Bloomberg News

Paulson & Co. PFR Gold Fund Fell 16 Percent in September

October 21, 2013

Hedge-Fund Manager John Paulson

Hedge-fund manager John Paulson started the PFR Gold Fund in 2010 with the expectation that the Federal Reserve’s asset purchases would ultimately trigger inflation and stoke demand for bullion and related securities. Photographer: Jin Lee/Bloomberg

Hedge-fund manager John Paulson’s PFR Gold Fund fell 16 percent in September after bullion and related stocks declined, according to a report to investors obtained by Bloomberg News.

Last month’s loss brings the 2013 decline in the $350 million fund, which invests in gold stocks and derivatives, to 62 percent, according to the report. Bullion producers fell 9.4 percent and the metal dropped 5 percent in September after a Federal Reserve policy maker said a small reduction in bond purchases may occur in October and the threat of a U.S. attack on Syria eased.

Paulson, 57, is known for making $15 billion for his investors in 2007 by betting against subprime mortgages before the housing collapse. He is rebounding in his main strategies from losses tied to gold and two years of wrong-way calls on the economy. The PFR Gold Fund, which takes its name from the initials of Paulson and gold specialists Victor Flores and John Reade, started in 2010 with the expectation that the Fed’s asset purchases would ultimately trigger inflation and demand for bullion and related securities.

“While actual inflation and inflation expectations remain subdued, we continue to believe we are at risk of high inflation in the future,” Paulson & Co. wrote in the report. “We also believe we are in a pause phase, which is likely to persist until we see the leading indicators of inflation pick up.”

Federal Reserve Bank of Chicago President Charles Evans, an advocate of monetary stimulus, said today in a CNBC interview that fiscal strife in Washington will probably delay the central bank’s tapering of its monthly bond purchases. The Fed on Sept. 18 maintained the pace of buying.

Armel Leslie, a spokesman for $18 billion New York-based Paulson & Co. at WalekPeppercomm, declined to comment on the report.

To contact the reporter on this story: Kelly Bit in New York at kbit@bloomberg.net


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