Trouble is brewing for the global economy with the consequences impossible to predict, RIT Capital Partners Chairman Lord Rothschild warns in his semi-annual address to investors, criticizing central bankers for what he called “the greatest experiment in monetary policy in the history of the world.”
“We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30% of global government debt at negative yields, combined with quantitative easing on a massive scale,” he stresses.
Rothschild has called attention to the fact that despite the policy having resulted in the rapid rise of stock markets, this growth cannot last forever as the real sector remains anemic with weak demand and deflation in many developed countries.
Meanwhile, the geopolitical situation is not getting easier: China’s economic growth has slowed down, the election atmosphere in the US remains fraught and the conflict in the Middle East continues to rage on. Germany, France and the US have been subjected to terrorist attacks. To complicate matters even further the UK voted to leave the EU.
To tackle emerging risks, RIT Capital Partners has adopted a series of measures.
Interestingly enough, Rothschild has signaled that he is shifting from sterling (in anticipation of Brexit) and the US dollar to gold and “other currencies.”
By the end of June RIT Capital Partners increased their gold and precious metal assets to 8%.
Commenting on the matter, PolitRussia.com online media outlet pointed out that Rothschild’s concerns clearly indicate that the global economy is heading to a perfect storm due to the irresponsible monetary policies of Western central banks.
Although US President Barack Obama has repeatedly stated that the financial crisis of 2008 was over due to the Federal Reserve System’s effective monetary policies, this is likely wishful on his part. The media outlet warned that the Fed’s policies resemble nothing so much as a dangerous worldwide experiment which may soon bear its bitter fruit.
Purportedly therefore, Jackob Rothschild has reduced his company’s equities exposure and the US dollar assets seeking shelter in gold and other precious metals.
In April 2016 James Rickards, a lawyer, author, economist and editor of Strategic Intelligence, highlighted that gold has made an amazing comeback this year, adding that investors have always regarded gold as a safe haven.
“Countries are also acquiring gold in advance of a collapse of the international monetary system,” he remarked in his article for The Telegraph.
“The system has collapsed three times in the past century. Each time, major financial powers came together to write new rules,” the economist underscored hinting at the possibility that the next collapse could be right around the corner.