Last week's market volatility was strongly driven by political uncertainty. Markets can handle negative news – provided there is consistency. Currently, however, the environment is characterized less by clarity than by unpredictability. President Trump's approach – with frequent changes of direction, sometimes within a few hours – has undermined investors' ability to plan ahead. This inconsistency is leading to erratic movements in the major indices and their individual stocks.
At the same time, this environment is creating targeted opportunities. Stocks that had previously performed strongly and no longer offered attractive entry points are again opening up interesting possibilities as a result of price declines. For example, Aya Gold & Silver had been on our watchlist for some time. The recent market weakness allowed us to enter the stock at USD 9 – just a few days later, the stock was trading 22% higher. This confirms our approach of taking advantage of weakness in companies with high conviction.
The strong market reaction to the temporary suspension of planned tariff increases again demonstrates the extent of the uncertainty. Since I entered the capital markets in 1996, I have rarely experienced a comparable upward movement in just one day. The loss of confidence in the stability of US politics has also supported the price of gold – we expect gold mining stocks to continue to rise and to align with the strength of the underlying asset.
Even President Trump's recent comments about possible territory acquisitions – such as Greenland or parts of Canada – can hardly be explained by “national security” alone. In our view, the main issue is access to raw materials such as gold, silver, copper and other critical resources. This is a driver that should support the entire commodities sector in the long term.
The 90-day tariff delay looks like a short-term “postponement of the problem”. Our hope is that during this period the US administration will restore its credibility and reach viable, mutually beneficial agreements with trading partners.
The trade tensions between the US and China remain a key issue. Although we expect this to be resolved at a later stage, the market needs one thing above all: clarity – in the form of a timeline and the certainty that agreements will not be revoked at short notice. Stability and reliability are essential to regain trust and orderly market behavior.
– Fund Management Team, Commodity Capital
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