Salient to Investors:
The number of hedge funds investing in gold is at the lowest level since 2010.
Farhan Mumtaz at EurekaHedge said hedge fund performance declines tied to volatility and withdrawals led either to closures or a shift in strategies – the number of funds investing in gold fell to 290 globally by May versus 310 in December, while assets shrank to $22.2 billion from $32.1 billion.
Credit Suisse forecast last month that gold may drop to $1,100 in a year.
Warren Rogers at Duet Asset Mgmt said people forget that at the end of the day gold is a commodity, and commodities become crowded, run out of steam and fall dramatically.
John Paulson, the top investor in the SPDR Gold Trust, maintained a stake of 21.8 million shares in Q1.
Paul Singer at Elliott Mgmt said gold remains the best store of value in an uncertain global economy, and will rebound as governments have yet to find a solution to reducing the debt they have accumulated.
Ben Davies at Hinde Capital said his fund’s redemptions are being replaced at this level by people who understand gold fundamentals, given the shortage of physical metal in London.
Countries from Brazil to Russia last year added 534.6 tons, the most since 1964, and may buy 450 to 550 tons this year according to the World Gold Council.
Ric Deverell at Credit Suisse said last month that gold will drop as inflation fails to accelerate and risks to the global economy subside. Nouriel Roubini at NYU forecasts a drop toward $1,000 by 2015.
Gabriel Garcin at Europanel Research & Alternative Asset Mgmt said there was an accumulation of very big positions by speculators and people realized that, because of what Draghi has said, the euro will not collapse, the US is doing whatever it can to reduce unemployment, and says if you are buying gold for safe-haven reasons, then you should be selling now.
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