As QE Set To Take Off In Europe, Irish Finance Minister Noonan Rotates To Gold

As the start to quantitative easing in the Eurozone is in sight and, in reality, there still is not a solution to the Greek default issue, Irish Finance Minister Michael Noonan thinks it’s time to rotate into gold.

According to Noonan’s recent financial disclosure, he rotated a significant portion of his investment portfolio into SPDR Gold shares exchange traded fund, selling shares of the Lyxor EuroStoxx 50 ETF over the last year, the Independent newspaper noted. The Lyxor EuroStoxx 50 represents Europe’s top companies.

The curious move out of stocks into gold

Moving out of stocks into gold is curious and might be reflective of a concern regarding the economy. Gold has traditionally performed well during times in inflation or deflation. But then in addition to moving to gold, Noonan also took a position in Portuguese sovereign debt in the last year, buying a short term Portugal government bond maturing in 2017.  The sovereign debt positions indicates that Noonan doesn’t think the world will come till an end, at least not until 2017.

The Portuguese bet has paid off, as bond yields fell to record lows last week.

Economic uncertainty cited

The Independent noted that the economic uncertainty in Europe “probably inspired” to sell off his EU stock investments. In doing so, Noonan is bucking a trend among Hedge Funds who are investing in European stocks, anticipating that central bank quantitative easing and a lower euro currency will boost European stock prices.

Michael Noonan has a strong track record

Noonan has a canny investment track record. IN 2011 he invested in the U.S. banking sector, making “huge profits” from the SPDR KBW US Banks exchange traded fund, which is up 20 percent over the period.  Noonan isn’t entirely out of stocks. He still owns the iShares FTSE100 exchange traded fund, which is up 17.4 percent from the time he became finance minister four years ago.

He also invested in the “Market Vectors Agribusiness ETF” last year, which is up 7 percent since last October, adding to a previous stake he had in the ETFS Agricultural commodities ETF two years ago, the Independent noted, citing earlier filings.

Finance ministers must report financial interests they hold with a value of over €13,000 each year.