Paulson and gold

Reports late yesterday and this morning that John Paulson liquidated one half his ETF holdings raise as many questions for me as they do answers. Let’s approach the subject logically:

1. We know that Paulson believes in gold as a long-term portfolio hedge.

2. We know that he was under heavy public pressure primarily from the financial press to sell his gold.

3. We know that most of his selling must have occurred in May and June (after the meltdown) because he made public statements in April that he was holding onto his gold.

4. The choice to sell post-April is uncharacteristic of a successful hedge fund manager in that the liquidation would have been into weakness — weakness that many gold advocates held suspect.

Something doesn’t add up here. One can assume from all this that Paulson either had a complete change of heart on gold ownership, or something else happened.