Money Markets: Opportunities everywhere

At the time of writing the dollar is king, Obamamania has taken hold and the US is poised for a turnaround, property’s cheap and there’s an opportunity somewhere.

Risk aversion is the current byword, or is that two? Sell everything risky and buy…hmm the dollar? I guess in stormy times it’s better to be in a cruise ship than a tender, even if that cruise ship is a sub-standard rusty old bucket of junk; hope the analogies aren’t too obscure. The thinking being the largest ship must be unsinkable; hardly any point in equipping it with enough lifeboats for everyone, they won’t be needed will they? I do hope not, but perhaps some thinking differently have been buying gold, slowly building substantial long positions. Is it a buy for all precious metals in times of doom and gloom? Not really, platinum has stagnated – put on hold as 50 per cent of its sales are driven by automakers’ need for the metal to produce catalytic converters, so no demand for cars translates to no platinum buying. Even gold that has enjoyed a good rally is being held back by the worry that demand for jewelry will not support the rally.

Gold typically falls as the dollar rallies otherwise the price of gold measured in other currencies would sky rocket, and that’s exactly what’s been seen of late. Gold as priced in Sterling is now at an all time high, but measured in dollar terms it is around 15 per cent below its highs, time to buy? Could be.

Everywhere you read in the popular press realtors (estate agents et al) are eschewing the affordability of property, prices are lower and interest rate are lower. All true but just because it’s more affordable doesn’t necessarily make it a good buy, more likely a good bye. Unless you have your heart set on one particular house my take is it’s still a waiting game. You can’t afford to wait until the market bottoms or the creeping optimism will have people pulling desirable properties from the market in expectations of better times, except for the forced sales which will be few and far between.

Even before Obama was off the innaugauration podium the markets had decided that he hadn’t done enough and sold the hell out of banking stocks. With two rescue packages totaling $1.2 trillion already in the works it may have been a little foolish to expect much more than uplifting rhetoric from the man. A public statue has already been built for his achievements as President of the US, at least in the minds of many. Never before has so much been expected of a new President. I hope they aren’t disappointed, but it seems impossible not to be.

Disclaimer: The views expressed are the opinions of the writer and whilst believed reliable may differ from the views of Butterfield Bank (Cayman) Limited. The Bank accepts no liability for errors or actions taken on the basis of this information.



Butterfield Bank’s Phil Turnbull