New Yorkers are reflected in the window of the Nasdaq MarketSite in Times Square. Facebook took a 20 per cent hit in one day last last month, the worst ever loss for a single stock in the history of the US stock market. Photo: AFP
New Yorkers are reflected in the window of the Nasdaq MarketSite in Times Square. Facebook took a 20 per cent hit in one day last last month, the worst ever loss for a single stock in the history of the US stock market. Photo: AFP
New Yorkers are reflected in the window of the Nasdaq MarketSite in Times Square. Facebook took a 20 per cent hit in one day last last month, the worst ever loss for a single stock in the history of the US stock market. Photo: AFP
New Yorkers are reflected in the window of the Nasdaq MarketSite in Times Square. Facebook took a 20 per cent hit in one day last last month, the worst ever loss for a single stock in the history of t

Why gold will remain one of the safest ports during the turbulent times ahead


  • English
  • Arabic

Those who heeded my recent warning to sell their Fang stocks (Facebook, Amazon, Apple, Netflix and Google) will still be sitting comfortably.

Meanwhile for those who ignored it – Facebook took a 20 per cent hit in one day, the worst loss for a single stock in the history of the US stock market. This sort of sudden volatility is an ill omen and seldom ends well for the wider market.  

Facebook was not alone with other Nasdaq stocks also coming under heavy selling pressure, like bellwether Intel, Amazon, Tesla, Visteon and Netflix. Chinese tech giant Tencent saw its shares crash $143 billion (Dh535.3bn) in value, more than Facebook.

The bigger macroeconomic picture is one of investment values inflated by a decade of ultra-low interest rates that are now just beginning to move in the opposite direction. What’s been surprising is how long financial markets have held up under this gravitational force, and yet the sense of inevitability about higher interest rates ultimately means lower valuations have not gone away. 

Long periods of low interest rates are well known for distorting investment, supporting companies that would otherwise be dead and producing all sorts of Ponzi schemes and dodgy investment ideas. Too much credit floats all boats.

In the Arabian Gulf, the unravelling of the Abraaj business empire this year is another classic example of over-extension and an inability to meet loan commitments. China is also seeing large conglomerates fail for the same reasons. 

Indeed, Donald Trump’s trade war with China appears the most likely catalyst to bring the whole house of cards crashing down. 

In July the Trump administration announced it would seek a 10 per cent tariff on thousands of Chinese goods worth around $200 billion, ranging from dog food to beauty products, and it has recently been threatening to raise this tariff to 25 per cent. At the simplest level, trade tariffs are inflationary in that they raise the cost of the item taxed, and distort production away from the most efficient producer. 

They are also highly disruptive to established trading patterns and introduce an unwelcome unknown into commercial life as you just don’t know where they will strike next. Where tariffs go wrong is that they invite a tit-for-tat response. True, China imports far less than it exports to the US, and that makes it impossible for its response to tariffs to be as big. But there are other possible responses, most probably a huge devaluation of the Chinese yuan. This devaluation could be used to offset the entire impact of US tariffs. 

In the recent past, devaluations of the yuan have always been negative events for global stock markets.

Given that a yuan devaluation to offset Mr Trump's threatened half-a-trillion dollars of tariffs would have to be proportionately much larger, then the threat to global stock markets must be proportionately much bigger. 

Certainly any major stress in the global economy is likely to be acutely felt in global bourses because their valuations are so stretched that they are vulnerable to anything that indicates a change in recent strong profit performance. 

_________

Read more from Peter Cooper:

Buying gold and dumping stocks is a no-brainer this summer

Why Gulf investors should buy and hold UAE property

Tenancy laws need a review to attract more UAE buy-to-let investors

Will new residency and company ownership rules raise UAE house prices?

__________

Two weeks ago, I am sure a number of readers thought I was mad to warn that Mark Zuckerburg might not be richer than Warren Buffett for much longer. Then he lost $16bn in a day.

To be fair the insider trading reports show he was fully aware of the approaching doom and selling his own shares as fast as he could. Some shareholders are suing Facebook for allowing this to happen

So what are the Chinese up to now knowing, as they do, more about what lies ahead?

Well, in June gold purchased by China through Hong Kong jumped by 40.3 per cent from the previous month to the highest level since March 2017, despite the falling price. China has long been the world’s biggest buyer of gold.

Of course, if you knew a large devaluation of your currency was approaching then shifting money into hard assets like gold, which is priced in dollars, would make a great deal of sense.

So to would the inflationary impact of tariffs. Gold is the classic inflation hedge as a monetary metal.

Strange then that commercial speculators have been running near record short gold positions, driving gold prices lower and lower in recent months. They operate with extreme leverage and this greatly distorts gold prices to the downside.

Then again, as soon as the wind changes and these shorts all have to be covered then there will be a huge surge in the price of gold. Nice for those who bought at low prices in June or now.

Gold analysts have seen this happen many times before and an autumn rally is baked into the cake. That is even without a crisis in global financial markets and a flight to safe havens like precious metals and treasuries.

In the summer of 2015, gold prices rallied 11 per cent after hitting a bottom in July, and from a low in December 2015 the yellow metal moved up 32 per cent. A yuan devaluation is good for gold.

Those market commentators who see a rosy future for stock markets and doom and gloom for gold have got this the wrong way around. Were they also tipping Facebook shares a couple of weeks ago?

In such volatile periods as the one we are heading into, there are few safe places to invest. Keeping cash in multiple major currencies, bonds and precious metals has never made more sense.

But please don’t fall for the canard that cryptocurrencies are all bad except for Bitcoin. It too is a Ponzi scheme with new buyers very welcome so that the original speculators can tip-toe out of the back door before the cinema burns down.

In fact, the only thing Bitcoin will become next is a symbol for everything that went wrong with global finance in the current cycle and credit explosion. The vaults of the world’s central banks are full of gold, not Bitcoin.

Peter Cooper has been writing about finance in the Gulf for more than 20 years. The views and opinions expressed in this article are those of the author

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Why seagrass matters
  • Carbon sink: Seagrass sequesters carbon up to 35X faster than tropical rainforests
  • Marine nursery: Crucial habitat for juvenile fish, crustations, and invertebrates
  • Biodiversity: Support species like sea turtles, dugongs, and seabirds
  • Coastal protection: Reduce erosion and improve water quality
THE CLOWN OF GAZA

Director: Abdulrahman Sabbah 

Starring: Alaa Meqdad

Rating: 4/5

The Beach Bum

Director: Harmony Korine

Stars: Matthew McConaughey, Isla Fisher, Snoop Dogg

Two stars

The specs
  • Engine: 3.9-litre twin-turbo V8
  • Power: 640hp
  • Torque: 760nm
  • On sale: 2026
  • Price: Not announced yet
Best Foreign Language Film nominees

Capernaum (Lebanon)

Cold War (Poland)

Never Look Away (Germany)

Roma (Mexico)

Shoplifters (Japan)

Sustainable Development Goals

1. End poverty in all its forms everywhere

2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture

3. Ensure healthy lives and promote well-being for all at all ages

4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

5. Achieve gender equality and empower all women and girls

6. Ensure availability and sustainable management of water and sanitation for all

7. Ensure access to affordable, reliable, sustainable and modern energy for all

8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

9. Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation

10. Reduce inequality  within and among countries

11. Make cities and human settlements inclusive, safe, resilient and sustainable

12. Ensure sustainable consumption and production patterns

13. Take urgent action to combat climate change and its effects

14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development

15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss

16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

17. Strengthen the means of implementation and revitalise the global partnership for sustainable development

MATCH INFO

Wales 1 (Bale 45 3')

Croatia 1 (Vlasic 09')

UAE currency: the story behind the money in your pockets
The specs: 2018 Renault Koleos

Price, base: From Dh77,900
Engine: 2.5L, in-line four-cylinder
Transmission: Continuously variable transmission
Power: 170hp @ 6,000rpm
Torque: 233Nm @ 4,000rpm
Fuel economy, combined: 8.3L / 100km

Conflict, drought, famine

Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.

Band Aid

Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.

Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.

Ferrari 12Cilindri specs

Engine: naturally aspirated 6.5-liter V12

Power: 819hp

Torque: 678Nm at 7,250rpm

Price: From Dh1,700,000

Available: Now

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Cricket World Cup League 2 Fixtures

Saturday March 5, UAE v Oman, ICC Academy (all matches start at 9.30am)

Sunday March 6, Oman v Namibia, ICC Academy

Tuesday March 8, UAE v Namibia, ICC Academy

Wednesday March 9, UAE v Oman, ICC Academy

Friday March 11, Oman v Namibia, Sharjah Cricket Stadium

Saturday March 12, UAE v Namibia, Sharjah Cricket Stadium

UAE squad

Ahmed Raza (captain), Chirag Suri, Muhammad Waseem, CP Rizwan, Vriitya Aravind, Asif Khan, Basil Hameed, Rohan Mustafa, Kashif Daud, Zahoor Khan, Junaid Siddique, Karthik Meiyappan, Akif Raja, Rahul Bhatia

What is Reform?

Reform is a right-wing, populist party led by Nigel Farage, a former MEP who won a seat in the House of Commons last year at his eighth attempt and a prominent figure in the campaign for the UK to leave the European Union.

It was founded in 2018 and originally called the Brexit Party.

Many of its members previously belonged to UKIP or the mainstream Conservatives.

After Brexit took place, the party focused on the reformation of British democracy.

Former Tory deputy chairman Lee Anderson became its first MP after defecting in March 2024.

The party gained support from Elon Musk, and had hoped the tech billionaire would make a £100m donation. However, Mr Musk changed his mind and called for Mr Farage to step down as leader in a row involving the US tycoon's support for far-right figurehead Tommy Robinson who is in prison for contempt of court.