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A-rated gold manager: India ‘getting its act together’ is a risk
by Robert St George on Oct 18, 2013 at 14:35
Bob Lyon, the Citywire A-rated manager of the Smith & Williamson Global Gold and Resources fund, has recognised that moves by the Indian government to suppress the gold trade are depressing the metal’s price, but argued that the greater long-term risk is that India finally modernises its economy.
Through this year, India’s government has introduced a swathe of measures to curb dealing in gold, with the objective of cutting the country’s current account deficit.
These have included more than doubling the gold import duty and requiring gold importers to re-export 20% of what they bring in, as well as direct appeals from ministers not to buy the metal.
‘In the short term, it’s clear it’s having an impact,’ said Lyon.
Over the past year, the gold price has plunged by 27%. But he did not see the country’s efforts proving successful in the long term, given that they address only supply and not demand.
‘They’re fixing a long-term problem with a short-term solution,’ Lyon observed. ‘I’m more worried about India getting its act together and making people not want to own gold.’
Over the past five years Smith & Williamson Global Gold and Resources has returned 18.3%, compared with a collapse of 22% in the FTSE Gold Mines index. Over the same period Evy Hambro’s BlackRock Gold & General fund has lost 4.8%.
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