Gold Breaking – Out

At Sequoia, we agree that Gold is showing some positive signs for the future as it recently broke out of a prevailing long-term sideways channel that was existent since 2015. Whilst not discounting the possibility of some consolidation leading into 2020, this is an important long-term bullish signal in our opinion and reflects growing concerns of a global recession. For this reason, we believe it can make a lot of sense to offer an investment which enables a cost-efficient allocation to Gold at this stage in the economic cycle.
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S&P500 Still Bullish

Notwithstanding the comments above in relation to Gold, the S&P500 remains surprisingly strong as is close to all-time highs. This is even after the extreme level of bearishness across most market commentators and economic forecasts. This is where Sequoia takes a different view compared to many equity houses as we remain bullish on a longer term basis on US Equities. The reason for this is that international capital continues to move in the direction of USD denominated assets including US equities.

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Technical Bullish trend remains in tact

From a pure technical perspective, the S&P500 also remains positive across various key technical levels on a longer term basis (monthly, quarterly and yearly basis). So whilst we cannot rule out the possibility of further choppy price action as we head towards 2020, this appears to be occurring within the confines of a clear bullish trend on a monthly basis. We believe this is important to understand as it does help to put a lot of the bearish economic forecasts into a more objective context as far as US equity prices are concerned. We also remain a long distance away from breaching critical support levels and until this occurs we continue to remain bullish on the S&P500 over the next few years.

Given the apparent strength of the S&P500, we do not think it is beneficial for clients to then sacrifice part of their US equity allocation in order to gain exposure to a safe haven asset such as gold. If they can actually invest into a product which delivers the best of both, this can provide a much more efficient hedge via their gold allocation whilst enabling them to still benefit from the potential upside on the S&P500. This is why we are offering Launch Series 51.

Offer Close Date: 23 October 2019

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