Gas up, oil up, inflation up, defence spending up, humanitarian aid sky rocketing, investments down. We get on top of Covid, for now, only to find the new Putin virus impacting on the world. The immediate prognosis is poor and doesn't look like it will improve any time soon. No doubt some folk will still make money out of it all - armaments and munitions manufacturers for sure.
Just a heads up for what probably will happen within the next 2 years or so. The 5yr and 30yr Treasury yields are now inverted or have turned negative, meaning that the yield on the shorter term note is greater of the two. Historically this has resulted in a big drop in the US stock market and a recession down the road, and maybe another housing market crash. The old saying 'When the US sneezes the world catches a cold' could ring true again.
Oh well, I did try to warn my nephew about taking out that new mortgage on such risky terms.
Just my own view, but I can see Gold going to 2600 to 2800 within the next year or so, and who knows where Silver could end up. Market trading in the US is suggesting that, although we may get a last gasp rally, the end seems to be very near for this very long bull market. Sectors that do well at the end of a bull cycle like, Utilities, Precious metals, Consumer Staples, Energy, and Healthcare are all doing well, at the moment. It's getting very defensive, and with Bond yields increasing it's always bad news for growth stocks, and particularly Tech stocks. It's fragile out there. Not an ideal environment in which to be raising interest rates aggressively without crashing the market.
Although the rhetoric from the Fed is getting increasingly hawkish, they haven't really acted. With many of the yield curves turning negative, under normal circumstances interest rates would have been raised several times by now to try to control inflation, and to give themselves some leeway to cut rates in order to stimulate the economy further down the road, should a recession take hold. I think they know that, although they say they can, they really won't be able to control inflation by raising interest rates aggressively. That would be a difficult thing for them to admit to, as the the whole premise that their monetary policy is based on, is of QE expansion, and QT contraction. I guess in the long run all we have really got is days of QE, despite the toolbox they keep mentioning. Those are happy days for bailed out banks, and over stimulated traders.
So, what do we do with our savings? Buy gold and rent a safety deposit box - not from Brinksmat...
I know what you mean.
For what it is worth, and as an idiot, I can only give my view, which is definitely not financial advice.
Due to current high volatility, the situation can change dramatically very quickly, and two experts (there is no such thing), both with very good good track records of analysing the markets over many years, can, and are having very opposing views on how things are going to play out, and therefore the advice they give on where the best place is to invest our savings.
Although things are changing dramatically almost from week to week, at this moment in time things are on the whole looking very defensive, but that can change in a heartbeat. Currently, despite the inflation effect, there seems to be a lot of funds held in cash (the big boys smart money), and has been for quite a while, mainly in US dollars or a dollar fund. Despite what you may hear others say, Cash is a position, it's keeping your powder dry for future opportunities.
Gold is holding up very well despite all the turmoil, and has been used by some as an insurance policy for at least part of their savings, if things do really get bad. As you say you could buy a safety deposit box, and actually take possession, but then you have the worry of becoming a potential target (yes I am paranoid), alternatively most highly regarded companies that supply gold bullion will store it for you for an annual fee. Another way to invest in physical gold is through an ETF within your pension, ISA, or a trading account. The OEIC funds seem to concentrate on gold and silver miners, and the markets for these move differently from the physical metals, and are more unpredictable, although it would be reasonable to assume that if gold does start to rise aggressively, then the miners should take the lead.
As far as other funds are concerned, Oil, Natural Gas, and general commodity ETFs and OEICs continue to boom. Will this last for many months more? I have not got a clue. But I do think we are possibly seeing the start of a multi-year bull market in commodities with multi-week or month long consolidations (bull flags) along the way. Nothing ever goes up in a straight line in a bull market, or down in a bear market, just take a look at the Gold spot monthly chart.
In my view, whatever the individual investor decides to do with his or her savings, diversification is paramount in order to protect oneself from the unknown. It is common sense to not to put your eggs into one basket.
The way I see it, what happens in the future largely depends on what the intentions of the Federal Reserve are. My own view is that they will continue to raise interest rates by relatively small amounts to combat flat / negative yield curves, and to some degree inflation. Although prior to the Fed starting to raise interest rates, high inflation and high yields were beneficial to banks when yield curves were positive - they made tons of money. Coincidentally the Fed only started to raise rates once the yield curves were turning negative, a situation when the banks don't make money.
Once an economic downturn takes a strong hold (late 2022/23?), that will give the Fed a new excuse to announce a new glorious round of unlimited Quantative Easing (QE) - probably something like $171 trillion to be added to the deficit. The UK and European central banks will follow. More money for bailed out bankers, and another big Tech boom along with alternative energy solutions. Will history repeat itself for a third time, or will it be different?
With Bitcoin now down to the 18000 level, it should, in my opinion, find a little support here, and maybe even rally for a while to form another bear flag. However, my own view is that it will eventually go down to somewhere between 10700 and 12900, by maybe around November time. This is the area I see as being where it will probably start to find firm support and consolidate.
When will the bottom be? Well, if Cathy Wood is going to be found to be correct in her prediction of how high Bitcoin will rise to, and if you believe in the crypto story, that the future is ultimately digital currency, maybe the bottom will be when all hope is lost, and you hear some start to ask if Bitcoin, and crypto generally, will actually survive. The complete opposite of when Bitcoin was reaching it's peak, and you started to hear of some, e.g rappers, wanting to receive payment in Bitcoin - that was the time to think that maybe this freight train has gone too far, for now, and that it is time to sell.
The S&P 500 has had a good run over the past few weeks, and could indeed be squeezed higher. Does this rally indicate that the market bottom is in, maybe. Is it just another run of the mill bear market rally/bull trap, I personally suspect so. The Corporate Bond Market can be used as an indicator of what the smart money is doing (HYG on investing.com). Over the past few days it is looking like it is about to reverse (hourly/dailychart) as the S&P 500 continues to rise. It has been a fairly reliable predictor of rallies and reversals in the past, however, as with everything, nothing is ever guaranteed.
Bitcoin and Ethereum have both had good rallies, and have both formed, in my view, classic bear flags, and are looking like they are about to break down, and move lower.
Whatever your view is, be careful out there, protect your capital, and don't catch FOMO.