Weekly Market Update- Week Ending 01/12/2023

It was a positive week for investment markets. During November, investors have become progressively more reassured that we have reached the peak in interest rates, leading to an increase in risk appetite and strong gains for global equity markets. Inflation has continued to fall faster in many cases than expected and this instils a feeling that central banks are winning their fight.

The price of gold rose to a six-month high of around $2,045 an ounce this week. The rise has been attributed to a number of factors, including a weakening dollar, falling interest rate expectations globally, and fears of a potential escalation in the war between Israel and Hamas.

Unlike many other investments, gold doesn’t yield anything. For this reason, falling interest rates (or even the expectation of them falling) are seen as a positive for the price of the yellow metal, as the opportunity cost attached to holding the asset is lower. During four periods in the last five years, the price has passed the psychological $2,000 mark, only to subsequently fall back. Investors will be keen to see if a new trend higher will be confirmed this time around.

On Tuesday, we got the sad news of the passing of the legendary US investor, Charlie Munger. The longtime partner of Warren Buffett died just a month away from his 100th birthday. As the vice chairman of Berkshire Hathaway, he played a crucial role in the company’s success, partnering with Buffett for over 60 years.

Munger will be remembered for his sharp wit, financial acumen, and straightforward approach to life. He had a great knack for combining financial wisdom with a dose of humour. A couple of my favourite quotes include, “The first rule of a happy life is low expectations,” and “The big money is not in the buying and selling but in the waiting”.

John Naylor, Chartered FCSI – Head of Investment Committee