Agio Gold Sector Fund Market Update: March 2024

Global Macro Economy

Recent headlines are mixed (hat tip to Zero Hedge):

                                  “Goldman Trader: We Continue to See Institutional Clients Sell Tech Stocks“
                                 “San Francisco Four Seasons Hotel Investors $3mio late as Foreclosure Looms”
                                 “From Goldilocks to Goldishocks as Fed Quietly Raises Inflation Target above 2%”
                                 “Who is Mr. 100? Mysterious Bitcoin Whale Becomes 14th Biggest BTC Holder”
                                 “US Banks See Large Deposit Inflows as Bailout Fund Expires. RRP Liquidity Plunges”
                                 “Markets are Still Waiting for Godot In China’s Money Data”
                                 “Oil Set for Strong Weekly Gains on Demand as Gas Price Surge to Accelerate”

With risk asset markets like stocks, commodities and crypto near record highs the negative observations do not seem to matter - because they don’t – in the short run. What matters are changes in credit conditions as indicated by the shape of the yield and the liquidity preferences of the global banks. They set the table, allow the clients to eat – on all you can basis, then take the food away from a monetary perspective. If you’re still hungry because you didn’t get a seat soon enough – or at all – that’s your problem.

Commodity Complex

Oil – What can you say? It was expected to seasonally strong into March and it is. For players on the long side be it oil, copper, uranium, or base metals in general there have been technical excesses reached in many of them. What this means is for participants to be watchful for impending reversals. They rarely come all at once but fall out in a series, one after the other. The degree of the collective decline will test the market for money creation – credit – some time after mid year.

Gold Sector

As the conventional instruments of credit contract during a global decline, Mother Nature has a way of finding liquidity. Gold’s commodity adjusted price is reversing to increasing, which prompts increases in production. This in turn gets in the money markets increasing liquidity, after the market has been assaulted by a credit contraction. This is only a year into what will likely be a multi-year bull market for the sector.

The Agio Gold Sector fund has been more aggressive in adding to its Gold Equity positions due to some shorter term counter trend signals. What this means in short hand is that we have been “buying the dips” due to the fact the most recent dips have indicated that a reversal to upside. The fund will likely be net positive for NAV and positioned for accelerating gains in to the second half.



⚠ Disclaimer: