This is a good day for all certified gold lovers who have patiently taken barbs through most of this year and held on to their precious holdings. Gold is breaking free and is out of the bear market, rallying over +21% after hitting its lowest point in June of this year. In the past weeks gold ETFs have been taking their first net inflows, SPDR Gold Trust (ETF) (NYSEARCA:GLD) marked its first weekly inflow in the week ending on Aug 16 after losing $19 billion in redemptions for the year. So the gold trend has been turning around for some time now.
Both gold and oil are rising as fears of a military strike on Syria have escalated over the last couple of days. As investors rush to their safe haven assets amid market uncertainty, gold is expected to rise. Spot prices of gold rose as high as $1433.85/oz, around 2 AM GMT today, and are now at $1420/oz.
Value Partners Asia ex-Japan Equity Fund has delivered a 60.7% return since its inception three years ago. In comparison, the MSCI All Counties Asia (ex-Japan) index has returned just 34% over the same period. The fund, which targets what it calls the best-in-class companies in "growth-like" areas of the market, such as information technology and Read More
Gold expected to go higher
Nomura Global’s Tyler Broda expects gold to go beyond the near term target of USD 1500/oz on heels of regional instability and risks of increased insurgence in Syria and Egypt. A further rise in gold prices will come from uncertainty around the Federal Reserve’s tapering intentions. Broda sees deterioration of Asian EM current account balances in response to the Fed’s tapering as a risk to continued increase in gold prices.
Klarman, Einhorn, Paul Singer still strong in gold
Among hedge funds, those who have stuck around with gold despite losses were Seth Klarman and David Einhorn. Klarman’s Baupost increased its gold holdings through Canadian gold miners in the last quarter despite the market hitting the lowest of lows in that period. Einhorn’s Greenlight Capital cut some gold holdings but at the same time bought into gold miners and said that he still believes in the strength of gold as a hedge. One should point out here that Einhorn is one of the staunchest believers of the precious metal, who has even criticized Warren Buffett for his dislike of gold. Paul Singer was also unshaken by gold’s free fall until April of this year and it does not look as if he has sold anything. The same goes for Kyle Bass who has said that gold remains a safe investment despite of recent turbulence. John Paulson cut some of his holdings but still holds several positions in gold ETFs and bullion.
Dan Loeb, Barry Rosenstein exited gold holdings
At the same time there were several who exited their gold holdings almost entirely. Dan Loeb’s Third Point exited all of his gold positions in the last quarter and sold out around $1400. Barry Rosenstein’s Jana Partners also wrapped up gold holdings during the same period. We cannot be sure about George Soros, but he exited gold ETFs in the last quarter and has given contradictory comments on gold, saying at one time that it is a safe haven investment but that the European debt crisis has destroyed its role as a safe asset. So we are not sure where he stands on this issue now.
Stay tuned for more updates on what is happening in precious metals.