1 / 25

Summer Goldrums 29 May 2014

War Room. Summer Goldrums 29 May 2014. HiddenLevers War Room. CE Credit. Macro Coaching. Idea Generation. Archived webinars. Open Q + A. P resentation deck. Product Updates. Scenario Updates. Summer Goldrums. Market Update Gold Scenarios Gold 101 Gold Macro Picture. HiddenLevers.

fay-glass
Download Presentation

Summer Goldrums 29 May 2014

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. War Room Summer Goldrums 29 May 2014

  2. HiddenLevers War Room CE Credit Macro Coaching Idea Generation Archived webinars Open Q + A Presentation deck Product Updates Scenario Updates

  3. Summer Goldrums • Market Update • Gold Scenarios • Gold 101 • Gold Macro Picture

  4. HiddenLevers Market update

  5. Market Update World Cuprising US-China Tensions EM regime changes EU Deflation = QE Reborn sources: HiddenLevers, Marketwatch, New Yorker, Wikipedia, Reuters

  6. Macro Snapshot Endless bull? VIX + UI claims at 2007 levels, and 10Y diverging southward

  7. HiddenLevers Summer goldrums – Scenarios

  8. Review: Gold Crash Scenario – Aug 2011 Gold Crash Amidst Uptrend 100% priced in Aug 2011 gold miners distinction was key -33% start of HL risk parity ethos Slide from Aug 2011 War Room Solid analogy Gold 2011-13 Oil 2008-09 Dec 2013 sources: HiddenLevers

  9. Ugly: Gold signals Deflation MDD 700usd/ounce Several precedents on- 40-50% MDD fiat currency 1930s analogies invalid USD purchasing power rising caveatgovt price controls 1929-41 Gold Standard CPI sources: HiddenLevers, MarketWatch, USAGold.com

  10. Bad: Gold 1k drift MDD 1000usd/ounce technical support at 1k don’t confuse bounce for long term investment -40% drop fits into usual MDD paradigm Fed sees no inflation risk, continuing taper $1000/ounce

  11. Good: Gold Rebound QE ending priced in, so is gold bottom India/China demand surprise Russia, Ukrazy escalation Safe-harbor during EM chaos Bounce off technical support at 1k sources: HiddenLevers, Forbes, WSJ, John Holt

  12. Scenario: Summer Goldrums • Good • Gold Rebound • Bad • Gold 1k Drift • Ugly • Gold Signals Deflation Rising inflation could drive gold prices back up – if a source of inflation can be found. Typical gold decline is 40-50% from peak, 1900 -> 1000 in this cycle. This could occur while S&P continues its steady climb. A deeper gold crash could be a harbinger of deflation, which is negative for both equities and gold.

  13. HiddenLevers Summer Goldrums – Gold 101

  14. Gold 101 – Overview Silver follows gold – precious metals moving together Median Ratio = 15 Gold trading below long term oil-gold ratio, as it did for most of ‘00s Gold demand down 3 years straight sources: HiddenLevers, World Gold Council

  15. Gold 101 – Interest rates + Inflation Gold price returns follow inflation… And by extension rates as well. source: HiddenLevers, Reuters

  16. Gold 101 – Historical Comparisons • Real commonality between events driving gold: Inflation • Gold has experienced numerous bull/bear cycles, with typical Max Drawdown over 40% before new cycle begins • Gold 10y standard deviation almost 20%, greater than S&P 500 source: Bloomberg, HiddenLevers, Principes de Science Economique

  17. Gold 101 – Recap inflation = key driver of Gold volatility: Gold > S&P 500 typical Gold drawdown = - 40-50% worldwide demand down 3 years running

  18. HiddenLevers Summer goldrums – macro picture

  19. Macro Picture – India • 2013 • Rupee tanks • Stocks rally to record • US recovery boon to software + exporters • State-run Gold importers only • Gold performance = -28% • Post 2014 election • BJP govt relaxing import laws • Investors selling, prices weaker • Shortage of gold over • Jewelers not buying for long-term Rupee strong, diverging source: HiddenLevers, WSJ, CNN

  20. Macro Picture – China • 2013 ---> 2014 • Jewelry demand up 9% • Investor demand down 17% 2013 Yuan USD fix over China CPI vs Gold source: HiddenLevers, Economic Times, Shanghai Daily

  21. Macro Picture – Bitcoin + Other Alternatives Similarities divisible, durable, known/limited supply, transferrable. Market Caps Gold: 6500 B BTC: 7.3 B History Gold: 5000y BTC: 4y Crypto-currency Market 7.8 B source: Coin Market Cap, Only Gold

  22. Macro Picture – Global Deflation Risk decreasing birth rate technology automation sluggish GDP growth commodities sinking first world baby bust If you believe inflation will return, buy Gold. (we don’t) sources: HiddenLevers, Economist

  23. Macro Picture – Recap Bitcoin – the new girl in school India no longer worships gold global deflation = quicksand China + Gold jewelry, not investment

  24. HiddenLevers Use Cases Summer Goldrums scenario Gold Crash Data Center Currencies scenarioGlobal Deflation Data CenterCommodities scenarioEnd of QE

  25. Product Update • Annuities Support (Fixed / Variable / Equity Indexed) • Advisor Fees Support • Index Correlations • Options Support – Call Writing • Integrations: • BlackDiamond • WealthAccess

More Related