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Gold Bears Pull $20.8 Billion as BlackRock Says Buy: Commodities

Elizabeth Campbell
Bloomberg [1]
May 13, 2013

Hedge funds [2] increased bets on lower gold prices [3] after investors pulled a record $20.8 billion from bullion funds this year while BlackRock Inc. (BLK) [4], the world’s biggest money manager, said it’s still bullish.

Speculators held 67,374 so-called short contracts [5] on May 7, 6.4 percent more than a week earlier, U.S. Commodity Futures Trading Commission data show. The net-long position dropped 10 percent to 49,260 futures and options. Net-bullish wagers across 18 U.S.-traded raw materials climbed 5.8 percent to 582,265, with gains for cocoa, cotton and hogs.

Gold is having its worst start to a year since 1982 after dropping 14 percent and sliding into a bear market [6] in April. Holdings in exchange-traded funds backed by bullion tumbled to the lowest since July 2011 even as central banks print money on an unprecedented scale to boost growth. BlackRock’s President Robert Kapito [7] said May 9 he would still buy the metal, echoing billionaire John Paulson [8], who’s sticking with a bullish view even after losing 27 percent in his Gold Fund last month.

“People have been told the world is going to end for five years, and it hasn’t, so they’re finally moving on,” said James Paulsen [9], the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees $325 billion of assets. “So even when crisis flashes now, you don’t get the same upside, and then in good times, you get more downside, and that’s what you’re getting in gold as the Armageddon premium is coming out.”

Full story here. [1]