lower it goes, the more I can buy. You can't even imagine how thankful I am for this.
If you think we buy gold because we intend to sell it later at a higher dollar price, you haven't understood shit about why we do it.
He lost whether he owns physical or paper,
He lost.
Gold will be CRUSHED
Man, you really scared me on this one. I just run to check my stack, thinking that someone might have crushed it by smashing with a hammer or something.
Thank god it's all there. 100% of it. What the hell were you talking about?
you bot high. you are a bagholder
I buy gold because gold is insurance against government stupidity. Why would I give a fuck about what amount of toilet paper other people are willing to pay me for it?
My need of toilet paper is very limited, and I don't generally use the bankster-issued one to clean my ass because I prefer other brands.
On the other hand, my need of insurance against government stupidity knows no boundaries. No matter how much insurance I buy, I always feel better getting a bit more.
A 154% gain will be no problem /sarc