It is sheer coincidence that the tragic sinking of the Titanic a century ago marked the point at which Britain’s economy was officially overtaken by America’s. A similar power shift is underway in modernity, albeit from West to East. It is likewise poignant to take stock and look back over the last 5 years. In 2007 I published my book forecasting of the credit crisis, called The Final Crash: Addictive Debt and the Deformation of the World Economy. As well as calling the year of the crash, it also examined its cause, effect and consequences well into the future. We are witnessing an unprecedented confluence of 5 key megatrends namely: population growth, resource scarcity, environmental degradation, currency devaluation and a rebalance of power referred to earlier. Appreciating commodity prices are escalating the speed and scale of resource extraction and subsequent destruction of the environment. This is the critical clash of theory versus reality; where infinite money creation meets finite supplies of natural resources.
Leading by Example
To lead by example, Oppenheim & Co has launched the Luxembourg-based Gaia Opportunities Fund investing in liquid assets that benefit from these megatrends. Given the clear manipulation of equity, bond and precious metal markets one may wonder if securities are the right vehicle to effect reformation in the real world. Although markets are being artificially moulded it does not mean they have mutated for good. They will undergo a transformation of ‘swords to ploughshares’ but for now are swelled by printed money and the assumption that asset prices are officially guaranteed from falling by central banks. In the meantime we can utilise market mechanisms to concentrate capital toward the right areas which for once will benefit the real world rather than the banking sector.
The Gaia Opportunities fund is designed not just to be ethical but to offset risks that are endemic in this post-bubble economy. It invests in areas that are beneficial to mankind today and more importantly for generations to follow. This need not be sentimental or socialist; it is using a key component of capitalism whereby price changes spawn solutions that can never be achieved politically. In my book I stated that rising oil prices would be like a flash flood in a desert; areas that once seemed barren and hopeless are given life. The same is true of alternative energy, agriculture and forestry. Rising oil prices will change our behaviour and also make alternative energy cost-effective, attracting capital in the process. While ‘Peak Oil’ is hotly debated it appears unlikely that we will run out any time soon; it will just be far more expensive to extract, process and distribute fossil fuels.
1930’s Parallels: Protectionism and Polarity
Sadly, the parallels with the 1930’s are becoming more disturbing by the day and leave one convinced that our leaders have little notion of historical precedent. Like the Book of Revelations, key events are unfolding that appear pre-determined and obvious to those with understanding. Nationalism has most clearly been shown with the 2010 wheat shortages in Russia as exports were banned as the fires blazed. This is a clear dress-rehearsal of things to come when national interests are put before a failed ideology of globalisation. A period of polarisation and currency wars is pending, fomenting energy and resource nationalism, with heightened protectionism and political tension. Just as markets correlate closely during a crash, seemingly unrelated factors are being drawn into this vicious vortex including population growth, pollution and detrimental weather patterns. Analysts and economists struggle to encompass such big-picture events outside of the latest earnings figures or neutered inflation numbers. This is why so many fail to comprehend the kaleidoscopic changes underway.
Taking advantage of Megatrends
The Gaia Opportunities Fund will seek to provide long-term, sustainable growth of capital deriving from these themes whilst limiting downside volatility. The Fund will focus on green investments, precious metals and commodities, especially those related to food production and fertilisers, hence the title ‘Green, Gold and Agriculture’.
Managing Director Oppenheim & Co Limited (Guernsey)
Toby Birch (email@example.com) is the Managing Director of Oppenheim & Co. Limited in Guernsey, the boutique wealth manager for institutions and family offices. He is a Chartered Fellow of the Chartered Institute for Securities and Investment and also holds the Islamic Finance Qualification. He has 20 years’ investment management experience and is the lead manager of the new Gaia Opportunities fund, a multi-asset, long-only fund with no leverage. A quarter of the performance fee will be donated to sustainable projects and Foundations aligned to the Firm’s philosophy. The minimum investment is €125,000 or currency equivalent and is only suitable for Well-Informed or Professional Investors.