Australia Pursuing Global Ventures for Golden Opportunities
Gold bullion has plunged 28% in 2013 as some investors lost their faith in the metal as a store of value.
Consolidation in the Australian resources sector is creating a serious shortage of investment opportunities, and some fund managers said that it’s leaving them with no choice but to risk and build portfolios which are dominated by offshore companies as a way to gain exposure to commodities like gold.
According to Caledonia investment manager Chris Baker, there’s currently a real shortage of opportunity in Australia and that is the problem with consolidation, and looking for global ventures is the primary matter of concern. Also, adding that his view is despite recent falls in the spot gold price, it might also make it more attractive to some investors.
“Of the gold equities we own, 60% to 70% are listed outside Australia. We do that to enable us to find the best companies with the best assets.” he said.
The spot gold price dropped 0.5% to $US1,284.4 an ounce on Tuesday, touching its lowest since February as US equities rallied on the news of stronger corporate earnings results. The fall in the traditional safe-haven asset has been driven by improvements in the US economy and the belief that US-denominated assets are becoming less risky.
According to Bloomberg data, net-long positions contracted to the lowest price since mid-February and investors more than doubled bets on lower prices in the past months while reducing wagers on a rally in six of the past seven weeks.
However, the gold price has remained largely supported this year by consumer demand from China which is the biggest buyer of the precious commodity, and worries about the health of its economy.