ALTERNATIVE MARKETS UPDATE – END NOVEMBER 2023

​With relatively quiet central banks over the past weeks in terms of interest rate decisions and inflation slowly coming down, financial markets have calmed down with the exception of the impact following the war between Israel and Hamas. The start of the war has reignited interest in gold as a safe haven asset. While gold has been trading close to its historical high throughout the past years, the recent events led to another record high of $2,074 per ounce. After the initial shock from the war, gold declined again slightly, but has since regained most of its value, as the US dollar is getting weaker. Despite high interest rates and positive real rates, gold remains attractive. It is widely assumed that inflation will remain elevated for quite a while. Yet, positive real rates will do so too given that it takes a lot of interest rate cuts by central banks, which will take time. In the medium-term future, gold will not lose its attractivity, due to an elevated crisis risk and the general instability around the world. Since 2022, gold’s price has increased by more than 10%, as shown in Figure 1. While gold remained stable during these times, oil has behaved much more volatile. Compared to the beginning of 2022 WTI crude oil is now down around 5%, despite being up more than 50% in June 2022. Oil strongly soared when the war between Russia and Ukraine started and maintained an upward trend until the summer of 2022. Then, it started to gradually fall to more normal levels. 2023 was characterized by supply cuts to prevent the price from crashing. Further cuts in the summer of 2023 resulted in consistently raising prices for the first time since the war started. The latest war further led to price increases, which stopped the initial downward trajectory, but it was only a brief reaction. Currently, oil prices are still on the decline with the current supply, as industrial demand is slowed. The postponed OPEC+ meeting also contributed to the latest declines.

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RESEARCH PERSPECTIVE VOL. 216 November 2023 Alternative Markets November 2023 With relatively quiet central banks over the past weeks in terms of interest rate decisions and inflation slowly coming down, financial markets have calmed down with the exception of the impact following the war between Israel and Hamas. The start of the war has reignited interest in gold as a safe haven asset. While gold has been trading close to its historical high throughout the past years, the recent events led to another record high of $2,074 per ounce. After the initial shock from the war, gold declined again slightly, but has since regained most of its value, as the US dollar is getting weaker. Despite high interest rates and positive real rates, gold remains attractive. It is widely assumed that inflation will remain elevated for quite a while. Yet, positive real rates will do so too given that it takes a lot of interest rate cuts by central banks, which will take time. In the medium-term future, gold will not lose its attractivity, due to an elevated crisis risk and the general instability around the world. Since 2022, gold’s price has increased by more than 10%, as shown in Figure 1. While gold remained stable during these times, oil has behaved much more volatile. Compared to the beginning of 2022 WTI crude oil is now down around 5%, despite being up more than 50% in June 2022. Oil strongly soared when the war between Russia and Ukraine started and maintained an upward trend until the summer of 2022. Then, it started to gradually fall to more normal levels. 2023 was characterized by supply cuts to prevent the price from crashing. Further cuts in the summer of 2023 resulted in consistently raising prices for the first time since the war started. The latest war further led to price increases, which stopped the initial downward trajectory, but it was only a brief reaction. Currently, oil prices are still on the decline with the current supply, as industrial demand is slowed. The postponed OPEC+ meeting also contributed to the latest declines. Figure 1: Cumulative Return of Gold and Oil (WTI Crude) from January 2022 to November 2023, Sources: Investing, November 2023 Uranium has drawn a lot of attention, especially in the past few months. Ever since the war between Russia and Ukraine started, nuclear energy has become more attractive, as natural resources from Russia were hit with sanctions. In particular Europe, which relies to a substantial degree on Russian natural resources for its energy, saw a threat of energy shortage. With that issue, many countries increased the capacity of the existing nuclear power plants alongside plans to increase the number of power plants in the future. In addition, nuclear power is also relatively clean compared to other natural resources, such as oil. Hence, it also looks more promising in the energy transition in the long term, as alternative energy sources are not yet able to substitute the “dirty” energy sources. Following the war between Russia and Ukraine, Uranium prices soared by 40% and remained at around 20% until 2023, when demand and price started to soar. As of October 2023, Uranium is up nearly 80% compared to early 2022, as shown in Figure 2. This price increase stems from the following reasons, but the effect is not immediate, as it takes time for power plants to ramp up their capacity. With most nations more interested in nuclear energy sources, demand increases even further. According to Cameco, Uranium prices soared to $74 per pound at the end of October, the highest it has been since 2011. Figure 2: Cumulative Return of Uranium from December 2021 to October 2023, Sources: Cameco, November 2023 STONE MOUNTAIN CAPITAL Stone Mountain Capital is an advisory boutique established in 2012 and headquartered in London with offices Pfaeffikon in Switzerland, Dubai and Umm Al Quwain in United Arab Emirates. We are advising 30+ best in class single hedge fund and multi-strategy managers across equity, credit, and tactical trading (global macro, CTAs and volatility). In private assets, we advise 10+ sponsors and general partners across private equity, venture capital, private credit, real estate, capital relief trades (CRT) by structuring funding vehicles, rating advisory and private placements. As of 19th May 2023, Stone Mountain Capital has total alternative Assets under Advisory (AuA) of US$ 61.2 billion. US$ 44.7 billion is mandated in hedge funds and US$ 16.5 billion in private assets and corporate finance (private equity, venture capital, private debt, real estate, fintech). 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