Paulson sticks to guns on gold

John Paulson, the billionaire hedge fund manager seeking to rebound from losses tied to bullion, posted a 23% decline in his PFR Gold Fund last month, according to a letter to investors. The drop brought losses in the strategy, formerly known as the Paulson Gold Fund, to 65% since the start of the year, the firm said in the July 3 letter, a copy of which was obtained by Bloomberg News. The fund, which consists mostly of Mr. Paulson's own money, is the smallest strategy of the $19 billion money manager and the only one to post losses this year. The firm re-iterated a commitment to investing in bullion and stocks of gold producers for protection against currency debasement as central banks pump money into the global economy. Gold fell 12% last month after Federal Reserve Chairman Ben S. Bernanke said that he may start reducing bond purchases that have fueled financial market gains. “Although the timing is uncertain, if you have a long-term view, we believe the funds offer the potential for outsized returns,” the firm wrote in the letter. Armel Leslie, a spokesman for Paulson & Co. Inc. at Walek & Associates, declined to comment on the letter. The firm posted losses in its four main strategies last month as markets slumped on the Fed's warning that it may phase out stimulus. Those funds have all posted gains for the year in the dollar share class. Investors can choose between dollar- and gold-denominated share classes of most of Mr. Paulson's funds. The firm said last month that it would report returns separately in the PFR Gold Funds. Mr. Paulson, 57, made $15 billion for investors in 2007 by betting against subprime mortgages before the housing collapse.