By Irwin Speizer
When the run up in gold prices stalled this summer, investors questioned whether long bets on the precious metal were finally at a peak. But instead of retreating, many hedge funds have continued to pile into gold, building up their holdings for what could turn into a major showdown.
Over the past two years, long gold positions in varying forms have been a widely used and lucrative hedge fund strategy, attracting everyone from billion-dollar-club members like John Paulson, George Soros and David Einhorn to tiny funds like Atyant Capital Partners of Boca Raton, Fla., which manages $6 million.
Gold peaked at $1,264 an ounce on June 21, a gain of about 15% for the year. But then it drifted down a bit and bounced around the $1,200 range into early August as gold bulls and bears fought it out over which way the precious metal and global...