Thursday seems weak again for stocks, with concerns of spreading the US virus. USA And unemployment claims in focus.
Beating the S&P 500 for a mile has been GCQ20 gold,
one of the best performing asset classes of the year, which recently peaked at 8 years, generating bullish predictions.
Providing our call of the day is Crescat Capital’s global macro analyst Otavio ‘Tavi’ Costa, who believes that we are in the early stages of a major bull market for precious metals as an uncorrelated macro asset class. That is good news for an unloved stock group.
“Wait until Robinhood merchants find out about the penny stocks of gold and silver, that’s where we are long,” Costa told MarketWatch. He was referring to a low-cost commercial app that has attracted an avalanche of new investors, who have lately won some bets on overdue stocks.
“The mining space has been in a kind of recession since the peak in gold and silver prices in 2011. The capital in space has dried up significantly. I think now that macro and fundamentals are aligned with the long-term technical aspects, I have never seen such a good setup for an industry like precious metals, ”said Costa.
Costa says they have been taking friendly activist stakes in some “junior scout” miners with prolific projects. “Crescat created a fund dedicated to mining companies a year ago because the sector was badly hit.
The miners are divided into GDXJ juniors,
who are focused on finding precious metal deposits, and senior GDX miners,
that have large developed mining operations.
He said the large-cap mining space has started to improve a bit, and he believes investors will move from there to the bottom of the industry.
The overall market capitalization of the precious metals industry represents less than 1% of the global market capitalization of the stock market as a whole, Costa said. It’s the best place to take advantage of factors like a depressed economic picture fueled by the virus, historically high valuations of US stocks, global fiat printing, and long-term rates suppressed, to name a few.
“Metal prices should increase significantly and capital will start to reach the industry as a whole, and I think it will be a big change in terms of margins and fundamentals for those companies,” Costa said. The mining sector is listed at a free cash flow of five to 10 times, a measure of the company’s operating expenses and capital spending, compared to any industry in the technology sector that is listed for sales 20 to 70 times.
“There are no fundamental reasons why we are going to see organic growth in the economy, and that brings it back to the government situation. It is already broken and deficits will only increase in the future … will force the Fed to continue stimulus in the future. That creates and an environment for gold, “and all those miners said. Read more about his thoughts here.
The market
Dow YM00,
S&P ES00,
and Nasdaq NQ00,
futures are under pressure, with European stocks SXXP,
Also below. A 2% drop for South Korea’s Kospi 180721,
took Asia down.
The buzz
The data is expected to show another 1.38 million new jobless claims (see preview). Revised first quarter growth data and durable goods orders and trade data are also to come. Meanwhile, a Moody’s study says state and local governments will need billions more to avoid 4 million layoffs.
Disney DIS
It will delay the reopening of Disneyland and other California theme parks until after July 17.
German payment system provider Wirecard WDI,
filed for bankruptcy, after failing to find € 1.9 billion ($ 2.1 billion) and the arrest of its chief executive officer on suspicion of market manipulation.
Sweden paid a high price for health care for failing to block COVID-19, and its economy does not appear to be better. And a Japanese study says wearing a mask dramatically reduces virus death rates.
Random readings
Native Americans are furious at President Donald Trump’s plans for a big July 4 visit to Mount Rushmore.
You can’t sue a TWR on Twitter,
False cow account, the judge tells the Republican lawmaker.
Who runs this city? Monkey gangs at war.
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