Crisis Investing: The Return of 14 Assets in Times of Distress
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Crisis Investing: How 14 Different Asset Classes Performed in Times of Distress

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Crisis Investing: How 14 Different Asset Classes Performed in Times of Distress

Crisis Investing: How 14 Different Asset Classes Performed in Times of Distress

Note: to see the bigger version of this infographic, click here.

History does not repeat itself, but it often rhymes. This could not be truer for crisis investing.

Between China’s stock market and the debt troubles of Greece and Puerto Rico, it is clear that we could be entering a time of potential financial crisis.

Every situation is unique, but generally the types of asset classes that protect investors in times of crisis are not necessarily the same as those during a bull run. Therefore, it’s worth taking a look at five previous periods of distress to see the returns of conventional and alternative asset classes.

1994: Surprise Rate Hike

In 1994, the economy was recovering from a significant recession and treasury yields started to rise from the lows of the previous year. The Fed and Alan Greenspan surprised markets by tightening monetary policy with the first rate hike in five years.

Returns: Large cap (-7.75%) and small cap stocks (-9.84%) got crushed. Managed futures (4.07%), commodities (3.15%), and gold (0.28%) did okay.

1998: LTCM Goes Under

Long-Term Capital Management started off with promise as it brought in annualized returns (after fees) of 21%, 43%, and 41% in its first three years with high leverage and normal macroeconomic conditions. LTCM directors Myron Scholes and Robert Merton would share the Nobel Prize in Economic Sciences in 1997. Promptly after, the hedge fund would lose $4.6 billion in four months in the aftermath of the Asian financial crisis, requiring a bailout from the Federal Reserve and various banks.

Returns: Stocks and REITs get crushed. Bonds (0.78%) and managed futures (5.61%) survive.

2000: Dotcom Bubble Bursts

Fledgling internet companies with no profits and limited revenues went public, reaping huge gains on IPOs. Prices went up and up, but eventually came crashing down in March of 2000 with the Nasdaq losing up to 70% of its peak value.

Returns: Large cap stocks (-40.33%), small cap stocks (-35.29%), private equity (-25.40%), and international stocks (-46.53%) get hammered. REITs (49.48%), bonds (19.65%), global macro (44.69%) all did well. Gold (0.47%) remained virtually unchanged.

2001: 9/11 Tragedy

Coordinated attacks on the United States shock markets, and the NYSE and Nasdaq remain closed until September 17th. Upon re-opening, the Dow drops 7%.

Returns: Almost all asset classes struggle, but gold (3.73%) got the highest return.

2008: Global Financial Crisis

Lehman Brothers goes under and the Greenspan real estate bubble crashes and burns. Excessive speculation, lenient mortgage lending, and the proliferation of derivative financial products such as credit default swaps contribute to the problem. The Fed has $29 trillion in bailout commitments while 8.8 million jobs and $19.2 trillion in household wealth are lost.

Returns: Again, most assets get crushed. It is no surprise that worst off are REITs (-63.77%). Gold continues to shine, gaining double digits (16.33%).

Original graphic by: Attain Capital

The Silver Series

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Mining

Visualizing the New Era of Gold Mining

This infographic highlights the need for new gold mining projects and shows the next generation of America’s gold deposits.

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The following content is sponsored by NOVAGOLD
gold mining

Visualizing the New Era of Gold Mining

Between 2011 and 2020, the number of major gold discoveries fell by 70% relative to 2001-2010. 

The lack of discoveries, alongside stagnating gold production, has cast a shadow of doubt on the future of gold supply. 

This infographic sponsored by Novagold highlights the need for new gold mining projects with a focus on the company’s Donlin Gold project in Alaska.

The Current State of Gold Production

Between 2010 and 2021, gold production increased steadily until 2018, before leveling and falling.

YearGold Production, tonnesYoY % Change
20102,560-
20112,6603.9%
20122,6901.1%
20132,8004.1%
20142,9906.8%
20153,1003.7%
20163,1100.3%
20173,2303.9%
20183,3002.2%
20193,3000.0%
20203,030-8.2%
20213,000-1.0%

Along with a small decrease in gold production from 2020 levels, there were no new major gold discoveries in 2021. Meanwhile, annual demand for the yellow metal increased by 10%, up from 3,651 tonnes to 4,020 tonnes

The fall in production and long-term lack of gold discoveries point towards a possible imbalance in gold supply and demand. This calls for the introduction of new gold development projects that can fill the supply-demand gap in the future. 

Sustaining Supply: Gold For the Future

Jurisdictions play an important role when looking for projects that could sustain gold production well into the future.

From political stability to trustworthy legal systems, the characteristics of a jurisdiction can make or break mining projects. Amid ongoing market uncertainty, political turmoil, and resource nationalism, projects in safe jurisdictions offer a better investment opportunity for investors and mining companies. 

As of 2021, seven of the top 10 mining jurisdictions for investment were located in North America, according to the Fraser Institute. Here’s a look at the top five gold-focused development projects in the region, based on measured and indicated (M&I) gold resources: 

ProjectM&I Gold Resource, million ounces*Grade (grams/tonne)Location
KSM88.4Moz0.51g/tBritish Columbia 🇨🇦
Donlin Gold**39.0Moz2.24g/tAlaska 🇺🇸
Livengood13.6Moz0.60g/tAlaska 🇺🇸
Côté Gold13.6Moz0.96g/tOntario 🇨🇦
Blackwater11.7Moz0.61g/tBritish Columbia 🇨🇦

*Inclusive of mineral reserves. **See cautionary statement regarding Donlin Gold’s mineral reserves and resources.

Located in Alaska, one of the world’s safest mining jurisdictions, Novagold’s Donlin Gold project has the highest average grade of gold among these major projects. For every tonne of ore, Donlin Gold offers 2.24 grams of gold, which is more than twice the global average grade of 1.03g/t. 

Additionally, Donlin Gold is the second-largest gold-focused development project in the Americas, with over 39 million ounces of gold in M&I resources inclusive of reserves. 

Novagold is focused on the Donlin Gold project in equal partnership with Barrick Gold. Click here to learn more now

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