Hedge fund involvement in gold deep and unlikely to unwind soon

Hedge fund involvement in gold deep and unlikely to unwind soon

Financial Times ran a comprehensive report on recent involvement of hedge funds in the gold market citing several prominent names, among them Paul Singer’s Elliot Management. “New York-based Elliott,” says FT, “which manages about $40bn in assets, told its investors last month that gold was ‘one of the most undervalued’ assets available and that its fair value was ‘multiples of its current price’.” Hedge funds have been among the chief supporters of the gold bullion market in recent months. Gold ETFs, the primary beneficiary of that interest, added a strong 298 tonnes to their holdings in the first quarter of the year, according to the World Gold Council. Total ETF holdings now stand at 3,185 tonnes – a new record and the third-largest holding after the United States (8,133.5 tonnes) and Germany (3,373.6 tonnes).

Hedge fund involvement in the gold market is deep, the players are prominent, and their commitments, given the rationales publicly stated, are unlikely to unwind anytime soon. “ALL the smart money,” writes market analyst Fred Hickey at his Twitter feed, “Dalio, Druckenmiller, Tudor Jones, Zell, Gundlach, Singer, Klarman, Einhorn, Mobius (and some who I know are loading up but are doing it quietly) are long gold and understand the simple concept Hugh Hendry explains here. Question is: What are YOU waiting for?” Hickey then reposts famed hedge fund manager Hugh Hendry’s comments: “Today, however, ‘if you fear inflation then you should buy more gold.’ It is simple. The Fed is trying to debase the $ to help the economy. Will it help? Maybe. Will it help the stock market? Probably. Will it help gold? Definitely. This is the final leg that I envisaged in 2002.”