The following content is sponsored by Kalo Gold.
How Much Gold is in the World?
Gold has retained its value throughout history, partly due to the fact that it is indestructible.
That means that virtually all the gold in the world that has been mined is still around in one form or another. Some of it may have turned into jewelry, while some might be sitting inside vaults as bullion. So, just how much gold have we mined, and how much of it is left beneath the ground?
This infographic from our sponsor Kalo Gold visualizes all the gold in the world that’s above ground and the identified reserves that we have yet to mine.
Where is All the Gold?
The World Gold Council estimates that miners have historically extracted a total of 201,296 tonnes of gold, leaving another 53,000 tonnes left in identified underground reserves.
If all of the above-ground gold were stacked beside each other, the resulting cube would only measure 22 meters on each side, which is a testament to the metal’s rarity. But where exactly is all of this mined gold?
Nearly half of all the gold ever mined is held in the form of jewelry. India and China have been the largest markets for gold jewelry consumption, combining for more than 50% of global jewelry demand in 2020.
|Category||Gold stocks held (tonnes)||% of above-ground stocks||Dollar value* (US$, trillions)|
|Official holdings/Central banks||34,211||17%||$2.1T|
*Dollar values are based on gold’s price of $1756.66/oz as of close on Sept. 30, 2021.
Investors across the globe buy gold because of its ability to deliver value, and when inflationary pressures are high, gold often acts as a flight to safety. Consequently, investment is one of gold’s biggest end-uses, with over 44,000 tonnes of gold held as bars, coins, or bullion for gold-backed exchange-traded funds (ETFs).
Besides investors, central banks are also among the biggest holders of gold. Unlike foreign currency reserves, equities, and debt-backed securities, gold’s value largely depends on supply and demand. Therefore, central banks often use gold to diversify their assets and hedge against fiat currency depreciation. Central banks’ gold holdings account for almost one-fifth of all above-ground gold; as of 2021, official holdings exceed 35,000 tonnes.
Although gold is widely coveted as a precious metal, it also has various industrial uses, with applications in electronics, dentistry, and space. In fact, it’s estimated that a typical iPhone contains about 0.034 grams of gold, in addition to other precious metals. It is these industrial uses that account for 29,448 tonnes or roughly 15% of all above-ground gold.
Underground Gold Reserves
Before it turns into jewelry and bullion, gold goes through several stages in the supply chain, beginning with mineral exploration and mining of underground reserves. As of 2020, the world had 53,000 tonnes of gold in identified reserves. Here’s where all this gold lies:
|Country||Gold reserves (tonnes)||% of total|
|Rest of the World||27,100||51%|
Given their availability of reserves, it’s no surprise that Australia, Russia, U.S., and Peru are among the world’s largest gold producers, with only China having produced more in 2020. These reserves not only help determine current production but can also provide an idea of where gold mining could occur in the future.
In 2020, miners produced just over 3,000 tonnes of gold, and at this rate, underground reserves will last less than 18 years without new discoveries. However, it’s important to note that reserves can change and grow as explorers find gold in different parts of the world.
A Golden Future
Gold has been around for thousands of years, and it will likely remain that way in the future.
With rising concerns over the growth in money supply and inflation, gold will continue to deliver value and protect investors in times of volatility while preserving wealth for the long term.
Kalo Gold is discovering gold on the edges of the mineral-rich Pacific Ring of Fire with its Vatu Aurum project in Fiji.
Government Handling Of COVID Has Been “A Crime”, Expect More Selloffs: Trader
Government Handling Of COVID Has Been "A Crime", Expect More Selloffs: Trader
Submitted by QTR’s Fringe Finance
This is Part 1 of an exclusive…
Government Handling Of COVID Has Been “A Crime”, Expect More Selloffs: Trader
Submitted by QTR’s Fringe Finance
This is Part 1 of an exclusive interview with Rosemont Seneca, a U.S. based professional trader focused on event-driven and distressed situations. Rosemont spent their career on the buy-side working as a financials analyst and their investing/trading style is inspired in equal parts by Icahn and Druckenmiller.
Like me, Rosemont is not an RIA and does not hold licenses. Market commentary and opinion expressed in this interview are personal views, not investment advice or solicitation for business.
QTR’s Note: The point of this blog is to bring to the reader information and perspectives they, or the mainstream media, may not otherwise find on their own. The cool thing about FinTwit is that you get to meet people based on their ideas and investing acumen and not their identities. I have been following Rosemont on Twitter for years and love their perspective and takes on the market – their takes often stand at odds with my own and they have helped me broaden my horizon and be less bearish on markets, while still maintaining my skepticism about monetary policy. They have chosen to remain completely anonymous with me, which I respect, and I have never personally met or otherwise know anything about the identity of Rosemont. That doesn’t matter, however, because I like their ideas and their commentary. You can follow Rosemont on Twitter here.
Part 2 of this interview can be found here.
Q: Hi Rosemont. Thanks for agreeing to an interview for my readers despite wanting to stay anonymous. Right off the bat: why do you use Bernard Baruch for your Twitter profile photo?
Baruch is one of the most fascinating Wall Street characters of 20th Century. He has tremendous intuition and gut instinct for the markets, macro economics and politics and he reminds us that the three are intertwined at all times
That’s a great segue to my next question: you recently got very bullish on gold when you hadn’t been in the past – what caused that shift in attitude?
We saw a global risk contagion event in capital markets today (11/26); Bitcoin lost over 8.0% of its value, the S&P dropped -2.2% and gold ended the session flat on the day after a mostly positive session. We expect more days like this in 2022.
This is the first time since the post-GFC period in 2009 that we’ve purchased or held gold instruments in our portfolios. At present we own an 8.0% position in the GLD ETF and periodically traffic in Barrick Gold and Newmont equities. Recall that during the Q4 2018 ‘Taper Tantrum’ and most acute phase of the COVID dislocation in Q1-Q2 2020, gold futures, ETFs, and gold miner equities protected your wealth from severe capital market drawdowns.
Gold is an umbrella we hope will keep us dry if it rains very hard next year.
Holding gold in a portfolio today is a pragmatic ‘TINA’ bet borne of healthy caution in the wake of a multi-year equity bubble that has begun to run amok.
The reality is gold is not an optimal investment for compounding wealth in the long-run; owning the GLD ETF since inception in 2004 has returned a roughly 8.0% CAGR which is adequate for a pension fund or retiree but relatively mediocre vs. the alternatives.
Investors are better off owning Walmart, Costco, McDonald’s or Starbucks and grow our capital tax-efficiently with high-ROE/RoIC ‘compounders’ that pay dividends. The gold ‘streamers’ such as Wheaton and Franco-Nevada however happen to be very interesting investments with compelling business models that have generated compounder-like returns for Shareholders over the last two to three decades.
We’ve come a long way from the market depths of March 2020 and perhaps it’s time to take a more cautious stance going into year-end. We are currently operating on the premise that the Nasdaq and S&P could see negative returns in 2022. If the indices see a drawdown of 10-20% (or greater) we expect gold to appreciate or hold its value in real terms next year. There are labor and supply chain shortages globally that will definitely impact the gold mining industry. If CPI hits escape velocity and reaches 8-10% higher next year, we’ll be content with a 10% allocation in gold as we expect institutional and speculator capital flows to put a firm bid behind the yellow metal.
You’re one of the very few out there calling the entire crypto space a bubble. What’s the key argument in differentiating crypto from other assets? Is crypto worth zero or is there a value and, if there is, where does the value come from?
In the last few years market participants have adopted a pseudo-religious attitude towards Bitcoin, Ethereum, and a whole host of crypto currencies. People have come to either ‘believe’ or ‘not believe’ in the asset class and its prospects.
What we can definitely say today is that there are over 14,850 different crypto currencies trading on over 430 venues with a combined ‘market capitalization’ of roughly $2.5 trillion dollars. To our best knowledge these assets produce zero cash flow or dividends, exhibit very high volatility, remain subject to boom-bust sequences, and are used as an apparatus for elaborate criminal hacking schemes.
The average daily volume of these 14,000+ crypto currencies is roughly $150 billion per day. We estimate that approximately 90% of this turnover is driven by purely speculative or gambling capital flows from small retail traders. If we assume that roughly 2-3% of average daily volume consists of bona fide commercial transactions (including portfolio investment), this leaves almost $10 billion of daily volume that derives from money laundering, fraud and other illicit schemes etc.
Some governments have rushed to legalize, adopt or allow for crypto currencies to proliferate in their economy for fear of stymieing or not supporting innovation. Others have taken a hardline stance and begun to outlaw the usage of crypto in their banking and financial system. We are of the view that Bitcoin-like protocols present a clear & present danger to many emerging market countries’ ability to issue currency and sovereign debt over the next decade. As the true nature of these crypto assets become more evident, we’ll see more and more countries outright ban and prosecute their usage in their economies.
Bitcoin and Ethereum (combined 60% of total crypto market capitalization) may very well survive and find a way to thrive due to ‘fiat-by-consensus’ adoption. Under that scenario they clearly will not trade to zero. But that doesn’t negate the presence of a current bubble where 99% of cryptos are of near-zero ultimate value. Promoters have come to euphemize cryptocurrencies as ‘projects’ but most cryptocurrencies are outright frauds.
We think it’s time for crypto investors and regulators to have a more honest, empirical framework for discussing the intrinsic value and risks of these crypto assets. If we can handicap real estate on cap rates and LTV ratios and equites on P/E ratios and cashflow yields, we should adopt a framework for Bitcoin and Ethereum etc (Dogecoin?) that doesn’t border on the pseudo-religion.
I wrote an entire article based off your assumption that we are once again in a 1999-2000 style crash setup. What were the signs that helped you recognize this?
In the wake of the COVID crisis and ensuing Monetary/Fiscal stimulus, too many people with very little financial literacy or professional training took up day-trading of equities, options and crypto currencies as a hobby and eventual vocation. The prudent, cautious amongst us (Warren Buffett included) were seemingly left behind in the speculative frenzy that ensued in the summer of 2020.
We’re often reminded to not confuse investing/trading luck with skill. Regardless, many very young people made a lot of money in a very short period and thought that this process was somehow normal or even sustainable. To be perfectly clear: there was nothing normal about the Meme Stock frenzy, SPAC mania, or crypto and NFT bubble that erupted.
When we witnessed trillion-dollar market caps such as Tesla and Nvidia trading like biotechs in the frenzy of Q4 of 2021, we decided we’d seen enough of this equity market mania. It was eerily reminiscent of Cisco, Lucent, Intel in 1999. The equity market today feels bloated and reckless; it’s probably a good time to start taking chips off the table and leave the party while people are still having fun.
November 2021 was a harsh reminder that valuations and capital structures eventually do matter; people will learn the hard way.
What are the most likely catalysts to set the market off moving lower?
Nobody rings the bell at a market top, but negative catalysts include:
– inability to eradicate COVID in Europe & Asia will keep global trade and travel routes shut for another year
– cascade of lingering supply chain woes = potentially very recessionary
– debilitating energy price spikes in 2022-2023 = looming stagflation
– margin loan balances are at historically very high levels
– continuation of the Tech selloff we witnessed in Q4 2021
– fraud & accounting malpractice (always prevalent in manias)
– Fed signaling significantly higher interest rates in the aftermath of inflation
– Geopolitics: a potential Kamala Harris Presidency would see Russia and China turn belligerent overnight
What’s your take on how we’re handling Covid? You’ve mentioned what happened to our economy over the last 18 months was “economic terrorism”. Will we learn – either through people revolting or negative consequences – or will we continue down this Orwellian path?
It’s very disappointing to see how politicized the pandemic became in the United States. It obviously didn’t help that COVID struck in an Election year, but there will be plenty of blame to go around the table when a proper post-mortem analysis is conducted years from now. We hope that Bethany McLean (Enron: The Smartest Guys in the Room) will eventually write a thoroughly unbiased expose on the timeline of policy decisions in 2020. We’re of the firm belief that our Leaders in Washington D.C. did more harm than good in the early months of this pandemic.
We can safely conclude the 2020 COVID shutdowns are the direct cause for the supply chain dislocations and hyperinflation that Americans are about to suffer. The shutdowns that we witnessed in the United States were a flawed policy decision akin to willful pilot error or ‘economic terrorism;’ Federal and State Governments suffocated millions of livelihoods and permanently destroyed hundreds of thousands of perfectly viable small & medium family-owned businesses. The larger, better capitalized multinational corporations capable of accessing capital markets and Government Stimulus Programs not only survived, they eventually thrived.
What happened can only be described as a crime.
Part 2 of this interview, where we discuss inflation, the Biden administration, why China banned crypto and more, can be found here.
It should be assumed I or Rosemont Seneca has positions in any security or commodity mentioned in this article. None of this is a solicitation to buy or sell securities. Neither I nor RS hold licenses or are investing professional. None of this is financial advice. Positions can always change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot.
These 18 ASX resources IPOs are due to list in December. EIGHTEEN.
It’s like an advent calendar for mining and exploration IPOs, except instead of factory floor chocolate you get gold. GOLD. … Read More
The post These…
It’s like an advent calendar for mining and exploration IPOs.
Please note that these listing dates are extremely speculative. If you’re interested, contact the company direct for a better idea of when they expect to start trading on the ASX.
COSMOS EXPLORATION (C1X)
Focus: Gold, Copper and Nickel
Tentative Listing Date: 1 Dec
The RareX (ASX:REE) spinoff wants to raise $5m through its IPO. It has two projects: ‘Byro East’ (nickel-copper-PGEs) in WA and ‘Orange East’ (gold) in NSW.
Byro East was pegged by $45m market cap rare earths explorer RareX last year. It is very greenfields — having never been drilled — but Cosmos has identified four areas which could be prospective for Ni-Cu-PGEs.
Based on past exploration work, Cosmos has also identified several gold-copper targets at the small 40sqkm ‘Orange East’ project.
ORANGE MINERALS (ASX:OMX)
Focus: Gold, Copper
Tentative Listing: 3 Dec
Orange, which is looking to raise $7m in an IPO, is hunting for copper-gold in two major regions: Lachlan Fold Belt (NSW) and Eastern Goldfields (WA).
The NSW assets are close to major gold mines like Cadia (43.4Moz). In WA, it has ground within 25km of Lefroy’s (ASX:LEX) ‘Burns’ copper gold discovery (38m @ 7.63g/t gold, 0.56% copper).
A minimum 1,500m of drilling is planned following listing, with maiden resource at ‘Calarie’ gold project in NSW forecast for early 2022.
Focus: Gold, Nickel, Copper, PGEs
Tentative Listing Date: 3 Dec
The FirstAU (ASX:FAU) spinoff wants to raise between $8m and $12m through its IPO. It has lodged its prospectus with ASIC and is seeking to listing on the ASX around 3 December.
It has five projects in WA. Its flagship is ‘Talga’ project in the East Pilbara, a leading exploration location with new discoveries made nearby by Calidus Resources (ASX:CAI) at its ‘Warrawoona’ project and De Grey Mining (ASX:DEG) at Hemi.
The potential targeting of ‘Hemi-like’ intrusions within the East Pilbara projects present an exploration opportunity for 8AU “as both the exploration areas of the Talga JV and Railway Well project are located in a comparable geological environment”, it says.
LARVOTTO RESOURCES (ASX:LRV)
Focus: Gold, Copper, Cobalt, Nickel, PGEs
Tentative Listing Date: 6 Dec
Larvotto is looking to raise up to $6m in an IPO. It has three main projects: ‘Mt Isa’ (copper-gold-cobalt in Queensland), ‘Eyre’ (nickel-gold-PGEs in WA) and ‘Ohakuri’ (gold in NZ).
Mt Isa — acquired from Minotaur Exploration and Rio Tinto — is in a well-endowed, world-class copper and gold region.
Nearby deposits include the Mount Isa Mines Operation (MIM), Ernest Henry, E1, Swan-Mt Elliott, Starra, Osborne, Little Eva, Eloise, Jericho, Barbara, and Kulthor.
Larvotto says the project, although adjacent to the famous MIM operation, has been underexplored using modern exploration techniques.
AMERICAN WEST METALS (ASX:AW1)
Focus: Zinc, Copper, Indium
Tentative Listing Date: 7 Dec
John Prineas-chaired American West wants to raise $11m through its IPO. It has three advanced, high grade base metal projects in Utah focused on copper and zinc; two of which already have significant resource estimates.
The ‘West Desert’ project already hosts a 59Mt historical zinc-copper resource defined under Canadian NI-43-101 standards.
Following admission to the ASX, American West will undertake work to establish a JORC compliant resource – a must-have for ASX listed companies — and will further assess development potential with scoping studies.
The company will also continue exploration across the large and underexplored project area “where high-grade intersections of copper and zinc have already been encountered outside the resource envelope, indicating strong potential for further discoveries”.
RUBIX RESOURCES (ASX:RB6)
Focus: Copper, Nickel, PGEs, Zinc, Gold
Tentative Listing: 8 Dec
Rubix is looking to raise $4.5m in an IPO.
Its key asset is ‘Paperbark’, 25km from the ‘Century’ mine held by New Century Resources (ASX:NCZ) in North Queensland.
Supporting the Paperbark Project are three greenfields (unexplored) projects: ‘Etheridge’ (gold in Queensland) ‘Lake Johnston’ (nickel, copper, PGEs in WA) and ‘Collurabbie North’ (nickel, copper, PGEs in WA).
PANTHER METALS (ASX:PNT)
Focus: Gold, Nickel
Tentative Listing: 10 Dec
WA-based PNT, a subsidiary of London-listed Panther Metals PLC, raised $5m in an IPO.
Initial drilling will take place at the Coglia nickel-cobalt project, where a JORC compliant exploration target of 30-50 million tonnes at 0.6-0.8% nickel and 400-600 parts per million cobalt has already been defined.
The Merolia gold project is also high on Panther’s agenda, with immediate drilling also planned at the ‘40 Mile Camp’ 2.5km by 5km gold anomaly.
RONIN RESOURCES (ASX:RON)
Focus: Gold, Copper, Coal
Tentative Listing: 10 Dec
Colombia-focussed Ronin is looking to raise $5m in an IPO.
The company’s main game is ‘Vetas’: a large, high-grade, thermal coal project containing a JORC Compliant Exploration Target.
The Santa Rosa Project is an earlier stage gold and copper project “located in a prolific artisan mining district”.
HARANGA RESOURCES (ASX:HAR)
Focus: Gold, Uranium, Lithium
Tentative Listing Date: 13 Dec
The African gold, lithium and uranium explorer wants to raise up to $6.5m in an IPO.
‘Saraya’ in Senegal is an advanced-stage uranium-lithium-tin project explored by French Government-owned Areva prior to 2010. That work included an estimated 48,000m drilling.
The project is mainly hosted by granites and pegmatite units which is also prospective for lithium, tin, tantalum and niobium, with spodumene (lithium minerals) having been visually reported.
INFINTY MINING (ASX:IMI)
Focus: Gold, Lithium, Nickel
Tentative Listing Date: 14 Dec
It will have 19 tenements covering 711sqkm in the Pilbara and Central Goldfields.
ARMADA METALS (ASX:AMM)
Focus: Nickel, Copper, PGEs
Tentative Listing Date: 15 Dec
Armada wants to raise between $8m and $10m through its IPO.
It has 2,991sqkm of ground in the Nyanga Province, Gabon which includes several drill-ready nickel-copper targets like ‘Libonga North’, ‘Libonga South’ and ‘Matchiti Central’.
With over U$10m spent on exploration to date, Armada plans to hit these targets hard with drilling over the next two years.
CHEMX MATERIALS (ASX:CMX)
Focus: High Purity Alumina, Kaolin, Manganese
Tentative Listing Date: 20 Dec
ChemX — more advanced materials technology company than aspiring miner– wants to raise $7m through its IPO.
It says it has developed a proven process to produce High Purity Alumina (HPA), a critical input for battery technology.
ChemX plans to develop this ‘HiPurA’ HPA tech, as well as the ‘Kimba’ kaolin-halloysite and ‘Jamison Tank’ manganese projects in South Australia where exploration drilling is scheduled to kick off in Q1 2022.
DMC MINING (ASX:DMM)
Focus: Nickel, Gold
Tentative Listing Date: 22 Dec
WA-based nickel explorer DMC wants to raise $5m through its IPO. It has two projects: ‘Ravensthorpe’ and ‘Fraser Range’.
Ravensthorpe is a nickel and gold project next door to’ (FQM) open-pit nickel mine and the RAV8 sulphide nickel mine. There has been limited historical exploration within the project, DMC says.
The 873sqkm of Fraser Range tenements makes DMC one of the largest junior landholders in the region, which is best known for its company-making Nova nickel discovery.
FALCON MINERALS (ASX:FAL)
Tentative Listing Date: 22 Dec
This hotly anticipated Chalice Mining (ASX:CHN) spinoff will be chaired by Mark Bennett, discoverer of the aforementioned Nova nickel discovery.
Falcon wants to raise between $15m and $30m through its IPO to tackle three projects: Pyramid Hill (VIC), Viking (WA), and Mount Jackson (WA).
Pyramid Hill — CHN’s No 1 focus before it hit the motherlode at Julimar – is highly prospective for high-grade gold deposits like the nearby, world-class Fosterville mine.
Since 2018, CHN has completed ~124km of drilling across the ~5,000sqkm project, defining four large scale prospects.
They include ‘Karri’, which is defined by shallow gold hits up to 34g/t over ~4km of strike, and ‘Banksia’, a giant 10km-long anomaly which returned hits up to 8.7g/t.
ARBARTA RESOURCES (ASX:AB1)
Focus: Gold and Base Metals
Tentative Listing Date: 23 Dec
Arbarta wants to raise between $5m and $7m through its IPO. It has three exploration projects in WA – ‘East Laverton’, ‘England’ and ‘Edward’.
East Laverton sits on~ 1200sqkm of its namesake underexplored East Laverton Greenstone Belt.
Greenstone belts host economic deposits of many minerals — including silver, copper, and zinc — but they are best known for gold.
Edward is also in an area of underexplored greenstone belt on trend to the south of the ‘Marvel Loch’ and ‘Transvaal’ deposits, and ~40km from the Marvel Loch processing facility.
England is next door to the Granny Smith processing facility in Laverton owned by miner Gold Fields. This means any discovery could be developed quickly, it says.
SOLIS MINERALS (ASX:SLM)
Tentative Listing: 24 Dec
The South American copper play is looking to raise $6m in an IPO.
It is already listed on the TSX, so this IPO is designed to “significantly enhance its exposure to investors in the ASX market, which has a dynamic and deep junior resources exploration sector”.
Solis has three large-scale copper exploration projects in Chile and Peru.
The recently acquired ‘Mostazal’ project in Chile has a multi-kilometre porphyry target to be drill-tested this year, underneath a high-grade copper-silver historical resource.
Solis also owns the ‘Ilo Este’ and ‘Ilo Norte’ projects in Peru’s southern coastal copper belt, prospective for porphyry and IOCG discoveries.
VERTEX MINERALS (ASX:VTX)
Tentative Listing: 24 Dec
This gold explorer is looking to raise $5.5m in an IPO. It has four projects: ‘Hill End’ (NSW), ‘Hargraves’ (NSW), ‘Pride of Elvire’ (WA), and ‘Taylors Rock’ (WA).
Hill End is in the region where the Beyers and Holtermann nugget — the largest single piece of reef gold ever discovered — was found. This is the nugg itself:
ANDEAN MINING (ASX:ADM)
Focus: Copper, Gold
Listing: Just before Xmas
Andean (expected code: ADM) seeks to raise up to $7m through its initial public offering that is due to close on 9 December.
Its relatively advanced ‘El Dovio’ copper-gold (with silver and zinc) project in Colombia is a volcanogenic massive sulphide system –deposits that are rich in base and precious metals like copper, zinc, lead, gold, and silver.
Because these deposits tend to ‘cluster’ together, VMS camps – like DeGrussa on Western Australia — can often be mined for a very, very long time.
Nearby VMS projects include producing ‘El Roble’ mine, which has mined ore plus reserves totalling 3.89Mt grading 2.77% copper and 2.44 grams per tonne (g/t) gold, and ‘El Alacran’ (4.8Mt at 1.4% copper and 0.83g/t gold).
El Dovio is also close to other significant mining projects such as AngloGold Ashanti’s 28 million oz gold equivalent (AuEq) ‘Quebradona’ project and Zijin Mining’s 12Moz ‘Buritica’ gold mine. Great neighbourhood.
The post These 18 ASX resources IPOs are due to list in December. EIGHTEEN. appeared first on Stockhead.
9 Stocks to Buy Before Inflation Fears Take Hold
Despite the pandemic, the stock market has had a decent year so far. Right now, the Dow Jones Industrial Average is up 14% year-to-date (YTD) while the…
Despite the pandemic, the stock market has had a decent year so far. Right now, the Dow Jones Industrial Average is up 14% year-to-date (YTD) while the S&P 500 is up over 23% YTD. But with the threat of inflation currently stoking fears in the fourth quarter, now is the time to start considering inflation stocks.
Inflation stocks provide some protection when prices begin to skyrocket. In October, the consumer price index rose 6.2% from a year ago, which is the biggest increase in 30 years. Core inflation also rose by an alarming rate, moving higher by 4.6% from a year ago.
But all is not lost. CNBC “Mad Money” host Jim Cramer says there are plenty of ways to grow your portfolio even when inflation rises. Cramer says that some of the best inflation stocks come from banking, large pharmaceuticals and tech companies. He noted the following:
“That’s a huge chunk of this market, unlike any combination I’ve ever seen. Plenty of winners out there if you just stop freaking out and start looking at the opportunities.”
Other proven strategies include looking for solid dividend growth, as well as seeking names that help consumers stretch their paychecks.
Here are nine solid inflation stocks to buy in Q4:
- Apple (NASDAQ:AAPL)
- American Express (NYSE:AXP)
- Chevron (NYSE:CVX)
- Dollar General (NYSE:DG)
- Dollar Tree (NASDAQ:DLTR)
- Newmont (NYSE:NEM)
- Nvidia (NASDAQ:NVDA)
- Target (NYSE:TGT)
- Walmart (NYSE:WMT)
Inflation Stocks to Buy: Apple (AAPL)
Source: WeDesing / Shutterstock.com
First up on this list of inflation stocks, Apple is one of those names that could possibly be considered inflation-proof. With a market capitalization of more than $2.6 trillion as well as more than $191 billion in cash on hand, AAPL stock can easily withstand any downturn in the market.
But you shouldn’t expect Apple to drop at all. Returns so far in 2021 are 24%. The company should also see strong sales numbers for the holiday shopping season in Q4. Wedbush analyst Daniel Ives says Apple was expected to sell 10 million iPhones over the Black Friday weekend.
This company’s fiscal Q4 earnings came in a $1.24 per share, up around 70% from a year ago. For the quarter, sales also rose 29% to $83.4 billion. However, revenue missed analyst expectations due to semiconductor chip shortages.
American Express (AXP)
Source: First Class Photography / Shutterstock.com
American Express isn’t the biggest or best-known name in the credit card space. However, AXP stock may be one of the best inflation stocks to buy during these inflationary times.
Why? Well, American Express caters to business clients as well as individuals who are more well-off. It makes 82% of its money “from discount fees, card fees, travel-related commissions and other revenue.” Only 18% of its money comes from interest.
In the third quarter, AXP delivered $2.27 per share and revenue of $10.9 billion. Both numbers beat analyst estimates.
This pick is up nearly 28% so far in 2021. Currently, it trades at a forward price-earnings (P/E) ratio of 16.56 times and a forward price-sales (P/S) ratio of 2.93 times.
Inflation Stocks to Buy: Chevron (CVX)
Source: LesPalenik / Shutterstock.com
What’s one of the first thing that investors do when they fear inflation? They buy oil. One hedge fund, Man Group, says that energy commodities were the “best performing asset class” in the last eight inflationary periods. That’s why a major oil company like Chevron is a solid pick when looking for inflation stocks.
Chevron is already up more than 37% YTD, but even at these lofty highs CVX stock is far off the highs it reached back in 2018. Right now, it’s coming off a huge Q3, in which the company posted its best quarterly profit in eight years. Net income was $6.11 billion, versus a loss of $207 million in the prior-year period. Finally, cash flow from operations came in at $8.5 billion.
What happened? Of course, Chevron and other oil companies suffered greatly last year when the oil market collapsed because of the pandemic. Because of that, Chevron made big budget cuts. Now that’s being reflected in this year’s profits. In fact, Chevron says that its spending so far this year is 22% lower than a year ago. That gives it an outsized profit margin.
On top of it all, CVX stock pays a great 4.68% dividend.
Dollar General (DG)
Source: Jonathan Weiss / Shutterstock.com
Inflation means that consumers will have less money to spend for both necessary and discretionary spending. For instance, there are already reports of meat and other staples costing more today. Because of that, I always consider dollar stores like Dollar General when I think about inflation stocks.
Based in Tennessee, Dollar General operates more than 17,600 stores across some 46 states. This company’s strategy is to put stores in neighborhoods in order to spread its footprint as wide as possible. Once inside, customers can fine low-cost food, snacks, cleanings supplies, health and beauty products, clothing and seasonal items.
For the year, Dollar General stock is up 6%. Revenue is up by around 53% since 2017, according to Seeking Alpha. What’s more, the company has a reasonable forward P/E of 22 times.
When it comes to DG stock, analyst sentiment is solid. Out of 27 analysts, 22 are bullish or very bullish. Meanwhile, 3 other analysts remain neutral on DG stock.
Inflation Stocks to Buy: Dollar Tree (DLTR)
Source: shutterstock.com/Jonathan Weiss
Based in Virginia, Dollar Tree is a different kind of discount retailer than Dollar General. With more than 15,000 stores across 48 states as well as in Canada, Dollar Tree buys bulk items and sells them at low prices.
How low? Until recently, items in the store were a dollar (hence the name), but this pick of the inflation stocks recently announced that it was raising the prices of items to $1.25. Additionally, according to NPR, Dollar Tree has been testing higher-priced items for a few months, including adding $3 and $5 products in its Dollar Tree Plus stores.
If nothing else, raising prices will allow Dollar Tree to expand and sell a wider variety of sizes and products.
Most recently, Q3 earnings came in at $6.42 billion and earnings at 96 cents per share. Both exceeded analyst expectations of $6.41 billion and 95 cents per share. Currently, DLTR stock is up a whopping 25% YTD in 2021.
Source: Piotr Swat/Shutterstock
Next up on this list of inflation stocks is Newmont. Gold is a natural hedge against inflation and a market downturn. Sure, cryptocurrencies are flashier and have had a much higher return in the last few months. Still, NEM stock is a solid pick here.
Newmont is the world’s largest gold miner. What’s more, Joule Financial’s Quint Tatro recently told CNBC that NEM is one of his top picks against inflation. The company added to its position in NEM stock after the consumer price index report came out.
“Newmont has an incredible balance sheet. It is truly a proxy for gold. It should move in lockstep with gold if we’re right, and we get paid almost 4% to wait […] I think it will do very well […] You’re getting it at a discount, and I believe that it will continue to rise with gold if we continue to see core inflation move up as well.”
Right now, NEM stock is down by around 8% so far this year. But Fundamental Research analyst Siddharth Rajeev maintained his “buy” rating on the stock, setting a price target of $63.10. That represents more than 14% upside today, which would be welcome during an inflationary run.
Inflation Stocks to Buy: Nvidia (NVDA)
Source: rafapress / Shutterstock.com
According to VandaTrack, which is a Vanda Research flow tracker that measures net stock purchases, NVDA stock was one of the most-purchased equities on Wall Street in November.
Why? Well, Nvidia is absolutely on fire. Up by more than 140% so far in 2021, Nvidia is currently priced at more than $320 per share.
Recognized as one of the world’s biggest semiconductor companies, Nvidia is in an enviable position. Remember, we are still in a chip shortage — and those chips are needed to run everything from electric vehicles (EVs) to computers and small electronics.
If supply and demand rules the world, then this name is in the catbird seat. And that demand is not going to go away just because of inflation.
This pick of the inflation stocks reported its Q3 earnings on Nov. 17. For the period, revenue was up 50% year-over-year (YOY) to $7.1 billion, beating analyst expectations of $6.81 billion. Earnings per share was $1.17, which topped expectations of $1.11.
Source: jejim / Shutterstock.com
Next up on this pick of inflation stocks, Target is a discount retailer that operates higher-end stores than Dollar General and its peers. Presently, TGT stock is up nearly 40% so far in 2021 but slipped after the company reported Q3 earnings in mid-November.
What happened? Well, the company did manage to beat analyst expectations in earnings and revenue. Plus, it raised its outlook. But Target also warned that its margins would be pressured in the coming months as labor costs increase and supply-chain disruptions persist.
No worries, though. That dip is just a solid buying opportunity in TGT stock. One Bank of America analyst also agrees, according to CNBC. Analysts at Raymond James and DA Davidson raised their price targets for Target shares as well.
Inflation Stocks to Buy: Walmart (WMT)
Source: Jonathan Weiss / Shutterstock.com
That brings us to the last entry on this list of inflation stocks: Walmart. This name is the biggest retailer on the planet and boasts revenues of $519 billion according to the National Retail Federation. Walmart operates 10,500 stores across 24 countries.
With its expanding footprint (Walmart owns Sam’s Club, among other brands) and its growing online presence, Walmart had a solid Q3. But what really made the difference was the company’s grocery offerings. Walmart says its size helped it navigate supply chains and keep shelves stocked. CFO Brett Biggs told CNBC the following:
“We’ve always been an inflation fighter for customers […] Our scale and the product breadth that we have allows us to do things in a way that is beneficial to customers and beneficial to shareholders.”
For the quarter, revenue came in at $140.53 billion, versus the $135.6 billion that analysts expected. What’s more, earnings per share came in at $1.45 versus expectations of $1.40.
On the date of publication, Patrick Sanders did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders. As of this writing, he did not hold a position in any of the aforementioned securities.
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