Tuesday, January 18, 2011
Commodities enthusiasts are investing five years too late, according to legendary fund manager Anthony Bolton.
"The best time for commodities was in 2006, when the whole world was growing above trend," said Mr Bolton, who manages the Fidelity China Special Situations investment trust.
"Western economies are anemic at the moment, and I am not sure emerging market growth is enough to keep commodities going.".
"Commodities are measured in US dollars and the US dollar has been weak for the past couple of years. If commodities were measured in a stronger currency, the recent rallies might have been different."
The exception to this rule, according to Mr Bolton, is gold. He said he considered it a good investment while the West was experiencing slow growth.
"Gold is more like a currency than a commodity," he said. "Only a small fraction of gold mined is used – for jewellery and the like. The way it is held as an asset in central banks is not a feature common to other commodities.
"Almost every country has a big budget deficit at the moment so it is in their favour to see their currency depreciate. Countries hold gold as a protection against that."
Chinese investors have also started to take an interest in gold, he said, where previously they were buying American bonds........read in full
Overheating emerging markets, in China in particular, pose the biggest threat to the market and political situation in 2011 according to Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
“These economies are clearly overheating and governments are putting measures in place to slow them down to fight inflationary pressure. More than anything else, food inflation is a problem," Gijsels told CNBC.com.
"In countries were 70 percent to 80 percent and sometimes more of a family's budget goes to food, explosive price rises risk to destabilize these societies. Remember the old saying: 'hunger starves civilizations,’” he added.
“We believe that some of these governments will be quite aggressive in their inflation fight. And we do not even want to think about the consequences if this year were to have a disappointing monsoon,” Gijsels said.....read on
The ratings agency Fitch slashed Greece's credit rating to junk tonight as Europe's leaders struggled to agree on measures to tackle the mounting crisis affecting the 17-nation eurozone.
Expressing severe doubts about the ability of Greece to grow fast enough to pay off its debts, Fitch said it could not rule out further downgrades.
The move – which means all three ratings agencies now rate Greek sovereign debt as junk – came amid signs of disagreement between Paris and Berlin over the financial support that should be provided to struggling eurozone members......read on
Relatives of ousted Tunisian leader, Zine El Abidine Ben Ali are thought to have fled the country with 1.5 tonnes in gold, Le Monde reported on Monday, citing French intelligence sources. At Monday's prices, 1.5 tonnes in gold would fetch USD 65 million on the open market. According to Le Monde, President Nicolas Sarkozy's office has been briefed by French intelligence that Leila Trabelsi, Ben Ali's second wife, withdrew gold ingots from the Tunisian central bank last week.
The governor initially resisted her request, but backed down under pressure from Ben Ali himself, the report said.Ben Ali and Leila have now fled Tunisia, under pressure from an unprecedented wave of street protests amid anger that their family is accused of looting the country's resources.