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.