Gold: All that glisters
The noisiest story of the year so far has undoubtedly been AI, with investors hurtling towards a future that may involve untold prosperity, or the destruction of the human race, depending on who you’re chatting to. But it certainly needs eye-watering levels of investment and valuations to challenge the hardiest of sphincters.
Quietly, at completely the opposite end of the shiny and new spectrum, the story that has made the most money this year has been trusty old gold.
Nvidia’s up 40% this year, Alphabet’s up 30%, but the gold price has risen by 52% and the S&P global gold mining index has absolutely killed every other sector in the US with a jump of 126%. Physical gold has topped $4,000 a troy ounce for the first time as central banks have been piling into bullion to diversify away from the dollar, and investors who are concerned about inflation and rising levels of debt have been flocking back to this most traditional store of value.
This latter-day Klondike moment has brought back memories of gold’s outperformance after the financial crisis and the subsequent collapse after gold stocks peaked in 2011. For those with even longer memories it has put a decent price tag on dear old Gordon Brown’s decision to offload almost half of the UK’s gold reserves when he was chancellor of the exchequer. Between 1999 and 2002 he sold 395t at the princely average price of $274.92 per ounce, a truly epic example of bottom picking that has cost the taxpayer a notional $47bn.
Tata Group: Tata my profits
It has been a rocky road for India’s oldest and largest conglomerate since the death of its longtime leader, Ratan Tata, a year ago.
Tata Trusts is the philanthropic body that controls 66% of Tata Sons, the holding company of the myriad listed companies that make up the Tata Group. Reports of power struggles between the leadership of the two entities have reached such a crescendo that the government has got involved to knock some heads together and get things into a more functional state.
In the past few months alone the Tata Group has faced numerous crises, starting in June with the crash of a Tata-owned Air India Dreamliner in Ahmedabad, killing more than 260 people.
Tata bought Air India from the state almost four years ago, after years of mismanagement that had caused many to view the airline as a national embarrassment. It invested heavily in IT systems and recruitment and ordered 470 new planes to turn the airline around.
The preliminary report into the tragedy in Ahmedabad has seemed to point towards the actions of the pilots, but it is a long way from providing any real answers to the cause of the disaster.
Then in August a ferocious cyber attack shut down Tata’s UK-based automaker Jaguar Land Rover (JLR). This caused questions to be asked about the role of Tata Consultancy Services (TCS), India’s biggest IT services company, which managed JLR’s technology as well as that of Marks & Spencer and the Co-op, which both suffered cyberattacks earlier in the year.
TCS is also suffering from weak market conditions and the rise of AI.
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