swiss bank puts wealthy clients in gold

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    Swiss bank puts wealthy clients in gold
    Thu 18 September, 2003 10:06 BST



    GENEVA (Reuters) - Swiss private bank Lombard Odier Darier Hentsch has said it is luring wealthy clients back to gold, plugging the diversification, protection and potential growth benefits of the asset.

    "Against a background of geopolitical uncertainty and very turbulent equity and bond markets, investing in gold is a good way to protect and diversify assets while still aiming to achieve an absolute performance," the bank said.

    Its multi-manager "World Gold Expertise Fund" which it launched on August 7, has already attracted over $150 million and LODH believes it could double by the end of this year.

    "We've no specific target but we think we could double the size of the fund within a couple of months," Cyrille Urfer, head of fund research and multi-management at LODH told Reuters on the sidelines of an investor briefing.

    The fund invests in four fund managers each with a slightly different perspective on the gold market but all with a focus on gold mines. It has two reference currencies -- the euro and the dollar, and carries an annual management fee of two percent.

    Apart from diversification, which has regained importance in many portfolios decimated by an over-reliance on stocks when the bull run ended, gold also offers some protection against rising inflation in a negative environment for the U.S. dollar.

    "Diversification has been rediscovered, but it's not only in alternative investments. Investors can also find it in traditional assets," Urfer said.

    LODH recommends that private investors put at least five percent of their portfolio into gold and believes that, despite recent strong gains posted by many gold funds, there are still opportunities for appreciation.

    "We strongly believe that the gold theme is not just for six months or a year. It's long term," Urfer said.

    Joseph Foster, a geologist and fund manager at Van Eck Global, where LODH invests 35 percent of its fund, believes gold can break through the $400/oz barrier as the supply from mines declines. Gold was trading at around $372.90 on Wednesday.

    "We're in a bull market for gold that's going to go on for quite some time," he told the briefing. "We'll test $400 between now and the year-end. Whether we'll get through it this year or next year, I don't know, but ultimately we'll get through it."

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