Review- & Outlook

October 2022

The problems plaguing our world are currently so manifold that it would be impossible to list them all within the confines of this letter.

Although Ukraine has made some advances in recent weeks thanks to the military aid provided by the West, this in turn increases the pressure on Russia and entails the risk of escalation with potentially apocalyptic consequences.

In the Far East, the US is raising the pressure on China through import and export duties as well as export restrictions, while at the same time provoking China by expressing its friendship with Taiwan.

The sanctions imposed by the West on Russia, and by the US on China, in turn increase the pressure on those countries to reorganise themselves and seek common trade solutions. The international divide between East and West is therefore growing noticeably wider. The end of globalisation means that many countries now want to produce the products they need themselves, but this will impact negatively on inflation.

Inflation rates may now have passed their zenith. But let’s not hold high hopes that inflation rates will soon fall sharply. Energy and food prices in particular will keep global inflation high in the near term.

Central banks around the globe are trying to counter the inflationary pressures by raising interest rates. Out in front is the US, which has so far raised its central bank rate by 3% over the course of the year. As Europe especially is unable to replicate these interest rate moves on the same scale due to economic conditions, this is leading to an ever stronger US currency due to the growing interest rate differential. This in turn is causing considerable financial difficulties for heavily US dollar-indebted developing countries. As a result, there is an emerging risk of a global financial crisis, which would have catastrophic consequences for the US, too. In recent days, there has therefore been increasing hope that, in light of these crises at least, the US might also pause temporarily, despite its vehement announcements that further interest rate moves are absolutely necessary.

For years, inflation rates will remain well above the interest rates obtainable on cash deposits. The main reason is the unsustainable global debt pile, which can likely only be reduced to a level more sustainable over the long term through the erosion of value caused by inflation. The purchasing power of our currencies will steadily decrease, making it essential to invest wealth in high-quality assets such as equities, real estate and precious metals which, over time, generate growth rates in excess of inflation.

As the situation in Ukraine began to escalate in February of this year, the gold price rose to a new all-time high. In unison with the slump in equity markets, however, precious metals prices also came under pressure from the massive interest rate hikes in the US and the strong US dollar. Since the all-time lows in mid-September, metals have staged a slight recovery. In local currencies (Swiss franc, euro), the gold price is already back above the prices at the end of last year. As soon as we receive a clear signal from central banks that reduces the pressure for higher interest rates, we expect precious metals prices to rise sharply again.

The negative financial market performance in the third quarter also impacted on our investments. We are convinced of the quality of our broadly diversified investments and are keeping to our long-term investment policy, even in these difficult times. The positive turnaround in market sentiment over the past few days makes us cautiously optimistic about the rest of the year.

We would like to thank you for your trust and wish you many more beautiful autumn days to come.

All Reviews & Outlooks

Review & outlook 23-Q4

Review & outlookJanuary 24Dear Investor The geopolitical situation around the globe has continued to deteriorate dramatically in recent weeks. Europe is showing ever stronger signs of fatigue when it comes to supporting Ukraine. On the other hand, Russia appears...

Review & outlook 23-Q3

Review & outlookOctober 2023Central banks around the globe continued to raise interest rates in the third quarter of this year. Especially in the US, news from the economic front still indicates an astonishingly subdued response to record-high interest rate...

Review & outlook 23-Q2

Review & outlookJuly 2023The US Federal Reserve has raised benchmark interest rates by 5% since spring 2022 and the market is now expecting US interest rates to rise by a further half a percent over the course of the year. Although inflation rates have been on a...

Review & outlook 23-Q1

 Review & outlook April 2023The financial markets have long been warning on the risks posed by the massive interest rate hikes by central banks. But for us too, last month’s collapse of Credit Suisse was a previously unimaginable scenario. The takeover by UBS that...

Review & Outlook 22-Q4

 Review & OutlookJanuary 2023An extremely eventful year is now at an end and will go down in the history books. At the beginning of the year, sentiment across the economy was still optimistic due to the waning pandemic, but the optimistic mood was then abruptly...

Review & Outlook 22-Q2

Review & OutlookJune 2022The economic situation continued to deteriorate in the second quarter, most notably as the prospect of an imminent end to the war in Ukraine receded. This is impacting on the prices of many commodities such as energy and foods, pushing global...

Review & Outlook 22-Q1

Review & OutlookMarch 2022Schon während der Pandemie der letzten zwei Jahre zeichnete sich ein baldiges Ende der Globalisierung ab. Der Einmarsch Russlands ins Nachbarland hat nun aber definitiv die Weltordnung beendet, an die wir uns seit dem Ende des Kalten...

Review & Outlook 21-Q4

Review & outlookDecember 2021As we now put an extremely turbulent year behind us, it seems harder than ever to reliably forecast what the New Year will bring. Even two years on, we are still completely in the grip of the pandemic and there is no end in sight. The...

Review & Outlook 21-Q3

Review & outlookOctober 2021The global economy has performed well over recent months, although some darker clouds are already gathering on the horizon due to many different reasons.The continuing spread of the Delta variant of the coronavirus has dashed all hopes...

Review & Outlook 21-Q2

Review & outlookJuly 2021Our investments have continued to perform well in the second quarter. Global stock market indices are now between 10 % to 25 % higher than at the outbreak of the pandemic in January 2020. This might trick us into thinking the pandemic has...