Market Comment: US Economy & Equities – Hard Times Coming
Please follow this link to our latest market report, which analyses several macro economic and financial market issues and trends. We have tried to substantiate the analysis with facts and figures, directly referring to the accompanying chart pack throughout the report. The discussion goes well beyond the precious metals and commodities sector and affects ALL investment categories.
2018 was a year full of challenges. As we enter the final weeks of the year, many investors begin to realise that the investment environment is growing increasingly difficult and unpredictable. What has apparently worked for many years can no longer be counted on going forward. The "rules of the game" in global financial markets are about to be redefined, leading to significant new challenges for investors. 2019 will thus also be full of challenges. The market comment will hopefully help you to identify and prepare for some of them.
Central bank monetary policy has entered a new era, as the US Fed started "Quantitative Tightening" (QT) in 2018. Other central banks will follow suit in time. QT changes the financial conditions which have been in place for 10 years. It reduces the liquidity available to financial markets, affecting not only stock markets, but also bond markets, currencies, commodities and expected market volatility. The repercussions will be critical for all investments in 2019 and beyond.
The US economy is on a sugar high. Is the risk of recession underestimated? We analyse various areas of risk to the US economy, showing that the likelihood of a recession in 2019 is growing steadily.
The second part of the report discusses how gold and commodities stand to benefit from the changing financial environment. We discuss the miners and recent events in the sector, such as the Barrick merger, as well as explain the reasons for the difficult market environment that gold miners have faced in recent months. How cheap is “cheap” ? We highlight some of the absurd valuation multiples in the sector currently.
Please also find the link to the monthly reports for November (Precious Metal Fund and Global Resources Fund).
We appreciate your support and attention and hope that the report will provide interesting reading and analysis.
Greiff's Volker Schilling interview with Markus Bachmann
Greiff's Volker Schilling interview with Markus Bachmann -
Market Comment - Gold & Miners
This is a follow up to our recently published marketcomment. We add some further content with regard to the current macro environment, which you will find in Part I.
Part II takes a deeper dive into the current dynamics of the metals markets, comments on the correlations between gold and the US dollar and gives further consideration on the situation in global futures markets. Are the aggressive shorts in the goldmarket the missing link for a price recovery?
Part III - Metals prices are under pressure: how do the miners fare in this environment? How does it impact margins, cash flows and their balance sheets? We look at valuations as well.
In addition to the marketcomment you will find a chart pack as a separate document. Pictures often tell more than many words and they will hopefully add additional colour to our comments and to underlying market dynamics.
We hope you will find these comments and charts useful in navigating through the current environment. (View as PDF: Market Comment | Chartbook)
The Dollar, Emerging Markets, China and Gold
Financial markets are facing deep disruptions that have emerged since mid-April 2018. These developments have the potential to unsettle many asset classes. Therefore, we would like to take the opportunity to connect a few dots that we hope will help our readers to orientate themselves in this very fast changing environment. Part of the content is not new to the informed reader, but nevertheless we hope to add some aspects, in particular also in relation to metals and miners. Gold has not really been a part of the conversation in the recent market turmoil, other than it has been caught in the cross fire between dollar strength, trade war tensions and emerging markets disruptions. Hence the focus in this market comment will be mostly non-gold related. We will give the metals and miners center stage in further market comments that will be available shortly. (View as PDF)