Market Update

Blackrock on gold - BP on energy

Good afternoon

We would like to invite you to our yearly Australian Resources Conference in Zurich, 24th of February, Hotel Baur au Lac. As always, the attending companies are inviting all interested investors and other interested followers. Please pass on the information to your colleagues as well! 

Please register by clicking this link:

Australian Resources Investment Conference

This year, following companies will attend:

Evolution Mining / Perseus Mining / Panoramic Resources / Prairie Mining / Genex Power / Graphex Mining / Breaker Resources / Peak Resources / Finders Resources / Energia Minerals

Market Update

Australia has been quiet today- Australia Day! All markets closed....

This has been published by Blackrock today:


From BlackRock: Russ discusses the signs that inflation is rising faster than many expect, and what that means for your portfolio.

Like the proverbial frog that does not notice the rise in water temperature until it’s too late, investors seem to be experiencing a similarly stealthy rise in inflation. Changes in headline inflation measures suggest a gentle firming in prices. However, underneath the surface there is evidence that inflation may continue to rise past the steady 2% nirvana that central banks prefer. Consider the following:

Housing costs are now rising at the fastest pace in nearly a decade.

Housing is a major component of core inflation, i.e. inflation without volatile food and energy prices. The main housing component in the Consumer Price Index (CPI) is Owners’ Equivalents Rent (OER). As overall housing costs make up over 40% of core inflation, this is a key metric to watch. Last December OER rose over 3.5% from the previous year, the quickest pace in nearly 10 years (see the accompanying chart).


Medical inflation is not as contained as many had hoped.

A few years back it seemed that medical costs were finally under control. That conclusion now appears premature. CPI for medical care has been rising at roughly 4% year-over-year for the past six months. With the exception of a brief period in 2012, medical costs have not been rising at this rate since early 2008.

Wages are rising.

One of the defining aspects of this recovery has been persistently sluggish wage growth, even in the face of a strong labor market. That is slowly changing. While still muted by historical standards, average hourly earnings are rising by 2.9% year-over-year, the fastest pace since the spring of 2009. A potential bolster to the trend: 20 states raised their minimum wage rates as of the first of the year.

Consumer inflation expectations are also starting to tick higher.

Up until recently consumer expectations for inflation remained muted. This was arguably a function of plunging oil and gasoline prices, which seem to exert an oversized importance in consumer perceptions of inflation. With oil and gasoline more stable, expectations are changing. The University of Michigan’s one-year inflation expectation survey is now at 2.6%, up 0.4% from the previous month.

None of this signals ’70s style inflation; it does suggest inflation may surpass still modest market based expectations. While 10-year inflation expectations, measured by the Treasury Inflation Protected Securities (TIPS) market, recently rose to 2.05%, they remain well below the 2.6% level reached in early 2013, a time when core inflation was roughly 50 basis points lower than it is today.

To the extent realized inflation and inflation expectations continue to rise, investors may want to consider several themes in their portfolios: a preference for TIPS over nominal Treasuries, an overweight to financial stocks, typically beneficiaries of higher interest rates, and an underweight to bond market proxies, such as utilities and consumer staples. Finally, should inflation expectations rise faster than nominal rates, gold is likely to continue to merit a place in most portfolios.

The SPDR Gold Trust ETF (NYSE:GLD) fell $0.63 (-0.55%) in premarket trading Thursday. Year-to-date, GLD has gained 4.30%, versus a 2.70% rise in the benchmark S&P 500 index during the same period.

GLD currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #3 of 32 ETFs in the Precious Metals ETFs category.

This article is brought to you courtesy of BlackRock

Interesting stuff!! Unfortunately, gold is falling again seems to be highly correlated with bonds...even though real yields are not rising...

Consumer Confidence in Germany is still very high! Labor market in the US is still strong, even though numbers out today have been slightly negative vs expectations. Trump has started his "infrastructur-program" by allowing two pipelines to be built, and one big wall....the first 30 bill US$ or so in spending are on their way....We ripped down our wall years ago - he is building new ones....not only between Mexico and the States, but also walls between many people....

BP published their yearly energy-bible...interesting ( ): They are basing their forecasts on the expectation of 3.4% growth , driven by China/India ( about 50% of worldwide growth ) and other developing/emerging markets.That results in GDP more or less doubling to the year 2035. They are forecasting a 30% increase in energy consumption until 2035 - all sources will grow from today, driven by alternative energy, but also nuclear ( 2.6% growth p.a. ) , gas ( 1.6% ), oil, and even coal ( 0.2% p.a. ). While they see growth of carbon emissions halving vs the last 10 years, they still see the need for incentives, to improve on that measure. But certainly interesting to see, that they believe in coal - seeing the peak of consumption taking place at asbout 2025 and very small contraction thereafter. But BP believes, that fossil sources of energy will shrink to 75% of the total by 2035, from 86% today. This should result in ongoing dampening of oil prices, and they forecast, that the market share in oil will move more strongly to cheap producers like the Middle East, and to production from shale formations. Nothing too much to worry for natural resources companies - but some adoption in long term strategy might be needed.

Have a nice evening!