Precious metals a safeguard for financial crisis: Tyche Grp

Most of the Asian markets are up in the green today. Martin Hennecke, Senior Manager at Tyche Group says fundamentally we still like the Asian markets. In the Chinese market we see the present levels quite attractive. The H-Shares of the Hong Kong led Chinese companies generally are still cheaper than the Mainland market said Hennecke.

Speaking to CNBC-TV18 he said, “We think that United States will further be going into very deep recession or depression and  so we recommend precious metals for financial crisis protection.”

Excerpts from CNBC-TV18's exclusive interview with Martin Hennecke:

Q: Firstly this bounce we are seeing today in Asia is it just a bounce from oversold levels because most of these indices and most of these markets has sold off for the last 6-8 days, or is this really significant, this USD 136/bbl mark cool off we have seen in crude?

A: We do fundamentally like the Asian market particularly at these levels as they have come down a lot since November last year and particularly China. We do like the Renminbi, today we have seen a new high in Renminbi against the dollar and we think it has really got to appreciate much further.

Particularly in the Chinese market we see the present level quite attractive. The H-Shares of the Hong Kong led Chinese companies generally are still cheaper than the Mainland markets but with the 55% drop in the Chinese Mainland market even there we now find reasonable price earnings ratio stocks with still very high growth, so we do see an opportunity in that correction.

Having said that in our view, in the United States the crisis will get much-much worse. Yesterday there was this talk about more emergency loans to the banks but the real issue is where that money is going to come from because the US government basically don’t have any money, they have USD 10 Trillion in the government debt. The entire US economy if we look across all the sectors, they have got about USD 53 Trillion of debt and USD 66 Trillion of future unfunded liabilities. Basically they are close to national bankruptcy, so some where the money has to come from but they don’t have so they have to print it.

We think that United States will further be going into very deep recession or depression and to some extent Europe as well, we stay out of these developed markets and would go into Asia, particular China. We recommend precious metals for financial crisis protection.