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

FINtech Focus: Fundbase Aims To Revolutionize Access To Hedge Funds

Jan 23 2015 | 11:03am ET

Global investment in financial technology—also known as fintech—is booming....

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

From Switzerland With Love: Some Hard Truths About Central Banks And Risk

Jan 23 2015 | 7:54am ET

In the wake of the Swiss National Bank uncoupling the country’s currency from...

 

Editor's Note