• Wednesday, April 24, 2024
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BusinessDay

Hedge funds favour gold, most bearish ever on copper

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 Hedge funds are making the biggest bet against copper on record as global inventories expand to a nine-year high, while concern that Europe’s debt crisis will spread spurred the biggest gain in gold bets since 2008.

Walter ‘Bucky’ Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama, says commodities prices are going to be driven by supply-and-demand considerations and technical factors for each commodity.

This implies huge market potential for investors in gold-based Exchange Traded Funds (ETF) like the NewGold Exchange Traded Fund (ETF), which trades on the Nigerian Stock Exchange.

Gold prices rose 1 percent in March, heading for the first monthly gain since September. The metal is still down 4.2 percent this year as the US unemployment rate fell and assets in exchange-traded products backed by gold dropped 6.7 percent. Investors increased their bullish bets by 63 percent to 70,193 contracts, the biggest expansion since September 2008.

Speculators raised net-short positions in US copper futures and options by 53 percent to 25,719 contracts in the week ended March 19, according to Commodity Futures Trading Commission data that begins in 2006.

A jump in bullish bets on corn, gold and natural gas boosted overall holdings across 18 raw materials for a second consecutive week.

“We are sitting on unprecedented stockpiles of copper and other metals,” says Jack Ablin, chief investment officer of BMO Private Bank in Chicago, which oversees about $66 billion of assets. “Demand has been pretty tepid for industrial metals. In the global economy, we’re seeing improving growth, but it’s still at a slow rate,” according to Bloomberg.