Monthly Letter

Elements202112

31/12/2021

AuAg Monthly Letter

When we sum up 2021, we can see how AuAg has grown on all fronts. More employees, new strong partnerships, a new fund, and total assets under management (AUM), which increased from EUR 84 million to EUR 118 million (+ EUR 34,6 million). Exceeding 100 million in assets under management is truly a historic milestone - and we have achieved that thanks to you, our investors, and the positive net inflows we saw in the funds during the year.

AuAg Silver Bullet had an excellent first full year 2020 but now a weaker 2021. This year, AuAg Precious Green had its first full year, which was also a good starting year for our more stable, "multi-asset" fund. AuAg Precious Green appears on more and more platforms, most recently on Strivo.

As in previous years, a new fund, AuAg ESGO ETF, an exchange-traded Gold Mining fund, was "born" in 2021. ESGO is listed on the following stock exchanges: London, Frankfurt, Milan, and most recently in December on the Paris Stock Exchange. Being first with a Swedish-created ETF focused on a global market feels really big. The ETF market is very competitive and a challenging market where our peers are the world’s largest fund managers, such as iShares/BlackRock. Exciting!

Our focus on the advisory market and institutional investors will increase even more in 2022. We will also make a significant investment in our digital value proposition, where we plan to launch a new website at the beginning of the year.

As you can see, we are really looking forward to 2022! With continued growing interest from you, our investors, and a favourable market, we will probably be able to pass additional milestones together this year as well.

Do not forget to keep an eye out in our Research Centre, where you will find all the new articles, videos and podcasts that we have participated in. Of course, what we have published earlier is also available there if you missed it.

The Funds

Click on one of the funds below to get to the respective fund page. There you can find more information, such as: how to invest, the updated fund sheets (under "Documents"), and the live ticker price on the holdings.

Highlights

The Fed’s "tapering,” phasing out of asset purchases, still means that the balance sheet is growing, only slightly slower than before. Beginning in January, the Fed will only increase its holdings of government securities by USD 40 billion per month and credit instruments secured by mortgages by USD 20 billion per month.
The United States solved the debt ceiling problem at the last minute when a one-time increase in the debt limit was voted through by the smallest possible margin. The US loan limit was raised to USD 31.4 trillion from USD 28.9 trillion. The increased level is needed to pay off the USD 7.85 trillion that the increased indebtedness entailed during the Covid crisis.
Inflation in recent months has risen sharply in almost all countries, and high energy prices are hitting Europe particularly hard. Therefore, employees in all industries want to see significant wage increases as compensation for the cost increases, especially as many companies have shown strong results and profits.
Europe needs energy during the transformation into a green world. The European Commission has proposed that nuclear power could be classified as "green" during a transition period. France is probably behind the proposal, while Germany, which is dismantling both coal and nuclear power, is not. We look forward with excitement to how this issue develops. Nuclear power (fission) provides a lot of energy but also has its problems. We would like to see Thorium power plants that cannot meltdown or be used for nuclear weapons. In addition, it is probably the successful development of fusion energy that will finally solve the energy issue.

Outlook

Here are some important factors that will affect the investment environment in the future.

The Fed has now realized that inflation is higher and more persistent than expected. Therefore, there are ongoing new statements about austerity - but will we really see faster downsizing and meaningful interest rate hikes? Regardless, inflation will, in all probability, be higher than future interest rates, which provides an investor environment with a continued negative real interest rate. In an environment of negative real interest rates, gold and precious metals have historically always been strong over time.
Precious metals such as gold and silver are now very cheap in relation to the S&P 500, and at the same time, the metals’ mining companies are historically cheap in relation to the metals themselves. This provides a significant "risk/reward" opportunity to invest for a long-term portfolio or a pure "contrarian" investor.
The positionings on COMEX continue to show that Commercials are stuck with large short positions, which puts them in a vulnerable and challenging situation. Will they buy back and let prices push up, or will they try to find a way to buy back at lower prices?

The Elements

The elements of the month are gold and beryllium, and one of the month’s most exciting events was when NASA’s space telescope "James Webb" took off on December 25 at 07:20 EST on an Ariane 5 rocket from Europe’s spaceport in French Guiana, on the northeast coast of South America.

The Web Telescope will be the premier observatory for the next decade, serving thousands of astronomers worldwide. It will study every phase of the history of our universe, from the first glowing glow after the "Big Bang" to the formation of solar systems that can support life on planets like Earth to the evolution of our solar system.

Several innovative technologies have been developed for Webb. These include a primary mirror with 18 separate segments that unfold and adjust to their shape after the rocket takes off. The mirrors are made of ultralight beryllium and plated with gold to capture faint infrared light. As we say: "It’s the Elements – it is all about their unique properties.”