Pimco Adds to Gold Holdings on Inflation Concerns

Pimco Adds to Gold Holdings on Inflation Concerns

The world’s biggest bond-fund manager, Pacific Investment Management Co., is buying gold futures as it bets that global inflation rates will pick up over the next three to five years.

The Pimco Commodity Real Return Strategy Fund, which has about $20 billion in assets, has increased its gold holdings to 11.5% of total assets recently, from 10.5% two months ago, and has been adding to the position when gold prices dipped toward $1,500 a troy ounce, says Nic Johnson, the fund’s co-portfolio manager.

The money manager predicts global inflation rates will run higher, on average, over the next three to five years than what the world had witnessed over the past 25 years. However, the risk won’t arise for another 12 months, during which inflation should be subdued.

Inflation–the erosion in money’s purchasing power that is typically measured by the increase in the price of goods and services over time– plays a key role in debt markets, where Pimco, a unit of Allianz SE (ALIZF, ALV.XE), has made its name.

August 22, 2012 – Dow Jones Newswires

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