Hedge funds may have been the winners in the bear market of 2002, but in the crisis of 2008 they were among the biggest losers. Locked in to losses by “gates” and other “side-pockets”, private investors have been disappointed by their performance in the market rally over the past four years. Today aversion to liquid [...]

Just as investors had begun to regain some confidence in recent months in the EU’s ability to respond appropriately to the crisis of the single currency, the proposed means of financing the bailout of Cyprus’s banks has abruptly reminded them of growing financial repression in the large, overindebted Western economies. As the following chart shows, [...]

In September 2011, the gold price peaked at $1,920 an ounce – only 4% short of our target price of the $2,000 level that long formed part of our investment strategy. We therefore faced a choice: either raise our target price or sell gold. At the time, we opted to raise our target to $3,000 [...]

Since the secular peak in developed equity markets in 2000, the correlation between gold and stocks, while unstable and complex, has had one consistent characteristic. Since that moment, which marked the beginning of the bull market in gold, stocks have never experienced a bull phase without gold also rising in parallel. It has happened that [...]

John Maynard Keynes wrote in the preface to his seminal work The General Theory of Employment, Interest, and Money, published in 1936, that “the difficulty lies, not in the new ideas, but in escaping from the old ones”. The systemic crisis shaking the global financial edifice to its foundations for over four years now has [...]

Traumatised by the memory of two 50% drops in equity markets over less than a decade, investors have developed an in-built aversion to extreme volatility. Their frantic search for stability has resulted in massive flows to the bond markets and a steady weakening in the flow to equity markets. What are current prospects for returns [...]

We consider the metal silver as one of the types of asset most sensitive to quantitative easing (QE). It is already seven weeks since the Federal Reserve announced a fresh round of unconventional monetary stimulus. However, the price of silver had already begun to rise in mid-August as investors began to discount the measures revealed [...]

he US and European central banks are widely perceived as committed to a path of frantic monetisation in order to avert the risk of deflation. However, the unlimited QE (quantitative easing) of the US and its European cousin OMT (‘outright monetary transactions’ – of peripheral sovereign debt) differ significantly in terms of the likely monetary [...]

By the end of August almost all major asset classes had posted positive returns for the year, of between 2% and 15%. With an increasingly gloomy outlook, even for the Chinese locomotive, many observers find this performance puzzling.The answer to the markets’ performance lies mainly in how implicit expectations for growth and inflation have evolved [...]

We have only just avoided the worst.The tilting of the Franco-German axis in favour of France after the change of power in Paris was used to extract a vague agreement at the EU summit on 28 and 29 June.The deal is long on promises and short on details. As always, the devil will be in [...]