Warren Buffett is famously not a fan of gold.
“If you buy an ounce of gold today and you hold it 100 years, you can go to it every day and you could coo to it and fondle it and 100 years from now you’ll have one ounce of gold and it won’t have done anything for you in between,” the legendary investor said in a TV interview in 2012.
He was certainly right at the time, as gold prices crashed from $1,800 an ounce to below $1,200 in mid-2013.
But some advisers, including Nour Eldeen Al Hammoury, the chief market strategist at Abu Dhabi-based ADS Securities, say it might be gold’s time. He argues that now is a classic case when precious metals like gold and silver are “safe haven” investments to avoid a period of high volatility in the financial markets.
Oil prices have crashed and currency and interest rate markets in the major economies have been roiled by the inability of governments to get a meaningful economic recovery under way.
“The global economy is still suffering under huge debts and there have been no truly structural reforms,” Mr Al Hammoury argues.
Although the US Federal Reserve has pumped vast amounts of money into the economy over the past several years, the country’s growth has been fairly anaemic.
The Fed recently said it would stop lending the banks virtually free money (known as quantitative easing, or QE), even though there have been some signs – such as a slowdown in housing and manufacturing – indicating that the US economy is slowing again.
After years of hesitation, meanwhile, the European Central Bank announced recently that it would begin pumping money into the euro currency economies in a huge QE programme of at least €1 trillion (Dh4.2tn).
Mr Al Hammoury says this may be too little, too late. “We have reached the point where the cheap money effect will be negative for the economy,” he says, pointing to the diminishing ability of cheap money to stimulate the US economy over the past decade. A sharply lower value for the euro in the past year means that cheap money will also have a diminishing effect on economic growth there.
The result is a great deal of volatility for financial markets, which traditionally favours the precious metals. “I still like gold, silver and platinum; they are safe havens,” Mr Al Hammoury says.
The view has support from other investment advisers.
Francisco Blanch, a Bank of America Merrill Lynch commodities analyst, says that gold seems to be driven now more by interest rates and currency moves than by other commodities, such as oil, even though gold prices have moved broadly in tandem with oil prices for decades.
“Since gold prices crashed by $203 an ounce over two trading days in 2013, the influence of oil on the yellow metal has been fading,” Mr Blanch wrote in a note to investors yesterday.
Although gold has been out of favour with investors in recent years, “this trend may be about to change, in our view”, Mr Blanch adds.
One of the main reasons, Mr Blanch argues, is that investors have lost faith that putting their money in government bonds or leaving it in cash will protect its value. Even central banks have recently started to buy more gold, he noted.
Although Mr Buffett is right over the long haul, there are times when gold has been the safest place to store wealth. It just depends on getting people to go along with the idea.
As Mr Buffett pointed out, gold bugs tend to make their case forcefully. “Why do you think gold bugs get so irate?” he said. “You can knock almost any investment and nothing happens. But when you talk about gold it’s different. Of course that says something about their motivation for ownership. They want people to agree with them … They want people to be as afraid as they are.”
amcauley@thenational.ae
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ABU%20DHABI'S%20KEY%20TOURISM%20GOALS%3A%20BY%20THE%20NUMBERS
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BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
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David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
Profile
Company name: Jaib
Started: January 2018
Co-founders: Fouad Jeryes and Sinan Taifour
Based: Jordan
Sector: FinTech
Total transactions: over $800,000 since January, 2018
Investors in Jaib's mother company Alpha Apps: Aramex and 500 Startups
SPECS
Nissan 370z Nismo
Engine: 3.7-litre V6
Transmission: seven-speed automatic
Power: 363hp
Torque: 560Nm
Price: Dh184,500
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
RESULTS
1.30pm Handicap (PA) Dh 50,000 (Dirt) 1,400m
Winner AF Almomayaz, Hugo Lebouc (jockey), Ali Rashid Al Raihe (trainer)
2pm Handicap (TB) Dh 84,000 (D) 1,400m
Winner Karaginsky, Tadhg O’Shea, Satish Seemar.
2.30pm Maiden (TB) Dh 60,000 (D) 1,200m
Winner Sadeedd, Ryan Curatolo, Nicholas Bachalard.
3pm Conditions (TB) Dh 100,000 (D) 1,950m
Winner Blue Sovereign, Clement Lecoeuvre, Erwan Charpy.
3.30pm Handicap (TB) Dh 76,000 (D) 1,800m
Winner Tailor’s Row, Royston Ffrench, Salem bin Ghadayer.
4pm Maiden (TB) Dh 60,000 (D) 1,600m
Winner Bladesmith, Tadhg O’Shea, Satish Seemar.
4.30pm Handicap (TB) Dh 68,000 (D) 1,000m
Winner Shanaghai City, Fabrice Veron, Rashed Bouresly.
UAE currency: the story behind the money in your pockets
The years Ramadan fell in May
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Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
No more lice
Defining head lice
Pediculus humanus capitis are tiny wingless insects that feed on blood from the human scalp. The adult head louse is up to 3mm long, has six legs, and is tan to greyish-white in colour. The female lives up to four weeks and, once mature, can lay up to 10 eggs per day. These tiny nits firmly attach to the base of the hair shaft, get incubated by body heat and hatch in eight days or so.
Identifying lice
Lice can be identified by itching or a tickling sensation of something moving within the hair. One can confirm that a person has lice by looking closely through the hair and scalp for nits, nymphs or lice. Head lice are most frequently located behind the ears and near the neckline.
Treating lice at home
Head lice must be treated as soon as they are spotted. Start by checking everyone in the family for them, then follow these steps. Remove and wash all clothing and bedding with hot water. Apply medicine according to the label instructions. If some live lice are still found eight to 12 hours after treatment, but are moving more slowly than before, do not re-treat. Comb dead and remaining live lice out of the hair using a fine-toothed comb.
After the initial treatment, check for, comb and remove nits and lice from hair every two to three days. Soak combs and brushes in hot water for 10 minutes.Vacuum the floor and furniture, particularly where the infested person sat or lay.
Courtesy Dr Vishal Rajmal Mehta, specialist paediatrics, RAK Hospital
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Building boom turning to bust as Turkey's economy slows
Deep in a provincial region of northwestern Turkey, it looks like a mirage - hundreds of luxury houses built in neat rows, their pointed towers somewhere between French chateau and Disney castle.
Meant to provide luxurious accommodations for foreign buyers, the houses are however standing empty in what is anything but a fairytale for their investors.
The ambitious development has been hit by regional turmoil as well as the slump in the Turkish construction industry - a key sector - as the country's economy heads towards what could be a hard landing in an intensifying downturn.
After a long period of solid growth, Turkey's economy contracted 1.1 per cent in the third quarter, and many economists expect it will enter into recession this year.
The country has been hit by high inflation and a currency crisis in August. The lira lost 28 per cent of its value against the dollar in 2018 and markets are still unconvinced by the readiness of the government under President Recep Tayyip Erdogan to tackle underlying economic issues.
The villas close to the town centre of Mudurnu in the Bolu region are intended to resemble European architecture and are part of the Sarot Group's Burj Al Babas project.
But the development of 732 villas and a shopping centre - which began in 2014 - is now in limbo as Sarot Group has sought bankruptcy protection.
It is one of hundreds of Turkish companies that have done so as they seek cover from creditors and to restructure their debts.
The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
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Company%20Profile
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