Connect with us

Economy

Gold sizzles as world economy fizzles: Will 2020 be the year of yellow metal? – Economic Times

Published

on


By Laskhmi Iyer

Gold was the ‘Student of the year’ for 2019 with a spectacular performance vis-a-vis financial asset classes. This came as a huge respite for gold lovers, especially Indians who have a a natural tendency to own gold – at times way beyond what may be needed. Hence the joy may be outflowing to gold investors as the winning streak continues well into 2020. In 2020, year to date, gold has returned ~21% annualised return!

So, what justifies this gold rush?

For starters, gold is an asset which has to be mined, and there is no other way to produce gold. This is unlike the currencies which can be printed to infuse liquidity into the financial markets. Here, gold assumes the role of the ‘last person standing’ as faith in fiat currencies falter.

The deadly coronavirus outbreak has led to a sharp decline in the world economic outlook. There are reports that suggest the worst-ever global outlook since the great depression of the 1930s. Even if that is exaggerated, the fact remains that over 40 central bankers have rushed to ease the monetary conditions to combat the medical crises the world is facing. Thus it is no surprise to see the solid innings gold continues to play in the current year as well.

India and China are among the largest gold consuming nations in the world. It is interesting to note that even central banks like Turkey, Russia, Mongolia etc. have been adding gold to their reserves.

So can the winning streak continue?

After a spectacular run in any asset class, it is natural to see some small breather, which holds true for gold too. However, given the uncertain medical situation we are in and the extended phase of global slowdown, gold is unlikely to stop its northward march so soon! Therefore, the “Bhag Milkha Bhag’ act may well be a trend for gold till some clarity emerges.

Investors, however, should be mindful of not chasing the momentum and get lop sided while investing in gold. Treat gold like an insurance cover on your portfolio. Have only so much as is required to offer a ‘cover’ to your financial assets. In some sense, it is akin to having a term insurance on your life. Hence, the predominant investments could still be tilted towards financial asset classes like equities and fixed income. I would say: Equities – the wealth creator; Fixed Income – the wealth stabiliser and Gold – the wealth protector.

Occasions are a great time to own gold traditionally in most Indian households. While I do not urge you to break away from this tradition, one can be more mindful of the way one can own it.

Gold ETFs, gold fund of funds, sovereign gold bonds are better alternatives to physical gold, and the hassle of storage etc is outsourced too. These are all backed by physical gold and hence this is a more hassle-free way of owning gold. As lifestyle undergoes a 360 degree change in the wake of Covid-19, I would urge you to make changes to your buying pattern and choose a more appropriate vehicle to own the yellow metal.

Wish you all a Happy Akshay Tritiya. Stay safe and take care. Make sure to stay healthy and also keep your portfolio well hydrated ?

(Lakshmi Iyer is Chief Investment Officer (Debt) & Head Products at Kotak Mahindra AMC. Views are her own)

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Doug Ford rejects regional approach to reopening Ontario's economy – Toronto Star

Published

on


One size fits all.

That will be Ontario’s mantra for reopening the economy in the wake of the COVID-19 pandemic, insists Premier Doug Ford.

Even though the Greater Toronto Area accounts for 65.6 per cent of Ontario’s cases, leaving huge swaths of the province relatively unscathed, Ford is rejecting the regional approach of opening up as is being done in neighbouring Quebec, Manitoba and New York state.

“I have to follow science and the medical advice. I always have, I always will,” the premier said Thursday, emphasizing that provincial chief medical officer of health Dr. David Williams and other public health officials will make the call.

“I’ll take their advice and if Dr. Williams doesn’t think it’s the right thing to do, then I’m following his advice. I have from the beginning. I’ll continue to follow it,” he said.

Ford admitted he is under a lot of pressure to expedite the opening of the economy in regions beyond the GTA.

There are far fewer coronavirus cases in Kenora, Algoma, North Bay, Parry Sound, Sudbury, Kingston, Renfrew, Huron-Perth, Prince Edward County, and most of southwestern Ontario outside the Windsor city limits.

“I hear it at cabinet, I hear it at caucus. I hear it all the time from our own members,” the premier said.

Indeed, Progressive Conservative MPPs from outside the Golden Horseshoe privately confide that they are feeling heat from their constituents.

“How am I supposed to keep telling businesses in my area to remain closed for what’s essentially a Toronto problem?” said one rural Tory MPP, speaking on condition of anonymity in order to freely discuss internal caucus discussions.

“At a certain point, we’ve got to reopen,” added the MPP, who personally lobbied Ford against the universal reopening approach.

But the premier, who began the first phase of reopening the economy last week when stores with street-front entrances were allowed to welcome customers, said “we just have to be cautious” to curb the spread of a virus that has killed 2,248 people in Ontario.

“On a long weekend in the summer, there’ll be half a million cottagers going up to the Muskokas, the Haliburtons, up to the cottage area — and they’re coming, primarily, they’re coming from the 905 and 416 area,” he said.

In Quebec, where 4,228 people have died from COVID-19, Premier François Legault has pushed a phased regional approach to opening.

Outside of Montreal, the epicentre of the pandemic in that province, much of the economy will be up and running next week, including indoor shopping malls.

“We have to continue to be careful because we cannot afford to have large increases in the next few days or weeks in the number of people in our hospitals in Montreal,” Legault said earlier this week.

In Manitoba, where only seven people have died of COVID-19, Premier Brian Pallister announced Tuesday that most businesses — including restaurants, bars, and gyms — will be open next week.

Pallister stressed “slow and careful movement in the direction of easing our restrictions is the right approach.”

New York state has suffered 23,282 deaths — more than 10 times as many as Ontario despite a population of 19.5 million compared to the province’s 14.5 million — but is pushing forward with phased regional reopening.

In New York, a region must meet seven different metrics before being allowed to move a broader stage of reopening, including a sustained decline in total hospitalizations over a three-day rolling average and a decline in deaths.

Get the latest in your inbox

Never miss the latest news from the Star, including up-to-date coronavirus coverage, with our email newsletters

Sign Up Now

Each region must have at least 30 per cent of its intensive care unit beds and 30 per cent of all hospital beds open and must meet diagnostic testing and contact tracing capacity.

Western New York, across the Niagara River from Ontario, currently meets all seven requirements for reopening selected businesses and services.

Earlier this month, Gov. Andrew Cuomo defended his plan.

“Close down everything, close down the economy, lock yourself in the home — you can do it for a short period of time, but you can’t do it forever.”

Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

JOIN THE CONVERSATION

Q:

What do you think of the “one size fits all” strategy for reopening Ontario’s economy?

Conversations are opinions of our readers and are subject to the Code of Conduct. The Star does not endorse these opinions.

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Province's decision to reopen economy still lacks some clarity: CFIB – HalifaxToday.ca

Published

on


The Atlantic Vice President of the Canadian Federation of Independent Business says he’s pleased with the province’s decision to reopen the economy, but adds it still lacks some clarity.

On Wednesday, Premier Stephen McNeil announced the province’s next steps to reopening the economy, saying businesses that were required to shut down due to the COVID-19 pandemic will be able to restart operations on June 5.

Jordi Morgan told NEWS 95.7 he’s happy to hear this, but adds there are still some questions that need to be answered.

“It remains to be seen how well this happens because we’re still not entirely clear on what all the requirements are for these individual businesses,” said Morgan.

Morgan is also pleased with the province’s new small business reopening and support grant, a $25 million fund that will help businesses welcome back customers safely.

“Very happy to see that because there are a number of businesses that are going to require some bridging to reopen, invest in personal protective equipment and other things that are necessary in order to operate the business,” said Morgan.

He says once they get all the guidelines in place, they’ll have a better idea of how to operate and keep both the public and employees safe.

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Nearly 40% of the economy may vanish in Q2 because of COVID-19, but then do something surprising – Yahoo Canada Finance

Published

on


The S&P 500 has crossed the 3,000 level again and investors are clearly riding high on hope for a second half economic recovery post the worst of COVID-19.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="But that doesn’t mean the market is immune to a pullback this summer primarily because the economic data will likely continue to be horrible. Remember bulls, the U.S. economy has been kicked in the face by the pandemic, and a rebound won’t happen overnight simply because states are reopening. Corporate sales and profits remain under severe strain, sending many off to explore bankruptcy or cut thousands of workers even with quarantines being lifted.” data-reactid=”17″>But that doesn’t mean the market is immune to a pullback this summer primarily because the economic data will likely continue to be horrible. Remember bulls, the U.S. economy has been kicked in the face by the pandemic, and a rebound won’t happen overnight simply because states are reopening. Corporate sales and profits remain under severe strain, sending many off to explore bankruptcy or cut thousands of workers even with quarantines being lifted.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“We think that the reported unemployment rate may be around as high as 20% in May,” Barclays chief U.S. economist Michael Gapen warned on Yahoo Finance’s The First Trade. The unemployment rate in April increased by 10.3 percentage points to 14.7%.” data-reactid=”18″>“We think that the reported unemployment rate may be around as high as 20% in May,” Barclays chief U.S. economist Michael Gapen warned on Yahoo Finance’s The First Trade. The unemployment rate in April increased by 10.3 percentage points to 14.7%.

Gapen believes the U.S. economy may contract a whopping 40% annualized in the second quarter, then surprisingly grow by 25% in the third quarter and 8% in the fourth quarter.

Part of Gapen’s cautiousness on the economy in the second quarter stems from his outlook on the consumer, which comprises two-thirds of the U.S. economy as is often cited.

A woman shops for clothes Wednesday, May 27, 2020, in Los Angeles. California moved to further relax its coronavirus restrictions and help the battered economy. Retail stores, including those at shopping malls, can open at 50% capacity. (AP Photo/Marcio Jose Sanchez)
A woman shops for clothes Wednesday, May 27, 2020, in Los Angeles. California moved to further relax its coronavirus restrictions and help the battered economy. Retail stores, including those at shopping malls, can open at 50% capacity. (AP Photo/Marcio Jose Sanchez)

“I think when we move into the third quarter, the savings rate will start coming down. All else equal, we are expecting the consumer to remain cautious. I think you will see a blend. Some return to normalcy, but it will take time,” Gapen explains. “Negative wealth is still at play. Equity markets are doing well, but the average household may not feel that. And I think that there will be caution and a preference for saving.”

To be sure, recent economic data warrants the markets taking a short-term breather.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Another 2.123 million Americans filed for unemployment benefits&nbsp;in the week ending May 23. Over the past 10 weeks, more than 40 million Americans have filed for unemployment insurance. U.S. durable goods orders tanked 17.2% in April, U.S. Commerce Department data showed Thursday. Durable goods dropped 16.6% in March.” data-reactid=”34″>Another 2.123 million Americans filed for unemployment benefits in the week ending May 23. Over the past 10 weeks, more than 40 million Americans have filed for unemployment insurance. U.S. durable goods orders tanked 17.2% in April, U.S. Commerce Department data showed Thursday. Durable goods dropped 16.6% in March.

Pending home sales in April fell 33.8% year over year, the National Association of Realtors said Thursday. That marked the biggest decline since January 2001.

“I think the market has priced in that April is probably the worst of the economic data,” explained Sevens Report Research founder Tom Essaye. “While it looks like the worst is behind us — which is great — we need to start to see more improvement.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.” data-reactid=”37″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Read the latest financial and business news from Yahoo Finance” data-reactid=”38″>Read the latest financial and business news from Yahoo Finance

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.” data-reactid=”50″>Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.

Let’s block ads! (Why?)



Source link

Continue Reading

Trending