Li Ka-Shing-Backed CEF Seeks Gold, Prices to Remain Flat

CEF Holdings Ltd., a venture between Li Ka-shing’s flagship company and Canadian Imperial Bank of Commerce, is looking to invest in gold mining companies after a slump in prices creates buying opportunities.

“Long term, gold is a good place to be,” CEF Chief Executive Officer Warren Gilman, 53, said in an interview in Hong Kong. Cheung Kong Holdings Ltd. (1), controlled by Li, Asia’s richest man, and CIBC each own 50 percent of CEF. The venture focuses on investing in resources companies globally.

Bullion is heading for its first annual decline since 2000 and has slumped 27 percent from a record $1,921.15 an ounce in September 2011. The plunge prompted investors John Paulson and George Soros to sell gold as mining companies cut jobs and the valuation of their mines.

Gold Price

Gold for immediate delivery fell 0.4 percent to $1,399.33 an ounce. The metal is down 16 percent this year as the dollar strengthened and amid concern that the Federal Reserve will begin cutting back its stimulus measures.

Prices may stay between $1,000 an ounce and $1,400 an ounce for “a couple of years and that’s predominantly because gold has to get used to, and it still seems to be adjusting, to the taper and rising real interest rates globally,” Gilman said.

Prices will average $1,300 an ounce in the fourth quarter. Bank of America Corp. is the most bullish, predicting a fourth-quarter average of $1,495 an ounce, and JPMorgan Chase & Co. anticipates rising averages in every quarter through the end of next year.

Gold Rallies

Gold has rallied 13 percent since the end of June as lower prices boosted demand, particularly in Asia, with prices averaging $1,313.58 an ounce. Bullion will rebound as spending cuts by producers and the closure of costly operations brings better balance to supply and demand, the producer-funded World Gold Council said this month.

Gold mining companies have announced at least $26 billion of write-downs in recent months and are seeking to sell assets after prices declined.

Gold Fields Ltd. last week agreed to pay $300 million for three Barrick Gold Corp. mines in Australia. Norton Gold Fields Ltd., the Australian producer controlled by China’s Zijin Mining Group Co., said this month it’s seeking further acquisition targets as falling prices cut the value of mines.