JERSEY, Channel Islands (HedgeWorld.com)–Executives at Liberty Ermitage Group have been bitten by the gold bug and, as a result, will launch a gold and precious metals hedge fund.
The new fund, the Liberty Ermitage Gold & Resources Fund, will be listed on the Irish Stock Exchange, domiciled in Bermuda. Liberty Ermitage will charge a relatively cheap 0.5% annual management fee and just 10% of profits, according to a statement from the firm. The minimum to invest will be US$15,000.
Spurred by a view that equity markets are going nowhere and that the low interest rates set by the world's central banks will lead to inflation, Liberty's executives view gold as a safe haven in a coming storm. "We still have a long way to go in purging all of the incredible bubble related excesses and structural imbalances in the U.S. economy," said Ron Mitchell, chief executive and chief investment officer for Liberty Ermitage, in a statement. "It took over 18 years to create the biggest speculative bubble in stock market history and we would be deluding ourselves if we believe that this bear market in equities is coming to an end," he said.
His argument: The stock market hasn't bottomed yet–because panic has not spread widely enough and stock prices are still relatively high–while all of the fundamentals point to a continued weak U.S. economy. The Standard & Poor's 500 still stands at a P/E ratio of about 30; recent performance data suggest the market could have a fourth down year in 2003; the housing market is starting to look weak; and borrowing continues at high levels. "This is not the environment to kick start a new bull market in equities," says the Liberty Ermitage statement.
