Bloomberg

George Soros, who’s described gold’s surge as the “ultimate asset bubble,” cut his holding in the SPDR Gold Trust in the third quarter, while investing in the iShares Gold Trust. Rival fund manager John Paulson kept his bet in shares of SPDR Gold, maintaining the largest stake.

Soros Fund Management LLC sold 547,689 SPDR Gold shares as of Sept. 30, according to a filing with the U.S. Securities and Exchange Commission yesterday. The disposal represented 10 percent of his holding, Bloomberg calculations show, and follows sales in the first two quarters. He acquired 5 million shares in the iShares Gold Trust valued at $64 million, the filing shows.

Gold has soared to a record this year as investors sought protection against weaker currencies and a possible resurgence of inflation. Soros, who made $1 billion breaking the Bank of England’s defense of the pound in 1992, described gold as a bubble in January, and said buying at the start of one is rational. He cut the SPDR Gold stake by 24 percent since Dec. 31.

Soros “simply took profits after the rally,” Tetsu Emori, a commodity fund manager at Tokyo-based Astmax Ltd., said today by phone. “I don’t think he has changed his mind” as investors are preparing to deal with inflationary pressure, he said.

Spot gold, which touched a record $1,424.60 an ounce on Nov. 9, has gained 24 percent this year and traded little changed at $1,359.45 at 11:37 a.m. in London. Fund managers including Paulson added the metal after the 2008 financial crisis shook investors’ confidence in currencies. The SPDR Gold Trust is the biggest exchange-traded fund backed by bullion.

Mindich Sells

New York-based Paulson & Co. maintained its 31.5 million SPDR Gold Trust shares, or 7.4 percent of the U.S. exchange- traded fund, as of Sept. 30, according to a filing yesterday. Eric Mindich’s Eton Park Capital Management LP sold 2 million shares in the period, a separate regulatory filing showed.

Money managers who oversee more than $100 million in equities must file a Form 13F with the Securities and Exchange Commission within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.

Deutsche Bank AG is among banks forecasting more advances for gold even after its rally. Precious metals were among the “safest long positions,” Michael Lewis, global head of commodities research at Deutsche Bank, said last week. Gold may soar to $3,800 an ounce within three years, Myles Zyblock, chief institutional strategist at RBC Capital Markets, said in October.

Three-Quarter Selloff

Soros Fund Management’s holding in SPDR Gold Trust shares reached 6.2 million as of Dec. 31, 2009, according to an earlier 13F filing. With sales over the past three quarters, that’s been reduced by 24 percent, Bloomberg calculations show. SPDR Gold is the Soros Fund’s largest single holding in the SEC filing.

SPDR Gold Trust remained Paulson & Co.’s top holding as of the end of September, valued at about $4 billion, compared with $3.83 billion at the end of June. The New York-based firm sold 2.7 million depositary receipts in AngloGold Ashanti Ltd., its second-largest holding, in the third quarter, the filing showed.

Mindich is a former Goldman Sachs Group Inc. partner who began New York-based Eton Park in 2004 with $3.5 billion. SPDR Gold shares were his second-largest equity holding in the third quarter after the sale. Paulson has maintained 31.5 million SPDR Gold shares since March 31, 2009, according to 13F filings.

Soros said that gold’s rally may continue, Reuters reported in September, citing an interview. “I called gold the ultimate bubble which means it may go higher but it’s certainly not safe and it’s not going to last forever,” Soros was cited as saying.

Shumway, Third Point

Calls by Bloomberg News after normal office hours in New York to the offices of Armel Leslie, Mary Beth Grover and Michael Vachon, spokespeople for Paulson, Eton Park and Soros respectively, were not immediately answered.

Separately, Shumway Capital Partners LLC, the $8.9 billion hedge-fund firm run by Chris Shumway, added 2.08 million SPDR Gold shares as of Sept. 30. The new position represented about 6 percent of the firm’s portfolio shown in the filing.

Third Point LLC bought 115,000 shares in the trust in the period, according to its filing, while Highfields Capital Management LP said it acquired call options on 1.6 million shares. A call option gives holders a right to buy underlying stock or derivatives.

http://www.bloomberg.com/news/2010-11-16/soros-cuts-gold-holdings-for-third-straight-quarter-as-paulson-holds-bet.html