💅 BlackRock: gold is pointless

Precious metal? Good one | ECB takes back control |

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Hi Reader, here's what you need to know for March 12th in 3:03 minutes.

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Today's big stories

  1. BlackRock thinks investors betting on gold are misunderstanding one important thing
  2. There are a handful of listed companies that'll be more and more essential to keeping the world fed – Read Now
  3. The European Central Bank announced steps to help keep eurozone bond yields under control

All That Glitters

All That Glitters

What’s Going On Here?

Gold might look like the ticket to protecting your portfolio, but BlackRock – the world’s biggest investment manager – thinks some of that shine is starting to rub off.

What Does This Mean?

Investors typically think of gold as a hedge: it protects them from the cash-eroding effect of inflation by rising alongside the prices of goods and services, and – given that investors usually buy into the metal in times of turmoil – from stock market drops too.

But BlackRock thinks those truisms are flawed: they might justify holding gold for hundreds of years, sure, but very few investors tend to last that long. Over much shorter time horizons, the metal’s relationship with inflation and stocks isn’t actually all that strong. Instead, BlackRock reckons the best hedge is cold hard cash – especially while inflation is so low (tweet this).

Why Should I Care?

Zooming in: Gold’s still got a few tricks up its sleeve...
At least gold’s relationship with the US dollar is holding up: the metal’s price usually rises when the dollar’s value falls relative to other currencies, and BlackRock doesn’t think that’ll change any time soon. That’s because gold is priced in dollars, so a cheaper dollar – all else equal – makes the commodity look cheaper to non-US buyers. And if that tempts them to buy in, its price might still have room to rise.

The bigger picture: … but an economic recovery isn’t one of them.
Gold might become more valuable over time, but it doesn’t earn investors dividends or interest payments along the way like a stock or bond might. So as the economy recovers, inflation picks up, and interest rates rise, income-focused investors who are finally able to make decent returns elsewhere might start to lose interest in the metal altogether.

You might also like: Is gold an outdated investment?

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2. Analyst Take

How To Profit From A Booming (And Hungry) Population

What’s Going On Here?

The world’s population is forecast to reach around 10 billion by 2050, which means we’re going to need a lot more food – 50% more, according to the United Nations.

But with the availability of crop-bearing land on the decline, that’s a big ask.

Cue precision agriculture: the use of technology to increase the efficiency and productivity of farming techniques.

That involves everything from crop-monitoring drones to resource sensors, and everyone from agricultural equipment makers to tech companies.

In fact, analysts at Morgan Stanley estimate the precision agriculture market could rake in revenue of $17 billion in 2030 – up from $5 billion in 2019.

So that’s today’s Insight: how you can profit from a booming population with rumbling stomachs.

Read or listen to the Insight here

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Gymshark’s secret to a blockbuster year

Gymshark hit a $1.3 billion valuation in 2020 – a big deal for an eight-year-old fitness apparel company operating during a pandemic.

You might be wondering how they did it, and how you can too. It wasn’t all great products: Gymshark tracks changing consumer needs and quickly adapts to meet them.

By using Attest to survey their target demographic, Gymshark learned that 50% planned to spend less on fitness clothing during the pandemic – tricky for a brand built on workout gear.

But the survey results uncovered valuable insights too, which allowed Gymshark to shift focus toward their audience’s new needs – like home workouts and comfortable rest day clothing.

Be ready to adapt as fast as consumer habits are changing: start your own consumer research with Attest.

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Soothe Operator

Soothe Operator

What’s Going On Here?

Here’s something to help investors chill out in these stressful times: the European Central Bank effectively promised on Wednesday to keep eurozone bond yields from rising.

What Does This Mean?

Just like the US, the eurozone’s pumped huge sums of money into its economy to keep things ticking over throughout the pandemic. And now that a recovery’s on the cards, investors have started to worry all that cash will send product prices higher – and that inflation will then force the region’s central bank to prematurely raise interest rates.

But while the ECB acknowledged inflation had picked up, it seemed confident that it was a short-term feature fueled in part by tax hikes and higher energy prices. Over the medium term, it still doesn't think inflation will hit its long-standing target. Now, then, the central bank’s plan is to leave interest rates where they are and speed up its bond-buying instead.

Why Should I Care?

For markets: The ECB is keeping bond yields down.
By accelerating its bond-buying, the ECB will increase demand for eurozone bonds. That should push their prices up and their yields down, which should signal to countries, companies, and investors alike that borrowing money in Europe is still cheap. And that, in turn, should hopefully encourage them to invest in economy-growing activities. The announcement alone worked a treat: Italy’s 10-year government bond yields dropped almost immediately afterward.

The bigger picture: Central banks’ messaging isn’t always straightforward.
For investors, the ECB’s message was clear: rising bond yields are a concern even if inflation isn’t. If only the Federal Reserve’s thinking was as easy to follow: the US central bank confused investors recently when it said it wasn’t anticipating making any changes to its interest rate policy. That’s despite the country’s improving economic growth outlook, which would usually come with at least the hint of a future adjustment…

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💬 Quote of the day

“I had no idea that history was being made. I was just tired of giving up.”

– Rosa Parks (an American activist in the civil rights movement)
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📚 What we're reading

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🌍 Finimize Events

🥊 Themes vs. stocks

Sure, you could invest in a few individual stocks here and there. Or you could look at tying together a diverse range of investments that could profit from one big theme: the green revolution, the rise of AI, the evolution of 5G – you name it. That’s thematic investing, and you can find out how to nail it in our Thematic Investing with VanEck CEO event next Tuesday.

🏦 The Next Decade in Banking: 6pm UK Time, March 11th
💰 The Evolution Of Crypto: 6pm Dubai Time, March 12th
🌍 Thematic Investing with VanEck CEO: 6pm UK Time, March 16th
🕶 Investing in Virtual Reality & 5G: 6pm NYC Time, March 16th
👌 The Three Most Important Metrics In Investing: 6pm UK Time, March 18th
💉 Investing In Healthcare: 6pm UK Time, March 22nd
👩‍💻 The Possibilities of a She-covery: 1pm UK Time, March 25th
🤑 A Guide To Crypto In 2021: 6pm UK Time, March 25th
🎙 Finimize Monthly Town Hall: 1.30pm UK Time, March 26th
😎 Crowdfund Club: 6pm UK Time, March 30th
😡 The Influence of Behavior on Investing: 5pm UK Time, March 31st
♻️ ESG: The Environmental Perspective: 6pm UK Time, March 31st
🚀 The Rise Of The Retail Investor: 9pm Hong Kong Time, April 6th
💵 The Surge In Digital Payments: 6pm UK Time, April 8th

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