Don Coxe, chairman of Coxe Advisors LLP and one of North America's best-known commodity gurus, said his investment management team has cut asset allocation weightings in precious metals for all portfolios he advises to record lows.
In a note to clients, Mr. Coxe did not disclose what weighting gold now has in his managed portfolios. But he did note that his team had already cut some exposure to gold when bullion failed to rally earlier this year.
The actions may come as a surprise, given Mr. Coxe is a long-time bull on gold and most other commodities.
During a live discussion with us in October, he said $2,000 (U.S.) an ounce "was a reasonable short-term target" if Barack Obama won the presidency and a fiscal crisis developed over inflated debt levels. He was more confident in the longer term, saying that gold has to rise past $2,000 an ounce because of the money-printing by central banks.
In his latest note, Mr. Coxe said his team expects to eventually rebuild gold exposures, adding that he believes "gold’s peak price will eventually be far above its previous high."
We'll ask Mr. Coxe more about his views on gold and other commodities when he joins us for a live discussion today at 1 p.m. (ET) at Inside the Market.
For now, here is more of what he said in his note:
"We have not changed our views about the huge risks in the monetary and fiscal policies that are now being practiced in so much of the industrial world. But monetary-driven inflation needs transmission mechanisms to work its way into the 'real' economy — Seventies style. Government employees’ wages need to be rising at least as fast as inflation, and food and/or fuel prices also need to be increasing rapidly. By the time those processes begin to drive measured consumer prices higher, the ranks of gold believers will be swelled far above those who have plenty to lose from inflation.
"We know enough not to stand in the way of a runaway 18-wheeler. So, we cut precious metal weightings in our asset allocation for all portfolios we advise to their lowest levels since inception (after having already cut them back when gold failed to rally earlier in the year).
"Gold was ready for a pause. While it regroups, the politicians and central bankers will continue to devote themselves to making it absolutely necessary.
"Because of our confidence in those money-printers and deficit increasers, and in the coming crisis for absurdly underfunded government employee pensions, we expect to rebuild our gold exposure. We believe that the central bankers and politicians will continue their inflationary processes, and, therefore, believe gold’s peak price will eventually be far above its previous high."