Standard Life Teams Up With GoldMoney

For someone who's been lumped in with the gold nuts, James Turk certainly has arrived. His company, GoldMoney, has cut a deal with Standard Life to offer an option for self-directed pension plan holders to buy gold through GoldMoney for their retirement.

Standard is offering its 100,000 self-invested personal pension (Sipp) clients the ability to invest directly in gold bullion, in association with GoldMoney, one of the world’s largest holders of physical bullion for retail investors.

Clients will be offered “online access to GoldMoney’s website 24 hours a day, seven days a week, where they will be able to buy and sell gold bullion”, says Standard’s release.

“Customers can buy or sell a total of 2000 grams of gold in one business day and receive it at a confirmed price.”

The spot price on offer is based on the trading prices from the London Bullion Market Association, and the bullion purchased is held “in a secure vault in London”.

The fees include a 1.92% charge for purchases of up to £600,000 (then 1.04%), in addition to an annual storage fee of 0.15%....

Included in the article is a warning from a UK investment dealer about excited buyers getting in at the top of the market.

In the short term, that advisor has a point. The throng of Germans who got into gold at the height of the Eurocrisis last year did get in near an intermediate-term high. Over the longer term, though, they've done well. That peak is well below today's price, and was below even the panic low of last January 27th.

There's no sign of the long-term gold bull market coming to an end. Any excited buyers may end up with a short-term loss, but until the bull cracks they'll gain over time.

New, Sober Book Gives Three Reasons For Buying Gold

Back in the late 1970s, the only gold-buying investment books around were by hardcore goldbugs. Only they had the background experience to put the case for gold down on paper, as virtually all mainstream financial analysts shunned it.

Those times have changed. The hardcore goldbugs are still around, of course, but they're being supplanted by a more moderate breed of gold boosters who recommend gold as portfolio insurance. One of the latter group is Shayne McGuire, who manages the gold investments of the Texas Teachers' Retirement Fund. The fund has only a small amount of gold as a percentage of its assets, 0.3%, but the dollar amount is substantial. McGuire's reasons for owning gold are summed up in a favorable review of his book by Scott Burns:

Talking over breakfast and reading his book, Hard Money: Taking Gold to a Higher Investment Level (Wiley & Sons, $35), McGuire makes a clear three-point case for why we should own some gold....

Gold has never been more under-owned as an asset. Historically, gold was money. It accounted for a substantial part of global assets. It was a universally recognized store of value and medium of exchange. Today, it is an asset only as a commodity.

The value of all the gold in the world, he points out, is about 0.6 percent of all financial assets. This is down from 2.5 percent as recently as 1980.

So gold is a rounding error. The value of the largest gold exchange-traded fund, at $57 billion, is less than the market capitalization of McDonald's ($79 billion) and only a fraction of the most valuable stocks, such as Exxon Mobil ($403 billion), Microsoft ($246 billion) or Apple ($316 billion).

After years of being net sellers, he points out, governments are now net buyers of gold. Moreover, institutions such as pension and endowment funds now have vehicles for investing in gold.

Long prohibited from owning physical gold, these funds can now own it through exchange-traded funds such as SPDR Gold Shares (ticker: GLD). Significantly, State Street Global Advisors' annual report on ETFs shows that GLD was the fifth-most-traded ETF in 2010.

With gold accounting for so little of global assets, McGuire says, only a small shift in asset preferences — from currencies to gold or bonds to gold - would cause a major price increase in gold.

It looks like McGuire has hung his hat on a a shift to gold by major institutions, and is positioning himself as ahead of the curve on that basis. He may well be right.

UK's Andrew Bolton Shy On Commodities..Except One

That one is gold. He's blunt about his take on the prospects for other commodities, saying that investors in the sector are five years too late.

"The best time for commodities was in 2006, when the whole world was growing above trend," said Mr Bolton, who manages the Fidelity China Special Situations investment trust.

"Western economies are anaemic at the moment, and I am not sure emerging market growth is enough to keep commodities going."

Despite many managers believing that commodities are a key part of the emerging markets story, Mr Bolton holds only one commodities stock in his fund, a gold mine.

It is uncertainty about America that is keeping Mr Bolton from increasing his exposure to commodities. While China is experiencing a bull market, he warned that the "stars of one bull market are not necessarily the stars of another".

The reason he makes an exception for gold is because of gold's money component. He also cites Chinese and central-bank interest in the metal, as well as seemingly permanent budget deficits.

Hedge Funds Pulling Out Of Gold

A Bloomberg story reports that hedge funds have reduced their exposure to gold, to levels not seen since July of 2009.

“There’s been a lot of profit in gold, and people are getting nervous that there might not be more,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. “The big boys are starting to get out. They know that these prices aren’t cheap in anybody’s mind.”...

“Interest rates are going to be rising worldwide,” Kaplan said. “I’m not convinced it’s over for gold yet, but it’s very close.”

Those hedge funds evidently see gold as toppy. There's no reason to classify these people as sheep, so they might be right about gold's near-term prospects. On the other hand, they know about gold and can shift back to the metal if they've underestimated its prospects.

George Soros' Biggest Buy Is New Gold ETF

As reported by Goldseek, George Soros' Quantum Fund's biggest buy of the quarter is the iShares Gold Trust.

Many of those calling gold a bubble have done so simply on the basis of George Soros’s recent comments regarding gold being the ultimate asset bubble or becoming the ultimate asset bubble. Soros’s comments were somewhat cryptic and had some commentators claim that Soros was saying gold is a bubble and others claiming that Soros was simply saying gold would become the ultimate bubble.

George Soros said subsequently “It’s all a question of where are you in that bubble ... The current conditions of actual deflationary pressures and fear of inflation is pretty ideal for gold to rise.” This would suggest that he is bullish on gold, contrary to much of the media headlines and commentary.

As ever with hedge fund managers and large investors it is important to watch what they do rather than what they say. In the last quarter, Soros's biggest buy wasn't actually a stock. His firm spent $64 million on shares of the iShares Gold Trust (IAU).

When George Soros begins liquidating his gold holdings, it may be an indication that the gold bull market has run its course and it is time to reduce allocations.

Recently, he sold over 500,000 shares from Quantum's GLD holdings. The two amounts almost match up in terms of dollar value. So, instead of abandoning gold, Soros was reallocating. iShares Gold Trust has lower fees: 0.25% instead of GLD's 0.4%.