Hedge Fund Gold Stocks

Hedge Funds Cut Back on Gold Stocks in Fourth Quarter

While John Paulson's hedge fund is still betting big on the rising price of gold, many hedge funds are doing the opposite. According to Goldman Sachs' fourth-quarter Hedge Fund Trend Monitor, gold stocks accounted for 1.5% of single-stock long portfolios, a .3% drop from the previous quarter. Gold stocks and ETFs in the average dropped long portfolio from 2.9% to 2.2%.

Paulson is still a bullion bull, but some of his peers are moving on to other sectors. Gold stocks and exchange trased funds represent 2.2% of the average hedge fund long portfolio, down from 2.9% in the second quarter of 2010, according to Goldman Sachs'(GS_) fourth-quarter Hedge Fund Trend Monitor, which dissects 699 hedge funds with $808 billion of long stock-specific and ETF equity assets. Excluding gold-related ETFs, gold stocks accounted for 1.5% of the average single-stock long portfolio, down from 1.8% in the quarter ended June 30.

Hedge funds are worried over the prospects of rising inflation and have devoted $23 billion to long positions in gold stocks and ETFs. About $8.6 billion of that exposure, or 38%, is in the form of the SPDR Gold Trust ETF, according to estimates from Goldman analysts. Newmont Mining(NEM_) is a stock favorite. Source

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