The Hong Kong-based asset manager plans to take delivery of $35 million worth of gold bars that can be traded on the London Bullion Market Association and other international markets, William Kaye, its founder and chief investment officer, said in a telephone interview on Jan. 18.
It has secured vault space at Hong Kong International Airport to store the gold, he
Investors disillusioned with government money printing to service "insurmountable" public debt may seek alternatives to fiat currencies, Kaye
Asset managers, including Soros Fund Management LLC
, Paulson & Co.
and Sprott Inc.
, are betting on the precious metal even after a 12-year rally has cemented the longest bull market in at least nine decades.
"Gold, the way we look at it, is anywhere from being undervalued to being seriously undervalued," Kaye
Central banks have so far been able to manipulate interest rates to allow governments to service their debt at low costs, averting market seizures, Kaye
Still, the next big rally in precious-metal prices may be 18 months to two years away, triggered by a "financial catastrophe," he
Ownership of gold through financial instruments based on it, such as Comex futures contracts, now represents more than 100 times the physical gold that exists above ground worldwide, Kaye
said, citing the Pacific Group's
"All you actually need for a major upward revaluation of gold is for a small fraction of people to physically reclaim from major central banks or other depositories that are holding your gold and using it for their purposes," he
The Pacific Group
has just converted the first tranche of such investments, buying gold bars from local refineries, Kaye
said without giving the exact value of the delivery.
Kaye was a manager of the arbitrage department of PaineWebber in New York and also worked in the mergers and acquisitions department of Goldman Sachs Group Inc., according to abiography posted on his company's website.
In 1991, he
set up the Pacific Group
, which also has made private-equity investments.