By Devika Krishna Kumar
May 16 (Reuters) - Gold bull John Paulson slashed his bets
on bullion while billionaire investor George Soros and other big
funds returned to the metal for the first time in years, filings
showed on Monday, as prices staged their biggest rally in nearly
30 years.
New York-based hedge fund Paulson & Co, led by John Paulson,
one of the world's most influential gold investors, slashed its
investment in SPDR Gold Trust GLD (NYSE:GLD).P , the world's biggest gold
exchanged-traded fund (ETF), by 17 percent to 4.8 million
shares, U.S. Securities and Exchange Commission filings showed
on Monday.
It was Paulson's third cut to his SPDR stake in a year and
saw him drop to the third largest investor in the fund from
second, behind BlackRock and First Eagle Investment Management.
"If you were already long, which clearly Paulson was, maybe
he's just taking some profits off the table," Mike Dragosits,
senior commodities strategist at TD Securities said.
In an interview with Reuters last July, Paulson described
prices, which were languishing at five-year lows around $1,100
per ounce at the time, as "fairly valued".
His outlook suggested he believed prices had little room to
recover significantly as the Federal Reserve prepared to hike
rates, ending an era of low rates and taking the sheen off
bullion.
Since the end of the first quarter, prices have extended
their rally, hitting fresh one-year highs above $1,300 earlier
this month as investors have bet that the pace of interest rate
increases may be slower than previously expected amid global
economic turmoil.
Volatile equity markets and negative rates in some countries
have also boosted demand for a store of wealth.
Paulson's view on gold has been closely followed since he
earned roughly $5 billion on a bet on the metal in 2010,
following a similarly successful $4 billion payday on his bet
against the overheated housing market in 2007.
In stark contrast, Soros, who once called gold "the ultimate
bubble," returned to gold for the first time in three years in
the quarter buying 1.05 million shares in the gold ETF, valued
at about $123.5 million.
Soros Fund Management LLC had sold its stake of almost
531,000 shares worth $82 million in the fund in the first
quarter of 2013.
Others have followed Soros back into gold, although on a
smaller scale, including Jana Partners, led by activist investor
Barry Rosenstein, which bought 50,000 shares, worth about $5.9
million.
Monday's 13F filings come after CI Investments Inc
CIXCI.UL , an investment manager of Toronto-based CI Financial
Corp CIX.TO , almost quadrupled its stake in the ETF, becoming
the sixth-largest shareholder, a May 6 filing showed.
SOARING PRICES
The buying by Soros and other big investors highlights how
many funds piled back into bullion ETFs, which are backed by
physical gold, as expectations of further U.S. rate increases
faded.
In the first quarter this year, spot gold prices XAU=
rallied 16 percent for their best quarterly performance in
nearly three decades and hit their highest level in a year.
Funds have also increased exposure to gold company stocks.
The Soros fund returned to invest in Barrick Gold Corp ABX.TO
after unwinding its stake in the company in the third quarter of
last year.
It bought nearly 19.4 million shares in Barrick Gold at a
value of $263.7 million, the filing showed. CI Investments
bought 1.5 million shares in Barrick Gold and 2.9 million shares
in GoldCorp Inc G.TO .