Europe continues its search for solutions for a future supply model of energy, metals and food. But these are processes that cost both a lot of time and money. It will require greatly increased stimulus and indebtedness to cover the costs. At present, it is impossible to even see the extent of the impact on the financial system.
In the middle of the month, FED raised the interest rate, but only by 0.25%, now having an interest rate range of 0.25%-0.50%. At the same time, they are trying to "talk" down the inflationary pressure by communicating that the interest rate is to be raised by the same amount at each of the remaining six meetings in 2022, which then gives an interest rate range of 1.75% -2.00%. This would mean a sharp increase in borrowing costs while at the same time increasing living costs for all citizens. Companies, in need of loan financing and weak pricing power, are facing a tough and uncertain future. [1]
In crises such as trade wars or wars, the gold price often goes up due to its “safe haven” status as a currency. As we usually communicate, these gains however usually correct down again quite quickly. Gold e.g. temporarily rose by 8% (USD) now in March and then ended at plus 1.5% (USD). The long-term rise in the gold price is instead based on the amount of credit and liabilities created in the system. The costs of the war, sanctions and their consequences will again require stimuli from the world central banks, and in connection with this also increased indebtedness through fiscal policy measures.
During the month, the gold price climbed to a new all-time high in several currencies such as the euro and the yen. [2]
Outlook
After the rises in precious metals in early March, the commercials have increased their short positions on COMEX but above all through the non-transparent OTC (over-the-counter) trading. Historically, this is short-term bearish (negative) for metal prices. At the same time, we are constantly approaching the day when this can no longer continue as it risks bank failures. When banks are no longer allowed to go short in the market for metals, we will see market prices that are substantially higher. [3]
It is clear that more transparency in marketplaces will be required with the March months Nickel debacle on the LME (London Metal Exchange) in mind. The Chinese company Tsingshan Holding Group had built up short positions in nickel and had at most debts to the banks of 15 billion euro on their positions as the price in one week rose by at most 250%! The temporary salvation for the company was that the banks could not afford to take the beating and thus caused the LME to close trading and introduce limited trading. It has been shown that the LME could only see 20% of the positions (and the risk), as the rest had been done via OTC trading. Going short physical commodities that are necessary for the industry is a very dangerous game. So dangerous that it simply should not be allowed. Transparency and a free-market economy are crucial for a sound financial system. [4]
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1M
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3M
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6M
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YTD
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12M
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SI
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AuAg ESG Gold Mining UCITS ETF (ESGO)
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6.45%
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11.76%
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27.61%
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11.76%
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NA
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7.53%
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Solactive AuAg ESG Gold Mining Index
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6.38%
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11.84%
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27.93%
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11.84%
|
13.95%
|
7.80%
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Performance before inception is based on back-tested data. Backtesting is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such a strategy would have been. Back-tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 31/03/2022. Please note that all performance figures show net data.
Composition / Holdings
- In the ordinary rebalance, the new composition will be implemented over a period starting on 25.03.2022 (cob) and ending on 30.03.2022 (cob). The new composition and target weights will be fully reflected in the index open 31.03.2022:
- New constitutes (green and bold)
- Deletions (red and drawn out)
- Constitutes with over 85% participation from all 29 quarterly rebalances since the start of the index (dark)
- Gold Miners ETF, ESG Risk Score – average: 25,31 / highest: 32,28 (Endeavour)
- Universe, ESG Risk Score – average: 38,10 / highest: 65,20 (as of ESGO inception July 2021)
- Index value as of 31.03.2022: 2520,94 368,85 / +152,09% (index start date 27.03.2015, at 1000)
Source of all data: AuAg Funds / Bloomberg / Sustainalytics / Solactive. Data as of 31.03.2022
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