Commodity Manager Bets Big on Oil After Selling Gold at Peak

Commodity manager Adam Rozencwajg, co-founder and portfolio manager of Goehring & Rozencwajg, had nearly sold out his gold position by January this year. His firm's Resources fund held a record high in gold exchange-traded funds (ETFs), but Rozencwajg was cautious about the metal's valuation.

Rozencwajg built his gold position from late 2023, taking advantage of what became known as the debasement trade. Gold fell from $1,900 in 2011 to $1,100 in 2015, with gold miners losing 70% to 80% in that period.

Rozencwajg sold his gold holdings due to three signals flashing red: a high gold-to-oil ratio, silver's strong performance, and an increase in physical gold buying through ETFs. He believes these signs indicate a peak in gold prices and expects the metal to fall another 20% before making a bottom.

The proceeds from selling gold were invested in oil and US natural gas, which rose from 14% or 15% of the portfolio to about 25%. Rozencwajg expects crude to fall when the war ends and then rally as refineries struggle to meet demand for refined products.