Gold, oil and softs shine at Hedge Funds World
Posted on 11 March 2009 with no comments from readers
Gold, oil, agricultural land and soft commodities emerged as the top tips from this year’s 10th annual Hedge Funds World Middle East, a rather sparsely attended event whose participants had been badly battered by the global financial crisis.
Attendance was a fraction of the more than a thousand who gathered in Dubai a few years ago, and several unemployed hedge fund managers looking for work sat among their number.
However, hedge funds have out performed mutual funds over the past six months, and vindicated the long and short strategies that permit them to make money in bad as well as good times, although not nearly as much.
Shariah stars
Probably the star of this year’s show was Eric Meyer and his associates from Shariah Capital whose shariah compliant Islamic hedge funds represent the only Dubai offering in the sector. He brought the New York based managers for his oil and gold funds to Dubai for the event, Ashton Lee and John Hathaway.
Mr Hathaway has been interviewed on this blog and reminded the audience that in 1982 and 1934 gold represented 20 and 22 per cent respectively of US financial assets, by comparison with five per cent today, leaving considerable upside potential.
In response to questions to the performance of gold stocks during the Great Depression he reminded the audience that gold companies delivered the best share price performance of the 1930s, and were looking particularly cheap after last autumn’s crash.
Mr Lee pointed out that US oil consumption had rebounded since last summer on lower prices, rather confounding the idea that a business recession would lower oil consumption. He said that royalty trusts like Enerplus of Canada offered high yields and could currently be bought very cheaply.
Oil and gold
Another pointer that oil prices should rebound is their long-term correlation with the gold price which is up, he added.
Meanwhile, agricultural land and soft commodities also featured in several presentations a the Hedge Funds World 2009. Emergent Asset Management presented its extraordinary fund investing in farms in Sub-saharan Africa, and another speaker advised soft commodities as a great market for playing volatility.
Hedge fund managers clearly have not run out of ideas, but they are depleted in numbers after a vigorous shake-out of the sector. The numerous fund closures and their losses were naturally not a subject that this industry gathering chose to dwell on; the relatively good performance of the sector is only of the living and cares not to mention the dead.
Dubai Eye radio interview with Peter Cooper
Dubai Eye kindly invited me on to their breakfast show this morning for an interview about ‘Opportunity Dubai’ which is now on sale in Dubai.
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UBS bullish on gold price nearing $2,500
By Javier Blas in London
Published: March 10 2009 19:25 | Last updated: March 10 2009 19:25
Gold could surge to $2,500 a troy ounce in the next five years because the prospects of either deflation or inflation were “becoming more extreme”, UBS said on Tuesday. The Swiss bank told investors to overweight gold in their portfolios.
The Swiss bank’s warning is the most radical among mainstream institutions and comes as some hedge fund investors who made money last year by betting against investment banks are now buying gold as a way of betting against central banks.
“The current environment is one which can best be characterised as having a ‘low margin of error’ for central bankers, with the prospects for deflation or inflation becoming more ex treme,” said Daniel Brebner, analyst at UBS in London.
A bet on gold is considered by some as essentially a bet against all paper currencies.
I bet the central banks lose in politics and win with a rising gold price, much against their will.Morons. Sometimes, even clever dimwits win the battle and lose the war. Am happy to see Sharia etf insist on 100 per cent physical gold. My boy will be in Dubai, the city of gold, this week, and he is there thinking of the future, not doing the bidding of bankrupt Western central banks and their scared vassals in’governments’. Cheers,Peter. Information is light, and the internet enlightens the young. Bye bye banksters. Game over.gold 2000 minimum. Silver 1:40 ratio minimum. The very best wishes to Dubai, the city of gold and its integrity by insisting on Sharia compliant etf. Perfect for these times. Saladin would approve, in my humble opinion.