UPDATE 1-Paulson holds on to huge gold pile in third quarter

Thu Nov 15, 2012 11:06am EST
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* Paulson kept 21.8 mln shares in SPDR Gold Trust by end Q3
    * Gold ETF stake results in paper gain of about $365 million
    * Soros, Tiger boost gold ETF, Windhaven cut stake by 46 pct
    * Most hedge fund managers bullish on gold miners

    By Frank Tang
    NEW YORK, Nov 15 (Reuters) - Prominent hedge fund manager
John Paulson kept a major stake in gold in the third quarter of
2012, a confidence boost to bullion's appeal as a hedge against
economic uncertainty, a U.S. regulatory filing showed on
    Paulson has to date been the biggest holder of SPDR shares,
using them to hedge currency exposure. Just last week, a Paulson
executive said at an industry conference that the firm stayed
bullish on the yellow metal.
    Analysts read the third-quarter filing by Paulson as a sign
that the manager, who found fame and fortune on a bet against
the U.S. housing market in 2007 and also a well-known gold bull,
has not lost his faith in the precious metal as a long hedge
against inflation.    
    "It does show that while we've seen a number of hedge funds
getting out of industrial commodities in general, there are
still big players who are willing to put themselves out on the
limb," said Bill O'Neill, partner of New Jersey-based
commodities investment firm LOGIC Advisors. 
    Turnout from other major fund managers with positions in
SPDR Gold was mostly bullish, as billionaire financier George
Soros raised his shares in the ETF by a half. 
    Paulson & Co owned 21.8 million shares in SPDR Gold Trust
 at the end of September, unchanged from his stake on
June 30, a U.S. Securities & Exchange Commission filing showed.
    His bet on gold resulted in a paper gain of nearly $364.7
million for the company as the value of its ETF holdings rose to
$3.75 billion from $3.39 billion. The increase was due to an 11
percent jump in gold prices during the third quarter.
    Paulson also kept his stakes in major gold miners including
NovaGold Resources, Iamgold and Barrick Gold
 and about half a dozen others, while he trimmed his
shares in African gold producer AngloGold Ashanti. 
    In the second quarter, Paulson raised his stake in gold for
the first time since the first quarter of 2009. 
    Bullion's 11 percent rise in the third quarter was largely
driven by the Federal Reserve's aggressive stimulus program in
September to pump $40 billion into the U.S. economy each month
until it saw a sustained upturn in the weak jobs market.
    On Thursday, spot gold fell 1 percent to around
$1,710 an ounce on recession fears related to the so-called
"fiscal cliff," tax hikes and spending cuts set to trigger early
next year should the U.S. Congress fail to act.
    Mihir Dange, COMEX gold options floor trader for Arbitrage
LLC, said funds which liquidated their gold investments could
stay put with their bets until they are more certain on the
macroeconomic outlook.

    Other well-known managers also stayed bullish on gold at the
end of September. 
    George Soros, who had called gold "the ultimate bubble" last
year, boosted his position in SPDR Gold to 1.32 million shares
in the third quarter from 884,000 shares in the second.
    Last year, Soros dumped his massive stake in the gold ETF
before the metal ran up to a record peak of $1,920.30 an ounce
in September. 
    Tiger Management's Julian Robertson, another legendary
manager, increased his exposure to gold in the third quarter.
The firm raised its stakes in Market Vectors Gold Miners ETF and
Junior gold miners ETF and Barrick. 
    However, Windhaven, a major shareholder in SPDR gold, cut
its stake to 2.1 million shares in the third quarter, down by 46
percent or 1.8 million shares valued at $226 million. 
    Third Point LLC's Daniel Loeb, who previously said he
favored more discreet investments in physical bullion, slightly
reduced his stake in SPDR gold to 130,000 shares during the
third quarter. 
    SPDR Gold Trust is the world's largest gold-backed,
exchange-traded fund that held 1,336.3 tonnes in physical gold
bullion valued at $74 billion - which also makes it among the
world's top ETFs in terms of market capitalization.