2017 Year in Review

After the turmoil of 2016, 2017 will likely be remembered as the “low vol”(atility) year where financial markets broke new highs on a regular basis as ‘everything was awesome’ and even if it’s not really, the central banks have ‘got this’ so no need to worry….

Yesterday we presented a timely reminder of reality and if you missed it, please read it before 2018.

First, let’s look at 2017 by numbers:

The US:

  • Gold up 10%
  • Silver up 1%
  • S&P500 up 19.9%
  • Dow up 24.6%.

From Lance Roberts:

“Dow has posted three all-time records just this year:

  • 70 new highs,
  • A 5000-point advance in a single year, and;
  • 12-straight months of gains.”

It’s actually impressive that gold, the uncorrelated safe haven, still held up 10% against that low vol, ‘everything’s awesome’ environment.  Sure Rocket Man scared markets a bit and boosted gold, but it is likely investors are just having an each way bet given the lack of fundamentals to the sharemarket rally and the reality that it will end badly at some stage and without warning. 

Silver held off entering negative territory (again, good for an uncorrelated asset when financials hitting all time highs) but that 79:1 gold silver ratio tells the whole story for silver.  Silver historically has lower lows which slingshot into higher highs when the market turns.  Only 5 times in the last century has this ratio exceeded 79:1 and 3 of those occasions by less than 1.  History shows this is it’s ‘resistance line’ and that might well make silver investors very excited….

At home:

  • Gold up 3%
  • Silver down 5%
  • All Ords up 7.6%

Our market continued to reflect a nation trying to deal with a post mining boom reality, near zero wage growth and largely hitched to a property market looking decidedly shaky.  The falling USD saw the AUD up and hence taking the shine off our metal returns.

The year will also be likely remembered for the beginning of the mainstreamilisation of crypto currencies.

In AUD terms, year to date:

  • Bitcoin up 1446%
  • Ethereum up 1985%
  • Litecoin up 302%
  • Ripple up 16,054% (no that is not a typo…). 

Those, on any account, are spectacular returns and we have a lot of very happy customers.

Such returns are alluring and there was a decent amount of capitulation, particularly amongst silver investors as they became disillusioned with the metal ‘bouncing along the bottom’.  Such capitulation is not unusual as a market bottoms and we shared recently some encouraging signs that a bottom may well be in for the metal.

All we can do is remind you that for most, precious metals are an investment in an uncorrelated hard monetary asset.  When financial assets are bouncing along the top, it should be neither a surprise nor disheartening to see metals bouncing along the bottom if you have a balances portfolio.  Unless, for the first time in history, we don’t get a correction to a hot financial market…

Let’s finish with our trademarked tag line…

“Balance your wealth in an unbalanced world”

From all of us here at Ainslie, let us also take this opportunity to thank you for your custom this year and wish you and yours a wonderful Christmas, holiday break, happy New Year and prosperous 2018.