Tuesday, April 16, 2013

Pity Party: How Paulson’s Gold Fever Dream Lost Him $1 Billion in Two Days



NY Mag’s Kevin Roose writes: "I always thought it was somewhat bizarre that John Paulson, the hedge-fund billionaire and imaginary IM pal of Jessica Pressler, was heavily invested in gold. Gold, unlike the credit default swaps on mortgage-backed securities that made Paulson his billions, isn't a thinking man's investment. Betting on gold requires no counterintuitive analysis, no Paolo Pellegrini whispering insights in your ear. It's a fairly obvious reactionary play for doomsday preppers and Fed-haters, and has been since Paulson began piling into it in 2009.


"What's weirder is that Paulson, who is temperate (if conservative) in his personal politics, isn't simply betting on gold as a speculator. That, at least, would be an understandable move. (Rough investment thesis: There are a lot of gold bugs in the world, and the Fed's quantitative easing efforts will likely create more, driving up the price of gold and making me rich[er].) No, Paulson seems to be a true believer, who really does think that the Fed's expansionary monetary policy will create massive inflation and debase the dollar.

"What's the only asset that will hold value? It's got to be gold," Paulson said back in 2009….

Grab a fresh hankie and go to http://nymag.com/daily/intelligencer/2013/04/john-paulson-loses-1-billion-on-gold.html

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