Thu, Apr 17, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Kleinwort Benson: More ‘Blue Sky’ ahead: “Gold trending higher”

Tuesday, November 02, 2010
Opalesque Industry Update - Gold has prospered as investors have sought ‘safe haven’ assets and protection against inflation. Gold is up c. 70% in 3 years and almost 25% since the beginning of the year, and with analysts at Goldman Sachs recently predicting that the spot price will be at USD 1,650 in a year’s time, some analysts are talking of Gold as a bubble waiting to burst.

Kleinwort Benson’s Head of Advisory Portfolio Management, Andrew Thompson, believes that Gold may well become a bubble in due course and if so, it will burst - as all bubbles tend to do. However, for now, he is encouraging his ‘Trend Following’ clients to stick with their Gold positions and to protect the downside via Trailing Stops.

Gold is also seen as a ‘currency of last resort’ and the spectre of an all-out Foreign Exchange war is adding to Gold’s appeal. At c. USD 1,355 Gold is currently trading at an all-time high. Some investors believe that the very fact that Gold is trading at an all-time high is indicative of a bubble and is grounds for selling the commodity. This is not consistent with Thompson’s Trend Following investment philosophy. Indeed, Thompson points out that when Gold finally broke through USD 1,000 in September 2009, there were plenty of analysts decrying the commodity as a bubble. Since then Gold has gained a further 36%.

Thompson also points out that Gold is very difficult to value from a fundamental perspective (because it has no yield), thus its price has the potential to be driven much, much higher by the dual forces of ‘Fear and Greed’. For now Gold remains in the clearest of primary up-trends and more ‘blue sky’ beckons, with some financial commentators forecasting price targets of USD 1,500, USD 2,000 and some even suggesting the price could go as high as USD 6,000.

In a poll taken amongst bankers, producers and analysts attending the London Bullion Market Association conference in Berlin recently - one of the biggest gatherings of the precious metal’s industry – the consensus view was that Gold will rise to USD 1,450 a troy ounce in the next year.

In the short-term, Thompson accepts that Gold is looking ‘overbought’ and some sort of correction is all but inevitable. Thompson’s Trend Following clients are likely to use any such correction to add to existing Gold holdings. In the meantime, they are protecting the downside by raising their Trailing Stops.

Gold is one of 15 or so themes that Thompson is following and in which the Bank’s clients are investing via his Trend Following Managed Advisory Service.

(press release)


The Kleinwort Benson Managed Advisory Service is designed for experienced and financially sophisticated, high net worth clients who want to work with their investment adviser in identifying major market themes and trends and who wish to receive personalised advice on their investments and the management of their portfolios. Risk management is at the core of its investment philosophy. Clients are alerted to investment opportunities and with regular advice on the management and composition of their portfolios, the client maintaining the decision to purchase, hold or sell an investment. www.kleinwortbenson.com/ourservices/managedadvisoryservice


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Banner
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: European stock-picking fund up 19% YTD, bets on small caps’ high cash level[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Here is a European long/short equity fund that has been beating the odds since its 2008 inception by employing its own investment model, frequent company visits

  2. CTAs could face new challenges in a rising rates environment[more]

    Bailey McCann, Opalesque New York: CTAs have taken a beating performance wise lately, and asset flows reports show that investors aren't sticking around to see how the movie ends. Now, a new white paper from Roy Niederhoffer and Coen Weddepohl notes that as interest rates start to tick back u

  3. Investing – Big hedge funds bought Puerto Rico's junk bonds, Fidelity explores new trading venue amid flash trade concerns, Crisis-era Greek bonds reward early buyers with big effective returns, Cargill unit discloses stake in Freddie preferred[more]

    Big hedge funds bought Puerto Rico's junk bonds From Reuters.com: Several large hedge funds doubled down on Puerto Rico in last month's giant bond sale despite the U.S. territory's financial struggles, the Wall Street Journal reported, citing confidential documents reviewed by the newspa

  4. Opalesque TV: First Trust Advisors launches liquid alternatives platform[more]

    Bailey McCann, Opalesque New York: First Trust Advisors is launching a new liquid alternatives platform aimed at building on the companies existing alternative ETFs offering by adding hedged mutual funds. Senior Portfolio Managers Rob Guttschow and John Gambla recently sat down in an

  5. Commodities – Popular value fund manager David Iben bets on Russia, gold,[more]

    From Reuters.com: With large bets on Russia and North American gold miners, one of the best performing stock pickers in the wake of the 2008 financial crisis is back with a new fund that reflects his deep aversion to following the crowd. In the Kopernik Global All-Cap Fund, David Iben is follo