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.
Following an inadvertent tilt to cyclical value stocks in 2018, we have focused on returning the portfolio to its customary position of balance, where individual stock elements may be the determinant factors in stock performance rather than the macroeconomic environment. While the economic background will always influence stocks, ideally, we look for stocks where the stories of corporate change can transcend the macroeconomic environment.
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.
“One of the things that's important that we do a little bit differently at First Eagle, is we don't define value just in purely statistical terms."
Though the current business cycle—the longest in US history—is showing signs of age, the potential timing of and impetus for its end remain uncertain.
First Eagle Funds
Shareholder Servicing Agent
PO Box 219324
Kansas City, MO 64121-9324