Alex’s Notes: This guy manages a $1 Billion Fund, he cant be all that dumb.

Star fund manager sticks to $1600 gold troy ounce prediction despite slump

By Philip Haddon | 06:13:00 | 19 August 2008

Despite gold falling to below $800 for the first time in nine months on Friday and hitting his fund’s performance, AAA-rated star US equity manager François Mouté is standing by his prediction of the gold price reaching $1600 per troy ounce in the next year.

Mouté (pictured below) has a number of gold mining companies in the top ten holdings of his $1 billion ABN AMRO US Opportunities fund. As the gold price has fallen in recent weeks, reaching $787 per troy ounce on Friday last week, so have the values of some of his top holdings. This has resulted in Mouté suffering a rare period of underperformance; his fund has lost 11.4% in the last four weeks while the S&P 500 index has risen 4.5%.

‘I am disappointed to see gold below $800, and I am even more disappointed to see the exaggerated decline in the price of gold mines,’ AAA-rated Mouté told Citywire. ‘Mines are selling at 1.1 times NAV, when they normally trade at anywhere between one and three times NAV.’

‘The falling oil price was one of the factors that precipitated the weakness in gold,’ he says. ‘But I am still using as a basic yardstick the fact that an ounce of gold should be 16 times the price of a barrel of oil. So a falling oil price is not that worrisome, as even if oil goes to $100 a barrel, that still does not change my 12 month view of gold reaching $1600 a troy ounce.’

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