Soros and Paulson are back to gold rush

US billionaire George Soros (AFP Photo / Odd Andersen)
Legendary investors are aggressively building up positions in the precious metal. Gold exchange-traded funds have reached a record $145.1bn beating the gold reserves of every country except the United States and Germany.

This year ETF (Gold exchange-traded funds) investors bought 247 tons of gold – more than the annual production of the United States, US Securities and Exchange Commission filings show. Paulson & Co. has a $3.66 billion bet through the giant SPDR Gold Trust. The billionaire raised his stake by 26% in the second quarter and his holding of about 66 tons exceeds the official reserves of countries like Brazil and Bulgaria. Soros Fund Management increased its holding by 49% to $221.7 million in the 3d quarter.

That’s after George Soros called gold “the ultimate bubble” and largely dumped his stake in the ETF before gold rose to a nominal high of $1,920.30 per ounce in September.

The price of gold has risen for 11 consecutive years. Since the beginning of 2012 it added 11%. The price is expected to grow 20% and reach $1925 by the end of the year, according Bloomberg experts.

Analysts believe rallies will continue in 2013 amid uncertainty about the so-called fiscal cliff in the US, as well as the threat of inflation, which is growing due to increased monetary stimulus.

"We see gold as insurance against the stupid politicians. Now is a good time to strengthen portfolios of real assets such as gold," the CIF of Fiduciary Trust Michael Mullaney told Bloomberg.

However, billionaire investor Jim Rogers says the news about investors shifting to gold does not mean good news. “This [the news about investors shifting to gold] covers actions taken 3-5 months ago during the 3rd quarter of 2012. Who knows what is happening now? They could be selling. There is bad news about gold these days,” he told RT.

The global demand for the metal in the third quarter fell 11% year on year, according to the World Gold Council.

That’s despite Central banks increasing reserves in January – September by 351.8 tons. The Bank of Russia said on Tuesday it increased its reserves by 0.3%, to 936.2 tons in October.