GLOBAL - Liberty Ermitage is beckoning institutional investors into gold stocks with the launch of a new fund.
The Liberty Ermitage Gold & Resources Fund will initially invest in gold and precious metal shares and specialist funds. It already has a US$15m seeding and will target in excess of US$50m assets over the course of the year.
Liberty chief executive officer and chief investment officer, Ron Mitchell, believes that the new gold bull market that started at the end of 1999 is in its nascent stages as the the US dollar and global capital markets continue to weaken.
Mitchell said: “We still have a long way to go in purging all of the incredible bubble related excesses and structural imbalances in the US economy.
“It took over 18-years to create the biggest speculative bubble in stock market history and we would be deluding ourselves if we believe that this bear market in equities is coming to an end.”
Gold markets tend to pick-up during volatile times as investors retreat into this traditionally safe haven, usually as a hedge against drops in paper money and other financial assets.
Investor confidence in equities has started to climb marginally since the Iraq conflict began. But Liberty believes that any significant spring back in stock market values is far from realistic, citing a negative first quarter across all major equity markets.
“This is not the environment to kick start a new bull market in equities,” added Mitchell.
“With this in mind - do not be surprised to see this bear market last at least another 2 to 3 years.”
The gold market currently has a market cap of US$50bn worldwide. Mitchell believes the current gold price of between US$317 - US$320 has nearly bottomed.
“All new bull markets climb ‘walls of worry’ and the backing and filling price action of recent months is just what you need to build the firm foundations for a long and sustainable bull market.”
The fund is an open ended, Bermuda registered fund, to be listed on the Irish Stock Exchange. Annual management fee is 0.50% and a 10% incentive fee. Minimum investment is US$15,000, or currency equivalent. The fund will deal weekly and is also available to private clients.
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