Making sense of this crazy world
Lots of noise but lack of clarity
Whilst this week there have been no promises of a possible peace treaty, it looks like progress is being made around the Strait of Hormuz – but with Iran and Oman taking centre stage over the waterway.
At the start of the week, the main indices rose and the oil price once again dropped, but as reports unfolded that Iran would seek to restrict US and Israeli ships from the Strait and may require compensation from countries it considers hostile before allowing passage, equity prices slipped and the oil price rose.
Somebody somewhere is making a fortune over a fluctuating oil price!
Today, we’ll take a peek at gold as prices begin to rise after a huge sell-off. We don’t have a direct exposure to the pure metal across our portfolios and for good reasons.
Headlines appeared this week about what UK high net worth clients fear the most, and behind it is the perceived Andy Burnham ‘tax grab’. The right-wing press are certainly putting the boot in with their emotive phraseology.
Equity funds in the UK have seen outflows since Burnham was installed as Prime Minister, even though UK equities look relatively cheap to most other sectors.
However, as reported last week, the FTSE 100 once again reached a record high, and this week it’s the S&P 500 in the US. Despite all the geopolitics and uncertainty, corporate America is pushing on, helped recently by a bounce in performance from tech stocks.
Finally, we’ll take a look at the monthly performance of the main indices.
This week’s content:
- Cornflakes or gold?
- Burnham tax grab
- Outflow of equities
- The S&P reaches another record high
- Monthly performance of indices
- Conclusion
Cornflakes or gold?
It was well reported that a Federal Reserve press conference last week left many baffled with the mixed messages it delivered. On Wednesday, the gold price surged by 4.3%, its third largest gain of the year according to Bloomberg. The sudden rebound, according to the authors, underscores increasing concerns that the Fed may not be doing enough to control inflation.
So, should we dive into gold with our clients’ money? I guess the answer is, only if you want to be speculative. On the face of it, this may sound contradictory, for gold had long been seen as a safe haven asset in times of turmoil. However, the price of gold can be extremely volatile.
Gold was up over 60% in 2025. Central banks are hoarding and, as a result, retail investors are asking about it. Below are the three main things people believe about gold:
- Gold is a solid long-term investment
- That it protects them when markets fall
- It hedges inflation
All comments I’m sure you’ve heard or read about. The fact is, over years of history, the evidence largely contradicts these claims. According to International Adviser, since 1980, gold has delivered an annualised return of 2.8% against US stocks of 11.7%. Inflation over the period averaged 3.1%. In other words, gold lost money in real terms.
Much of the performance of the gold price has come in the last three years, which skews the figures even more.
Continues…
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Risk warning
Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.