Tuesday, January 22, 2013

Pacific Group Becomes Latest Hedge Fund Converting Assets to Physical Gold

Today’s AM fix was USD 1,688.00, EUR 1,269.08, and GBP 1063.58 per ounce.
Friday’s AM fix was USD 1,690.00, EUR 1,265.82, and GBP 1,060.49 per ounce.
Silver is trading at $31.98/oz, €24.10/oz and £20.21/oz. Platinum is trading at $1,672.00/oz, palladium at $716.00/oz and rhodium at $1,200/oz.

Cross Currency Table – (Bloomberg)

Gold was up 1.26% for the week and silver was up 4.60%. Gold fell $2.80 or 0.17% in New York on Friday and closed at $1,684.10/oz. Silver surged to a high of $32.11 before it also edged off, but it still finished with a gain of 0.47%.
Gold inched up on Monday on concerns about currency debasement and even looser monetary policies to be announced from the Bank of Japan.
BOJ is examining an open-ended pledge to buy assets until a 2% inflation target is near which is pushing the yen to a 2 ½ year low. Gold bullion on the TOCOM soared to match a multiyear record of 4,911 yen a gram before giving up gains. 
Physical gold demand is also ramping up in Asia with the upcoming Lunar New Year festivities just around the corner on February 10th.
This week’s economic highlights include Existing Home Sales on Tuesday, the FHFA Housing Price Index on Wednesday, Initial Jobless Claims and Leading Economic Indicators on Thursday, and New Home Sales on Friday. Next week investors will closely watch to the U.S. Federal Reserve's policy meetings on the 29th and 30th.
Sweden’s central bank hasn’t carried out any physical checks of its gold reserves deposited with central banks abroad and relies on the respective authorities to do so, Dagens Industri reported, citing the Riksbank. 
Central banks internationally, from Ireland to Germany and now in Sweden, are being forced to answer legitimate questions about their gold reserves by concerned citizens.
Swedish gold reserves are 126 metric tonnes and are valued at almost 45 billion Swedish krone. 
The Riksbank confirmed that the majority of Swedish gold reserves are located abroad.
Another respected hedge fund, the Pacific Group, has decided to convert one third of its hedge-fund assets into physical gold.
The Pacific Group Ltd., which manages over a $100 million worth of assets, believes that gold will continue to rise as governments print more money to pay off debt, according to Bloomberg.
Thus, continues the trend of some of the smartest money in the world diversifying some of their holdings into physical gold.
Respected hedge fund managers and investors such as George Soros, John Paulson, Bill Gross, David Einhorn and Kyle Bass have diversified into gold - the latter two opting for the safety of allocated physical gold bars.
The Hong Kong-based asset manager plans to take delivery of $35 million worth of gold bars that can be traded on the London Bullion Market Association and other international markets, William Kaye, its founder and chief investment officer, said in a telephone interview on January 18. 
It has secured vault space at Hong Kong International Airport to store the gold, he said.
Investors disillusioned with government money printing to service “insurmountable” public debt may seek alternatives to fiat currencies, Kaye said.
Fiat currencies have no tangible backing, such as gold or silver, except governments’ good faith and can become worthless due to hyperinflation or loss of public faith.
Central banks have so far been able to manipulate interest rates to allow governments to service their debt at low costs, averting market seizures, Kaye said. Still, the next big rally in precious-metal prices may be 18 months to two years away, triggered by a “financial catastrophe,” he added.
Ownership of gold through financial instruments based on it, such as Comex futures contracts, now represents more than 100 times the physical gold that exists above ground worldwide, Kaye said, citing the Pacific Group’s own analysis.
“Gold, the way we look at it, is anywhere from being undervalued to being seriously undervalued,” Kaye said. “We’re in the early stages, in our judgment, of what would likely be the world’s largest short squeeze in any instrument.”
The likelihood of a massive short squeeze has been predicted for some years by GATA, the Gold Anti Trust Action Committee and by financial journalist, Max Keiser and many others, including GoldCore.
The idea appears to be becoming accepted in the wider investment world. 
“All you actually need for a major upward revaluation of gold is for a small fraction of people to physically reclaim from major central banks or other depositories that are holding your gold and using it for their purposes,” he added.
The Pacific Group has just converted the first tranche of such investments, buying gold bars from local refineries, Kaye said without giving the exact value of the delivery.
For breaking news and commentary on financial markets and gold, follow U.S. on Twitter.

NEWS
Pacific Group to Convert One-Third of Hedge-Fund Assets to Gold – Bloomberg
Gold Climbs With Silver on Outlook for Stimulus Amid Debt Talks - Bloomberg
Gold inches up on Japan easing hopes - Reuters
Goldman Forecasts Gold Rally Amid Debt-Ceiling Confrontation - Bloomberg
Gold prices recover on weaker rupee - Reuters
COMMENTARY
Visualizing Silver As An Investment
– Zero Hedge
Something Substantial Has Just Changed In The Silver Market – King World News
Currency Wars As Japan Turns "Revolutionary" – The Telegraph
The Mind-Bending Ignorance of the Bretton Woods Years – 24HGold

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