Tags: gold | hedge | fund

And Now, a Hedge Fund for Gold Bugs

By    |   Monday, 02 Feb 2009 09:54 AM

Making money in a hedge fund sounds great, but what if the dollar collapses, eating up your gains?

What if you fear any paper currency right now? Osmium has you covered.

The $175 million Osmium Special Situations Fund now offers shares based in ounces of gold, rather than just dollars, British pounds or euros.

Gold hit a three-month high above $900 an ounce this week. Chris Kuchanny, Osmium’s chief executive, told the Financial Times that he’s putting almost all his own wealth into the new share class.

“Investors have voiced concerns that they’re overly exposed to the major fiat [paper] currencies in an environment where the fundamentals of those currencies are clearly deteriorating, with governments assuming more debt and having lower revenue and more expenditure.”

The fund will hedge the price of gold, he says, so that the precious metal’s price fluctuations don’t affect share values.

In other words, a 10 percent rise in the fund’s investments should turn 100 ounces of the gold class shares into 110, before subtracting hedging of 0.1 percent to 0.2 percent a year.

Be careful what you wish for: The price of gold can, of course, just as easily drop as it can rise. If that indeed happens, investors will be in for a rude awakening when they cash in shares for gold and then cash that gold in for dollars.

Still, some experts see gold staying strong as markets continue their turmoil.

People don’t have faith in currencies at the moment. There is still an underlying faith that gold will go higher,” Joel Crane, a Deutsche Bank metals strategist, told Bloomberg.

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Making money in a hedge fund sounds great, but what if the dollar collapses, eating up your gains?What if you fear any paper currency right now? Osmium has you covered.The $175 million Osmium Special Situations Fund now offers shares based in ounces of gold, rather than...
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Monday, 02 Feb 2009 09:54 AM
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