(InvestmentWeek) – The manager of the £1bn JPM Natural Resources Finance sold a large piece of his gold holdings before April’s price fall, upping his exposure to oil companies and copper miners in the method.
Until lately Gregson had been one of gold miners’ biggest protectors since taking over the finance from Ian Henderson in 2009. But this week he accepted the strengthening dollar and dropping gold cost have been too tough for miners to overwhelm.
He said “We sensed the headwinds were building for gold, with an expectation QE would taper, while the dollar was stabilizing ahead of some form of US recovery,” he added “If we are going into a period where dollar is the smallest ugly world currency that would be an attractive major headwind for gold.”
Gregson added it was improbable gold miners would trade at important premiums for the foreseeable future. He said “That is how gold portions utilized to trade – purchase them at two times fair worth and sell them at three times,”
“But now gold portions have underperformed gold for the last two years. Perhaps they were cost far too high in the nineties and will now be priced like any other excavation business. We do not expect to glimpse a comeback to premium multiples for gold equity.”
Gregson’s outlook has changed since the start of 2012, when Gregson said gold miners would be due a re-rating after a savage sell-off.
He said at the period “We believe the whole part has been struck up so much that there is deep worth there. I believe we have glimpsed the last of the underperformance of little caps,”
In October 2012, following a strong rally for gold and gold equities, he notified buying into Week there were “signs of life” in the gold excavation part.
“In the short period, we still anticipate more from gold and gold equities after a nice run, and you might anticipate glimpsing some consolidation,” he said.
Among of doubts of a ceramic slowdown which has impacted many products, Gregson has lost 16.6% over the last year, and 29% over the last three years. (According to Morningstar)