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Heavy drop in gold fund for man who made billions in 'big short'

The hedge fund manager who famously made billions betting against US subprime mortgages is now the one on the receiving end of a tanking asset market.

US financier John Paulson reached global fame betting against the housing market at the tail-end of the boom in a move dubbed the 'big short'.

Now, however, gold assets in his SPDR Gold Trust, a gold bullion-backed exchange-traded fund, have dropped to the lowest level in four years as stock market equities climbed to a record.

The fund's assets dropped 0.4pc to 1,057.79 metric tons yesterday, the lowest since March 2009. The assets fell 12pc in April, the biggest decline since the fund was started in 2004, according to Bloomberg.

The SPDR Gold Trust is the largest bullion exchange-traded product.

Gold tumbled into a bear market in April as investors favoured riskier assets on expectations that the global economy was recovering.

Standard & Poor's 500 Index rose to a record for a fourth straight day yesterday, while the Dow Jones climbed above 15,000 for the first time on higher corporate earnings.

Coutts said this week it had scaled back gold holdings and the price would probably not return to its peak.

"Investors globally are chasing yields and that is why we're seeing equities rally," said Victor Thianpiriya, of Australia & New Zealand Banking Group. "That's not a positive environment for gold."

Bullion lost 13pc this year, heading for the first annual drop since 2000, as equities rallied and some investors lost faith in gold as a store of value, cutting holdings and wiping $36.6bn (€27.8bn) from the value of global ETPs.

Mr Paulson, the top holder of the SPDR ETF, lost 27pc in his Gold Fund last month after the precious metal and related securities plummeted.

Mr Paulson has said gold is the best protection against currency debasement and inflation, while Elliott said it remains the best store of value and will rebound as governments haven't found a solution to their debts. (Bloomberg)

Irish Independent