Market Musings 290326: Heads I win, Tails I don't lose
Podcast: Gold and precious metals: update after recent correction
(click on link in title above to listen)In this podcast, Edmund Shing, Global Chief Investment Officer and Philipp Gijsels, Chief Investment Strategist,
discuss the recent correction in precious metals markets, with a particular focus on gold and its long‑term outlook.
Heads I Win, Tails I Don't Lose...
Given that the market volatility remains high in the current context of the ongoing Iran conflict, I wanted this week to look at a number of investment ideas that I think should work more or less well whether there is near-term military de-escalation in the Gulf or not. Hence heads I win, tails I don't lose.Remember, the key variable ultimately is how quickly the Strait of Hormuz is reopened to maritime traffic, allowing for the export of crude oil, oil produces like diesel, Liquefied Natural Gas (LNG), urea (nitrogen fertiliser), aluminium and helium (necessary for semiconductor chip manufacture) to resume.
While everyone is focused on the loss of supply of crude oil to global markets, I think that the greater pressure is actually on LNG markets globally.
These are the current estimates of the loss of LNG exports from the Gulf as a proportion of total global LNG supply, largely to Asia and Europe.
Nearly 7% of global LNG exports to be lost this year from Gulf
Asian LNG prices at highest since early 2023
Theme 1: US natural gas producers, infrastructure gain from higher exports
Favour North American natural gas producers, as they will be able to export in a much more favourable LNG market over the medium term.
You can see in the chart below how US natural gas producers (represented by the FCG Natural Gas producers ETF in the US) have recently broken out from a multi-year consolidation pattern, exceeding the highs reached briefly in 2022 post outbreak of war in Ukraine.
Favour US natural gas producers
