One of America’s best known hedge fund managers John Paulson is thought to have lost as much as $1bn on the sudden collapse of the price of gold.
The fund manager, who famously made billions forecasting the implosion of the US subprime lending market, has had an estimated $973m wiped off the value of his investments in the past few days, according to analysis by Bloomberg.
Mr Paulson has bet heavily on gold arguing that the precious metal is the best hedge against inflation and currency debasement which he says is the obvious result of the money printing policies being pursued by central banks around the world. According to Bloomberg, Mr Paulson had 85pc of his $9.5bn assets invested in gold share classes at the start of the year.
The price of gold plunged 9.3pc on Monday, through the $1,400-an-ounce level, the steepest decline in 30 years. Since August 2011, gold has fallen 20pc in value. Traders reported scenes of panic selling when the price dropped $30 in a matter of minutes.
Analysts said that mounting concerns that gold was overpriced were suddenly fuelled by fears that Cyprus was about to off-load its reserves in a bid to raise desperately needed cash.
On Tuesday the price rose marginally but stabilised at the low levels.
Sources at Paulson said that the hedge fund group had started investing in gold in four years ago when the gold was around $950 an ounce, so the funds are still in profit.
Mr Paulson hit headlines in 2007 with a $4bn payday from profits he made betting on the collapse of US house prices. He reportedly made even more in 2010, paying himself $5bn, after his funds, in which he has invested most of his fortune, delivered strong returns on bets on gold, commodities and a recovery for US banks.
However, recent months have been far tougher for Mr Paulson with reports of heavy losses, even before the drop in price of gold.
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