'Value Investor' de Vaulx: Owning Gold Reflects Mistrust of Gov’t

Wednesday, 14 Sep 2011 07:58 AM

By Michael Kling

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Gold is "under-owned" and is a way of reflecting a lack of confidence in government officials, says fund manager Charles de Vaulx of IVA Worldwide. "Owning gold is a way to express our mistrust of policymakers, be they in U.S., Europe, Japan or even China," de Vaulx told Fortune magazine.

"Over the past few months, when you see the idiotic political debates in America regarding the debt ceiling, when you see the cacophony in Europe — it makes you want to own gold."

The fund co-manager continues to buy gold even though the precious metal recently has reached $1,900 an ounce, a sevenfold increase since 2001.

gold200AP.jpg
(Associated Press photo)
His fund now has 7 percent of its assets in gold bullion, which is safer and cheaper than gold mining stocks, he said in the interview posted on CNNMoney.com.

Paradoxically, de Vaulx is considered a value investor.

The praise of gold isn't coming from a novice or mediocre fund manager. The IVA Worldwide fund had an annualized return of 16 percent since being founded three years ago versus a 7 percent return of its index, CNNMoney.com reports. Previously, de Vaulx managed the top-rated First Eagle Fund.

He won't decide to sell gold based on its price, he told Fortune. Instead, he will sell the precious metal if stocks become cheap.

"Or if by some miracle, policy makers around the world start to get their act together."

Newmont Mining Corp., the largest U.S. gold producer, predicts that the price of gold will reach $2,500 by 2013, a 36 percent increase, according to Bloomberg.

Its price should surpass $2,000 in a few months remain high for the next five year, said Newmont Mining CEO Richard O'Brien.

"I don’t see the facts to cause the gold market to change in at least five years," he told Bloomberg.

"There's going to be a lot of volatility, up, but volatile. We are going to continue to see the support for gold in that $1,850 range and above."

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