Emerging Markets & Gold

Will Danoff just celebrated his 20th year managing Fidelity’s go-anywhere Contrafund^®—Fidelity’s largest equity fund, with $62 billion in assets. More thoughts:

Companies positioned in Asia, India, Latin America, and Brazil may have the ability to grow at a much faster rate in the next five years than a company that's trying to sell more cups of coffee to the U.S. consumer. What I've tried to do is expose my funds to those companies with growing positions in the emerging markets, and those companies with true competitive advantages that may be able to grow by gaining market share in the more developed economies.

The U.S. government is spending more money than it is generating. I believe that's unsustainable, and probably bad for our currency, and therefore relatively good for gold. I still think that gold will probably appreciate if governments around the world don’t control their budgets. But there are some other reasons to consider owning gold: supply is declining, demand from consumers in the emerging markets is growing, central bank demand is up, and it's harder and harder to find gold.

If the dollar does weaken further, exporting companies will have an advantage, and global blue chips that make money in foreign currencies could also benefit, as those profits will convert into more dollars.

https://guidance.fidelity.com/viewpoints/5-experts-september-2010