BlackRock’s Hambro Advises Investors to Buy Gold Stocks, Funds

By Claire Leow

March 30 (Bloomberg) -- BlackRock Inc., manager of the world’s largest mining funds, said investors should build up a portfolio that contains shares of gold-mining companies and gold exchange-traded funds as the dollar may weaken.

“The strength of the dollar is overdone,” Evy Hambro, managing director of BlackRock’s $5.2 billion World Mining Fund, said today. Buying ETFs would allow investors to benefit from rising bullion prices, while shares in producers may also gain from higher prices, lower output costs and the potential for merger activity, Hambro said, without identifying companies.

Spot gold has gained 5.3 percent this year as investors seek to protect their wealth from a weakening dollar, and as central banks around the world boost money supply to combat the global recession. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, rose to a record on March 27, according to figures on the company’s Web site.

“The thing that encourages me is the fact gold has been as strong as it has been when the dollar has been strong,” Hambro said at a media briefing in Singapore. “It tells you that when the dollar goes weak, and you see it from time to time, gold has an explosive move.”

The dollar as measured against six major currencies including the Japanese yen and euro has surged 19 percent in the past year, compared with gold’s 1 percent advance over the same period. Spot gold, which touched a record $1,032.70 in March last year, traded today at $925.28 an ounce.

Exchange-traded funds are paper investments backed by reserves of an underlying asset, enabling an investor to buy holdings of a commodity or equity without taking physical delivery. The holdings in the SPDR Gold Trust rose to 1,127.44 metric tons as of March 27.

To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.ne

http://www.bloomberg.com/apps/news?p...