Tuesday, September 23, 2008
Sept. 23 (Bloomberg) — Jean-Marie Eveillard says he has stashed $1 billion in gold in a vault near Times Square as insurance against “extreme outcomes,” like a market collapse or unintended consequences of the U.S. plan to avert one.
Eveillard keeps as much as 8 percent of his $22 billion First Eagle Global Fund in bullion or gold-mining stocks. He occasionally visits the vault in a building about 12 blocks from his Midtown Manhattan office, he said.
“Gold is insurance,” Eveillard said in an interview yesterday. “In most of those instances where things would get bad enough so you would get into equity bear markets, where economic and financial circumstances would be bad for a year or two or three,” gold prices will rise.
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Gold futures traded on the Comex division of the New York Mercantile Exchange have surged 19 percent since Sept. 12, the last trading day before Lehman Brothers Holdings Inc. filed for bankruptcy protection. The metal has gained for seven straight years, more than tripling in price, as the dollar declined.
Bullion rose $44.30, or 5.1 percent, to $909 an ounce yesterday.
Eveillard, a 68-year-old Frenchman, came out of retirement in March 2007 to resume managing the First Eagle fund after his successor, Charles de Vaulx, abruptly resigned. With Wall Street’s turmoil forcing the U.S. toward a $700 billion plan to prop up the financial system, the dollar may plunge and inflation accelerate, Eveillard said.
The First Eagle Global Fund, which he managed for 24 years before his first retirement, has returned 13 percent annually in the past five years, placing it in the 95th percentile of similar funds, according to Bloomberg data. The fund has dropped 8.2 percent this year.
This article was posted: Tuesday, September 23, 2008 at 9:32 am