Tom Winnifrith, manager of t1ps Smaller Companies Gold
"If you buy gold at $1,500 and it goes to $2,000, you make a gain of 33 per cent. If a gold miner has costs of $500 an ounce, they’d be making $1,000 profit on $1,500 gold. If the price goes to $2,000 then they’d be making a $1,500 dollar profit, or 50 per cent.""This is operational gearing and the share price should reflect the profits. So if you feel the gold price is going to go up, the way to play it is to buy gold equities."
"There is another reason to buy gold equities rather than physical gold. Although the gold price has gone up by about 30 per cent over the past year, gold equities have gone down in price by anything from 20 to 40 per cent, so there is a fundamental disconnect between the gold price and gold equities, which has to correct."
"Once the speculators are squeezed out of the market, as they will be, value in gold miners will reassert."
Rob Burdett, multi-manager at Thames River Capital
"We’ve chosen not to play the gold theme. We prefer an approach that
finds value in managers.""We’ve held BlackRock Gold & General in the past but, while we like the manager, we felt that with more than 70 per cent exposure to gold in the fund it was a play on the underlying price on the commodity rather than a play on the manager."
"Gold is a very emotional asset with the price largely driven by sentiment, which makes it incredibly hard to analyse. If we were to go more defensive then we’d be more likely to hold cash than gold."
Robin Hepworth, manager of Ecclesiastical Amity International
"Although gold has had a big fall-off I’m still holding on. It is difficult to get right because it is so sentiment-driven, but bad economic news is good news for gold."
"Saying that, I’ve made 40 per cent in about a year so I wouldn’t completely rule out taking profits on some of that soon."
Joe Le Jehan, analyst on Marcus Brookes’ multi-manager team at Cazenove
"We like the long-term story but there are so many reasons people are holding gold at the moment – whether as a hedge against inflation, as a safe-haven asset or as the least-bad currency – that we’re concerned that pretty much everybody owns it."Traditionally, gold tends to pull back by 5-to-10 per cent in that kind of environment and we’ve taken a per cent here or there and put a bit into cheaper equities."
Graham Toone, manager of Margetts St Johns Realistic Core
"We don’t use gold but we can see why people do. When we have panics like we did in August then investors run to the hills and buy up the precious metal."
"We don’t buy into the idea that it is a hedge against inflation or a currency play. It’s a geopolitical risk asset that people hold when they need a safe-haven."