Given gold’s continued strong performance over the past year – it has risen 29% – it’s hardly surprising that the BlackRock Gold & General Fund is proving popular with Isa investors. But after having risen 120% in the past five years, can it go any further?
Fund manager Evy Hambro invests in gold-mining companies and other commodity businesses. He believes the price of gold miners has become disconnected from the price of gold and a correction is due. “Gold shares are down around 10% in sterling terms since the start of the year, while the gold price is down about 3%. That is a material difference and you would not expect that, given recent correlations,” he tells Investment Week. However, Hambro also believes that three factors will help propel the gold price up over the coming months.
Firstly, supply will remain tight as a number of the world’s largest gold mines are approaching the end of production. Second, demand will continue to rise as central banks have become net buyers of gold after 21 years of being net sellers. Jewellery demand from India continues to have an impact too. Third, takeover activity among gold miners could increase as the big players look to increase their reserves.
And that’s not all, according to Meera Patel of Hargreaves Lansdown. “Concerns over the financial markets, eurozone debt and other political tensions could keep the gold price firm,” she says. “The BlackRock Gold & General Fund is well placed to benefit in the long term from any further rise.” With annual fees of 1.75%, it’s not the cheapest fund. But Hambro may be worth it.
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BlackRock Gold & General Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Newcrest Mining | 9.8 |
| Fresnillo | 6.8 |
| Gold Corp | 6.0 |
| Kinross Gold Corp | 5.7 |
| Newmont Mining Corp | 5.7 |
| Agnico Eagle Mines | 4.6 |
| Compania De Minas Buenventura | 4.5 |
| Randgold Resources | 4.1 |
| Anglogold Ashanti | 3.2 |
| Barrick Gold Corp | 3.2 |