Societe Generale’s Andrew Scott discusses the volatility in gold and oil prices on “Bloomberg Markets: The Close.” (
Gold Price Volatility Is ‘Ridiculously Low,’ SocGen’s Scott Says
Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More
I think it's ridiculously low. If you look at the very short term macro narrative and make sense we've got a bit of an appeasement with risk. The Fed puts being reasserted. We saw what the ECB did this morning but if you think on a slightly longer time horizons there's an awful lot of risks that remain unresolved and you know every client I meet is looking at aU.S. recession. Just around the corner. Growth expectations really really coming in gold volatilities in the first percentile over kind of two three year time horizons. And to me that that just seems emotionally wrong.
Clearly bearish the dollar is when you own gold and you own oil in these trades. You rewind six months ago and think about the most overwrote and trade on the planet was the S&P. It was the most uncomfortable long. Fast forward to today and that's actually the U.S. dollar. And again it's exactly the same reasons there's just not a credible alternative. So I don't feel like people are in love with the dollar. They just don't know which country to pick against. And actually buying commodities that have been beaten up is a great way to be short dollars but not to select a specific country.
The pickup in gold and the pickup in allocation it follows gold volatility very neatly. But this small selloff gold vault collapsed and that very nice correlations start to break.
So turning to your trade idea and bringing oil?
I think it's a nice way to get a tail hedge on the portfolio.