CIC bullish on gold in face of price slump
Wealth fund's exposure is limited, board chief says, citing good performance of investment, and sees metal's price rising over the long term
A senior official at China Investment Corp says the US$500 billion sovereign wealth fund has exposure to gold, although "not on a big scale", and the fund is confident that gold prices will rise in the long run owing to limited global supply.
Jin Liqun, supervisory board chief at China Investment Corp, made the comment yesterday after gold prices tumbled earlier this week, reversing a 12-year winning streak.
"Gold is still the most important reserve for the economies in this world," Jin said on the sidelines of a forum hosted by Pioneer Investments. "In the long run, gold prices will continue to go up, but … not on a very steep curve."
Gold is still the most important reserve for the economies in this world. In the long run, gold prices will continue to go up, but … not on a very steep curve
Fast growth in emerging markets will push up the size of the global economy, and hence demand for gold, he said.
But if the US economy shows resilience with growth of 2.5 per cent to 3 per cent, and if the crisis in the euro zone eases, the pressure for gold to climb will be reduced, he said.
CIC has been "doing pretty well" with its gold investment, Jin said, without elaborating. CIC president Gao Xiqing told a forum last November that the fund's gold portfolio had been "the single most profitable one".
Jin's optimism seemed to have been borne out yesterday, as the spot gold price defied weakening US bullion futures to rise as much as 1 per cent. Buyers snapped up gold bars, coins and nuggets after prices sunk to their lowest in more than two years in the previous trading session.