A hedge fund is to offer its shares priced in ounces of gold rather than pounds or dollars to investors worried that inflation will take hold as a result of countries around the world printing more money.
Osmium Capital Management, a Bermuda-based money manager, says investors who take this option will gain the same exposure to the fund's investments as those whose holdings are denominated in conventional currencies, but they will also benefit if the gold price rises.
"The aim of this new class is to allow investors to buy a class of shares denominated in gold, isolated from the fluctuating exchange rates of the pound, euro and dollar classes, but investing pari passu [on equal terms] with other currency class investors," Osmium said.
An investor who wants to buy gold-denominated shares will be able to subscribe in dollars, euros or pounds, the company added. "The investor's subscription amount will then be converted into a number of ounces of gold and denominated as such thereafter."
It said the fund would hedge its exposure to the price of gold by selling gold for cash and buying gold forward on a monthly basis, just as it hedges against conventional currency fluctuations.
The result is that the investor will be able to hold the equivalent of a long gold position, Osmium said. "The gold [share] class will be invested in the same pool of assets as the other currency classes, except that this return will be denominated in terms of troy ounces of gold and exposed to the price of gold relative to the currency in which the subscription was made," it said.
"We believe that this is a new way to invest in a hedge fund. Given the challenging market environment, some investors want exposure to gold, which has historically been a good store of value during times of economic crisis.
"Many investors are already heavily exposed to the major fiat [paper] currencies and wish to diversify into gold without losing their ability to invest."

http://www.telegraph.co.uk/finance/personalfinance/investing/4401452/Hedge-fund-to-offer-shares-priced-in-gold.html

Interesting, but it seems that if the fund does well, but gold falls in value, the investor who chooses to be priced in gold will suffer. Or am I not reading it correctly?

As things get worse gold will stay at value or go up dramatical. I had to deals last month one was a sblc back credit line and a client that wanted to get a credit line using his private gold reserve guess which one was the easiest to get completed, the gold!. And it was a cash back sblc. Banks and other investors are liking tangible gold right now and i feel as a lot of my clients that this will keep going for a long time.
chad

Chad, maybe, but we also saw gold drop quite heavily from it's highs in March 08 during the heavy market vol. Admitidly we have seen an approx 30% gain since those lows, but part of me thinks if I liked the hedge fund AND I was a gold bull, then I would split my investable amounts between the two different assets. Then if gold reached my target levels, I could sell that position but keep the hedge fund exposure.

Still, it is an interesting idea and is perhaps indicative of the lengths hedge funds are going to have to go to in 2009 to get investors to place money with them.

I think where we are not seeing eye to eye on this matter is your talking futures I myself and what this hedge fund is talking about is the Tangible gold its self as in bar and coin. Plus if you look the tangle can not be purchased for spot prices nor sold for spot prices. Right now bar is cheaper then coin and you can still get bar for about 75-125usd over spot. Coin is much worse, no matter what gold will always be a good investment in its tangible form.
chad