What are gold savings funds
Gold funds break all records
With a 71 percent increase in value, the PEH-Q Goldmines has left all the competition far behind it this year. This does not only apply to the other gold funds, but to all fund products that are currently on offer. With his focus on Australian (36%), South African (31%) and American (25%) gold mines, fund manager Martin Siegel has found the right mix. And best of all: He expects growth in the second half of the year as well.
Big plus with gold while the rest of the world is losing
Admittedly, it has not been difficult to leave the fund community behind this year. Most equity funds are trading in the red. But an increase of 71 percent, or 60 percent, as much as the next-placed AIG Equity Gold and Merrill Lynch World Gold Fund achieved, would have caused a stir in other years as well.
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The fear of savings is causing the price of gold to rise
The special thing is that the gold price has been in an upward trend since April 2001. From around US $ 255 a troy ounce, it peaked to 327.85 in February. The gold price is currently quoted at 316 US dollars (see attached pdf file). There are several reasons for the increase: First, there is stable industrial demand with declining production volumes. Above all, there is suddenly demand for the crisis metal gold. A renaissance, because most market observers had long since denied the safety function of the yellow metal. But the ongoing bear market on the stock markets, the fear of terrorist attacks and now also the balance sheet fraud at various companies have deeply unsettled investors. "The demand for gold does not simply increase because of a war somewhere in the world, but only when psychological aspects play a role", Martin Siegel tries to resolve the contradiction. And one such aspect is "that people are afraid for their savings," Siegel continued.
Gold bars or coins are of no interest
Siegel cites recent developments in Japan as an example of his theory. After the state deposit insurance of the banks was lowered, the already crisis-ridden Japanese bought gold. But gold is of no interest as an investment. The price of gold has risen by 13.4 percent since the beginning of the year. On a euro basis, however, there is only a seven percent increase. And that on the same terms as gold is traded among professionals. However, private investors still have to calculate a spread between the buying and selling price of around 4.3 percent for gold bars and between 7.5 percent for the Kruger Rand and 15 percent for gold ducats. This significantly reduces the theoretical profit. Gold coin buyers have even put more money this year.
Gold mining stocks are bulling at a ratio of 1: 6
Investments in gold mines, on the other hand, are much more interesting. The gold price of over 300 US dollars helps you because the mining is then profitable. And with every dollar that the troy ounce brings in, the yield of the mines grows disproportionately. Johann Fürstenberger from Activest gives the ratio as 1 to 6. In other words, if the price of gold goes up one percent, gold stocks will gain six percent. The development of the FTSE Gold Mines Index does not fully confirm this: it has increased by almost 30 percent in euros since the beginning of the year. On the other hand, the outperformance of the PEH, AIG or Merrill Lynch funds, which is based on the management performance of the fund managers, is much better.
Gold price: Target price 400 US dollars
And they are still optimistic. Siegel reassures his investors who are worried about the risk of setbacks due to a possible overheating of the market: "Hardly anyone has invested in gold so far, the market capitalization of the entire industry is about as high as that of the Dax value Allianz." with a further increase. And the Vienna RZB Bank even believes that the gold price will rise to 400 US dollars within twelve months.
Gold lovers should bet on funds
However, the professionals always consider it advisable to invest in gold via gold funds. The gold mines are mostly listed on distant stock exchanges, which are difficult to follow from Europe. And specialist knowledge is required to analyze the titles. In addition, the values are very volatile, so they should be monitored around the clock. Because the previous long-term downward trend in the gold price is still fondly remembered. Especially since the central banks are only reducing relatively small parts of their extensive gold reserves that they no longer need. A mortgage, because sales of gold in large quantities put a strain on the price. Clearly a job for specialized fund managers.
Note: The PEH Q-Goldmines is not approved for sale in Austria!
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