The company’s chief investment officer Jeremy Charlesworth says a pull back usually occurs before gold prices push up, but he is aware that waiting too long for the fall could result in missing the boat.
Charlesworth’s view on gold has been influenced by a recent visit to the US, where 20 out of the 22 hedge fund managers he met are buying physical gold to protect against excessive inflation. Many were concerned that quantitative easing would eventually result in higher inflation, as the resulting currency devaluation could be attractive to governments who need to reduce the value of debt that is hampering economic recovery.
Charlesworth says one of the managers he spoke to thought the US was wrong to bail out its banks and the economy.
Charlesworth says: “He thought it might have been better to let it go, see what landed and that while we’d have had a terrible period – much worse than it has been – we would have started on a lower base and ultimately ended up with a stronger economy, with inflation under control.
“My personal view is that it will take a long while for inflation to come through. Gold is a difficult commodity to trade, and few gold funds have beaten the price of gold. I will wait for a pull back and then take a long position.”