Anthony Bolton, the fabled fund investor, said he was taking profits in companies that are exposed to the gold price, after the precious metal hit fresh highs this week.
The manager has been profiting from the strong appetite for gold as investors around the world flock to the metal as a safe haven, amid increasing unrest over the quality of US and Eurozone debt.
Mr Bolton said he had bought a number of gold miners and jewellers in Hong Kong that are profiting from a rising appetite among Chinese consumers for gold. Some outlets are selling gold bars directly to the public.
But he has recently been reducing his exposure to gold, after the valuations of companies linked to the gold price rose. Mr Bolton typically seeks to hold stocks that he believes are undervalued.
“The demand for gold is very strong and might end up with a blow-off top,” the manager said.
Speaking at the Fidelity China Special Situations fund’s first annual meeting, the fund manager said that he had been surprised at the high incidence of poor corporate governance among companies he invested in.
Mr Bolton previously admitted he had had his fingers burned investing in Chinese stocks listed in the US that use so-called “reverse merger” structures.
The manager sold out of China Integrated Energy after it was temporarily delisted earlier this year following accusations of fraud at the company. He also sold out of Vision Opportunities China, a fund of funds specialising in listing Chinese companies on the US market and which had China Integrated Energy as its largest holding.
The fund manager is now using an independent company to help him research companies, admitting that the Fidelity name could sometimes cause companies to clam up.
That has uncovered further issues with some of Fidelity China’s other holdings in the US, Mr Bolton admitted, though he said the extra research had strengthened his conviction in other holdings.
But he said he was happy to hold companies that the market in general was wary of. The ex-chairman and major shareholder of Mr Bolton’s largest consumer holding, Gome Electrical Appliances, is currently in prison, a factor that Mr Bolton said made the company look attractively valued.