L1 Gold Fund Sees Opportunity in Gold Price Decline

Raphael Lamm, co-manager of the A$1.5 billion ($1.1 billion) L1 Gold Fund, sees the recent decline in gold prices as temporary and a buying opportunity.

Lamm points to the unsustainability of U.S. government debt, which is over $40 trillion, and growing central-bank allocations as medium- to long-term support for gold.

The L1 Gold Fund pairs long positions in gold-related stocks with short positions in gold futures as a hedge and has increased its long positions relatively aggressively when gold fell below $4,000.

Lamm expects more dealmaking in the mining sector due to consolidation and sees companies with lower valuations and near-term cash flows in the gold-mine development space as attractive targets for mid-cap and large-cap players.