SVM Asset Management’s Colin McLean believes the case for investing in gold miners has gained impetus from bullion’s recent performance in sterling terms.
As a result, SVM has about 6% of its UK Absolute Alpha fund in gold miners. Its hedge and long-only funds each have about 9% in miners, including Centamin Egypt, Rand Gold and Petropavlovsk.
McLean, SVM’s managing director and founder, says he was invested as bullion jumped 32% in dollar terms from lows last year.
“The price has moved up in sterling terms to new highs now, and also in many other non-dollar currencies.
“The market sold off initially on concerns the dollar was strengthening, but now there is a growing concern over other countries and people need to find a stable store of value.”
Bullion trades at £755.53, above a sharp spike to £741 last March, and 35% above its £559.58 low early last year.
He says: “The gold story is still there and I have faith in it, but now it is happening against a background of a strengthening dollar.”
McLean says Petropavlovsk, which hired rival manager Graham Birch from BlackRock in February, could attract more institutional buyers if it grows its dividend. Its shares yield 0.7%.
McLean says he was “surprised” to see Birch join Petropavlovsk and adds: “We would like to see a more progressive dividend policy at the company, which may attract more mainstream investors.”
A spokeswoman for Petropavlovsk says the firm announced an interim dividend of 7p per share, payable on March 30 to registered shareholders on 26 February.
Petropavlovsk narrowly missed inclusion in the FTSE 100 in December, but could do so at the next quarterly review in March, an event McLean says would bring extra demand for its equities from tracker funds.
