BlackRock’s Evy Hambro tells Emma Wall why both physical gold and gold equities will increase in value this year.
The value of physical gold rose for the 12th consecutive year in 2012 – but gold-related equities did not do so well.
Gold funds littered the worst performers’ chart – BlackRock Gold & General lost 11.5pc, Investec Global Gold lost 12.9pc and Smith & Williamson Global Gold & Resources 13.5pc.
Evy Hambro, manager of the BlackRock fund, blames the management teams at the mining companies for this lag.
“Not all gold company assets and management teams are equal, and the market has taken an increasingly discerning view of those companies that deliver financially and operationally and those that fall short,” he said.
Mr Hambro said that some companies were serving themselves rather than shareholders – and as a result, share prices fell.
However, this year has already seen a change in fortunes for the Gold & General fund, up 1.9pc since January 1.
Speaking about what did do well last year, Mr Hambro credited silver and platinum miners.
“The fund’s silver exposure was a source of outperformance, in particular Fresnillo: the stock was helped by a positive market reaction to the board’s approval for the development of their $500m San Julián silver project,” said Mr Hambro.
“Our overweight positions in gold royalty companies also aided relative performance. The fund’s holding in Impala Platinum, a major platinum producer based in South Africa, was also a positive contributor.”
Mr Hambro has expanded the global reach of the fund in recent months, adding exposure to the Philippines as well as an emerging Australian gold producer and a Guatemalan silver miner.
The manager believes that both the value of gold equities and the metal itself will rise in 2013.
“The investment case for gold looks robust, with recent action by governments indicating that real interest rates are likely to remain negative in 2013, and the risk of inflation has increased. In addition, the behaviour of central banks suggests gold purchases look set to continue as diversification of currency exposure remains a key focus,” he said.
The Telegraph – By Emma Wall
9:35AM GMT 24 Jan 2013