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Precious Metals

Bond King Declares: Financial Assets Are ‘Garbage’

The gold market is flirting with a breakout to the upside. Prices have rallied more than $100 since putting in a seasonal low in August. More importantly,…

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The gold market is flirting with a breakout to the upside. Prices have rallied more than $100 since putting in a seasonal low in August.

More importantly, gold has shown signs of strength and is acting like it wants to break through this summer’s technical congestion to potentially make a run at $1,900/oz in the weeks ahead.

A major gold rally could signal trouble for financial markets.

They have managed to avoid any significant problems this year after a turbulent 2020.

But as valuations become stretched while inflation runs hot and economic conditions deteriorate and, risks are on the rise for holders of U.S. stocks and bonds.

Friday’s employment report showed jobs growth coming up short of expectations at the same time as wages are rising at a better than 4% clip.

The kind of scenario where hiring slows while wage hikes and other inflation pressures persist is a symptom of stagflation – a very difficult environment in which to invest in conventional financial assets.

Last week, former “bond king” Bill Gross warned that stocks and bonds could become tantamount to garbage.

Gross retired as manager of the world’s biggest bond fund in 2019, so he is now free to pontificate without concern as to whether his words upset regulators or institutional investors.

“Cash has been trash for a long time, but there are now new contenders,” Gross wrote. “Intermediate to long-term bond funds are in that trash receptacle for sure, but will stocks follow? Earnings growth had better be double-digit-plus or else they could join the garbage truck.”

Gross sees inflation, coupled with waning demand for Treasuries by foreign central banks, forcing bond yields to rise. That, in turn, could cause equities to be repriced for a more a difficult earnings environment.

If even Treasuries and blue-chip stocks fall toward “junk” status, and cash remains trash, then how can investors prevent their portfolios from going into the dumpster?

One obvious thing they can do is load up on alternative asset classes, including physical precious metals. They might even consider an entirely different kind of “junk” that is anything but garbage.

Pre-1965 90% U.S. silver coins are often referred to as “junk” silver.

These formerly circulated dimes, quarters, and half-dollars may show a bit of wear and tear. But their silver content is just as valuable as the silver used in newly minted bullion products.

“Junk” coinage is one of the most cost-effective ways to accumulate physical metal.

It’s also one of the handiest for those who prefer to have some unit sizes that are smaller than full-ounce coins.

Bargain hunters may also be able to get great pricing on gold coins, rounds, or bars that have been scratched or dinged.

Regardless of which forms and sizes of bullion you prefer to own, anytime you convert U.S. currency into hard money, you’re effectively turning trash into treasure.

      

Economics

“Culture As An Asset”

#CKStrong Stunning. Hedge funds hoovering up trading cards as an “alternative to equities” with the same passion Brooks Robinson hoovered up ground…

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#CKStrong

Stunning. Hedge funds hoovering up trading cards as an “alternative to equities” with the same passion Brooks Robinson hoovered up ground balls.

This is usually a sign of the endgame for markets, i.e,, the precursor to a bear market. Think the “Great Beanie Baby Bubble” of 1999.

In general, there are two types of assets,

  1. They can be rare—gold bars, diamonds, houses on Victoria Peak, bottles of 1982 Pétrus, Van Gogh paintings, stamps, beanie babies, or baseball cards or
  2. They can generate cash flows over time  – GaveKal

Creating An Illusion Of Scarcity

Scarcity relative to the money stock is what its all about now, folks. 

It probably won’t be long before the Fed has to bailout the baseball card market, no?

Full disclosure,  I do own a Mike Trout rookie card

Given the extreme valuations of all most all asset classes, coupled with the massive amount of money in the global financial system, markets are now really stretching, looking for, and actually attempting to create scarcity as a useful delusion to justify, rationalize, and drive speculation. 

Maybe I will start collecting poop as an “anthropological asset,” put it the blockchain and super charge the price ramp by snapping a few pictures of each sample, converting them to NFTs to load up to the internet.

Then again, maybe all this is signaling the start of a big, big inflation cycle and the markets are looking to get out of cash and protect their purchasing power.   But that’s too rational.  

Can you believe what markets have become, folks?   It is hard to see clearly when everybody is making money. 

 

 

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Articles

Bryah nabs strategic exploration ground around namesake project

Special Report: Bryah Resources has expanded its footprint in WA, securing three exploration licences covering 50 km2 around its existing … Read More
The…

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Bryah Resources has expanded its footprint in WA, securing three exploration licences covering 50 km2 around its existing land holding in the Bryah and Padbury Basins.

The Bryah Basin hosts the high-grade copper-gold mines at DeGrussa, discovered by Sandfire Resources (ASX:SFR) in 2009, and at Horseshoe Lights, which was mined until 1994.

It also hosts several historical and current manganese mines including the company’s Horseshoe South mine.

Bryah Resources’ (ASX:BYH) is confident that the new tenements – E52/3848, E52/3898 and E52/3963 – cover prospective and under-explored areas which have gold, copper-gold and manganese exploration potential.

The tenements were acquired for 4 million ordinary shares at an issue price of $0.055/share.

Tenure right next to historic gold mine

The largest tenement (E52/3898) covers exploration ground adjacent to the historic Wilthorpe shallow open cut gold mine.

The mine straddles the boundary of new tenement E52/3898 and an adjacent E52/2059, held by Westgold Resources (ASX:WGX).

It was mined by Dominion Mining from 1993-94, producing 4,650 ounces of gold from 72,817 tonnes of ore grading 2.0 g/t gold.

And there has been limited gold exploration since.

Based on the reported mineral occurrences, Bryah considers the tenement package highly prospective for copper, gold, and manganese.

Pic: Tenement location plan

Exploration planning underway

The company will shortly commence a thorough desktop review of all historical exploration reports as well as its own extensive database.

The data review will support a detailed phase of exploration planning, ahead of ground exploration activities.

In the meantime, reverse circulation drilling is underway at Bryah’s manganese JV, in a 2000m program fully funded by partner OM Holdings.

 


 

 

This article was developed in collaboration with Bryah Resources, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

 

The post Bryah nabs strategic exploration ground around namesake project appeared first on Stockhead.

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Economics

US stocks march on, lifted by business optimism

Benchmark US indices closed higher for the second consecutive day on Thursday September 23 lifted by positive sentiments from Fed s economic outlook…

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Benchmark US indices closed higher for the second consecutive day on Thursday, September 23, lifted by positive sentiments from Fed’s economic outlook.

The S&P 500 was up 1.21% to 4,448.98. The Dow Jones rose 1.48% to 34,764.82. The NASDAQ Composite rose 1.04% to 15,052.24, and the small-cap Russell 2000 was up 1.82% to 2,259.04.

Traders ignored the weak unemployment data released by the Labor Department on Thursday, which showed new jobless benefits claims rose by 16,000 to 351,000 in the week ended Sep 18.

Economists consider the rise in benefits claims to be because of Hurricane Ida and forest fires and not due to flawed policy action. On Wednesday, the Fed said that it might start withdrawing stimulus support from November. The statement raised confidence in the economic recovery.

Financial stocks were among the top movers on S&P 500 Thursday, while energy and real estate stocks declined. Stocks of BlackBerry Limited (BB) rose 12.08% a day after reporting quarterly results. Its revenue rose to US$175 million in Q2, FY21, from US$174 million in the year-ago quarter.

Accenture plc (ACN) stock jumped 2.63% after reporting its fourth-quarter results. Its net income was up US$1.43 billion from US$1.30 billion in the same quarter of the previous year.

Salesforce.com, Inc. (CRM) stock rallied 7.38% after it raised the full-year revenue guidance. It expects its FY 2022 revenue to be US$26.35 billion, up from its earlier forecast of US$26.3 billion.

In the energy sector, Exxon Mobil Corporation (XOM) rose 3.58%, Chevron Corporation (CVX) gained 2.51%, and ConocoPhillips (COP) gained 2.45%. Kinder Morgan, Inc. (KMI) and EOG Resources, Inc. (EOG) advanced 2.51% and 2.76%, respectively.

In the consumer discretionary sector, Nike, Inc. (NKE) increased by 1.26%, Starbucks Corporation (SBUX) gained 1.25%, and General Motors Company (GM) rose 2.24%. Ross Stores, Inc. (ROST) and Hilton Worldwide Holdings Inc. (HLT) ticked up 1.62% and 4.30%, respectively.

In financial stocks, Berkshire Hathaway Inc. (BRK-B) rose 1.65%, JPMorgan Chase & Co. (JPM) jumped 3.35%, and Bank of America Corporation (BAC) rose 3.79%. Wells Fargo & Company (WFC) and Morgan Stanley (MS) jumped 1.58% and 2.86%, respectively.

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US stock indices closed higher on Sep 23 on positive economic outlook.

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Futures & Commodities

Gold futures were down 2.05% to US$1,742.40 per ounce. Silver decreased by 1.71% to US$22.515 per ounce, while copper fell 0.48% to US$4.2317.

Brent oil futures increased by 1.38% to US$77.24 per barrel and WTI crude was up 1.37% to US$73.22.

Bond Market

The 30-year Treasury bond yields was up 5.04% to 1.941, while the 10-year bond yields rose 7.71% to 1.434.

US Dollar Futures Index decreased by 0.39% to US$93.100.

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