The calm of equity markets across the world was rudely interrupted in February by a sudden spike in volatility which impacted virtually every asset class. Volatility across equities, bonds, currencies and commodities rose sharply. Gold bullion declined a modest 2.08% during February, and its relative lack of volatility merits notice.
Senior Portfolio Manager Trey Reik looks beyond the short-term damage of the Feb. 5 market selloff, and explores why the current fed tightening cycle is likely to increase the stress on individual consumers and inflict damage across a broad spectrum of financial assets.
With the beginning of the new year, we have entered a seasonally strong period for gold bullion and gold equities. Gold bullion posted a strong gain of 3.23% in January, ending the month at $1,345.15 per ounce. Even so, investor sentiment towards gold and gold equities continues to remain relatively muted.
Portfolio Manager Whitney George reviews his approach to value investing: “We just try to identify great businesses and buy them when they go on sale. Given the current backdrop, we expect our disciplined approach to be rewarded with attractive opportunities for investment throughout 2018.”
Gold bullion rose a respectable 13.09% in 2017, posting its strongest annual gain since 2010. Senior Portfolio Manager Trey Reik explores why gold's performance stacks up well against other alternative asset classes.
Senior Portfolio Manager Trey Reik takes a closer look at Trump's tax reform. Eager for the tax bill to pass, Trump boasts in a recent tweet, “It will be the BIGGEST TAX CUT and TAX REFORM in the HISTORY of our country!” We disagree.
Portfolio Manager Shree Kargutkar says, "gold is likely to benefit in early 2018 from its traditional first quarter strength." He also explains why gold mining equities are cheap right now, and why high-quality miners are positioned for strong earnings performances.
Maria Smirnova, Senior Portfolio Manager, discusses precious metals, and how it is getting much harder to find new deposits, given the drop-off in exploration budgets. She explains how an allocation to gold and silver in an investment portfolio can reduce volatility.
Senior Portfolio Manager Trey Reik examines the interplay between gold bullion and gold equities. This relationship has been noteworthy in 2017, given an anomalous performance gap that we believe may provide investment opportunity for precious metals investors.
Portfolio Manager Shree Kargutkar explains that while investment allocations to gold bullion and gold equities have been somewhat muted in 2017, we are now seeing signs of renewed interest in gold. Bridgewater Associates, the world's largest hedge fund, has been on a recent buying spree.
Senior Portfolio Manager Maria Smirnova shares key takeaways from the Silver Institute’s 3rd Silver Industrial Conference that focused on “Silver’s Evolving Role in Science and Technology.” Smirnova looks at silver’s expanding role given its use in solar, automotive, electronics and healthcare applications, and explains why we are bullish on the metal.
Senior Portfolio Manager Trey Reik presents a collection of empirical evidence we view as compelling support of gold’s productive role as a portfolio-diversifying asset. He also addresses the disinterest in precious metals among institutional investors. He argues that given the current financial risks confronting investors, gold’s purchasing-power-protection seems an incredibly precious commodity.
Senior Portfolio Manager Trey Reik explains we he believes that "virtually every measure of domestic and global debt is significantly worse today than at its financial-crisis peak." He recaps gold bullion's performance in August, which despite the continued fervor for U.S. financial assets, has posted solid year-to-date gains, and broke through resistance at $1,300.
Senior Portfolio Manager Trey Reik discusses why gold has spent the past seven months in a tight trading range between $1,200 and $1,300 per ounce. Given the stored force inherent in such a trading pattern, history suggests a breakout, whether up or down, is likely to be characterized by a steep slope. The question remains, which direction will gold follow?
Senior Portfolio Manager Trey Reik addresses the explosion of interest in cryptocurrencies, especially bitcoin. He attributes the growing interest in digital currencies to a concern shared by many gold investors: resentment over the financially repressive policies of global central banks. But the investment merits of gold and bitcoin are substantially different.
"Silver commands an established precious-metal pedigree, while simultaneously boasting a wide array of active economic functions," writes Senior Portfolio Manager Trey Reik. This report explores silver's bullish supply/demand fundamentals and why this bodes well for higher silver prices ahead.
Senior Portfolio Manager Trey Reik asks: "What is fueling this record-breaking investor complacency? We would suggest market perceptions of risk have been all but extinguished by relentless provision of central bank liquidity." He explains why gold's pullback is a reflection of persistent strength in U.S. equity markets.
Senior Portfolio Manager Trey Reik identifies ten market variables we view as bullish for the gold price: "With respect to precious metals, we have rarely observed such a confluence of gold-supportive technical and quantitative variables across such a wide spectrum of relevant asset classes."
Senior Portfolio Manager Trey Reik looks at gold's lackluster performance in March: "We attribute this swift shift largely to a short stretch of particularly impassioned Fed jawboning, book-ended by the FOMC’s two crucial thought-leaders, Vice Chairman William Dudley and Chair Janet Yellen."
Ed Coyne, Executive Vice President at Sprott Asset Management discusses how an allocation to gold and silver can complement equities in an investment portfolio, and why Sprott advocates a 5% to 10% allocation for most investors. Coyne also introduces the Sprott Physical Gold and Silver Trust (CEF), which represents the successful takeover of Central Fund of Canada.
Cryptocurrencies: New Gold or Fool’s Gold
Sprott’s Edward Coyne and Trey Reik explain the differences between gold and bitcoin, and argue that gold continues to be an attractive long-term investment and a proven store of value.
Industry Insights from The World Gold Council
"On February 5, stock markets suffered one of their more precipitous falls in recent years.... In our view, the recent selloff is a good reminder that gold can deliver returns and reduce risk in portfolios."
The spotlight shined brightly on the cryptocurrency market in 2017 with bitcoin’s parabolic price rise. The WGC explains why gold is very different from cryptocurrencies, namely gold is less volatile, more liquid, is a strategic asset that plays an important role as a portfolio investment, and trades in an established regulatory framework.
The WGC explores how allocations to alternative assets have grown significantly since 2000. Alternatives now comprise 24% of global pension funds, up from single digits in 2000. The WGC suggests that gold can complement alternatives by providing returns, improving diversification, adding liquidity, and enhancing overall portfolio performance.
In 2017, investors added gold to their portfolios as incomes increased, uncertainty loomed, and gold’s positive price momentum continued. As 2018 begins the WGC explores four key market trends and their implications for gold.
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