Hedge Funds keep betting big on Gold, UK’s Odey Asset Management initiated a new position in Shanta Gold Limited (LON:SHG) and the stake is a large one, 6.69 percent of shares (H/T Marketfolly). Shanta Gold Limited (LON:SHG), is involved in production and exploration of gold in Tanzania. The gold explorer recently began trading on London Stock Exchange and has a market cap of $89 million. Earlier this month, Shanta Gold Limited (LON:SHG) announced their commitment of achieving production of 6000 ounces of gold in Q4 and raise it to 70000 ounces in 2013.

Odey’s UK Absolute Return Fund has gained 28 percent in the first ten months of 2012.

Prices of gold have been volatiel recently, but that has not deterred hedge funds from buying the precious metal. The assumption is that gold will increase due to quantitative easing from the Federal Reserve (and other Central Banks).  If there is another round of QE in the making, we can expect more tailwinds for gold. So far any dip in gold prices has triggered a buying frenzy in the market, as the chart below from BAML Hedge Fund Monitor demonstrates.

Hedge Fund positions on Gold