Thursday, Jan 29, 2009
Hedge funds going for gold
FT Alphaville: Gold is the new money
A hedge fund has begun offering investors the chance to have their investment denominated in gold, as worries grow over governments debasing their currencies by printing money.
Osmium Capital Management, a $178m hedge fund manager based in Bermuda, is launching a new share class allowing investors to hold shares measured as troy ounces of the fund, rather than US dollars, sterling or euros.
Posted by mountain goat @ 01:26 PM (1291 views) Add Comment
33 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. mountain goat said...
Bloomberg - Greenlight Founder Takes Grandfather’s Advice on Gold - “To everyone’s dismay, we believe some of Grandpa Ben’s predictions are playing out,” Greenlight said in the letter, a copy of which was obtained by Bloomberg News. “The size of the Fed’s balance sheet is exploding, and the currency is being debased.” Greenlight hedge fund is turning to the centuries-old currency to mitigate the effects of the economic collapse and government efforts to end it."
2. jack c said...
Interestingly quite a few of the mainstream Jupiter investment funds now how Gold as a top 10 holding.
3. plato said...
I have a feeling there will be another 'gold rush'. Principally because confidence is being lost in most currencies and banks. This will be very good news for Switzerland and the currency. This will not be overlooked by the powers that be,so caution needs to be paramount.
4. str 2007 said...
Agreed Plato
What are the best ways of staying off the Government Radar when it comes to Gold ?
5. jack c said...
@str 2007 - Off topic/thread - I have just replied to yout BTL mortgage query
6. plato said...
str 2007..........
Good point of which the answer would probably warrant a prison sentence. Truthfully I am not getting involved in any way, my monetary wealth is far too modest. However if I were inclined to invest I would more likely be looking at funds and producers than the raw material, although I do have an appreciation for coins purely from an aesthetic leaning combined with their value - a wonderful combination, but equally a shame to spend them.
7. drewster said...
One of the FT comments says: - "If you're looking to hedge currency exposure why not just have an asset denominated in SDRs?"
That's missing the point entirely. All countries will have to inflate away their debt, so even SDRs will lose value against gold, ceteris paribus.
8. str 2007 said...
Jack
Thanks, interested to know what your colleague says.
Plato
How can you be sure you're not being sold fake coins ?
I assume there is a spread with coins and that is how the dealer makes his money.
How big is the spread normally as a percentage ?
Also do they just accept the coins over the counter so to speak or do they test there Gold content before buying them ?
I suppose if there was a total breakdown in the financial system (which I find unlikely) then a few Gold coins to store wealth in a small place and a bag of small silver ones with which to purchase essentials for a few months would be a good idea.
But in this scenario a gun would be more useful I suspect.
9. jack c said...
@str 2007 - He's in Leeds at the mo - so it will be later on that I'll get a reply.
In the meantime see if you can pick up some answers to the Gold questions you pose via the following www.spink.com/home_page/index.asp
10. sold 2 rent 1 said...
Here is a good related article
Gold Price Manipulation Further Forensic Examination
http://www.marketoracle.co.uk/Article8515.html
11. mountain goat said...
I have used http://www.coininvestdirect.com/ for buying coins, and was happy with the service. Have not tried selling coins back to them yet.
12. bellwether said...
I dislike consensus maybe because it usually indicates that something or somefact is being hidden. There was massive concensus about property before it popped. There were few dissenters and dissent was what was good about this site
I dislike the consensus here where gold is the only alternative to property and cash discussed in any depth.
People dream that gold might reach $1500 this year. I mean you could have bought barclays on Friday for 0.48p on Friday and sold for £1.15 on Tuesday.
13. sold 2 rent 1 said...
plato
"I have a feeling there will be another 'gold rush'"
Starting this April we should see 3 Elliott waves of the gold mania ending in March/April 2010
Aproximate entry points will be April and October 2009, then January 2010 for the wave 5 blow off
Be warned, this will be a bubble. Small/novice investors will get burned as per usual.
14. drewster said...
str2007,
You're quite right there's a huge spread on gold coins. Take a well-known online dealer, Hatton Garden Metals. They will sell you Krugerrands at £667.53 but buy them off you at £618.08. That's an 8% spread right there - you might as well burn 8% of your banknotes. With such huge spreads, coin dealing is only for eschatologists. By comparison the likes of BullionVault or GoldMoney or gold ETFs seem much more reasonable.
15. drewster said...
MountainGoat,
CoinInvestDirect are quoting prices of £ 635.06 / £ 712.63 to buy / sell Krugerrands. That's a massive spread.
s2r1,
It's a bubble when people are buying without thinking about how they'll sell in future. That's what mountaingoat has been doing....
16. plato said...
str........
How can you be sure you're not being sold fake coins ? -- Deal only with reputable dealers. (coinage also has aesthetic value).
I assume there is a spread with coins and that is how the dealer makes his money. -- As with everything demand and rarity decides the margins. Market rates apply decided by experts one of which is not me. Other bloggers will know far more
How big is the spread normally as a percentage ? No idea -- doesn't matter if you invest wisely,but that's another matter. Again other bloggers know more or you need to study the subject and learn by your mistakes.
Also do they just accept the coins over the counter so to speak or do they test there Gold content before buying them?-- Depends on your reputation. You will not be dealing with fools so your initial source is the important factor.
Some contributors here can advise you well,but you need to appreciate they are loath to give 'advice'.
17. mountain goat said...
Bellwether - I would say there is certainly no consensus about gold on this hpc site. There are always a few comments about bubbles etc.
I posted this article simply as reporting the fact that gold is starting to replace USD, sterling and Euro in hedge funds. It does make me nervous. The USA outlawed gold for decades after 1930. Now with everything being global I fear gold will be outlawed again as fiat currencies are under threat. Ironically the best chance of this not happening are the former communist countries who wont dance to the tune of the allies.
18. mountain goat said...
Drewster - "It's a bubble when people are buying without thinking about how they'll sell in future. That's what mountaingoat has been doing...."
how do you know what I am doing? All I reported was buying from them safely in the past?
19. str 2007 said...
Bellwether
''I mean you could have bought barclays on Friday for 0.48p on Friday and sold for £1.15 on Tuesday.''
Now if you'd told us that on the previous Wens/Thurs you'd get quite a following on here.
I think if there are good tips then please do share them but in the main I think most people on here aren't day traders (perhaps we should be).
Take your point though and it has crossed my mind that I might make more money if I turned my attention to full time trading the markets in this down turn than actually working.
I guess I may end up loosing my shirt, but at least that would be my doing not Gordon Browns.
20. str 2007 said...
S2R1
When you say entry points April, Oct & Jan are you expecting dips in the price at these points ?
Also what are your preferred methods of Gold purchase ?
21. bellwether said...
MG fair comment on gold being confiscated/outlawed, this biggest single risk to holding it in physical form
22. bellwether said...
str 2007 I share a lot of the pessimism on this site and suspect that elements of the market are still far from value - ie there are still big opps to make by shorting the market.
CFD's or spread betting provide an easily accessible route into this.
23. str 2007 said...
bellwether
As I understand it spread betting offers a tax free leverages (10x) way to speculate on your hunches. I also understand you can set a stop loss if things go in the opposite direction.
Therefore can you place a bet on the ftse falling the following day and win per point fall whilst at the same time having a stop in place if the ftse rises above opening level by say anymore than 10 points ?
If this is possible and you're right with your hunch I assume you can watch the market fall and close your position at a level your comfortable with. Say you'd bet £10 per point and you close at 150 points down you make £1500 but could only of lost £100 if it went against you ?
If I've got this right I must admit it seems quite easy (ie 50/50 chance but you win big and loose small) or am I missing something ?
24. yoyo1 said...
I'm glad the concept of confiscated selling is on some peoples radar. It's becoming more obvious isn't it, especially since they banned shorting on the banks for a time when it suited them. Soon they'll want to control all buying and selling .......
25. drewster said...
mg I don't mean to offend, just pointing out the risks involved.
During the recent house price boom, a lot of investors bought off-plan flats in questionable locations at a significant mark-up to what they were really worth. The mark-up was generated by aggressive marketing by the builders. When it came to re-selling those flats, the owners found that without aggressive marketing, glossy brochures, and a dedicated sales team, it's a lot harder to get a fair price. I fear the same fate could befall many gold buyers.
26. mountain goat said...
Drewster - definitely. There is a shortage of coins hence the big spreads. There is no shortage of bars of gold but for the small investor the only way to get access is through bullionvault and ETFs. Each hold there own risk, so I personally have a bit of each, including coins.
Bellwether - even owning gold mining shares is vulnerable to gold confiscation since the demand for gold will fall and also its price. Seems hard to imagine an international ban on gold if you consider how it is used in India, jewelry dowry etc. But then these are crazy times, about to get more crazy IMO.
27. jackas said...
str2007
In a stop loss they put a limit on your gain ("controlled trade" aswell as your loss. It means you have to watch it like a hawk because when it spikes, it spikes.
Volatility is the killer for the spread bets - unless you have a large deposit, you tend to get wiped out just through intraday movements. (Minimum purchase price is £1 per $ which translates to a £6700 holding).
28. bellwether said...
str 2007 I will let you know the mechanics, as just opening a CFD/Spead bet a/c this weekend, as have been struggling to find anything to go long on and my best bet in the past few months has been shorting sterling.
I see commercial property stocks and retail as 2 sectors that are still very overvalued
29. str 2007 said...
jackas
Thought it seemed to good to be true, still investigating it myself.
Keep me posted bellwether, interested to find out more myself.
str2007@o2.co.uk
30. sold 2 rent 1 said...
str 2007,
Gold stocks could have a 70pc correction at each of these points.
IMHO get a mix of physical gold/silver and gold/silver stocks
MG,
"even owning gold mining shares is vulnerable to gold confiscation since the demand for gold will fall and also its price"
Wrong. Mining stocks soared until 1939, the gold confiscation could not hold them back.
Confiscation happened in the 1930s during Calleman's 5th night when POWER was overcoming LAW.
There is a small chance of gold confiscation in the 6th night Nov 2009- Nov 2010 but because ETHICS is overcoming POWER this is remote. Answer: Buy silver and mining stocks as well as gold.
31. dohousescrashinthewoods said...
I see goldmoney.com allow you to do "payments" between accounts in gold and silver.
Sounds like the start of an alternative currency.
32. str 2007 said...
s2r1
Cheers for the info, 70% sounds like a huge drop, particularly as what your saying it will shoot back up to a higher level for the next to be able to happen. That's very volatile.
Are you expecting actual gold to react the same way ?
I'm seeing stories elsewhere about Gold being the thing of 2009 which would tie in with what you've been saying, particularly if it gets big in the media and a bit of a mania builds up, which if it's big in 2009 and can easily see people still piling in into 2010 only for it all to go belly up as you say in April 2010.
Is your plan to sell and buy back again at these points or are you just building it up until April 2010 ?
33. flintster1994 said...
str 2007,
s2r1, Is planning for something more wild than we can possibly imagine after the gold bubble.
From his previous posts, I doubt he will be selling any physical gold.