Oil, water and gold are an unlikely mix, but there's no denying that they are three of the most valuable commodities on the planet. And for savvy investors looking to add some interesting plays to their portfolios, these can offer solid, long-term returns.
Here's a riddle for you. What's black, wet and shiny, and could make you rich? Answer: oil, water and gold, three of the most valuable commodities on the planet.
Oil, water and gold don't mix, but you might want to combine them in your investment portfolio.
Oil
Until recently, the oil price only seemed to be heading one way. A barrel of Brent crude topped US$125 (Dh459.15) and some analysts predicted it could soon beat $150.
But it has gone sharply into reverse thanks to the euro-zone crisis and slowing global growth. Yesterday, it was edging above $93 a barrel. Credit Suisse says it could fall to $50 if the euro zone crumbles.
Oil will struggle to recover recent losses, says Rob Pemberton, the investment director at HFM Columbus, the London-based wealth manager. "Emerging market demand is sliding, while US oil inventories recently hit an all-time high. Geopolitical risk has reduced, as tensions ease over Iran. It is hard to see where the extra demand is coming from."
While shares in big oil have spilled between 5 per cent and 15 per cent, smaller stocks such as Ithaca Energy have dropped up to 60 per cent.
This makes now a great time to buy oil stocks, says Angelos Damaskos, who manages the Junior Oils Trust mutual fund. "Oil shares have been mispriced by weak, risk-averse markets. Patient investors who share our belief that oil prices will continue their long-term trend will be rewarded."
Investors should brush off recent oil price volatility, says Daniel Lacalle, the portfolio manager for the Ecofin Global Oil & Gas Fund. "Oil companies don't base their long-term planning on $125 a barrel, they view $50 to $70 as an acceptable return. Recent falls won't hit their capital expenditure or balance sheets, but they do create M&A opportunities."
Short-term demand may have slipped, but oil will remain the most important source of global energy for at least the next 30 years, Mr Lacalle says.
Higher-risk investors should consider oil exploration company Tullow Oil, says Sheridan Admans, the investment research manager at The Share Centre. "Its drilling operations have had a tremendous success rate and there is the chance of more good news to come."
Mr Admans also tips BP, which is steadily recovering from the Gulf of Mexico spill and has reinstated its dividend. "After the recent pullback in the share price, there is more value for long-term investors."
Water
Water is the world's most precious commodity, the one nobody can live without. With the global population growing, the planet is getting thirstier.
Last year, Willem Buiter, an economist at Citigroup, boldly claimed that water would eventually become "the single most important physical commodity-based asset class, dwarfing oil, copper, agriculture and precious metals". Should you sprinkle some water stocks in your portfolio?
Water is everywhere; in the oceans, ice caps, glaciers and underground, but only about 3 per cent is fit to drink. A growing number of water services companies are working hard to boost supply by extracting water, treating it to make it drinkable, building desalination plants and transporting it to cities.
Investors can choose from several specialist mutual funds investing in water companies such as the PowerShares Global Water Portfolio, which invests in global water companies like United Utilities and Severn Trent, and Ecofin Water & Power Opportunities, the UK-listed investment trust.
Mr Lacalle, from Ecofin, says water has traditionally been seen as a defensive sector, dominated by utilities. "Companies enjoy strong cash flow and pay attractive dividends, which appeals to many investors right now. But we are also seeing increased M&A activity among privatised water treatment and water services companies, which could throw up attractive opportunities."
But Mr Pemberton, of HFM Columbus, is more sceptical. "There will undoubtedly be much greater pressure on the world's water resources, but how do you make money out of that? No company can be seen to be making big profits from water. It isn't politically sustainable."
His favourite mutual fund is the Pictet Water Fund, which is based in Luxembourg. "This is a global fund that invests in water technology and treatment, and performance has been good. It has risen 60 per cent in the past three years."
Gold
Gold is the ultimate safe haven. When investors panic, the dollar weakens and central bankers devalue paper currencies through rampant money printing, gold sparkles. It hit an all-time high of about $1,900 an ounce last August, but was yesterday trading at $1,566.84.
Angelos Damaskos, who advises on the specialist fund Junior Gold, says gold has rebounded sharply in recent weeks, largely thanks to capital flight from beleaguered European banks and worries over growth in the United States and China. "That's good news for gold mining shares, whose balance sheets have never been stronger."
Adventurous investors might buy stocks such as Fresnillo, Goldcorp, Kinross Gold Corporation and Randgold Resources. But be warned: they can be highly volatile. The Fiji-focused miner, Vatukoula Gold Mines, for example, has seen its share price crash by 70 per cent over the past year.
Most private investors prefer to spread risk by investing in a gold exchange-traded fund (ETF) such as the ETFS Physical Gold ETF or iShares Physical Gold exchange-traded commodity.
Gold is a good way of diversifying your portfolio because it behaves differently to equities and other assets, says Mr Pemberton. "But I'm worried that it has changed its nature. What was once a safe haven now looks like a speculative investment."
The proliferation of ETFs has made buying gold much easier, but may also make the price more volatile. "People held onto gold coins for years, but, thanks to ETFs, you can trade gold in a few seconds," says Mr Pemberton. This has transformed it from a hard physical asset into a speculative paper asset."
If the euro-zone crisis worsens, gold may glitter again, especially if the US Federal Reserve launches a third round of quantitative easing to stimulate the economy, forcing down the value of the dollar.
But at some point, it could lose its shine, Mr Pemberton says. "The problem with gold is that it doesn't produce any income, unlike, say, cash or bonds. With interest rates so low, that hasn't been much of a sacrifice. But once interest rates rise and cash pays an inflation-beating return, gold will come under pressure."
When that happens, this safe haven could suddenly look rather dangerous.
The global economy can't run without oil. People can't live without water. They might be tempted by gold, but when there's a recovery, most of us can happily live without it.
pf@thenational.ae
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
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Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
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10 tips for entry-level job seekers
- Have an up-to-date, professional LinkedIn profile. If you don’t have a LinkedIn account, set one up today. Avoid poor-quality profile pictures with distracting backgrounds. Include a professional summary and begin to grow your network.
- Keep track of the job trends in your sector through the news. Apply for job alerts at your dream organisations and the types of jobs you want – LinkedIn uses AI to share similar relevant jobs based on your selections.
- Double check that you’ve highlighted relevant skills on your resume and LinkedIn profile.
- For most entry-level jobs, your resume will first be filtered by an applicant tracking system for keywords. Look closely at the description of the job you are applying for and mirror the language as much as possible (while being honest and accurate about your skills and experience).
- Keep your CV professional and in a simple format – make sure you tailor your cover letter and application to the company and role.
- Go online and look for details on job specifications for your target position. Make a list of skills required and set yourself some learning goals to tick off all the necessary skills one by one.
- Don’t be afraid to reach outside your immediate friends and family to other acquaintances and let them know you are looking for new opportunities.
- Make sure you’ve set your LinkedIn profile to signal that you are “open to opportunities”. Also be sure to use LinkedIn to search for people who are still actively hiring by searching for those that have the headline “I’m hiring” or “We’re hiring” in their profile.
- Prepare for online interviews using mock interview tools. Even before landing interviews, it can be useful to start practising.
- Be professional and patient. Always be professional with whoever you are interacting with throughout your search process, this will be remembered. You need to be patient, dedicated and not give up on your search. Candidates need to make sure they are following up appropriately for roles they have applied.
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Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
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Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
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What is blockchain?
Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.
The main difference between blockchain and other forms of DLT is the way data is stored as ‘blocks’ – new transactions are added to the existing ‘chain’ of past transactions, hence the name ‘blockchain’. It is impossible to delete or modify information on the chain due to the replication of blocks across various locations.
Blockchain is mostly associated with cryptocurrency Bitcoin. Due to the inability to tamper with transactions, advocates say this makes the currency more secure and safer than traditional systems. It is maintained by a network of people referred to as ‘miners’, who receive rewards for solving complex mathematical equations that enable transactions to go through.
However, one of the major problems that has come to light has been the presence of illicit material buried in the Bitcoin blockchain, linking it to the dark web.
Other blockchain platforms can offer things like smart contracts, which are automatically implemented when specific conditions from all interested parties are reached, cutting the time involved and the risk of mistakes. Another use could be storing medical records, as patients can be confident their information cannot be changed. The technology can also be used in supply chains, voting and has the potential to used for storing property records.
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BMW M8 Competition Coupe
Engine 4.4-litre twin-turbo V8
Power 625hp at 6,000rpm
Torque 750Nm from 1,800-5,800rpm
Gearbox Eight-speed paddleshift auto
Acceleration 0-100kph in 3.2 sec
Top speed 305kph
Fuel economy, combined 10.6L / 100km
Price from Dh700,000 (estimate)
On sale Jan/Feb 2020
Why your domicile status is important
Your UK residence status is assessed using the statutory residence test. While your residence status – ie where you live - is assessed every year, your domicile status is assessed over your lifetime.
Your domicile of origin generally comes from your parents and if your parents were not married, then it is decided by your father. Your domicile is generally the country your father considered his permanent home when you were born.
UK residents who have their permanent home ("domicile") outside the UK may not have to pay UK tax on foreign income. For example, they do not pay tax on foreign income or gains if they are less than £2,000 in the tax year and do not transfer that gain to a UK bank account.
A UK-domiciled person, however, is liable for UK tax on their worldwide income and gains when they are resident in the UK.
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Favourite place in UAE: Al Rams pearling village
What one book should everyone read: Any book written before electricity was invented. When a writer willingly worked under candlelight, you know he/she had a real passion for their craft
Your favourite type of pearl: All of them. No pearl looks the same and each carries its own unique characteristics, like humans
Best time to swim in the sea: When there is enough light to see beneath the surface
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March 4-8: First Test, Rawalpindi
March 12-16: Second Test, Karachi
March 21-25: Third Test, Lahore
March 29: First ODI, Rawalpindi
March 31: Second ODI, Rawalpindi
April 2: Third ODI, Rawalpindi
April 5: T20I, Rawalpindi
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Transmission: six-speed and 10-speed
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Torque: 385 and 650Nm
Price: from Dh229,900 to Dh355,000
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SHAITTAN
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Company name/date started: Seez, set up in September 2015 and the app was released in August 2017
Founder/CEO name(s): Tarek Kabrit, co-founder and chief executive, and Andrew Kabrit, co-founder and chief operating officer
Based in: Dubai, with operations also in Kuwait, Saudi Arabia and Lebanon
Sector: Search engine for car buying, selling and leasing
Size: (employees/revenue): 11; undisclosed
Stage of funding: $1.8 million in seed funding; followed by another $1.5m bridge round - in the process of closing Series A
Investors: Wamda Capital, B&Y and Phoenician Funds
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- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
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Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
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The specs
Engine: 2.0-litre 4-cyl turbo
Power: 201hp at 5,200rpm
Torque: 320Nm at 1,750-4,000rpm
Transmission: 6-speed auto
Fuel consumption: 8.7L/100km
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SCORES
Yorkshire Vikings 144-1 in 12.5 overs
(Tom Kohler 72 not out, Harry Broook 42 not out)
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COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
