The Newly Minted Shareholder’s Gold Council Vs the Destruction of the Gold Sector
$GLD, $SLV, $USD
After about a year of behind-the-scenes work, billionaire hedge-fund manager John Paulson announced that he has formed a coalition with 15 other investors aimed at curbing years of what his fund has called value destruction in the gold sector.
John Hathaway, a general partner at Tocqueville Asset Management LP and activist fund Livermore Partners are among those who have agreed to join the Group, according to an e-Mailed statement from the newly formed Shareholders’ Gold Council.
Egyptian billionaire Naguib Sawiris’ La Mancha Group is also on the council. In April, Mr. Sawiris said that he put 50% his $5.7-B net worth into gold.
The idea for the group was first floated by Paulson & Co. during the Denver Gold Forum in September 2017
“Since last year, the gold price has crept lower and shareholder returns have been poor,” Marcelo Kim, a partner at Paulson, said in a separate e-Mail. “Interest in the sector has continued to languish, and you have seen capital leave the space and notable fund closures.”
Gold was trading around 1,300/oz, about $100 higher than current spot prices, when Mr. Paulson, 62 anni, announced plans to unite big institutional gold investors around common issues.
Since then, there has been no noticeable improvement in gold behavior.
Mr. Kim in a presentation at the Denver meeting cited almost a decade of mismanagement by gold miners and called for institutional investors to exert more influence on issues like executive pay, board appointments and merger activity. The sector had incurred $85-B of write-offs since Y 2010, he said at the time, while continuing to reward executives.
The Shareholders’ Gold Council will be headed by Christian Godin, a former senior vice president at Montrusco Bolton Investments. Launching it took longer than expected because of compliance issues and housekeeping challenges dealing with 16 institutions and back-office teams, Mr. Godin said by e-Mail early Sunday.
The group mission is to ensure the management and boards of precious metals mining companies are aligned with shareholder interests, he said. The group will meet periodically to address a number of issues and will be funded by members.
Sprott Inc. is not named on the list, which includes four anonymous members.
Mr. Paulson is currently involved in a heated battle with Detour Gold Corp.’s management. That issue is entirely separate from the gold council, which is not involved in any way, Mr. Godin said.
Today Paulson & Co. manages about $8.7-B. In January 2010, The fund invests in mining companies and gold-related derivatives Mr. Paulson started the fund with about $250-M of his own money.
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