New York hedge fund Paulson & Co. has launched an initiative alongside a number of other large institutional investors aimed at shaking up the gold industry after years of poor performance amid a floundering gold price.
In a statement on Friday, the Shareholders Gold Council (SGC) said it will promote “best practices” in the gold sector and encourage “constructive engagement between the gold-mining industry and the investment community.” The SGC plans to publish research on relevant topics.
Its 16 members include, U.S. firms Adrian Day Asset Management, Apogee Global Advisors, Equinox Partners LP, Livermore Partners and Canadian asset manager Delbrook Capital.
The SGC is headed by Christian Godin, who was head of equities and director of research at Canadian asset manager Montrusco Bolton Investments Inc. until late last year.
The SGC has been some time in the making with Paulson partner Marcelo Kim making his first public statement on the initiative in September of last year. Paulson is a major investor in a large physical gold exchange-traded fund (ETF) and a number of gold stocks. Lately, Paulson has waged a public battle against one of its holdings, Canadian junior Detour Gold Corp. The hedge fund which owns about 5.4 per cent of its common shares, wants Detour to eschew its plan to develop its flagship mine and instead put the company on the block. The hedge fund has also proposed a new slate of directors for Detour with a shareholder vote on the matter scheduled for December.
Paulson & Co. was founded by John Paulson in 1994. The firm profited from the great financial crisis, making short bets against the U.S. housing market. However, over the past few years, the firm has struggled with its assets under management falling from a peak of US$38-billion in 2011 to around US$9-billion now.
As of the end of June, Paulson owned shares in a number of Canadian gold companies including Goldcorp Inc., Agnico Eagle Mines Ltd., and Iamgold Corp. Paulson also owned 4.3 million shares of the SPDR Gold Trust ETF, which tracks the price of gold bullion.
Gold is down about 7 per cent this year, partly because of a the stronger U.S. dollar but many large Canadian gold companies are struggling even more than the price of bullion this year. Barrick Gold Corp, Goldcorp. and Agnico Eagle are down by 25 per cent, 13 per cent and 22 per cent respectively.