Investment Strategies
Julius Baer Launches Physical Gold Fund

Julius Baer, the Swiss private bank, has launched a fund that will mainly hold gold bars, taking advantage of continued strong investor interest in the traditional safe-haven yellow metal.
The Julius Baer Physical Gold Fund will invest only in physical gold, primarily standard 400-ounce bars, which will be stored in high-security Swiss vaults. The fund contrasts with those portfolios that gain exposure to the metal via ownership of mining companies, for example.
Gold has traditionally enjoyed a status as a place of safety for investors in times of great economic stress - as at the present time. But the metal has already risen sharply in recent years, fuelled by a mixture of strong demand from emerging economies such as India and relative lack of new supply - and gold has fallen from its March 2008 peak of over $1,000 per ounce to just over $800 at the start of this week.
The fund employs a restrictive investment policy, with no gold exposure through derivatives, along with a prohibition of lending and borrowing.
The Julius Baer Physical Gold Fund will be listed on the SWX Swiss Exchange, with one share equalling approximately one ounce of gold. The product will offer clients an open-ended fund, with daily liquidity, and the opportunity to redeem shares in the form of physical gold instead of normal payouts.
Since reaching its peak in 2001, gold production has been in decline due to factors such as technological and geographical limitations to extraction, and lower reserve grades. This decline in production, combined with factors such as the strong demand for gold in exchange traded funds and global inflation tendencies has led many to take a positive long-term view of the price of gold.
At the end of June 2008, the Julius Baer group managed assets in excess of $316.8 billion, with a presence in over 30 global locations. The firm has made significant gains from the troubles experienced by its Swiss rivals in recent months. As reported by Reuters, Julius Baer saw considerable inflows in the second half of the year, and is planning to take advantage of industry consolidation by significantly expanding its team of private bankers over the next few months.