* First time Paulson cut gold ETF holdings since Q4 2011
* Moves by Third Point, Soros bearish
* Baupost ups gold miners
* Selling by funds in Q2 may signal near-term price bottom
By Frank Tang
NEW YORK, Aug 14 Paulson & Co more than halved
its stake in SPDR Gold Trust, the world's biggest
gold-backed exchange-traded fund, in the second quarter, when
the bullion price lost nearly a quarter of its value.
The prominent U.S. hedge fund, led by longtime gold bull
John Paulson, owned 10.2 million shares in the ETF on June 30,
compared to 21.8 million shares on March 31, a filing with the
U.S. Securities and Exchange Commission showed on Wednesday.
That marks the first time Paulson cut his gold ETF stake
since the fourth quarter of 2011.
In addition, Paulson also dissolved his stake in Barrick
Gold Corp, the No. 1 gold mining company.
Investors pay close attention to the quarterly filings by
Paulson and other notable hedge-fund managers because they
provide the best insight into whether the so-called "smart
money" has lost faith in gold as a hedge against inflation and
Their massive stakes in SPDR Gold Trust, backed by 400-ounce
physical gold bars, also have tremendous influence in gold
prices as redemptions in the ETF require selling the metal in
the open market.
SPDR Gold Trust held 968.3 tonnes of gold at the end of the
second quarter, down 252.6 tonnes, or 21 percent, from the first
"Paulson got out of half of his position, who's to say he's
not going to get out of his other half over the next three
months," said Comex gold options floor trader Jonathan Jossen.
During the quarter, Third Point's Daniel Loeb also slashed
his holdings in the gold ETF, while George Soros switched to
owning massive put options in the second quarter from holding
calls in Market Vectors Junior Gold Miners ETF in the
Boston-based Baupost, one of the industry's most-revered
hedge funds run by Seth Klarman, boosted its stakes in Canadian
gold mining shares by initiating a 3.3 million share position in
Yamana Gold and 2.1 million shares in Kinross Gold
while keeping his 21.7 million stake in NovaGold
The price of gold fell 23 percent during the second
quarter, highlighted by a record two-day $225 drop on April 12
and April 15, as a better overall global economic outlook hit
gold's appeal as a hedge.
Many traders said that gold's free fall to a three-year low
at $1,180 an ounce on the last day of June was a result of
forced selling by funds as they met client redemption requests.
However, that could also suggest that funds are done or
close to finish selling their gold, indicating that resurgent
buying could lift bullion prices.
"There is a large possibility the washout needed after the
big decline occurred in Q2. That could signal a short-term low
was in place for gold," said Adam Sarhan, chief executive
officer of Sarhan Capital.
Despite relentless selling by funds, retail investors
continue to buy physical gold coins and bars to take advantage
of the bargain gold prices, while Asian physical jewelry and
investment demand also rose to unprecedented levels.
Spot gold rose 0.7 percent to near $1,345 an ounce on
Wednesday after the filings by Paulson and other hedge-fund