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Money Managers Buy and Hold Gold

Release Date: 
Friday, March 1, 2013

Gold fell on Friday as the euro dropped below the $1.30 level against the dollar following weak  European economic data. Gold was $3.40 lower at 7:00 a.m. Pacific Time on the New York Spot Market, at $1,583.90 per ounce.  Spot silver was $0.17 lower at $28.78 per ounce.  (Click here for the most current spot prices.)

Purchasing indices in Italy and the U.K. were  lower than expected as euro zone unemployment rose to a new record. “Poor short-term visibility and a lack of medium-term sentiment shall result in day trading rather than real strategic position-taking,” said Frederic Panizzutti, senior vice president at MKS Group.

Adrian Day, of Adrian Day Asset Management, who manages about $170 million in assets, believes that increased public confidence in a recovering U.S. economy and a strong global stock market have recently reduced the perceived need for safe haven assets such as gold.  He noted a purchasing opportunity given the current sentiment based on other factors.  “We see this as a good level to be buying. There is no expectation of serious tightening in any major economy anytime soon,” he said.

Vishaal Bhuyan, who runs $20 million hedge fund Nariman Point LLC, says he has been buying physical gold "on dips," or as gold prices dipped recently, on a bet that interest rates won't soar. “If you look at gold as protection, you need to own it in coins or bars and not an ETF," said Mr. Bhuyan.

Billionaire John Paulson's hedge fund, Paulson & Co., is holding on to much of its gold in the current environment.  Mr. Paulson told clients that he believes gold will rise over the long term, as global central banks expand their respective money supplies and inflation eventually picks up.

(Sources: Gold up; analysts say investor fatigue has set in,” Wall Street Journal, March 1, 2013; “Big Investors Differ on Gold's Prospects,” Marketwatch, March 1, 2013; “Big Investors Differ on Gold's Prospects,” Wall Street Journal, February 25, 2013)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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