In this letter we are taking up the ambitious goal of painting a picture of the global economic landscape as we see it, in order to walk you through the investment process that we been fine tuning for this less-than-exciting picture.
As some of you may know, in a previous life I wrote a lot about gold and silver. I took the perspective of someone who was new and curious to the precious metals. I wanted to know more than just how the Fed announcements affected the prices, why demand and supply weren’t enough to predict movements and why history didn’t seem to have taught us any lessons.
I find that oil prices have reverted to the long-run price of gold, rather than the price of gold reverting to that of oil. So, the oil-gold price ratio reverts to its mean via changes in the price of oil.
I am in no way suggesting that Europe will break apart tomorrow. But the fact the ECB has admitted that even its extraordinary policies have failed to the point that it won’t achieve its goals for a decade indicates it’s the beginning of the end.