Hedge Funds Are Buying Up Gold ETFs, Should You?
ETF Database submits: Despite a relatively solid earnings season, anxiety continues to run high on Wall Street as elevated unemployment and sagging confidence stand as major obstacles to a continued economic recovery. As equity markets trend sideways and potential pitfalls materialize, many investors have moved slowly towards safe havens, preferring to watch from the sidelines until the storm clouds clear. Government bonds have been a popular choice, but record demand for these securities has driven prices up and yields down to near-historic lows. The combination of these paltry yields have and record budget deficit levels have sent many investors into precious metals, traditionally a calm harbor during rocky economic times. It isn’t just the cooky conspiracy theorists who are flocking to precious metals; investments in gold are a popular choice for some of the world’s most famous fund managers. According to recent 13F filings, demand for gold ETFs, particularly the SPDR Gold Trust (GLD), has soared in recent months among top hedge fund firms. Eton Park Capital Management revealed that it has about $800 million in GLD, while the legendary George Soros has a position of about $600 million. Not to be outdone, John Paulson’s fund maintains a $4 billion allocation in GLD, making his fund the single largest holder of State Street’s gold trust. That means that Paulson’s stake in GLD is as almost as large as the other two physically-backed gold ETFs (IAU and SGOL) combined.Complete Story »