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Kinross Gold Corporation Message Board

  • wolftts wolftts Apr 22, 2013 9:45 PM Flag


    Dan Denbow is not a gold bug, at least not in the traditional sense.

    He isn’t banging the table that gold is a screaming buy and the one true way to hedge against a race to the bottom in global currencies being orchestrated by central banks from the U.S., Japan, Europe and elsewhere.

    The USAA portfolio manager absolutely believes the metal has a well-deserved place in a properly-diversified investment portfolio; he just thinks investors need to have realistic expectations about what they get from the gold-related portion of their holdings.

    Denbow, who helps oversee more than $4 billion in assets at USAA including funds focused on precious metals and real return, says many investors did themselves a disservice by allocating too much capital to gold or letting its rise unbalance their portfolio.

    “We only advise 3-5% in gold-related assets,” says Denbow, “because it can very easily become the tail wagging the dog.” When a spike in volatility has gold on a roller coaster ride, it swamps the benefits of its defensive qualities.

    Those qualities become irrelevant in the midst of a broad selloff, like the one that took gold prices down more than 13% over two trading days April 12 and 15 (see the latest big drop in the year-to-date chart below). What caused the smackdown? Theories of a big player liquidating and fears of central bank selling from Cyprus – and potentially elsewhere in Europe — have their backers, but to Denbow the overaching theme is simpler: performance-chasing.

    ETFs have made entering and exiting the gold market much easier, he says, and with many investors chasing

    the returns enjoyed by earlier buyers in the gold space there were plenty of jittery hold

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