'Trade of Century': Buy #Gold, Sell Stocks (like Insiders are doing) before Recession Comes & Markets Drop

Buy Gold, Sell Stocks Is the 'Trade of Century' Says One Hedge Fund

Sarah PonczekMarch 19, 2019, 3:27 PM GMT+1

One of last year's best-performing hedge funds says the "trade of the century" is to buy gold and sell stocks as risk assets are due for another meltdown.

It's only a matter of time until the bearish bet pays off big, according to Crescat Capital LLC. While the Denver-based firm has only about $50 million under management, it has a history of outperforming the S&P 500 Index -- with its Global Macro Fund returning 41 percent last year alone. Now the investment company says it's ready to capitalize on an end of the economic cycle as indicators warn that a recession is imminent in the coming quarters.

The consensus is pointing to a recession in 2020 or 2021, Tavi Costa, a global macro analyst at Crescat, said by phone. "We think it's a lot closer than that and we have a number of macro timing indicators that we look at."

Going long gold in yuan terms and shorting global equities currently explains three-quarters of the hedge fund's strategy. While the firm uses the MSCI World Index in models to visualize the trade, it goes a bit deeper with its short position, selecting individual stocks and exchange-traded funds to bet against.

Impact of monetary policy on #Gold

From the World @GoldCouncil

A shift in monetary policy expectations has influenced gold's performance in recent months  Contribution to gold returns from movements in the US dollar, changes in interest rates, and other factors* *Based on a proprietary attribution model developed by the World Gold Council using the four drivers of gold described in Focus 1. "Other" include economic expansion, uncertainty, and momentum. For more details, see Goldhub. Source: Bloomberg, World Gold Council. The impact of monetary policy on gold The upcoming Federal Reserve Open Markets Committee (FOMC) meeting on 20 March is expected to confirm market expectations that the Federal Reserve (Fed) will remain on hold for the rest of the year. This, in turn, will likely influence gold's performance. Our historical analysis shows that when the Fed has shifted from a tightening to a neutral stance, gold prices have increased, even if this effect has not always been immediate. In our view, the combination of rangebound US interest rates, a slowdown in the appreciation of the US dollar and continued market risks will continue to make gold attractive to investors. Download the analysis

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Global #Gold-#Mining M&A remains weak, particularly the #Gold sector

From the @WSJ

Even with the recent burst of M&A, last year's gold-mining deals totaled $12.4 billion, almost half the peak in 2010, according to Dealogic. For mining as a whole, 2018's tally, at $59.6 billion, was 55% lower than the 2011 peak. For oil and gas, the total was $340 billion, the highest value in the past decade.

Miners and bankers give a variety of reasons for why the gold mining merger wave hasn't come. The poor performance of gold miners' shares means that sellers want to hold out for better valuations and buyers are reluctant to use shares they believe are undervalued for acquisitions.

The S&P TSX Global Gold Index is down 51% since its 2011. The S&P 500 has doubled in value in that time.

The industry as whole has a poor record in M&A. Miners overspent during the decadelong bubble that ended in 2011. That put off investors and made some executives wary of doing deals.

In 2016, PwC calculated that big miners had written off $200 billion of the value in acquisitions and projects over the previous five years.

See the whole article here:

Investors Are Still Waiting for a #Gold-#Mining Merger Wave

https://www.wsj.com/articles/the-mining-merger-wave-that-never-came-11552477876

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In #Switzerland, #Cash is (Still) King

 

The future of #Electricity #Trading is looking different #AI #ML

"There has been an explosion of data and the need to analyze this is becoming ever more important. Desks that survived without it and relied more on relationships now realize they need to build out."

All the data is also transforming the role of the modern power trader. More and more utilities and specialist companies are now using automated systems to buy and sell electricity -- sometimes just minutes or hours before delivery.

In Aarhus, Denmark's second biggest city, a whole new industry has emerged focused on short-term power markets. Trading company MFT Energy said it has hired staff from local competitors, while peer InCommodities are hiring both traders and software developers this year and next, Chief Executive Officer Jesper Severin Johanson said by email.

"It is all about data and programming skills," said Henry from H.W. Anderson. "Power is very tech and programming driven, and these skills are the biggest trend in the power trader hiring."

https://www.bloomberg.com/news/articles/2019-03-04/big-bonuses-return-for-european-energy-traders-as-prices-rally?srnd=premium-europe

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