The Equivalent of Shorting Subprime in 2007

Could buying gold in 2009 be the investment equivalent of shorting subprime in 2007?

Recently famous fund manager John Paulson has been piling into gold funds. If you recall, Paulson gained celebrity for his early and aggressive shorting of all things subprime and financial, a move which garnered all sorts of accolades… highest-paid fund manager of last year, Barron’s No. 1 fund, etc.

Paulson has now become the largest holder of the SPDR Gold Trust, better known as GLD. His fund owns a whopping 8.7% stake, worth over $2.8 billion. That’s his No. 1 holding, worth over 30% of his entire portfolio.

According to a recently filed 13-K, he’s also picked up super-sized stakes in the Gold Miners ETF (GDX), Gold Fields, Kinross Gold and AngloGold Ashanti.

The Daily Reckoning