Investor: the Top Concerns and Protecting Your Portfolio

• Fidelity International: Today’s Top Threats For Investors
• Kitco: Bullish Outlook on Silver, Growing Industry Demand
• Kitco: Will the Rising Energy Price Move Commodities As Well?

Fidelity International: Today’s Top Threats For Investors

In his tri-monthly market outlook Tom Stevenson of the Fidelity International highlights four main causes for concern investors have: China, inflation, commodities, and a correction.

China’s market has long been volatile, but so far it has been accepted by the investors as a worthy price for the country’s miraculous economic growth. Now however the miracle seems to have turned around, and the country’s government seems to be doing its hardest to make China uninvestable.

Inflation is a natural source of worry for the investment community, and now the real possibility of stagflation drives economists to ponder best ways to hedge or structure one’s retirement portfolio.

Commodity market has been in a flux, with the talk of a ‘supercycle’ moving on towards rumours of an energy crisis. Interestingly oil, iron and gold have been taking very different paths towards the same goal.

When both equities and bonds have a negative sentiment, the market will suffer a correction. Now many are rightfully asking, where to invest and which sectors are least likely to be affected.

Kitco: Bullish Outlook on Silver, Industry Demand Growing

Silver has continued to underperform its 2021 estimates, but James Anderson of Guanajuato Silver Company remains bullish and predicts that Silver could surge to $40 by mid-2022.

He explains that the weak economy will reduce secondary silver mining, while the simultaneous drive to expand silver-using industries, such as green energy and electric vehicle industry, will raise its demand. He points out that there is no large supply of above ground silver, like there is gold. This means that supply demand crunches can dramatically affect its price in a very short period of time.

James recommends using silver as a hedge against the devaluation of fiat currencies – which is happening to U.S. dollar, Euro, Yen and British Pound alike. He also warns of the risk of deflationary implosion, which would have a sharp downward effect for both gold and silver – but also a fast and sharp recovery.

Kitco: Will The Rising Energy Price Move Commodities As Well?

Edward Gardner, the commodities economist of Capital Economics warns that the looming energy crisis will affect commodity prices. Historically industrial metal, agricultural and precious metals prices have correlated with energy prices.

This happens because the production cost of these commodities is directly affected by the price of energy: industrial metals require large energy inputs to produce, which often causes their prices to move together. All in all, the metals sector accounts for 10% of the global energy usage.

Meanwhile agriculture is also sensitive to energy-price fluctuations because gasoline is needed for the whole process from planting to harvesting. In addition, many pesticides are produced using petroleum products. Gardner states that around half of the whole production cost of agriculture comes from fuel costs.

Sources:
Kitco / 12.10.2021, Anna Golubova
Fidelity International / 13.10.2021, Tom Stevenson
Kitco / 13.10.2021, Michelle Makori