SAN FRANCISCO (ResourceInvestor.com) -- Newmont Mining President, Pierre Lassonde, believes the World Gold Council's latest exchange traded gold fund will sustain its rate of growth. The American version of the fund launched earlier this month and has already accumulated nearly 100 tonnes of gold as investors piled into the super liquid gold security.
Lassonde was addressing an invitation only luncheon for professional investors attending the San Francisco Gold & Precious Metals Conference.
Noting a prediction he made some time back that gold would recover its role as an alternative currency, Lassonde said he was always unsure of the mechanism that would trigger it.
Lassonde said: "The answer is the gold ETF. In just 5 days just under 100 tonnes of gold has been taken up. This is real, physical gold. Once you buy an ounce of gold it has to be backed bya physical ounce of gold in the central vault of the Bank of England."
The new ETF has not been universally welcomed. Many in the gold conspiracy camp have marked it as a product of vested interests on the short side of the gold trade. There are suggestions that it is a vehicle purpose designed to aid gold price manipulation because there is not an absolute, irrevocable guarantee covering the physical gold.
A famous American stock picker mused to Resource Investor that the ETF was exactly what even conspiracists had asked for, but were now rejecting. "I fear they'll go to far," he warned, noting that substantial investment demand for gold had been something of a holy grail for gold bugs for several decades.
"I think what you're going to see is part of the Comex trading will turn to the ETF because it is a far more liquid market. I wouldn't be surprised if we see half the Comex market switching over to the ETF. That would be about 300-400 tonnes."
Gold ETF antagonists are more directly targeting the World Gold Council which they have long derided as a stool pigeon for a cabal of bankers and producers that sell their gold at fixed prices. However, Newmont and Gold Fields, two arch anti-hedgers have been among the most vocal proponents of the family of gold bullion funds that are trading in New York, London, Sydney and Johannesburg.
Lassonde says the early adopters are the "family office" - wealthy individuals who tend to take up new products more rapidly. "Then we'll see the trust fund, the endowment fund and very last, the pension funds.
"When you see CALPERS going into hedge funds that's the end of hedge funds which is what happened last week. It will be the same for this product; the adoption curve will last from 5-10 years.
"Every 100 tonnes of gold [taken up] is worth $7-10 on the gold price. So you can see the potential impact on the market. In the short run gold supply is totally inelastic. ... I'm looking at the next 5-10 years when the elasticity is important," Lassonde concluded.
