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Gold: New Boundaries
- Precious metals in general, and gold in particular, are peculiar commodities.
- During periods with no economic stress, precious metals tend to behave like other commodities. In times of economic crises, however, with Central Banks printing money, historically gold behaves as currency.
- At the moment, lacking new financial or geopolitical shocks, the price of gold should remain between 1200 and 1350 USD/Oz.
History Might Have Started Again-Fasten Your Seatbelts And Watch Your Portfolios
- Geopolitics are back, and investors might want to be wary of implications for global trade and their portfolios. Opportunities are bound to become more selective implying more thorough analysis.
- In emerging markets, look for countries which have rule of law, sound trade positions and independent Central Banks. Chile and the Czech Republic should do fine.
- Concentrate on cash flows and income statements: the time of the Balance Sheet focus maybe over for a while; small cap indices (like the Russel 2000) will probably outperform.
- Be claustrophobic; whenever you take a position, always ask yourself how easily and quickly you can get out, either by liquidating or hedging, even in extreme environments.
- Protect the downside: always have a part of your portfolio in something which will perform well when everything else is falling, like gold and quality government bonds.
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