At Crossroads Again
Markus Bachmann & Douglas Orsmond │ 7 February 2020
In June of last year, the gold price broke decisively out of its 6-year bottoming-out pattern. The yellow metal continues to grind towards the next important resistance of $1’620 - $1’630. It could open up the door for the long awaited up-cycle in gold and miners.
Financial markets find themselves at crossroads again. The new all-time highs by leading US equity indices are mainly driven by the relentless advance of index heavyweights. As long as monetary support by global central banks prevails, shorting these markets would be a frivolous endeavour. However, history has taught investors time and time again that this setup deserves some caution and attention. We think that markets are currently suffering from “inattention”.
It is an opportune time to draw the focus to the role of gold and, in particular, gold miners as a part of a well-diversified investment strategy. What impact do they have on overall investment returns, Sharpe Ratio and other key metrics? The attached presentation revisits the salient points. It is our conclusion that gold mining companies are fast approaching a very important watershed moment, probably the most significant one over the past 5 years. Therefore, the presentation takes a deeper look at the anatomy of this possible new cycle in precious metals and miners and explains how investor can benefit from it. It takes a look on how the Craton Capital Precious Metal Fund is positioned to capture the upside.
Compared to 2000 and 2008, financial markets have deeply changed in nature. There are many factors that lead to the conclusion that the current conditions create a much more vulnerable environment for investors. The market comment takes a closer look at these “fire accelerants”.