Around neck or in fund - Investment in gold available to investors in Serbia

Ilirika Gold investment fund, the first sectoral fund for investing in the shares of companies engaged in the production of gold and other precious metals (silver, platinum and palladium) in the market of the EU and the OECD, has officially started working.

Registration of investment units, of which individual value is RSD 1,000, will last until January 2011.

Ilirika investment funds management company CEO Gregor Zvipelj says that the fund aims primarily at institutional investors.

The same fund started operations in Zagreb at the same time, while the possibility of investing in gold will also be offered to investors in Slovenia in about ten days.

Ilirika Portfolio Manager Predrag Pavicevic says that the fund can invest the entire property in the shares of companies, up to 10% in open-end investment funds, and up to 25% in bonds and banking deposits.

As an advantage of investing in gold, Pavicevic has cited for eKapija the fact that the price of gold does not necessarily follow the trends of the economy, which is a good investment opportunity in the recession. He has added that investing in gold represents a protection from foreign currency risk exposure since that precious metal "registers a stable growth throughout the history".

When asked if the time was right for opening the fund and if some interest had already been expressed, Pavicevic responded:

- The markets of Serbia and the Balkans require an alternative investment opportunity. The interest exists and certain companies have already paid some money into the fund so we are satisfied with the response so far.

Igor Erker, a member of the Management of the Group, has explained that the investment public realized in the crisis that the value of money is decreasing so that they started investing in gold again, after a decade-long break.

- Gold diversifies investment opportunities - Erker said and pointed out that, in its opinion, "gold could have never been observed as a relict".

He has added that investors started buying gold last year after it had only been sold for ten years since the gold reserves of central banks have dropped from former 100% to current 50-60%.

Erker has also stated that the price of gold has been annually growing by 20% over the past five or six years.

DZU Ilirika

Ilirika investment funds management company was formed in 2000. Its market share amounts to 2.3% in Slovenia, 3.4% in Croatia, 34% in Macedonia, and 55% in Bosnia and Herzegovina.

Jovan Lukovac, an adviser of Ilirika Group, said that the funds ran by that company were disposing of the property worth about 140 million euros.

Ilirika manages 12 funds, five of which are operating in Croatia, two in Serbia, two in Macedonia, and another two in Bosnia and Herzegovina.

Gold - between metal and currency

In the opinion of numerous analysts, gold is in the top class of funds in the last ten years since it keeps the value on sustainable basis in both inflationary and deflationary circumstances.

Since 2001, its price has grown almost five times, that is, it grew by about 13.5% per year. However, the growth of its price is still not considered as sustainable. The national banks of India, Saudi Arabia and China have indeed bought gold for the first time in 20 years, but these central banks were the net buyers.

It is expected that growing share of funds will be gradually allocated for gold. Even the largest hedge funds find gold more and more attractive. It is often said that gold is the favorite investment for the prophets of doom, pessimists and instigators of fear who count on the collapse of financial system. What is overlooked is the fact that gold represents an excellent portfolio insurance with the history stretching back for thousands of years. Also, people do not forget that owning gold does not depend on any promises given by the state, institutions or individuals.

Gold has always been an indicator of stability of financial systems, monetary systems and inflation. Although the Eurozone is currently in the focus of attention, turbulence in that zone should not distract the attention from much bigger problems of the USA and Great Britain. Gold is an excellent standard for the quality of paper money. It is not exposed to any liquidity risks and it is accepted and traded all around the world 24 hours a day. Also, gold does not bear any credit risk since it will never lose its value.

J.Đ.