Review & outlook
January 24
Dear 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 undaunted and is even increasing the pressure. A peaceful end to this conflict seems to be an increasingly hopeless prospect and Russia is apparently willing and able to extend this conflict by years. In the Middle East, Israel has been fighting for over four months, with a catastrophic loss of human life among the civil population in Gaza, and the entire region is becoming ever more indignant. Unless a peaceful solution to this conflict is found soon, the situation will most probably escalate. The US is endeavouring to contain this war through diplomacy, but has yet to produce a proposed solution that is acceptable to all sides. The US, as Israel’s only reliable ally thus far, has not yet obtained an undertaking from its parliament to continue funding Israel. The same goes for another multi-billion loan to support Ukraine. In Asia, Taiwan is currently electing a new president and for some time there has been sabre-rattling between the US and China, as the US fears that China could be planning to stage a hostile takeover of Taiwan.
We have not had a threatening situation even nearly more worrying on our planet since the second world war. Some forecasters are already talking about the risk of a third world war. It is obvious, however, that the US could not fight a war on three fronts, something which – in addition to the political opposition – would be impossible to finance. Moreover, America faces presidential elections in November this year and even Donald Trump is keen to throw his hat into the ring again.
The effects on the global economy have so far been surprisingly small, but following the escalation in the Red Sea in recent weeks, energy prices in particular are likely to rise more sharply again. Inflation figures in most countries have been coming down in recent months, but mostly remain well above central bank targets. The steep rise in interest rates is now gradually putting a brake on the economy, which is why the financial markets expect central banks to start cutting benchmark interest rates again in the coming months in order to forestall a greater economic downturn. The dilemma over interest rate cuts is that cutting rates too early harbours the risk that inflation will rise again, something which therefore needs to be given careful consideration.
The Swiss franc is regarded by investors worldwide as a safe haven in times of crisis. The main reasons are, what are by comparison, much lower inflation figures in Switzerland, combined with a stable political situation. In the course of last year, the Swiss franc rose by 9% against the US dollar and the exchange rate of the euro fell correspondingly by 6%. This is very gratifying for Swiss consumers, but the Swiss export industry is suffering severely as a result of the strong franc. The Swiss National Bank is therefore required to respond and will have to monitor the situation closely.
At the beginning of this new year, it is absolutely impossible to provide a reliable outlook for the financial markets and we are therefore remaining cautious and holding our broadly diversified investments. Precious metals have risen sharply in recent weeks due to the preference for safe havens in uncertain times. Worldwide, debt is out of control and at record-high levels, causing the relevant currencies to lose purchasing power. Gold has been regarded as the safest investment currency for thousands of years and has survived all crises and always retained its purchasing power. We are therefore very optimistic about the future path of the gold price and remain heavily overweight in this asset class.
We would like to thank you for your trust and wish you a good start to the new year.
All Reviews & Outlooks
Review & outlook 24-Q1
Review & outlookApril 24Dear Investor Geopolitical conditions around the globe have continued to deteriorate since our report in January. The situation in the Gaza conflict seems more hopeless than ever, as the US has not yet been prepared to make further military...
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-Q3
Review- & OutlookOctober 2022The 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...
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...