Baker Steel rose 44 percent in the first 11 months and Plans fot new gold fund

Baker Steel Capital Managers LLP, a London-based firm managing about $ 1.7 billion, plans for a new gold fund, predicting another year of record prices for the metal.
The fund will have physical gold and actions of producers worldwide, Managing Director David Baker, said in an interview. It is seeking up to $ 200 million from investors, primarily in Europe, and can start buying the fund's assets next quarter.
Existing company Baker Steel Gold Fund rose 44 percent in the first 11 months rose and rose gold shares of Toronto-listed Great Basin Gold Ltd. and Nevsun Resources Ltd.. Baker, a metallurgist, gold expected to rise as miners struggle to discover new areas and strengthen Asian central banks reserves.
"Gold is a bubble," said Sydney-based Baker, who founded Baker Steel Capital Managers in 2001. "We will not find it necessary to increase the offer. We'll have to go to more marginal projects and third world countries where there are more risks."
Gold has gained 25 percent this year, reaching a record $ 1432.50 an ounce on 07 December. Baker, a gold analyst in Sydney and London in the 1980's, said the price may rise to over $ 1,800 in 2011.
Investors often turn to gold as a hedge against inflation. The price went up after this year's major currencies strengthened against the dollar, the world's reserve currency, while the Federal Reserve kept borrowing costs near zero and the money pumped into the economy with a new round of purchases bonds.
Shopping Asia
Baker, 51, said Europe's crisis of debt can force the European Central Bank to print money, fueling inflation. In China, where consumer prices rose at the fastest pace in 28 months in November, the central bank should be considering the purchase of gold against the U.S. dollar, he said.
"Something has to give and all that is happening is gold - it goes up," he said in an interview on 15 December in Sydney. "As soon as other Asian central banks believe that China is doing something, you will too."
Of 21 countries in Asia and the Pacific, only Pakistan has reduced its gold reserves over the past year. In China, gold imports increased nearly fivefold in the first 10 months of the total amount shipped last year, the Shanghai Gold Exchange said on December 2. Most of it became a mini gold bars, that Chinese investors to conclude, the exchange said.
Baker said 71 percent of the companies held by Baker Steel Gold Fund have begun to produce gold, and the highest concentration of mines in Africa. Investing in mining, as well as physical metal, gives the fund the opportunity to outperform bullion.
Nevsun, Determined
Vancouver-based Nevsun Resources, whose stock has more than doubled this year, has said it expects to start gold production at the mine Bisha in Eritrea in the last quarter. Great Basin Gold, who said two months ago the launch of its project in South Africa is "on track", rose 62 percent. Stocks are among the 10 largest holdings in Baker Steel Gold Fund.
Perth-based Resolute Mining Ltd., the largest holding of the fund in late October, has risen 26 percent in 2010. The stock, which trades at 17 times estimated earnings, is "ridiculously cheap," says Baker.