Will sit on the silver rather than buy the dip: Andrew Holland of Avendus Capital

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Andrew Holland: Let me take both, so let’s say it goes on a little longer than expected. Then what will happen at some point is the increase in commodity prices and food prices, this will also have an element of demand destruction, because obviously, you know, if you study, say in the UK, and you have £100 as disposable income, half of which could go towards new energy bills or food prices. Thus, you will have less disposable income, so the true demand for products and services will begin to decline. So this will drive commodity prices down at some point and that’s probably why the recession is first and then commodity prices fall.

So I’m a little less worried about that, longer term, but I think if things were to normalize and I said normalize, if the ceasefire happens, then there will be two things that will occur. Firstly the price of commodities will drop, obviously, then if it’s a ceasefire where either trade starts to take place, the sanctions go away, then obviously we’ll start to see that the supply chain will start to improve again, and so again, prices will fall. But the thing is, you still have to tackle inflation, it’s not going away.

So you will move into the next phase, which is the global interest rate environment and the Fed has already announced 25 basis points. I suspect if you had a ceasefire tomorrow they would do 50, just to get things under control and get things done. So, but I think the market will be happy with that in some ways and from a more optimistic perspective, if you’re in a rush, that’s true. Then there are a few things that I think should be two or three big trends that will happen. Governments will do what, they will look at their reserves of funds and say, you know, we don’t want to fall into this trap at a later date. So if we had dollar-based assets, like the US dollar, and the dollar depreciates less over time, I’m not saying everyone is going to sell their US dollar tomorrow, secondly, businesses, governments and companies are going to say, what is our supply and what are the issues with any supply going forward.

So if you think about it, you would naturally say should I buy semiconductors from Taiwan and given the risk of China’s intentions, so you’re going to start looking, we need to have more in our own country. Law. You see, with the start of German defense spending, renewable energy is going to be the next big thing because of oil prices and gas prices. Therefore, everyone will look where we have a shortfall in our supplies, so that we can start filling up at home. Thus, the capital expenditure of each of the countries towards these areas could be very large and this will lead to the growth of GDP in the future.

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