Why is Swiss Asia Cap betting on precious metals?

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Juerg Kiener, MD and CIO, Swiss Asia Capital, sees China having a major impact on commodities than the dollar. He expects gold, silver to outperform going forward. "Fundamentals should support metal prices going forward. Prices may rise due to global demand-supply imbalances and gain further momentum due to international money flows and debasement of purchasing power. However, aggressive Chinese activities will be the key driver."

He sees strong support for gold at USD 1,045 per ounce.

In terms of asset allocation towards 2012, Swiss Asia Capital's gold and silver physical exposure will stand at 20%.

Here is a verbatim transcript of an exclusive interview with Juerg Kiener on CNBC-TV18. Also watch the accompanying video.

Q: How have you read the volatility of the last fortnight in commodities? Where do you see it headed?

A: For the last 18 months, commodities have gone dramatic. Some of them are making new highs compared to a year ago and even prior to the crisis. So a correction of about 15-20% in the commodity market is normally what we get. We have got about six corrections since about 2008 to the tune of 20%. So this is one more of the same.

Q: What is happening with fund activity? In the equity or emerging markets space there has been tremendous selling pressure. Have you seen that in commodities as well?

A: We have not seen volume sales contracting that environment. This indicates that we are close to a bottom then to basically a beginning of the fall. So this means liquidity is drying up. Hence, it's very hard to accumulate a decent size. This tells me that the market is bottoming.