Ian Henderson, who manages about $7 billion in natural-resource assets at JPMorgan Chase & Co., added to his holdings in gold mining companies in the last two months as the metal advanced to a record.
Shares of precious-metal and diamond mining companies now account for 39 percent of holdings, Henderson said in an interview from London yesterday. His funds reduced holdings in companies with links to Australia after the government announced a mining tax, freeing up cash for the gold purchases, he said.
Gold climbed to a record $1,249.40 an ounce on May 14 and is set for a 10th consecutive annual advance, the longest winning streak since at least 1920. Fund managers including George Soros and John Paulson bought bullion as investors sought to protect themselves from plunging stock markets after the collapse of Lehman Brothers Holdings Inc. in 2008 and this year’s sovereign-debt crisis in Europe.
“Gold mining stocks are as cheap as they’ve been for a long time because for the first time in years they are making proper profits,” Henderson said. Gold and precious metals accounted for 34.1 percent of holdings at the end of April, he said at a conference in London today.
Barrick Gold Corp., the world’s biggest gold mining company, is trading at 18.9 times earnings, down from as much as 26.6 times in December, data compiled by Bloomberg show. The Toronto-based company in April reported first-quarter profit that beat analysts’ estimates. Newmont Mining Corp., the largest U.S. gold producer, trades at 16.4 times earnings, down from 26.7 times in December.
‘Strongest Since 1970s’
“Gold in portfolios is the strongest it’s been since the 1970s,” Henderson said today.
Henderson’s 1.9 billion-euro ($2.3 billion) Gl obal Natural Resources fund and 1.95 billion-pound ($2.9 billion) U.K. Natural Resources own shares in both Barrick and Newmont. Barrick has climbed 8.1 percent on the Toronto Stock Exchange this year and Newmont is up 18 percent in New York trading.
Henderson also reduced holdings in uranium mining companies on expectations that supply will continue to outpace demand, he said.
Uranium was at $40.75 a pound this week, according to Roswell, Georgia-based Ux Consulting Co. The metal, used in nuclear reactors, reached a record $136 a pound in 2007.
Investments in energy companies account for about 27 percent of the assets in Henderson’s funds, with about 29 percent in iron ore and industrial metals and the rest in fertilizers and agriculture.