Offshore Capitalist

The top gold manager believes boom has years to run

BlackRock gold guru Evy Hambro believes central banks will power the gold price forward for years to come.

Hambro says the supply and demand fundamentals of the precious metal are supportive of the current $1,150 price after some of the biggest central banks in the world became net buyers again.

Hambro manages around $30 billion in assets across a number of BlackRock funds, including the $13.3 billion World Mining and £2.1 billion Gold & General funds. But rather than focusing on metal prices in the short term, his investment strategy centres on analysing long-term supply and demand fundamentals.

Changing dynamics

Taking account of this fundamental perspective, Hambro says there have been a number of interesting dynamics developing, namely the actions of central banks.

He says: ‘For us the most exciting thing recently has been the activity of the central banks, which have historically been net sellers of gold from their reserve,base. Last year was the first I can remember where central banks were significant net purchasers of gold.’

The Chinese central bank led the way when it announced a planned increase in gold reserves from 600 tonnes to over 1,000 tonnes, while India surprised the market when it acquired 200 tonnes of gold from the International Monetary Fund.

Russia’s central bank, meanwhile, has also announced plans to double its gold reserves.

Hambro says: ‘It’s been a very exciting year of change. Central banks supply around 300 tonnes out of a 3,000 tonnes a year market, so when that turns from supply into demand, you can imagine the impact that it has on the underlying fundamentals of gold.’

via The top gold manager believes boom has years to run | New Model Adviser ® | Citywire.

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