Disclosure: The following represents my opinions only. I am long AOT, AYA, BIG, CDR, CGC, CRE, CVV, FPC, GOT, K, KRR, LBC, OGC, OSK, PEAK, NGD, NSE, RDU, RPX, RUP, TAO, TLG, TNZ, VLE (image credit to Kouji Tsuru on Unsplash)
If there’s one sector that is the story of the month, it has to be gold. Unless you’ve been living in a cave, you’ll know that gold is currently trading at an all-time high after obliterating resistance around the $2080 level. Generally speaking — and for quite some time — central banks have been buying gold, ETFs have been selling gold, and gold stocks have been grossly underperforming the metal itself. Belief in the gold breakout appears to be muted and, after so many prior head-fakes, my sense is that the market has yet to buy into the idea that gold is anything but a curiosity that is owned by “gold bugs” and old guys. Most investors have little or no exposure to gold and have been caught flat-footed by the strength of the price move, but their concentration in the top market performers (e.g., Nvidia) means that not participating in gold hasn’t hurt their performance one bit. At this stage, most investors out there don’t even know what the tickers of relevance are in the gold sector, let alone anything about the individual names and valuations, so it’s still early days. Meanwhile, bitcoin is also making new highs as I type this. Hmmmm. A quick look at the DXY shows that that U.S. dollar has rolled over recently as the chorus calling for Fed rate cuts, combined with what looks to be an unending upwards spiral in U.S. debt levels, sets the scene for a rally in things that are priced in U.S. dollars, like commodities, and arguably bitcoin.