The use of gold as a potential hedge against extreme market outcomes has long been a key tenet of First Eagle’s investment philosophy.
At First Eagle, we’ve long held that the United States does not have a monopoly on good companies. While we think most market participants would agree with this sentiment, asset allocation data suggest US investors in general continue to be significantly underexposed to international equities relative to their share of the global opportunity set.
The Global Value Team shares their current investment thinking and provides a mid-year update on the Global, Overseas and U.S. Value Funds.
While investors in gold may find it gratifying to see the price of bullion rise after moving sideways for six years, we make no prediction about whether the recent uptrend will continue. Around the globe, there are many unresolved issues—including financial, monetary and political developments in Europe—that could create significant volatility in financial markets and in the short-term price of gold.
Over the course of the quarter, macroeconomic developments exerted a powerful pull on the markets. In April, better-thanexpected economic data and accommodative central banks allayed concerns about global growth and propelled a rebound in risk assets. In May escalation of the US/China trade dispute darkened the outlook for global growth, sending stock markets lower and prompting rallies in perceived “safe haven” assets such as Treasuries and the Japanese yen. In June, more explicitly dovish comments from the Federal Reserve assuaged investors’ concerns and sent markets higher.