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It's My Money with Renee Eagar · Strictly Business

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  You're listening to Strictly Business Podcast with Lindsay Williams.
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  This edition of It's My Money is brought to you by Brenthurst Wealth, your partner
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  for global wealth creation.
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  Welcome to It's My Money.
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  It's My Money is brought to you by Brenthurst Wealth, South Africa's
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  multi-award winning boutique wealth manager.
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  With me today to talk about the US dollar and what we should do with it and the RAND
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  and what we should do with that.
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  It's Rene Igar.
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  Rene...
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  The RAND, as I look at my screen now, as we pre-record this podcast, is 16 to the
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  US dollar.
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  So I think to myself, the RAND's really, really strong, and that's very good for
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  the central bank.
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  It's a sort of a barometer of the health of the country.
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  So the RAND being strong is good.
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  And as a personal investor, I should be bringing my dollars back now, shouldn't I?
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  Hi, Lindsay.
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  Thanks for having me on your podcast.
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  So firstly, no, I don't believe that you should be bringing your dollars back?
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  And we're actually getting a lot of clients asking us the same question.
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  But if you put it in perspective, the RAND is strong at the moment based on a few
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  things.
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  And obviously, in particular, the current commodity cycle with, you know,
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  gold and silver and everything shooting the lights out.
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  And everything is a bit skewed.
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  So although there are some very positive things happening in South Africa, like...
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  ESCOM and, you know, just to kind of mention one big, big thing.
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  But we're not manufacturing anything.
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  We're not, you know, exporting in mass.
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  We actually are not, nothing's changed.
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  We're not making anything here.
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  So a lot of this perceived RAN strength can switch in an instant.
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  So in other words, you know, at the moment, commodities are holding our rand
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  up and everybody's a little bit scared of the dollar.
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  So they're rushing out of the dollar.
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  But, you know, South Africa is a very liquid market.
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  It can change in an instant.
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  So, you know, besides the investment opportunities that you get globally, no,
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  definitely not.
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  Definitely not.
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  I think about 70% of this current strength is the US, is the dollar weakness.
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  And about 30% is in the RAND's favour at this point in time.
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  So what you're saying is that it's out of South Africa's control, the strength of
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  the RAND that is.
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  Number one, you say it's the US dollar weakness, nothing to do with South Africa,
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  nothing to do with South African manufacturing or lack thereof.
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  And the other 30% you talked about was the commodity cycle.
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  And commodity cycles are exactly that, Rene.
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  I know from many years of bitter personal experience.
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  that when you get excited about commodities, that's usually the time that
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  they kick you in the teeth.
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  Hopefully not.
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  Hopefully there's more to come.
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  But commodity cycles end and then you go into a down cycle and that's when the RAND
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  goes weak.
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  So in fact, what you might be saying here is contrary to what I said in my cheeky
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  introduction.
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  And that is you should actually be buying your dollars now or whatever currency it
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  is against the RAND.
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  Be contrarian.
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  Absolutely.
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  And.
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  It goes to the same thing, you know, you buy when there's blood on the streets type
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  of thing.
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  You know what I mean?
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  Everybody, when the RAND goes on its weakening phase,
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  then everybody phones and wants to invest.
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  But when it's strong like this, nobody wants to take money offshore.
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  And this is when the smart investor takes the opportunity.
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  I mean, if you look at just like, okay, gold is one thing, I think it's up 30%.
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  in dollars since the beginning of the year.
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  But silver was up 60% in the first three weeks of the year.
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  And, you know, there was obviously a big correction last week, and now it's only up
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  10%.
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  But it just shows you the differential of how this whole thing can turn.
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  So yeah, you need to be very careful.
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  I mean, if you look at the currency, you know, if you look at it against, let's
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  say,
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  the Australian dollar or the pound.
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  or the euro, for example.
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  The rand is weaker, but it's not as weak as it is against the dollar,
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  which shows you that it's more dollar weakness than anything else.
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  Yes, the rand is strong because we are, you know, commodity driven and there are a
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  few good things happening, but it's definitely,
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  definitely skewed.
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  And, you know, I've got a lot of sort of, I say the same thing again and again to my
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  clients.
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  The JSC is made up,
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  a large percentage of local companies that have got offshore earnings.
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  So why do you not go just to the offshore earnings,
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  where your global spectrum is way bigger, there are way more sectors, there are way
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  more funds,
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  there are way more opportunities.
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  So I don't see how You know, even investing in the JSC, for example,
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  is a thing because it's so concentrated and it makes up such a small percent of
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  the world market.
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  So I say if you're invested offshore, stick to your guns,
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  stick to your strategy and do not make silly mistakes because it's all
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  emotion driven at the moment.
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  So in other words, don't take too much into account when you see short term
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  currency moves.
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  Don't be swayed.
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  by short-term currency moves.
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  Because if you look at the long-term graph of the rand against the US dollar or other
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  currencies, it's plain and simple.
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  For decades, it's been down.
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  I remember when I first came to South Africa, it was the US dollar, no, the
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  pound, actually.
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  It was about, I don't know if it was 180 or something.
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  The pound bought 1.80 rands, or was it the dollar?
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  Anyway, the point is But look at it now.
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  And that will happen again, although we're in a period of strength and it's very
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  welcome.
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  The RAND should, by historical standards, go down again.
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  So what do you do?
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  You don't panic about the US dollar at the moment.
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  Just stick to your long-term goals, Renee.
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  Stay with your long-term goals.
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  Don't be swayed.
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  I think, I mean, you know, the US, you cannot count the US out by any means.
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  And, you know, they're resilient.
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  They have low unemployment rates at the moment.
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  Their GDP growth is about 3% plus.
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  Their inflation is about, you know, less than 3%.
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  So, you know what I mean?
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  It's going to change.
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  The brand might look stronger for longer.
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  But the bottom line is, it's all based on speculation.
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  So, I saw an interesting number the other day that 80% of,
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  20% of the tariff implementation has...
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  actually happens.
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  So in other words, all the threat of tariffs that have actually been put in the
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  media, only 20%
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  have actually been actioned.
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  80% is Trump's tax tactics for negotiating power.
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  So again, we've got this market that's running up and down based on emotion,
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  speculation,
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  And just one person's view, you know, one person speaks and...
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  you know, South Africa gets the cold kind of thing.
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  So it's very, very tricky at the moment.
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  But I do believe that we might, this whole commodity cycle,
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  we might be closer to reflection point than we think.
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  I don't know how much longer it can go on for.
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  Well, we had a warning.
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  We've recently had a warning, haven't we, with the gold price at one stage.
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  And it was in the early hours of Friday morning.
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  I don't know why I was up, but I was.
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  It went to 5,000.
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  six hundred and twenty five dollars an ounce within
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  36 hours it was nine hundred dollars plus less than that i've never seen anything
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  like that but it shows you the
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  vulnerability of a commodity cycle it'll go up again i'm sure but longer term it'll
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  come down to its long-term
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  average as will other things like the platinum group metals like iron or like
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  coal everything else so yes be be of the commodity
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  cycle and stick to your guns stay focused renee that's your message i think you
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  Absolutely, Lindsay.
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  And, you know, from my side at this stage, you know,
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  people can't handle these big ups and downs.
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  So, you know, don't have all your money in gold.
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  Don't have all your money in silver.
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  You know what I mean?
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  Diversify, keep it calm, keep it simple, keep a level head, and it'll all play out.
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  I'm not saying don't have exposure to South African market or commodities.
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  By all means, have, but just all in moderation.
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  And I think that's...
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  That's the clear message.
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  And the clear message is also speak to your financial advisor.
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  Renee, thank you very much for your time.
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  Renee Egar is from Brenthurst Wealth.
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  And that was It's My Money.
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  It's My Money was brought to you by Brenthurst Wealth, an award-winning
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  boutique wealth management company.