Commodities & Metals

Paulson Inadvertently Kills Gold (GLD, NG, KGC, AU, GFI)

We aren’t going to bother telling you the news on Goldman Sachs being charged by the SEC with fraud over mortgage products.  The notion that hedge fund Paulson & Co. is being implicated and tied to this fraud does have serious implications elsewhere.  Whether it ultimately has any impact is still unknown, but the Paulson-Goldman angle is taking its toll on the gold market today.  This is hitting SPDR Gold Shares (NYSE: GLD), NovaGold Resources Inc. (NYSE: NG), Kinross Gold Corp. (NYSE: KGC), AngloGold Ashanti Ltd. (NYSE: AU), and Gold Fields Ltd. (NYSE: GFI) directly as Paulson holdings.  After these drops, even the non-Paulson companies will trade lower in sympathy.

In a recent call, our affiliate Adam Hewison of INO recently put $1,150.30 as the critical pivot to watch in gold for other reasons and he outlines what to expect down the road in much more detail.  That was a call of a technical nature, not one of Paulson ties.  With spot gold at $1,134 to $1,135 per ounce on a $24.00 drop, that $1,150.30 may now be the next ceiling rather than floor.

The reason that Paulson being implicated in the gold trade is that Paulson & Co. opened up a hedge fund to make bank on the long-term move that may come in the gold markets.  If he is implicated too deeply in the SEC charges, again IF, then traders are betting that there will be an exodus from his funds and that Paulson will have to sell just to deal with redemptions and client losses. Here are just some of the Paulson holdings:

  • NovaGold Resources Inc. (NYSE: NG)
  • Kinross Gold Corp. (NYSE: KGC).. PAULSON & COMPANY, INC. with 23,550,000.. 3.34%.. $308,740,500.. Dec-31-09
  • AngloGold Ashanti Ltd. (NYSE: AU).. PAULSON & COMPANY, INC. with 42,849,864.. 11.99%.. $1,721,707,535.. Dec-31-2009
  • Gold Fields Ltd. (NYSE: GFI) PAULSON & COMPANY, INC. with 23,550,000.. 3.34%.. $308,740,500.. 31-Dec-09

Again, this is the trade happening on Wall Street today.  One fund and one man won’t likely fix the trade forever.  You know trades, they go for the gold (no pun intended) when it comes to “where there is smoke, there is fire” theory.

JON C. OGG

Essential Tips for Investing (Sponsored)

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.