Hinde Blasts Gold ETFs, Says They ‘Should Not Be Owned’

Aug 16 2010 | 7:26am ET

There’s more glitter than gold in gold exchange-traded funds, one prominent gold hedge fund has claimed.

Hinde Capital took aim at gold ETFs and State Street’s SPDR Gold Trust, in particular, in a recent paper. The London-based firm wrote that central banks’ practice of lending gold to commercial banks leads to a lot of double-counting in the global markets, and that ETFs are one of the biggest culprits on that score.

“We see it as highly likely that encumbered gold or leased gold could be in ETF products,” CEO Ben Davies wrote. “If we were a major ETF holder, we would demand delivery of our physical bullion before all other investors demanded theirs from either ETFs or the OTC market.”

Of course, Hinde isn’t a major gold ETF holder, because, as Davies wrote, gold and other precious metal ETFs “should not be owned by serious professional investors,” the Financial Times reports.

Davies also called State Street’s management of the SPDR Gold Trust—by far the largest gold ETF—into question, noting that the fund’s custodian, HSBC, is a substantial shorter of gold. State Street brushed off the criticism.


In Depth

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset...

Guest Contributor

Agecroft Partners: Hedge Fund Industry Assets to increase $250B by Summer 2016

Aug 11 2015 | 11:29am ET

Assets will continue to flow into the hedge fund industry despite long-standing...

 

Editor's Note