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Alternative Market Briefing

2013 year of 'massive gold wealth transfer’

Friday, November 08, 2013

Paul Sacks
Benedicte Gravrand, Opalesque Geneva:

« I would describe 2013 as the year of the massive gold wealth transfer," said a CTA manager during the recent Opalesque Hard Assets Roundtable. And that is while gold is currently in its possibly first losing year after 12 consecutive annual gains.

Gold goes East Paul Sacks, co-founder and CIO of Aurum Options Strategies LLC, a New York based precious metals CTA/CPO, goes on to say that hundreds of tons of gold have been liquidated by the West (through GLD ETF), all the while the East (especially China and India) have been buying physical gold as prices fell.

"The gold has gone from short term momentum traders to long term investors," he adds.

In the East, gold has a big cultural role, from wedding ceremonies to intergenerational wealth transfers, he explains. So the East is not buying gold to sell it later when prices rally, which is what hedge fund managers do in the West.

Aunum Options Strategies closely follows the global environment, as it might impact his strategy, he said, with special attention to China and India. The latter, for example, regularly changes its gold import tariffs to solve the current account deficit issue. One has to also be wary of a hard landing in China as that would have a detrimental effect on the entire commodity complex.

In India, consumers bought around half the gold they usually buy i......................

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