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(Bloomberg) -- Australian hedge fund manager Raphael Lamm, whose long-short gold fund has delivered a net return of more than 200% to investors since its launch last year, sees the recent decline in bullion as temporary, arguing that the key forces underpinning its long-term rally remain intact. The “unsustainability of fiscal situations in key markets,” particularly US government debt of more than $40 trillion, as well as the growing central-bank allocations will support gold over the medium to long term, said Lamm, who co-manages the A$1.5 billion ($1.1 billion) L1 Gold Fund with Mark Landau. In the near term, prices are set to be driven by developments in the US-Iran war, real interest rates and inflation data, he said. Gold has been under pressure since hitting a record in January, as surging energy prices and bets on Federal Reserve rate hikes weigh on the non-yielding metal. It is down about 16% since the US-Iran war erupted in late February. “While there’s been some headwinds to gold markets and the gold price since the Iran war, we think they’re very temporary in nature,” Lamm said in an interview. “Most of the key drivers of demand for gold are going to remain intact or even strengthen over the medium term.” Bullion traded at $4,286.01 an ounce on Thursday evening in Sydney. Lamm’s fund, which pairs long positions in gold-related stocks with a short position in gold futures as a hedge, has returned a net 235% through August since its launch in February last year, according to a spokesperson. That compares with a gain of about 148% for VanEck Gold Miners ETF and 55% advance in physical gold prices over the same period. Part of the Melbourne-based L1 Group Ltd., which manages about $14 billion in assets, the L1 Gold Fund is using the decline in bullion to add to its long gold equity positions. Most of its holdings are in companies with market value of at least $5 billion, Lamm said. To protect against downside risk, the fund also shorts some gold stocks it views as expensive or facing operational headwinds, he said. “We started to increase our long positions relatively aggressively when the gold price got below $4,000, and now we’re keeping it where it is, which is in the low- to mid-60% net long,” said Lamm. The fund will consider trimming long positions only if its expectations of further upside to gold price materialize, he said. Lamm and Landau have also doubled down on their gold strategy with their own money. Both increased their personal stakes in L1 Gold Fund through an entitlement offer that raised A$160 million ($114 million) in August. The fund listed on the Australian exchange in April, and has posted a net 18% return for its clients through August even as gold prices fell 6%, according to its most-recent statement. “We’ve been very active in materials equities, particularly resources, gold and base metals over the last 12 years,” said Lamm. The mid-cap gold equities space that L1 Gold Fund invests is “over a trillion dollars of addressable market cap and we think there’s a really strong angle for a specialist group to focus on that space,” he said. L1 Group’s clients include large superannuation funds, pension funds, family offices, high net worth and retail investors. The fund’s stock-picking strategy focuses on companies with lower valuations and near-term cash flows in the gold-mine development space. Its biggest position is in Canadian miner Eldorado Gold Corp. The fund is also the largest shareholder of K92 Mining Inc., which operates the Kainantu Gold Mine in Papua New Guinea. Consolidation in the mining sector has also boosted the fund’s returns, and Lamm expects more dealmaking in the gold industry. OceanaGold Corp.’s recent acquisition of Australian miner Ausgold Ltd. for A$1.36 a share is set to deliver a sizable gain for the fund, which added the stock to its portfolio at about A$0.50 apiece, according to an August investor update. “We’re really excited about some of the returns that are gonna come through M&A,” said Lamm. “We think a lot of our developers are gonna be extremely attractive targets for the mid-cap and the large-cap players.” More stories like this are available on bloomberg.com ©2026 Bloomberg L.P. Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates. Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.
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