Gold's Jump Boosts Bullish Commodity Bets
Source: Bloomberg, Debarati Roy and Yi Tian (7/18/11)
"Gold holdings surged the most since September 2009 as prices climbed to a record."
Funds boosted bets on rising commodity prices by the most in almost a year as traders added gold amid escalating debt crises in the U.S. and Europe.
Speculators raised their net-long positions in 18 commodities by 15% to 1.09 million futures and options contracts in the week ended July 12, government data compiled by Bloomberg show. That's the biggest gain since early August. Gold holdings surged the most since September 2009 as prices climbed to a record. A measure of bullish agriculture bets climbed the most in 11 months.
The Standard & Poor's GSCI Spot Index increased for a third straight week, climbing to a one-month high on July 13. Gold futures climbed for nine straight sessions to July 15, the longest rally since November 2009, on increasing demand for the precious metal from those seeking to protect their investments.
"People have been thinking about where to invest when you are dealing with a situation of high debt in both Europe and the U.S.," John Stephenson, who helps manage $2.6 billion at First Asset Management Inc., said by telephone from Toronto. "People know there is tangible value for metals and commodities. There is a store of value in these products."
Investors invested $5.5 billion in commodity funds in the week ended July 13, the biggest addition since April 6, according to EPFR Global, a Cambridge, Massachusetts-based researcher. Ten of the top 11 funds getting money were gold funds, EPFR said.