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Philip Gibbs: Gold will climb higher on Western currency 'crisis'
Jupiter’s star financials manager Philip Gibbs thinks the gold price will continue to climb because of an ‘ongoing crisis’ in the major western currencies. While liking Asia, he also backs Switzerland as the safest of 'safe' havens.
Jupiter’s star financials manager Philip Gibbs thinks the gold price could continue to climb because of an ‘ongoing crisis’ in the major western currencies, despite the asset testing record highs in the last few weeks. While like Asia, he also backs Switzerland as the safest of 'safe' havens.
Speaking at an investment conference in London, Gibbs reiterated his view that emerging market currencies and economies, particularly in Asia, would best withstand a further double dip. He also singled out the pound for being ‘in for a rough ride’ over the next two to three years.
But Citywire A-rated Gibbs does not believe the dollar, yen, or euro look particularly desirable due to the onerous debt levels saddled to all of them and believes the standout currency choice in Europe at least over the mid term, is the Swiss franc.
Swiss franc 'absolute winner'
Gibbs, who runs the Jupiter Absolute Return fund and co-manages the Jupiter Financial Opportunities fund with Guy de Blonay, said: ‘Gold will continue to perform well because of the crisis in major currencies. I would say "no thanks" to all four.’
He describes the Swiss franc as the ultimate safe haven if fears of a double dip become reality.
‘The Swiss franc looks an absolute winner. Switzerland has such low indebtedness but also such a strong economy. It is not only a safe haven but also a safe economy.’
He added: ‘On a short-term point of view I would say the Swiss franc is the best currency bet for a bullish or bearish scenario but sterling looks weak.’
In terms of a potential double dip, Citywire Selection-selected Gibbs admitted to have been previously ‘a bit more worried than he is now’ but he thinks that if western economies do ‘stagger through’ then equities might ultimately do quite well.
Corporate bonds fair value
In terms of other asset classes, he thinks that at present levels corporate bonds look fair value.
‘I think 8% yields [on corporate bonds] when government bond yields are at 2% is very attractive, although it is not the case in our [financials] sector.’ He also describes the high yield bond space as ‘quite interesting.’
But Gibbs thinks that if the world does enter a double dip recession, then investors will steer clear of western government bonds completely, in contrast to previous slowdowns.
‘If the double dip happens I cannot see why anyone would want to be in western government bonds unlike previous double dips when you would have wanted to own them.
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