A rush away from gold

A promising hedge fund focusing on gold is suffering so far, with 10% losses. Have investors turned on the precious metal?

By Kim Peterson Feb 10, 2010 2:30PM
Gold bars. © Stockbyte/SuperStockJohn Paulson jumped headfirst into gold, but there aren't many following him.

Paulson started a hedge fund this year to bet big on gold, and it was generally expected that he'd be successful. After all, Paulson correctly anticipated the housing meltdown in 2007 and 2008, and made about $20 billion in profits from placing smart bets against mortgage and financial companies, according to The Wall Street Journal.

And so gold bugs were mighty excited about Paulson's new fund, hoping that it would bring more investors and push gold even higher.

But now, Paulson has only raised $90 million for the fund, the Journal reports. That's even after he put $250 million of his own money in there to lure investors.

Now, the fund has lost 10%. What happened? Most likely, people are simply less confident in gold these days. Gold has dropped nearly 2% this year as a result.

Other gold plays are hurting as well. AngloGold Ashanti (AU), a gold miner, have dropped to the $37 range after approaching $47 in early December.

Tags: gold
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