Bloomberg — One of Brazil’s largest hedge fund managers is betting on rising prices for precious metals after the U.S. and other allies imposed financial sanctions on Russia in response to its invasion of Ukraine, including the freezing of certain central bank assets.
SPX Capital, which manages about 64 billion reais ($12.7 billion), built a long position in precious metals, especially gold, during the past few weeks, Ylan Adler, a partner and head of commodities at the firm, said in an interview.
“These events are a game changer,” said Adler. “Central banks will likely boost their purchases of real assets and, if possible, store them under their own custody, creating additional demand for gold.”
Gold-backed exchange-traded funds have been drawing significant inflows as investors seek haven assets amid the geopolitical turmoil and accelerating inflation. Another large Brazilian hedge fund manager, Legacy Capital, is also seeking to increase its long position in gold, which has risen almost 10% this year to $1,986 per ounce, near a record.
In addition to its commodities bet, SPX scooped up defense stocks in Europe recently, according to a note sent to clients on Friday. The firm was created by a group of traders including Rogerio Xavier in 2010 and its flagship fund posted its biggest jump since 2017 last year.
Year to date, the fund is up 7.11%, compared to a 1.77% gain for the CDI benchmark rate used by the industry.