Presently there is unprecedented volatility in the International market place with global equities having the worst start since the great depression (1928) in January only to see a rally in the markets through March. Commodity prices have experienced the same volatility. Interest rates are at historical lows and in some countries they are even negative (effectively taxing peoples savings) and Global economies are still experiencing sluggish growth is any at all.
I am a firm believer that gold and silver represent an alternate asset class that can provide the public with a hedge to the risks we presently face. Silver and Gold should be a part of every long term investment portfolio, it is easily converted into cash, it typically out performs most asset classes when markets tumble, it is USD denominated and therefore allows you an instant hedge against the AUD and most importantly it appreciates over time.
In the near future we will be focussed on providing our customers with more information, services and products that provide flexibility for customers to invest or trade in physical gold and silver.
Economics
The US Fed seems to be grappling with the problem that the US Dollar seems to have become the worlds de facto currency and by default the Fed has become the world’s central bank. This means that the Fed is torn between its domestic market objectives and international ones. This seems very reminiscent of 1927. Yellen has pointed to International growth risks such as the economic slowdown in China, depressed commodity prices and Europe which is my view is a real basket case.
This concern has led to Yellen using the words “ caution is especially warranted” in relation to raising interest rates. As a result we have seen the March rally in Oil prices and equities. As the markets bizzarely cheer lower interest rates in the expectation they will stimulate the economy and markets. However, the reality is that interest rates typically decline when economies decline and increase in times of economic booms.
With this in mind there exists the real possibility that history may repeat itself. In 1927 the Fed lowered US interest rates to try to deflect capital inflows and to help bail out Europe. Unfortunately the opposite happened and capital poured into the US despite the lower rates (something we call today a “risk on trade”). As capital poured into the US, the US share market almost doubled which lead the Fed to aggressively increase interest rates to help prevent the crisis they helped to create. This all led to the 1931 sovereign Debt crisis and those declines led to political chaos.
About the Author, Scott MacRae
Scott lives between his home in Europe and Australia, and spent the last seven years living in Asia. He has a wealth of experience in commodities from agricultural through to metals and has been involved in the financing, marketing, trading and operations of various commodity businesses.
Living and working around the World provides Scott with the connections and access to information regarding the Global economy, investment and commodities markets. He has a Law Degree from the University of Sydney
To contact Scott email [email protected]