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Precious Metals

These Factors ‘Could Drive Gold and Silver Prices Much Higher’

Source: Crescat Capital for Streetwise Reports   09/22/2021

In a Sept. 10, 2021 Crescat Capital broadcast from the Precious Metals Summit in…

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This article was originally published by The Gold Report

Source: Crescat Capital for Streetwise Reports   09/22/2021

In a Sept. 10, 2021 Crescat Capital broadcast from the Precious Metals Summit in Beaver Creek, the firm's Portfolio Manager, Tavi Costa, and its Chief Investment Officer, Kevin Smith, talked about the current macroeconomic environment and highlighted the opportunity in gold and silver mining equities.

Portfolio Manager, Tavi Costa, noted that his funds firm, Crescat Capital, believes we are in a secular bull market for gold and silver and because we are now amid a pullback, the time is right to be taking advantage of stocks in the space over time. He showed a slide of silver's weekly candles and noted that the precious metal looks technically sound for taking advantage of.

"Cryptocurrency is getting a lot of attention these days, but Crescat Capital likes precious metals."

Looking forward, Costa added, "I think there are a lot of fundamentals behind what could drive gold and silver prices much higher and perhaps really benefit the explorers and a lot of the companies we have in our portfolio," he added.

Costa purported that we could be on the cusp of a new phase of mergers and acquisitions given the high level of liquidity among the mining majors. They have generated free cash flow at a pace never seen before and have lots of net cash available.

"I truly believe that tangible assets continue to be something very important for investors to own in their portfolios," Costa said.The portfolio manager said platinum is also at a good entry point and showed a slide of the metal's quarterly candles.

"Gold, we believe, has intrinsic value."

Also in the broadcast, he presented three slides depicting how various economic metrics are trending. The first metric was the Taylor Rule to the Fed funds rate Spread, and it showed that the spread today is the largest it has been since about 1975. Costa said the spread indicates interest rates should be at around 6 percent, but obviously they are not.

"It's a good reminder of how trapped the Federal Reserve is," he added.

Second, the cost of ride sharing with Uber and Lyft increased 92 percent between January 2018 and July 2021, Costa said. However, the intercity transportation component of the Consumer Price Index (CPI) that takes into account taxi, Uber and Lyft fares is up only 5 percent during the same period.

"This is example of how the CPI is massively understated in regards to the real inflation in the system," added Costa.

Third, the Duke survey of chief financial officers showed that internal company optimism about wages and sales is at a record high.

"The cost of living rising started to create a demand for higher wages and salaries, and we're seeing this in a lot of fronts," Costa said.

Next, Kevin Smith briefly summarized today's economic macroenvironment and with that as the backdrop today, what parts of the market Crescat Capital favors.

Smith reiterated that inflation is rising, growth is slowing and the stock market is in a bubble. Real interest rates are negative, and money printing continues. Deficits are the highest they have ever been.

Thus, cryptocurrency is getting a lot of attention these days, Smith said, but Crescat Capital likes precious metals.

"Cryptocurrencies, they're faith-based currencies," he said. "Gold, we believe, has intrinsic value, and the junior mining industry has been through essentially a 10-year bear market."

Read more about the companies Quinton Hennigh, Crescat's Geologic and Technical Director, discusses in part two of the Sept. 10 briefing.

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Streetwise Reports Disclosures:

1) This is contributed content from Crescat Capital compiled by Doresa Banning for Streetwise Reports LLC. Doresa Banning provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None. Her company has a financial relationship with the following companies referred to in this article: None.

2) The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

3) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in any securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. 

Important Crescat Disclosures Provided by Crescat Capital 

Please read Crescat’s important disclosures.

Nothing herein should be construed as personalized investment advice or a recommendation that you buy, sell, or hold any security or other investment or that you pursue any investment style or strategy.

Case studies are included for informational purposes only and are provided as a general overview of Crescat’s general investment process, and not as indicative of any investment experience. There is no guarantee that the case studies discussed here are completely representative of Crescat’s strategies or of the entirety of its investments.

Crescat has compiled its research in good faith and while it uses reasonable efforts to include accurate and up-to-date information, it is provided on an “as is” basis with no warranties of any kind. Crescat does not warrant that the information on this site is accurate, reliable, up to date or correct. In no event will Crescat be responsible or liable for the correctness of any such research or for any damage or lost opportunities resulting from use of its data.

You should assume that as of the publication date, Crescat has a position in the securities discussed and therefore stands to realize significant gains in the event the price of security moves. Following the publication date, Crescat intends to continue transacting in the securities, and may be long, short, or neutral at any time.

 

Economics

What is Stagflation and How Will It Affect the Global Recovery?

According to the National Bank of Canada the risk of global stagflation is surfacing due to rising oil prices, soaring food costs, and slow economic growth…

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According to…[the] National Bank of Canada…the risk of global stagflation is surfacing due to rising oil prices, soaring food costs, and slow economic growth…[which] threatens to undermine the global recovery. 

What is Stagflation?

Stagflation is high inflation during a recession, when it typically shouldn’t be seen.

  • In a healthy scenario, inflation is the result of rising productivity and a tight job market. It’s viewed as a side effect of too much success.
  • During stagflation, inflation rises with high unemployment and slow growth. It’s often the result of lower confidence in a currency. Rising inflation for essential goods means diverting spending from other areas of spending. Diverted cash diverts revenues for certain companies, which can further slow growth.

Early Signs Of Stagflation Have Begun To Appear

One of the most well-known periods of global stagflation was the early 1970s. Oil trade restrictions resulted in rising energy costs, which trickled into most goods. This made already elevated inflation even worse, especially for food. Since this was during a recession, it exacerbated the difficulty of unemployment…

The National Bank sees some signs of stagflation beginning to appear in the economy. Like in the 1970s, it’s starting with a shock to energy prices due to a shortage, and rising carbon permit costs in OECD countries and this can slow global trade. in addition, the pandemic recession is still raging on, with elevated unemployment…

Rising Global Food Prices May Slow Global Economic Growth

Global food prices are rising at an unusually fast rate these days, and it’s not a base effect. The United Nations Food Price Index shows the basket price of food is up 30% year to date, from it’s 2020 average…[which is] the highest level of growth since the 1970s…

…Food is one of the largest components of household expenses in emerging economies (about 60% of global GDP)…[and,] as food prices rise, capital will be diverted into essentials… killing emerging market consumption…[which] will drag global trade. “Clouds are forming over global economic growth forecasts for 2022,” concludes the National Bank of Canada.
Editor’s Note:  The original post by Daniel Wong has been edited ([ ]) and abridged (…) above for the sake of clarity and brevity to ensure a fast and easy read.  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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Precious Metals

Bitcoin Is Going To $500,000 and the Rationale Is Simple

While our year-end price target for Bitcoin is $100,000, we believe that Bitcoin prices will soar much, much higher in the long run – like 5X higher….

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…While our year-end price target for Bitcoin is $100,000, we believe that Bitcoin prices will soar much, much higher in the long run – like 5X higher. That’s right, we think Bitcoin is going to $500,000 and the rationale…is simple.

Bitcoin, in its most fundamental form, is the digital version of gold. The gold market is an $11 trillion market. If Bitcoin gets that big, you’re talking an $11 trillion market on 21 million tokens, which implies a price per token of about $500,000.

Of course, that back-of-the-envelope math rests on the huge assumption that Bitcoin is, indeed, the digital version of gold but it looks like that may already be the case. Just take a look at the chart below. The blue line tracks Bitcoin prices. The purple line tracks the 10-year Treasury yield, which is widely seen as the market’s dynamic proxy for inflation and the green line tracks the price of gold.

The blue and purple lines correlate strongly to one another but the green line doesn’t correlate to either…[and,] to us, it means that the market has already confirmed Bitcoin as the digital version of gold – and, indeed, as a superior version of gold.

Long story short, as inflation expectations rise, investors sell bonds, and the 10-year Treasury yield rises, too. To protect against that inflation, investors typically buy gold as a store of value, but this year, instead of buying gold, they’re buying Bitcoin.

Conclusion

Bitcoin has become the go-to hedge against inflation in 2021 – not gold… Fundamentally speaking, Bitcoin is better than gold.

Editor’s Note:  The original post by Luke Lango has been edited ([ ]) and abridged (…) above for the sake of clarity and brevity to ensure a fast and easy read.  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

A Few Last Words: 

  • Click the “Like” button at the top of the page if you found this article a worthwhile read as this will help us build a bigger audience.
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  • Register to receive our free Market Intelligence Report newsletter (sample here) in the top right hand corner of this page.
  • Join us on Facebook to be automatically advised of the latest articles posted and to comment on any of them.
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Economics

US stocks close flat after inflation data

Benchmark US indices closed flat on Wednesday October 13 after government data showed inflation rose in September increasing the possibility of stimulus…

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Benchmark US indices closed flat on Wednesday, October 13, after government data showed inflation rose in September, increasing the possibility of stimulus tapering sooner than expected.

The S&P 500 was up 0.30% to 4,363.80. The Dow Jones stayed flat at 34,377.81. The NASDAQ Composite Index rose 0.73% to 14,571.64, and the small-cap Russell 2000 rose 0.34% to 2,241.97.

The US consumer price index rose by 0.4% in September after rising by 0.3% in August. On an annual basis, CPI jumped 5.4% through September, while Core CPI rose 0.2% in September. Food prices rose 0.9% MoM in September, the Labor Department data showed on Wednesday.

Meanwhile, Atlanta Fed President Raphael Bostic has expressed concern over rising inflation. His comments come after the Fed released its minutes from its September meeting that supported withdrawing stimulus by mid-November or mid-December.

Basic materials, technology, and utility stocks led gains on the S&P 500 index on Wednesday. Nine of the 11 index segments stayed in the green. Financial and energy stocks were the bottom movers.

JPMorgan Chase & Co. (JPM) stock declined 2.60% after reporting better-than-expected quarterly profits. Its revenue rose 1% YoY to US$29.64 billion in Q3, FY21, while its net income was up 24% YoY to US$11.68 billion, or US$3.74 per diluted share.

Stocks of BlackRock, Inc. (BLK) rose 3.87% after reporting quarterly results before the opening bell. Its revenue ticked up 16% YoY to US$5.05 billion in Q3, FY21, and its net income came in at US$1.68 billion, or US$10.89 per diluted share, beating analysts’ expectation of US$9.35 per diluted share.

Delta Air Lines, Inc. (DAL) stocks tumbled 5.82% after reporting quarterly results marred by rising fuel costs. Its operating revenue fell by 27% YoY to US$9.15 billion in the quarter ended September 30, while its net income declined by 19% YoY to US$1.21 billion, or US$1.89 per diluted share.

In the basic materials sector, Linde PLC (LIN) rose 1.81%, Air Products and Chemicals, Inc. (APD) rose 2.32%, and Freeport-McMoran, Inc. (FCX) gained 4.22%. Newmont Corporation (NEM) and PPG Industries, Inc. (PPG) ticked up 3.31% and 0.90%, respectively.

In utility stocks, NextEra Energy, Inc. (NEE) gained 1.14%, Exelon Corporation (EXC) gained 1.17%, and DBA Sempra (SRE) rose 1.42%. Xcel Energy Inc. (XEL) and Edison International (EIX) advanced 1.62% and 1.31%, respectively.

In financial stock, Bank of America Corporation (BAC) fell 1.06%, Wells Fargo & Company (WFC) declined 1.16%, and Charles Schwab Corporation (SCHW) fell 1.46%. American Express Company (AXP) and Capital One Financial Corporation (COF) fell 3.44% and 3.25%, respectively.

Also Read:  Earnings update: Infosys revenue up 20%, Wipro net income jumps 18%

Also Read: Q3 Earnings Snapshot: Pinnacle’s (PNFP) net income jumps to US$136.5 Mn

Nine of the 11 S&P 500 index segments stayed in the green.

Also Read: Plug Power (PLUG) stock pops on rating boost, FuelCell (FCEL) up 2%

Futures & Commodities

Gold futures were up 1.97% to US$1,793.90 per ounce. Silver increased by 2.64% to US$23.108 per ounce, while copper rose 3.80% to US$4.4900.

Brent oil futures increased by 0.01% to US$83.35 per barrel and WTI crude was down 0.06% to US$80.59.

Bond Market

The 30-year Treasury bond yields was down 3.56% to 2.030, while the 10-year bond yields declined 2.63% to 1.538.

US Dollar Futures Index decreased by 0.54% to US$94.013.

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