Commodity markets

Avoid extremes

  Gold is one of the big winners of recent developments. Rising debt levels, low interest rates for an incalculable period of time and increasing political uncertainty in many parts of the world have led to a strong increase in interest in gold. At the same time, gold is supposed to make portfolios more resistant to risks that can only be assessed vaguely or not at all from the current perspective – so-called black swans. Besides gold, industrial metals in particular have risen sharply. Of course, the rapid economic recovery in China and the fiscal measures taken in other industrial countries played an important role in this. In addition, a certain scarcity premium is slowly becoming noticeable for many industrial metals. In the medium term, the rapidly advancing digitalization should lead to a noticeably higher demand for metals that are needed in this sector. This goes so far that many…

Gold easily jumps over USD 2,000

Like a highly decorated jumper, Gold easily takes the 2,000-meter hurdle. Especially among institutional investors, gold has become socially acceptable. They are increasingly confronted with the USD 16 trillion problem. That is how high the volume of bonds (investment grade) with negative returns can be quantified. Investment alternatives are therefore a rare commodity. We expect investment demand to continue to rise due to the current interest rate and uncertainty situation. Especially since the gold content of institutional portfolios is still extremely low, at less than 0.5 percent. Also the fact that the status of the US dollar as the ultimate safe haven is at least getting a scratch, speaks for continued high investor interest. At this point, it should also not be forgotten that the gold market is very tight. The globally outstanding Gold Exchange Traded Funds (ETFs) have a market capitalisation that is just about the same as that…

Gold rediscovered as the oldest asset class

Sometimes things happen fast and even faster than you think. The gold price in USD has broken its all-time high from 2011. The old investment lady is quite convincing in 2020. So far this year, gold has even outperformed the well-trained US technology stocks on the stock market. The price of the precious metal has been rising in various currencies for some years now, which in our view suggests that gold is certainly living up to its reputation as a currency alternative. Now the magical USD 2,000 mark is on the gold agenda. The Corona crisis has abruptly turned the (financial) world upside down and shaken it up once. Although the waves on the capital market have calmed down again, political and economic uncertainties remain very high. In view of the rising number of new infections in the USA, a second wave of infections cannot be ruled out. To cushion…

Gold as an ejection seat hedge in the rising „stock market jet

After a short pause for breath, the price of gold is now rising again and is currently only about USD 100 below its all-time high of 2011. In our view, it will be possible to exceed this level in the current rally, but not necessarily at the first attempt. The current reluctance of central banks to buy gold and the lower demand from jewellers argues for a slight price decline, at least in the short term. However, investment demand is currently very high. Fears of a second corona wave are growing. These uncertainties support gold. However, a second wave, which we do not expect, could also cause investors to panic again. In such a scenario, gold would also lose value. We maintain that gold profits from uncertainty, but not from panic. In the current environment, gold and the global stock markets are rising in step. But this is actually not…

Inflation – Waiting for Godot

A little concern about a renewed spread of the coronavirus is enough to tip the mood on the financial markets. This is what happened last week. Triggers were reports of a rising number of infections in the USA and a resurgence of infections in Beijing. This phase was ended, as so often in recent weeks, by the positive announcement of the US Federal Reserve on individual support measures. Such a scenario with rising infection figures is likely to be repeated even more often in the coming months. The pressure on central banks for further support will increase every time. An important variable for the ability of central banks to react is inflation. Fears of a significant rise in inflation have increased again significantly in recent weeks. The background to this is the enormous increase in debt and the measures taken by central banks. However, there are no signs that the…

Crude oil: super tankers are full

For the first time since January, crude oil inventories in the USA fell marginally. The price reaction was very positive. However, at least in the short term, we consider it excessive. Since some countries are moving into the post-lockdown phase, a recovery in demand in the second half of the year is plausible. However, the „pre-corona level“ remains a long way off. A more sustained stabilization of demand is not expected until 2021. Due to global supply cuts, the oil market will probably turn slightly into deficit in the second half of the year. However, this will at best be sufficient to minimally reduce the very high supply overhang in 2020. However, anyone who is happy about the slight decline in US stocks of 750 thousand barrels is blind on at least one crude oil eye. After all, over 30 supertankers filled with Saudi oil will be landing on the…

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