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Philip Gibbs: Gold will climb higher on Western currency 'crisis'

Jupiter’s star financials manager Philip Gibbs thinks the gold price will continue to climb because of an ‘ongoing crisis’ in the major western currencies. While liking Asia, he also backs Switzerland as the safest of 'safe' havens.

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by Matthew Goodburn on Sep 22, 2010 at 12:58

Philip Gibbs: Gold will climb higher on Western currency 'crisis'

Jupiter’s star financials manager Philip Gibbs thinks the gold price could continue to climb because of an ‘ongoing crisis’ in the major western currencies, despite the asset testing record highs in the last few weeks. While like Asia, he also backs Switzerland as the safest of 'safe' havens.

Speaking at an investment conference in London, Gibbs reiterated his view that emerging market currencies and economies, particularly in Asia, would best withstand a further double dip. He also singled out the pound for being ‘in for a rough ride’ over the next two to three years.

But Citywire A-rated Gibbs does not believe the dollar, yen, or euro look particularly desirable due to the onerous debt levels saddled to all of them and believes the standout currency choice in Europe at least over the mid term, is the Swiss franc.

Swiss franc 'absolute winner'

Gibbs, who runs the Jupiter Absolute Return fund and co-manages the Jupiter Financial Opportunities fund with Guy de Blonay, said: ‘Gold will continue to perform well because of the crisis in major currencies. I would say "no thanks" to all four.’

He describes the Swiss franc as the ultimate safe haven if fears of a double dip become reality.

‘The Swiss franc looks an absolute winner. Switzerland has such low indebtedness but also such a strong economy. It is not only a safe haven but also a safe economy.’

He added: ‘On a short-term point of view I would say the Swiss franc is the best currency bet for a bullish or bearish scenario but sterling looks weak.’

In terms of a potential double dip, Citywire Selection-selected Gibbs admitted to have been previously ‘a bit more worried than he is now’ but he thinks that if western economies do ‘stagger through’ then equities might ultimately do quite well.

Corporate bonds fair value

In terms of other asset classes, he thinks that at present levels corporate bonds look fair value.

‘I think 8% yields [on corporate bonds] when government bond yields are at 2% is very attractive, although it is not the case in our [financials] sector.’ He also describes the high yield bond space as ‘quite interesting.’

But Gibbs thinks that if the world does enter a double dip recession, then investors will steer clear of western government bonds completely, in contrast to previous slowdowns.

‘If the double dip happens I cannot see why anyone would want to be in western government bonds unlike previous double dips when you would have wanted to own them.

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11 comments so far. Why not have your say?

I wish he would buy some "ABSOLUTE WINNERS" for the two funds mentioned above. Both are giving crap returns.

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yes i agree i have sold out of all my jupiter holdings,performance has been very poor,maybe they have been distracted with jupiter flotation and how much they made

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So now this guy thinks gold is a buy? Then how come less than a month ago he was selling out of gold? Didn't Citywire publish a report on Aug22 entitled 'Leading fund manager Gibbs slashes cash and sells out of gold'? European debt crises was as much of a problem a month ago as it is now, then why did he sell out of gold then only to tell us gold is a buy now? Could it be that this is because most managers, stars or otherwise, are nothing but stupid morrons? Didn't it occur to the citywire journalist preparing this report to contact Gibbs and ask him why this sudden change of heart, or at least mention the contradiction in the article?

No wonder Jupiter Absolute Return is such an absolute mess.

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Sorry the article was published on Aug 26 not Aug22. Here's the relevant part:

In Gibbs' £600 million Jupiter Absolute Return fund launched last December, he has sold out of his position in physical gold. The ETF Securities physical gold ETF had been Gibbs' second largest long position at the end of June. A position in 2021- dated Australian government bonds yielding 5.75% had been added to the long portfolio over the same period.

Maybe the manager can explain why he sold out of gold only to tell us gold will climb higher barely a month later???

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Ruffer say japanese equities could soar and have taken out ba large position.

A well known Japanese fund manager who has been bearish for years on Japanese equities has put a substantial amount of his own money in his fund because ":japanese equities are so cheap" and has stated that they are so cheap if they fall he will simply buy more.

As as for currencies................easiest and quickest way of loosing money there is.

As for gold...................classsic bubble.

As for Phillip Gibbs ......I believe that the second split fund he manages has approimately 50% in cash and 35% in bonds and I believe he has a sustantial amount of his own money in this.

Suprised he didnt comment on cash?

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ISA23 – You make a fair point about the apparent contradiction. Gibbs is a very active, high conviction manager who does frequently change his mind. His recent performance notwithstanding, his long term track record inclines us to give him the benefit of the doubt.

He’s also notoriously press shy – getting a comment from him is much easier said than done! We have contacted Jupiter and we'll update this thread if we hear back from him.

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Thanks so much. I appreciate it. Gibbs' track record managing Financial Opportunities is outstanding, but I fear with the launch of Absolute Return, International Financial and the new Split he simply has too much on his plate and performance has therefore been mediocre. I also fear that him having a sizable part of his personal wealth in the funds may have distorted his judgment, much like Kenneth Murray’s Blue Planet trusts that have halved in value over the past few months when benchmark is up 12% because of him constantly changing his mind and getting his market timing wrong!

I look forward to hearing Gibb's comments, and if possible an interview with Kenneth Murray.

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"Gibbs is a very active, high conviction manager who does frequently change his mind."

Alcoholics are very active, high conviction drinkers who haven't got any mind left to change!

They are also notorious for not talking to the press.

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Maybe some of these managers just read kingworldnews or look at the iii forums just like the rest of us ..... better to make up your own mind than wait for a manager who is at least one month behind the times!

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If he likes corporate bonds giving an 8% return why have his funds been giving a negative return?Ithink the Absolute Return fund has a performanve fee based on libor-1/2%??!! so you have to ask if the fund's priority is the investor or the fund manager.

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D.LAING

Sep 27, 2010 at 11:52

Yes ISA 23 what is the story with Blue Planet now-trades at a large discount?

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