Warren Buffett is often quoted as saying that to buy gold is to go “long on fear”. Judging from the performance of gold in recent months, investors have plenty of fears. Gold now trades at around $1,700 an ounce, roughly 30% higher than a year ago.
As the UK marks 50 days of lockdown, investors have seen both positive and negative signs in the markets. Global stock markets have returned to positive territory after a disastrous early March, and most funds have made a positive return. However, billions of pounds worth of dividend cuts are weighing heavy on income-seeking investors.
Investment platform AJ Bell crunched the numbers to find out which funds have performed best since 23 March, as the UK steels itself for more weeks of restrictions.
A new crisis, a new gold rush. Only this time, one-third of the world’s population is stuck in lockdown. The resulting surge in gold demand, plus the forced shutdown of global supply chains, has fractured the bullion market, causing a dramatic crack in pricing between different forms in different places.
Money Observer Rated Funds: winners, losers and key takeaways from the market sell-off in the first quarter of 2020
Plenty of column inches in financial history textbooks will in years to come be dedicated to the first quarter of 2020, a period that saw global stock markets record steep falls as a deadly disease no one had heard of until the start of this year claimed thousands of lives worldwide.
Rarity, extreme impact, and retrospective predictability. Those are the three characteristics of a black swan event, according to Nassim Nicholas Taleb, the theorist who coined the term. Black swans come out of nowhere to derail financial markets – they are so-called because of an old saying that black swans did not exist, until one appeared to prove otherwise. But what can we learn from these events, and what can history tell us about how markets recover?
Those outright pessimists who long warned a financial apocalypse was around the corner during the 10-year long bull market for financial markets had concerns over unsustainably high levels of global debt, trade wars and sky-high valuations for the US equity market. Each worry was plausible, but ultimately none of them proved to be the straw that broke the camel’s back. Instead it was Covid-19, a deadly disease no one had heard of until the start of this year, which sent markets into meltdown.
Trying to determine the value of any investment is, to put it lightly, very hard. However, some asset classes are harder to value than others.
When you buy shares, in theory, you are buying a stake in a company.
The Royal Mint Physical Gold Securities ETC, called RMAU, will list on the London Stock Exchange, and is the Royal Mint’s first listed financial product.
Each ETC is equal to 1/100th of a troy ounce of gold, which is approximately $15 per ETC based on the current price of gold.
The Royal Mint has partnered with specialist white label ETF issuer, HANetf to issue, manage and distribute the RMAU ETC.
This piece was written in December 2019.
If geopolitical developments had the effect on equity markets that’s so often feared, recent years might have been much more volatile. But while the investment implications of political and macroeconomic turbulence are frequently overestimated, their impact on commodity prices can be a different matter.
Long driven by the fundamentals of supply and demand, commodity markets are increasingly shaped by factors such as policy change, trade disputes, political tensions and the response to climate change concerns.
Investors by now should be no stranger to global political instability having an impact on their portfolio. Throughout the 2010s, investors have had to navigate the eurozone crisis, the Brexit vote and now the unfolding US/China trade war, which has seemingly spilled into a broader confrontation between the two economic superpowers.