So the two top holders of the gold ETF are revealed as hedge funds in their first quarter regulatory filings.
Paulson & Co, whose founder was the highest paid fund manager in 2007 thanks to a well-timed bet against sub-prime mortgages, bought 31.5 million shares in GLD, the gold exchange traded fund, in Q1. Meanwhile, Lone Pine was not far behind with its purchase of 26.5 million shares.
But Paulson has also acquired stock in AngloGold Ashanti to the tune of a cool $1.3 billion. The man who called the US housing market correctly is clearly hoping to do exactly the same with the gold market, and for the record he achieved a double-digit gain in 2008, along with a few stars like George Soros while the average hedge fund loss was 19 per cent.
Follow the stars
Is this hedge fund star on to another winner, or will commodity price deflation send this good fortune into reverse? Former performance is no guarantee of future performance but it is often the best guide we have.
In 2007 few called the US housing market turn, and yet with hindsight this was a bubble that ought to have been obvious. Could we not say the same now of the bubble in US bonds? Interest rates are too low, and the inflation risk too high.