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Gold Investments Hit Record High As Family Offices Seek Safe Haven

Sept 5. 2019 Hedge fund managers and family offices, including some unlikely names, are turning to gold as a potential safe haven as global capital markets enter a new and uncharted phase of volatility.

The price of a single ounce of gold has skyrocketed by 26% over the past 12 months, reaching a level not seen since early 2013. Growing economic concerns due to the ongoing trade war and volatility in equities has convinced more family offices and high-net-worth individuals to buy gold bullions and gold-backed exchange-traded funds (ETFs), according to London-based industry expert GoldCore.

Meanwhile, a number of high-profile investment legends and family offices have expressed interest in buying gold over the past year. Former hedge fund titans John Paulson and Stanley Druckenmiller, both of whom have converted their hedge funds into family offices recently, have declared their interest in buying more gold. 13F filings from late 2018 show that Paulson & Co. had 4.32 million shares of the world’s largest gold-backed ETF, the SPDR Gold Shares ETF (GLD).
Meanwhile, Drunkenmiller has derided “the absurd notion of negative interest rates,” Druckenmiller said his family office was bearish on stocks. He told attendees at the Sohn Investment Conference earlier this year that gold was his family office’s largest currency allocation at the moment.
The debasement of currencies through loose monetary policy is also a concern for investment professionals like David Einhorn, Paul Singer, Jeffrey Gundlach and Ray Dalio, according to interviews and reports published by Bloomberg and CNBC.
Gold is used both as an investment and as luxury consumption by the world’s wealthiest, according to the World Gold Council (WCG). Family offices purchase gold to hedge against inflation and diversify their portfolios during times of economic uncertainty. This behavior is mirrored by large pension funds and even central banks. Record-breaking central bank purchases pushed gold demand to a three-year high during the first six months of 2019, according to the WGC’s analysis.

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