Month in Review
The value of the HHV portfolio fell 2% during the month, underperforming the MSCI World Index which rose by 4.5%. The election of Donald Trump as President saw a wave of optimism with the three US Indexes (Dow, NASDAQ and S&P) all hitting all-time highs during the month. In addition the US$ rose against other currencies as world bond markets fell.
The agenda of the Trump Presidency seems to be to massively stimulate the US economy through tax cuts, infrastructure spending, borrowing and, possibly, trade barriers, and thereby create jobs growth. However, there are inconsistencies in the strategy which will emerge with increasing force as currency and interest rate relativities change. In particular, a strongly appreciating US dollar is not necessarily a good thing for US or world growth.
Increasing expectations of interest rate rises and reflation caused gold to fall 8.5% in US$. Our gold holdings also fell with St Barbara (- 16%), Beadell Resources (-26%), Blackham Resources (-28%) and Doray Minerals (-5%), weighing on performance.
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