Metrics Ventures Market Observation: How to Choose Safe-Haven Assets When 'Currency is Weak' Becomes the Norm?

Author: Metrics Ventures

Market Observation Overview for July-August by Metrics Ventures' Secondary Fund:

1/ This was originally the title for July, but due to the significance of Warsh's statements in July, we have extended the monthly analysis period. Unsurprisingly, the title remains unchanged. As of the date this monthly report is issued, Warsh's ineffectiveness has already been priced in by the rapidly steepening spreads in the bond market. The issues surrounding the dollar can no longer be altered or resolved by a single Federal Reserve Chair, and the process will inevitably involve repeated disturbances.

2/ From a market perspective, we see that the U.S. stock and bond markets continue to view credit issues in a fragmented manner: after selectively clearing some leverage, the stock market has maintained a previously blind faith, while the bond and currency markets continue to ruthlessly express distrust. The early bottoming of gold and silver indicates a clear consensus among central banks that the era of "currency weakness" in the West no longer accepts verbal disturbances; the trend is unstoppable. At this moment, we are not concerned about a further collapse of the stock market in the short term; more attention will be focused on how liquidity release represented by FIMA will evolve next.

3/ Looking ahead to Q3-Q4, we remain optimistic about rigidly constrained resources in the global supply chain, such as copper and electricity, as well as gold, which continues to reflect a trend of currency devaluation. Regarding the digital currency market, we believe it will be difficult to see significant excess returns until the excessive liquidity release and the marginal growth of AI are fully priced in.

Market Overview and Commentary on Market Trends:

In terms of market trends, our main viewpoints are:

① Resources like gold are currently prioritized as liquidity-absorbing assets over Bitcoin, and the consolidation over the past few months has been very healthy:

② The bullish trend of RMB assets remains clearly established, and there should be no excessive doubts. Taking the core STAR Market 50 of this round as an example:

③ Not only has the spot price of copper reached a new high first, but the stock indices and currencies of key resource countries are also nearing a critical point of directional choice:

Considering the current trends in foreign exchange and the bond market, we tend to believe that stocks of major resources, including gold and silver, have reached the end of this round of consolidation. Even considering that some assets correspond to valuations that are equivalent to generously gifted bullish options on metal prices after a rebound, in the current context where the marginal growth of AI is inevitably slowing, some non-ferrous assets in the RMB market are worth noting.

From a macro perspective, we pay particular attention to the predictive significance of this round of U.S.-Japan joint currency intervention and the interaction between Warsh and Bessent for future Federal Reserve actions. In fact, it is unreasonable for a Federal Reserve Chair attempting to become a Jiajing Emperor at the end of an empire. The Treasury's direct involvement in using tools like FIMA to overstep the FOMC to serve as the supreme leader appears to be an honest action taken by the body. As a friend said, reducing communication, fabricating data, and glossing over issues allows the Ming Dynasty to continue its revelry. Based on this, if one were to choose a strategy with a significantly positive EV over a three-year horizon, going long on non-ferrous resources would also be a good choice.

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