INFORMATION LEAFLET N°10B SEPTEMBER 2012 … · information leaflet n°10b!september 2012....
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COMMODITIES - BLOOMBERG TICKER - IWCOMPE:LX - LU0762436201 LOW RISK - BLOOMBERG TICKER - IWLWRPE:LX - LU0762435906 REAL VALUE GROWTH - BLOOMBERG TICKER - IWRVGPE:LX - LU0762436110 INVESTMENT FOR WEALTH General report Comments for September 2012 ''Le Cri" d'Edvard Munch Fear, anxiety and the parable of the then Virgins In the past we have insisted multiple times that the worldwide financial systemic crisis that has engulfed the world-economy, will ultimately push the gold price up to levels far above $ 3600 per ounce, driven by sheer FEAR. If we look at the current marketplace - be it in bonds, currencies or equities - we see no fear. All we see, is complacency everywhere. Let’s look at the facts : Europe In Europe we see lower Spanish, Italian and Portuguese yields and narrowing spreads compared to bunds, in spite of rising unemployment, rising deficits, rising total government debts, falling PMIs and higher probabilities of steeper recessions. The Greek situation has fallen into oblivion and its solvency problems are thus nonexistent. We could go on ranting at nausea, but on what purpose? European equities are up and the euro is regaining some of it losses. The last, even on a day when wonderful American unemployment rates (only 7.8% compared to more than 11% for the Eurozone) have been published. It seems like goldilocks strikes again. US Budget deficits are above $ 1.1 trillion for the 4 th year in a row. A new record of Americans living on food stamps (46.681.833 persons) and a new record of persons living on disability benefits haven been achieved. Since December 2007 the number of jobs lost is about 4.5 million, while additional persons on food stamps or disability benefits are up 21 million. Even part of the establishment (Jack Welch’s, ex-CEO of GE lit on twitter we quote : “ Unbelievable jobs numbers.. these Chicago guys will do anything.. can’t debate so change numbers “) have become conspiracy adepts. California Gas prices are at an all-time high of $ 4.614 per gallon and federal debt is surpassing $ 16.15 trillion. But the Dow and the S&P are flirting with four year highs, treasuries remain at 32 year lows and and and… Japan Don’t get us started about Japanese 10y government yields at 0.77 % (“only” 21 bps down on the year) with government debt zooming in on 240% of GDP. Other BRICs Growth problems in China and India? Why bother. Tensions in the Middle East? Never heard of seems the market credo. Conclusion As your fund manager we are really SCARED by all this complacency… We see it as our primary duty towards you clients, to stay the course on preserving the capital you invested in our funds. We constrain ourselves not to run with the herd. We see the signs of the end stage, the forming a worldwide bond market bubble of epic proportions. This bubble is not limited to government bonds. Since March of 2009 investors sold $ 138 billion in equity mutual funds while a whopping $ 1 trillion was bought into bond funds. Yield hungry asset managers yanked the junk bond boom in full overheating mode. High yield debt returned 21 % over the last 12 months. We INFORMATION LEAFLET N°10B SEPTEMBER 2012
Transcript of INFORMATION LEAFLET N°10B SEPTEMBER 2012 … · information leaflet n°10b!september 2012....
COMMODITIES - BLOOMBERG TICKER - IWCOMPE:LX - LU0762436201 LOW RISK - BLOOMBERG TICKER - IWLWRPE:LX - LU0762435906 REAL VALUE GROWTH - BLOOMBERG TICKER - IWRVGPE:LX - LU0762436110
INVESTMENT FOR WEALTH
General reportComments for September 2012
''Le Cri" d'Edvard Munch
Fear, anxiety and the parable of the then VirginsIn the past we have insisted multiple times that the worldwide financial systemic crisis that has engulfed the world-economy, will ultimately push the gold price up to levels far above $ 3600 per ounce, driven by sheer FEAR.
If we look at the current marketplace - be it in bonds, currencies or equities - we see no fear. All we see, is complacency everywhere.
Let’s look at the facts :
EuropeIn Europe we see lower Spanish, Italian and Portuguese yields and narrowing spreads compared to bunds, in spite of rising unemployment, rising deficits, rising total government debts, falling PMIs and higher probabilities of steeper recessions. The Greek situation has fallen into oblivion and its solvency problems are thus nonexistent.We could go on ranting at nausea, but on what purpose? European equities are up and the euro is regaining some of it losses. The last, even on a day when wonderful American unemployment rates (only 7.8% compared to more than 11% for the Eurozone) have been published. It seems like goldilocks strikes again.
USBudget deficits are above $ 1.1 trillion for the 4th year in a row. A new record of Americans living on food stamps (46.681.833 persons) and a new record of persons living on disability benefits haven been achieved. Since December 2007 the number of jobs lost is about 4.5 million, while additional persons on food stamps or disability benefits are up 21 million. Even part of the establishment (Jack Welch’s, ex-CEO of GE lit on twitter we quote : “ Unbelievable jobs numbers.. these Chicago guys will do anything.. can’t debate so change numbers “) have become conspiracy adepts. California Gas prices are at an all-time high of $ 4.614 per gallon and federal debt is surpassing $ 16.15 trillion.But the Dow and the S&P are flirting with four year highs, treasuries remain at 32 year lows and and and…
JapanDon’t get us started about Japanese 10y government yields at 0.77 % (“only” 21 bps down on the year) with government debt zooming in on 240% of GDP.
Other BRICsGrowth problems in China and India? Why bother. Tensions in the Middle East? Never heard of seems the market credo.
ConclusionAs your fund manager we are really SCARED by all this complacency… We see it as our primary duty towards you clients, to stay the course on preserving the capital you invested in our funds.
We constrain ourselves not to run with the herd. We see the signs of the end stage, the forming a worldwide bond market bubble of epic proportions.
This bubble is not limited to government bonds. Since March of 2009 investors sold $ 138 billion in equity mutual funds while a whopping $ 1 trillion was bought into bond funds. Yield hungry asset managers yanked the junk bond boom in full overheating mode. High yield debt returned 21 % over the last 12 months. We
INFORMATION LEAFLET N°10B SEPTEMBER 2012
COMMODITIES - BLOOMBERG TICKER - IWCOMPE:LX - LU0762436201 LOW RISK - BLOOMBERG TICKER - IWLWRPE:LX - LU0762435906 REAL VALUE GROWTH - BLOOMBERG TICKER - IWRVGPE:LX - LU0762436110
have not participated in this frantic search for return. After the PIMCOs and Black Rocks of this world - with in their entrainment a whole cohort of hedge funds - made tons by front running the Fed, they have now started buying southern European debt in a seemingly risk-free, speculative and leveraged bet on the actions of the ECB, the ECB that has now openly confessed to imitate the Fed policies “whatever it takes”.
We, we don’t perceive the risk-free aspect of these bets. We, unlike Goldman Sachs , PIMCO, Black Rock etc. do not have the privilege to seat at the table of our world central printers, sorry we meant central bankers. In our vision we are long past the dilemma of the moral hazard based on the Fed (and now under Draghi the ECB as well) precommitting on future interest rates (already until 2015). The concentration and ever-expanding global pool, ready to finance with leverage this Credit Bubble has had nothing comparable since at least a century. Due to this concentration and expansion, the moral hazard has become a very simple blackmail game : “Federal Reserve chairman, make the values of these assets go up or we’ll dump them”, “Draghi, be ready with OMT or we’ll dump …”, “policymakers everywhere, play or you will have a total financial crash on your hands”.
We refuse to play along. We keep our fixation in the precious metal sector because we see the fingers of instability, dislocation and mispricing in every segment of the financial markets. These dangerously leveraged, speculative money flows can revert in a hart beat. The divergence with economic fundamentals is frightening.
The parable of the Wise and the Foolish Virgins came to our mind. Like the Wise Virgins, who kept their oil reserve, we believe we must keep your assets principally in precious metals. We let the foolish game of playing in the bond bubbles for those that want to imitate the Foolish Virgins. They think that due to their connections with the money printers they will be able to sell bonds in time and will be capable of buying precious and other real assets in time before the Big Financial Panic enrolls. We accept that the precious market can stay underpriced while the fools
are still in charge. We think that the Big Financial Panic will only be recognized in hindsight. We accept that the full hedging benefits off our asset allocation strategy will only be fully validated in the future. Better be mocked for a fool now than at the panic high.
The gold market still moves on no panic fears. Only limited inflation fears are pushing the gold price to new highs. So every time the market sees weak(er) economic fundamentals, the gold bull is stopped. In the current phase, gold will continue to act in a controlled way. Only when the bonds bubbles implode, will the fear out of bonds drive the fools to gold in a stampede. Looking at 10 year JGB yields at 0.77%, this moment still looks to be some years away. But as the parable said, the bridegroom can come as a thief in the night, we stay prepared.
Our goal for you - thanks to your precious hedge – to be able to sit at the feast meal when the panic cycle comes to truism. Fools will only have access to the bread lines. When? Somewhere between now and 2016 we think, but even if it’s finally 2020, we will stay the course.
Performances and trading
iW Alternativ SIF – Low RiskThe fund has increased by 5,5% in September, NAV 12571,98 EUR.
iW Alternativ SIF – CommoditiesThe fund has increased by 16,5% in September, NAV
INFORMATION LEAFLET N°10B SEPTEMBER 2012
INVESTMENT FOR WEALTH
COMMODITIES - BLOOMBERG TICKER - IWCOMPE:LX - LU0762436201 LOW RISK - BLOOMBERG TICKER - IWLWRPE:LX - LU0762435906 REAL VALUE GROWTH - BLOOMBERG TICKER - IWRVGPE:LX - LU0762436110
1282,04 EUR.
iW Alternativ SIF – Real Value GrowthThe fund has increased by 10,6% in September, NAV 118,1 EUR (I), NAV 117,18 EUR (P)
Best regards,The fund manager
Note : This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of, or located in, any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Additional information is available upon request.
The information, tools and material presented in this document are provided for information purposes only and are not to be used or considered as an offer or solicitation to buy, sell or subscribe any securities or other financial instruments. Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, expressed or implied, is made by “iW” regarding future performance. Information found in this report has been prepared based on information provided by various financial sources. Information usually attributable to a unique specific source is quoted whenever such information is available. Otherwise, the information may have been gathered from public news dissemination services such as Bloomberg, Reuters or any other news services.
Information and opinions presented by “iW” have been obtained from sources believed to be reliable, and, although all reasonable care has been taken, “iW” is not able to make any representation as to its accuracy or completeness. Accordingly, “iW” accepts no liability for loss arising from the use of this document presented for information purposes only. “iW” has no obligation to update, modify or amend this report or otherwise notify a reader thereof in the event that any matter stated herein becomes inaccurate.
INFORMATION LEAFLET N°10B SEPTEMBER 2012
INVESTMENT FOR WEALTH
