Monthly Letter

Elements | October 2022

04/11/2022

We believe in a bright future. We want to create a future where we have a sound sustainable world and a sound financial system. This future is enabled by the unique properties of the elements. The elements from our world, for our world.

Together we invest in the megatrends "monetary inflation" and "the transformation to a green world". These trends are only becoming more and more relevant every day and will be distinctive when looking back on this time period.

We at AuAg strive to create a fellowship and a community for everyone who has joined the journey. Part of this is to develop our website and communication with you constantly. The second part is the creation of innovative investor-friendly investment solutions with a focus on the elements we and our world need in the future.

Our new fund that will be launched later this year fits well into our current fund offering, as it will offer a broader exposure to several metals that are essential for our future, and thus has the working name "AuAg Essential Metals".

Some happy and exciting news is that AuAg Precious Green and AuAg Silver Bullet are now passported to Germany.

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.

Here are a few media links from the past month:

Investment Solutions

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.

AuAg Thoughts

Interest rates continue to rise, and central banks around the world will not stop raising until something breaks down. It will be interesting to see if it is inflation or the system's financial stability that gives way first. Since we believe that inflation is rather due to de-globalization and increased money supply than increased consumption by consumers, the risk is high that the interest rate weapon will not work as hoped. We see it as likely with an interest rate reversal from the central banks (pivot) as well as more quantitative easing (QE). This as the sharply increasing costs for all dollar debts around the world are gradually pulling the system into a new financial crash.
During the month, some of the world's largest and most influential companies released their Q3 reports. The noteworthy thing was that the mega caps: Amazon, Alphabet (Google), Microsoft, and Tesla all fell by 7-9% on the day of the report. Meta (Facebook) was the biggest disappointment, wiping out a quarter of its market value. The only company that managed to live up to expectations was the world's largest company, Apple. Such large price movements in world-leading companies have given the market a new dimension of uncertainty. The gains in previous years in these companies have resulted in their share of various indexes becoming very high, and thus resulting in a concentration risk.
The physical shortage of gold and silver is becoming increasingly noticeable. Current stock levels show that the volumes available to handle normal daily turnover will soon be completely exhausted. The current positioning between the big banks (commercials) and speculators (non-commercials) is also ultra-bullish. A dollar topping out and a market expecting an upcoming pivot from the central banks are also pieces of the puzzle in the bigger price rise that we see ahead.

AuAg Trends

In a publication from McKinsey & Company earlier this year, the headline is: "The raw-materials challenge: How the metals and mining sector will be at the core of enabling the energy transition". The International Monetary Fund (IMF) is also raising the question of the metals for a future "net-zero" scenario.
To meet the future demand, today's production of the following metals will need to increase by at least 25% and even up to 400%: Molybdenum, several Rare Earth metals (REEs), Platinum & Palladium (PGMs), Copper, Lithium, Nickel, Vanadium and Cobalt. The possibility of increasing production for these and many other metals looks different, which is what ultimately determines how significant the effect will be on the respective raw materials' future price.
We need the metals, and mining companies have a central role in the world's transition to a more sustainable future. AuAg is part of the green transition by investing in carefully selected companies that are part of the solution.