Quarter 1 and 2 of 2020 have proven to be massive turning points in the world of finance, commerce, and retail. Traditional currencies such as the dollar have taken a battering, and their inherent value is being put into question. Where do things go from here?
WHAT EXACTLY HAPPENED?
In answering that question, we need to look at it in a little more detail.
The Covid-19 Pandemic has given the worlds economies an irreversible push to digitalisation of many different sectors, and in turn has caused various governments to either introduce schemes to incentivise business and consumers, or provide essential training for “old school businesses.”
However, as this becomes more mainstream news, more and more investors are reading between the lines and noticing the decline of the inherent value of the Dollar, with major banks including Goldman Sachs predicting the dollar to lose is reserve status by 2022.
This all points to a major shift in how wealth in its entirety is measured, given that Gold is a limited production asset.
SO, WHY IS THIS HAPPENING?
There are a multitude of reasons that analysts and alike can attribute to the gradual decline in the value of the dollar, but one of the main reasons is the Covid-19 pandemic pushing the US “current account” into its biggest deficit of 17.9% in peacetime. This multiplied by a lack of saving by the US federal reserve is a combination for a potential disaster.
This is where Gold comes into play. Since the 1960s, many congressmen have argued that the US economies reserve currency should be Gold. Gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows. There are real concerns around the longevity of the U.S. dollar as a reserve currency.
Secured assets undepinning investments - a way forward for investors?
WHAT DOES THIS MEAN FOR INVESTORS?
There are various repercussions for investors, which may have investments in countries where the dollar is the underpinned currency such as developing African economies. There will need to be a major rebalancing of how wealth is attributed and valued, which is why investors are looking to something new for the capital.
We are seeing a gradual shift to alternative investments, ones that do not rely on political, high-end decision making from unaccountable individuals.
Perhaps better is where the investment has a fixed asset that underpins it. This of course could be the case with property, art, prestige cars or other assets such as yachts. Berkeley House Capital offer this type of product through their secured asset product ‘The Yacht Bond’.
As always, entering any form of ‘investment’ requires due diligence.
It seems this again points to the benefits of utilising the services of a boutique regulated alternative asset managers who specialise in these types of opportunities, effectively providing some degree of increased assurance that investments, whilst not removing all the risk, are managed correctly. Berkeley House Capital is one such boutique Company.
If you are a Wealth Manager, IFA, Family Office or Finance Professional and would like to know more about our investment products and/or services, send us and email to arrange a convenient time to discuss.
If you would like to discuss any aspect of this note please feel free to email: charlotte@berkeleyhousecapital.co.uk and one of the team will be very happy to arrange call with you.
www.berkeleyhousecapital.co.uk
12 Hay Hill, Mayfair,
London. W1J 8NR
United Kingdom
+44 (0) 207 863 7507
1. Berkeley House Capital is an Appointed Representative of Alternative Asset Management Ltd which is authorised and regulated by the Financial Conduct Authority (No. 450404). Not all of our activities are regulated by the FCA, further details are available from us on request.
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