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Gold Investors Should Switch From Equities To Bullion -Barings

LONDON (Dow Jones)--Investors in gold should switch from mining equities into bullion to take advantage of soaring prices, according to Percival Stanion, head of asset allocation at Baring Asset Management.

Stanion said gold, at record highs above $1,140 a troy ounce, currently provides a stable alternative to currencies such as sterling, the euro and the dollar.

"The multi-asset portfolios at Barings have recently benefited from the surge in gold prices and have now sold out of our exposure to gold mining and switched into gold bullion," he said. "In our view, gold is a more stable store of value, over a five-year view, than all paper currencies except the renminbi. Sterling is still our least favoured currency, even after significant falls in value," he said.

Barings' flagship institutional fund is the Baring Dynamic Asset Allocation fund, which has over GBP1.5 billion in funds under management since being launch in January 2007. It has had a high weighting in U.K. and European equities over the past few months while avoiding U.S. and Japanese equities, "which both turned out to be laggards," Stanion said.

"Now we have benefited from the European equity rally, we are largely moving away from European stocks, due to concerns about a lack of transparency in the banking sector, compared to Anglo-Saxon companies," he said. "We are also apprehensive about Europe's prospects for growth while the currency is so strong."

But the fund has been trimming its exposure to U.K. equities following the strong rally due to "concerns about the speed with which the market has rallied," he said.

"The global economic recovery is looking sub-par due to over indebtedness in the U.K., U.S. and some parts of Western Europe," he said. "There is going to be a speed limit on growth in the West as final demand weakens, in part due to the explosion of government debt, which will surely result in revenue raising measures."

-By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413; andrea.hotter@dowjones.com

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(END) Dow Jones Newswires

November 17, 2009 04:39 ET (09:39 GMT)


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