GLOBAL - A subsidiary of the Qatari sovereign wealth fund is to set up a separate vehicle to invest in gold equities - as other commodity specialists question current pricing.

Qatar Gold is understood to have $10bn (€7.5bn) to invest in gold equities after it struck a funds-for-equity deal with European Goldfields, a listed operating company.

Under the terms of the deal announced earlier this week, Qatar Holding will provide a $600m loan facility to develop projects in Greece. It also acquired a 9.9% stake in the firm, with a five-year option over a further 5.1%.

In a presentation on Monday, European Goldfields executive chairman Martyn Konig suggested the liquidity injection presaged a long-term strategic partnership that would lead to the sovereign wealth fund becoming the firm's largest shareholder.

Konig said the deal had provided a comprehensive financing solution - without recourse to turbulent and uncertain capital markets - from a "new, large, strategic shareholder who is interested in expanding its investment in gold assets and companies".

Yet a recent panel of bankers specialising in commodities investment questioned pricing around precious metals, including gold and silver.

Pat Mohr, a commodity markets specialist at Canadian bank Scotia Capital, said: "You're getting huge inflows for precious metals, but gold-mining companies' valuations really do not reflect gold prices.

"There should be some catch-up, and it may very well come in the next while."

Paul Horsnell, head of commodities research at Barclays Capital, said despite strong growth in precious metals, flows for directly traded commodities were still relatively low compared with those for commodity-related equities.

But he said the firm was overweight in energy and underweight in precious metals, including gold and silver, because of aggressive pricing in the latter.

The bankers were also critical of regulators' attribution of pricing in precious metals to "speculators", notably hedge funds.

In fact, said Horsnell, retail investors had driven prices for silver "because they see it as just like gold".