Ole Hansen, vice president of Saxo Bank and expert for trade in raw materials - Gold to hit new record price in 2012

(Ole Hansen)

We are lately witnessing disturbing events in the securities market that are shaken by announcements about the European debt crisis, of which epicenters are in Greece and Italy. Because of such news, we often forget about the potentials of the commodity market. This market represents an alternative to the securities market, that is, a form of insurance for investors' investments. The commodity market is almost completely resistant to the debt crisis.

At the invitation of Ilirika from Ljubljana, Ole Hansen, vice president of Saxo Bank and a respectable expert with a long-time experience in trading in commodities, is going to hold an exclusive seminar on the possibilities of trading in various instruments and explain the connection between the securities market and the commodity market.

Ole Hansen is an expert for the commodity market with over 20 years of experience in both purchases and sales. He works at Saxo Bank since 2008, and he is currently the vice president of a division analyzing a wide spectrum of products ranging from fixed revenues to raw materials. Before that he worked for 15 years in London, for a multiproperty futures and forex hedge fund, where he was in charge of the trade team.

eKapija: Does gold still have its 'safe haven' status? Regarding volatility of gold prices in this year, can gold in the future still play the role as value protector it used to?

- Gold is still by many being viewed as the ultimate investment with the urge by many investors to shield themselves from a variety of uncertainties, such as negative real interest rates, sovereign debt crisis, moneterization by central banks etc.

eKapija: Can we expect a new record in gold prices within six months or a year?

- Yes as long we continue to see negative real interest rates (government bond yields minus inflation) and strong buying from central banks gold should find enough momentum to make a new high during 2012

eKapija: What do you thing is best choice for investors: buying gold coins and bars, investing in gold ETF-s, gold mutual funds, gold options or buying stocks of gold mines?

- I prefer the direct exposure via gold ETFs as the tracking and trading cost are minimal. The extra cost of buying and subsequent holding coins and bars makes that investment less attractive although it is understandable that many would like to hold the physical gold in their hands. Gold mines are an interesting play but you expose yourself to the wider market conditions so althoug you may have a gearing if gold risis you could find yourself loosing out if the surrounding equity market performs badly. So far in 2011 gold has returned 26 percent while the major gold mining companies listed in New York as only returned 5 percent.

eKapija: In your opinion, how will the rising geopolitical risks in Iran influence commodity markets? Which commodities will be most affected? What should investors watch for?

Undoubtedly crude oil will be impacted the most as it raises the risk of supply disruption from the Middle East. The dollar is likely to rally while economic activity may get hurt from the rising oil prices thereby hurting cyclical commodities like base metals. Gold might also receive a boost from the safe haven aspect.

eKapija: Will oil prices go up because of geopolitical risks in Iran or drop because of rising concerns of European debt crisis and slowing growth?

- Right now the market has moved from oil negative to slightly positive, not least due to Iran and continued tightness in the spot market as a result of the Libyan war earlier this year. Should the geopolitical risk subside attention could return to the debt crisis and the risk it carries for lower growth and subsequent reduced demand for oil.

eKapija: What can we expect in price movements of natural gas in the future?

- US produced natural gas is in a chronic decline as the shale gas revolution in the US has increased dramatically the production of natural gas. We are only one milder than expected winter away away from further price declines and only a reduction in production (something that has not been seen yet) or a strong pick up in US economic activity will alliviate this overhang of supply.

eKapija: Can we expect a price rise of silver and platinum or fall because of slowing growth? Do investors see silver and platinum more like 'safe haven' or metals used in production?

- After the dramatic sell off in silver this spring the speculative investment flows in silver has been significantly reduced and it returned to become a follower of gold. Platinum is trading at a historical high discount to gold and until we see a pick up in growth, especially the demand for cars this discount look set to continue. We do like platinum as an economic recovery play but that is still too early given the nearterm outlook.

eKapija: Do copper prices have a chance to advance to levels they were at the beginning of the year or will they fall even further due to bigger then estimated copper inventories in China and slowing China growth?

- Copper has regained its composure after the recent serious setback. The slowdown in economic growth has also as a consequence removed some of the global shortage that the market were pricing in earlier this year. On that basis we do not see the recent highs being revisited anytime soon. China which consumes more than 40 percent of total global production holds the key and should the economy slow further copper prices will suffer.

eKapija: Is there any effect of copper used as collateral in China on copper prices? Was the fall of copper in september triggered because of that?

- The collateral storry from China has probably had some impact and help caused some of the recent correction. Overall the worry about recession and a speculative overhang of long positions probably did most of the damage.