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Hi John, here's what you need to know for July 28th in 3:12 minutes.

☕️ Finimized over a drip coffee at Fahrenheit Coffee in Toronto, Canada (28°C/82°F ⛅)

Today's big stories

  1. Gold’s price hit a new record high
  2. ...but there are a whole host of reasons you probably shouldn’t rush to invest – Read Now
  3. SAP, Europe’s biggest tech company, announced plans to sell part of its business for $8 billion
1/3

All Hail The King

All Hail The King

What’s Going On Here?

Investors – apparently worried by the ongoing pandemic and worsening US-China relations – turned to their weapon of choice in times of uncertainty on Monday, pushing the price of gold to its highest level since 2011.

What Does This Mean?

Coronavirus seems to be getting worse in the US, which partly explains why the country’s government is aiming to announce another $1 trillion of support for workers and the economy. One possible result of all this spending, combined with unlimited central bank support, is rapidly rising inflation: more money sloshing around in the economy could see prices for goods and services rise quickly when demand returns – in turn eroding both the value of cash and the regular income paid by bonds. Investors reckon that’s an environment that’ll suit gold, and they’ve been buying up the shiny metal. It’s now worth over $1,900 an ounce, and some analysts think it’ll soon cross the $2,000 mark.

Why Should I Care?

For markets: Pedal to the metal.
Gold’s price rise might’ve been supercharged by the recently weakened US dollar: the commodity – whose price is quoted in dollars – might be more attractive to non-US buyers when the currency is cheaper. That might’ve helped silver’s recent price rise too, though it does tend to rise more than gold in an economic recovery. Investors, then, might just be hedging their bets, backing gold and silver so they profit no matter what happens.

For you personally: All that glitters ain’t gold.
When currencies like the dollar became widely used, gold’s value partly came from its usefulness as an emergency currency. But buying gold nowadays is arguably not much more than speculation: investors generally buy it in the hope its value will rise if stocks fall (they’re “negatively correlated”). Of course, that didn’t exactly pan out during March’s selloff, when investors responded to falling share prices by selling off “safe” assets like gold to cover their losses – meaning its price also fell (tweet this).

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2/3 Premium

Er, Then Again…

What’s Going On Here?

While gold’s record price may look glitzy, its real value actually peaked back in 1980 – and the experience of the 40 years since suggests investors may not want to rush in after all…

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3/3

Another Happy Customer

Another Happy Customer

What’s Going On Here?

SAP, Europe’s biggest tech company, was feeling somewhere on a scale from one to five on Monday after announcing plans to hold an initial public offering (IPO) for survey software maker Qualtrics.

What Does This Mean?

SAP bought US company Qualtrics for $8 billion back in 2018, in an effort to beef up its cloud customer relations business and better compete with customer relationship management giant, Salesforce.com. But investors were worried at the time that SAP had paid over the odds as a way of convincing Qualtrics to abandon the $5 billion IPO it was planning. By selling 10-15% of the company to public investors, SAP will now be able to recoup some of the money it spent – and by keeping hold of the rest, it’ll still be in control of day-to-day operations.

Why Should I Care?

The bigger picture: The long way round.
A Qualtrics IPO might justify the price SAP paid last year if other investors are willing to buy its shares at that price or higher. The move will help SAP in at least a couple of other ways too: it’ll bolster the German giant’s cloud-based business, and it’ll give investors a clearer idea of what Qualtrics is worth on its own (investors need to work through more complex calculations when Qualtrics is wholly owned by SAP). And if investors then want to buy in, the boost in Qualtrics’ share price will help boost the valuation of majority shareholder SAP too.

For markets: What a pleasant surprise.
SAP also updated investors on its second-quarter earnings on Monday. The company did exactly as well as it suggested it would earlier this month, but it added a higher forecast for the “free cash flow” this year than it’d previously promised. That’s money SAP can use to pay investors dividends and buy back shares, further boosting their returns – which might be why its stock rose 3%.

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💬 Quote of the day

“One must take what comes with laughter.”

– Olivia de Havilland (a British-American actress)
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🔥 Looking good, Carl and Andrew

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🌎 Global: Finimize Live AMA – 1.30pm UK Time, July 28th
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🇬🇧 UK: The Bright Future for Renewable Energy – 12pm UK Time, July 30th
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