“Don’t Mention the War” Fawlty Towers.The entire month was spent switching from believing the war in Iran is ending to it will be a major offensive back to it could end any time. This impacted commodities, equities and the bond market. In our reflection section we analyzed the reasons Gold failed in its role as hedge in troubled times. We have been told for decades that gold is a hedge when there is inflation. The one aspect that was not considered is that gold does poorly when interest rates are high. High interests raise the cost of holding gold or at least make the zero-interest earned on gold seem much less attractive than the alternative GIC or T-bill. The other factor is one country alone sold 60 tonnes of gold to shore up its liquid reserves. This one sale would be approximately $4.8B USD. The third reason for the decline is once it stopped going up momentum investors also sold. Over the past year gold has served its role as a hedge; it just failed miserably in March 2026
We still see value in dividend paying stocks. If you know when and how the war will end you can design a portfolio that will surge depending on the result. With no certainty it is difficult to say it is time to sell, or this is a buying opportunity. I have almost lost count the number of times we have seen down days followed by spikes upward and vice versa. If investors in the US market got their statements based on the March 30th levels, they would have asked why didn’t you sell. The S&P 500 rose 3% on March 31st, so why didn’t we take advantage of the decline and catch the upswing? We did not make significant changes to the portfolios in March but will reassess once we have greater clarity.
