WIF: put your money where… the gold is

**High oil prices are here to stay, investment in Chinese services is a safe bet and the gold standard will kick its way back into the global currency market were just a few of the messages that came out of the 2013 Warwick Investment Forum (WIF.**

After seven months of preparation and near 200 possible speakers; the 15 strong WIF committee momentarily feared for the event when the University invoked its ‘Severe Weather Policy’ on Friday 18th. To everyone’s relief however, attendees braved the weather and showed up in force the morning. It was a professionally organised day with lunch provided and a wide variety of speakers from the Financial Times, JP Morgan, Barclays as well as numerous authors and entrepreneurs.

The day was kicked off by Amrita Sen, chief oil analyst at Energy Aspects, advocating for more efficient energy use in the face of growing energy consumption and with oil prices expected to remain high. With over 60 per cent of oil production derived from restive areas such as the Middle East and North Africa and high extraction costs – Russia’s oil venture in Siberia required new oil pipelines, while the costly extraction of lower quality shell oil is becoming ever more popular in the USA – it is not surprising that fossil fuel has soared from $20 to $110 per barrel in just 20 years. On the upside, Sen argued that such high prices can cause a larger push towards green energy.

However, the onus is on policy makers to stop subsidising consumption of oil in OPEC countries to eliminate energy waste, and of emerging economies to slow down their increasing consumption levels.

Not surprisingly a number of talks of the day focused on topics surrounding the financial crisis; from JP Morgan’s Benjamin Thompson discussing the wider investment market; John Authers’, the Financial Times columnist’s talk on asset bubbles, to Barclays’ David Travis’ presentation on the cynicism surrounding rating agencies. Despite warnings of possible slow growth as the world economy picks itself back up, there too was optimism as markets rally on the all-time issuance of high yield bonds and syndicated loans, and rating agents are increasingly regulated in a more competitive risk rating market.

More niche discussions included Greg Davis’ presentation on behavioural finance (why investors sell when stock is low and buy when it is high); Simon Caufield’s unconventional suggestion of a positive correlation between high debt and high profits; and Pierre-Olivier Baudot’s promotion of art as a safe long term asset investment.

Yet, perhaps one of the more provocative talks of the day was John Butler. Mr Butler’s argument that the world will land at a Nash Equilibrium scenario, whereby a return to gold as the reserve standard is inevitable, as the fiat dollar standard breaks down, certainly ruffled a few feathers. As gold cannot be manipulated as a currency and generally retains its value over time, he affirmed that this will be the ultimate solution to the debt problem and will leave everyone better off in the long run. Whether policy makers will catch on to the idea is another issue.