Author: Andrew Packer

Commodities

CME Group: Why Is the Gold Rally Leaving Silver Behind?

Posted on by Andrew Packer

Year-to-date, gold prices have soared to all-time highs. However, silver has lagged. In fact, on a nominal price basis, silver trades at about half of its all-time high.

That’s a significant gap. But it’s also one that reflects a number of unique conditions to the markets right now. Investors who understand those conditions can make better decisions on known when to trade gold and when to trade silver.

First, gold prices tend to move opposite to interest rate expectations. With investors still expecting interest rates to move lower, gold prices tend to trend higher.

That move explains why gold prices trended lower when interest rates first started moving higher. Investors expected gold to move higher at the time given rising inflation rates.

Currently, gold has continued to rally, even as rate cut expectations have dropped.

Part of that is driven by supply and demand dynamics. Central banks remain massive buyers of gold. That is keeping pressure on supply. And it’s a sign of why gold is gaining right now while silver isn’t.

However, silver could rise along with gold amid geopolitical fears. Soaring fears have seen both metals spike higher in price. However, those price spikes tend to wear off quickly when the geopolitical fears decline.

Silver is historically undervalued relative to gold. But soft growth for silver’s industrial demand could be weighing on silver relative to gold right now. Either way, with positive trends underway for gold and silver prices, mining companies could see big returns from here.

 

To view the full analysis, click here.

Stock Picks

The Average Joe: Intel’s Multi-Billion Dollar US Foundry Expansion Is Killing Its Stock, But It Could Also Save Its Future

Posted on by Andrew Packer

Semiconductor manufacturers have been a big hit with the market over the past year. While most of these companies aren’t profitable, they’re positioning themselves to sell AI chips. With soaring demand for all things AI, the future looks bright.

But then there’s Intel (INTC). One the leading semiconductor manufacturer in the 1990s, it’s moved to the wayside. Other competitors have fared better.

Intel just reported a $400 million loss, even as revenues rose by 9%.

The good news? Intel’s Gaudi 3 AI chip has better specs than Nvidia’s (NVDA) H100 chip. It’s currently clocking in at 50% and also 40% more power efficient.

Plus, in 2026, Intel plans to open the first US fabrication plant in over four decades. And it has plans to build as many as six more. That will make it the world’s second largest fabrication maker.

However, while this fab plant buildout is playing out, they’re unlikely to be profitable.

If this plan pays off, shares could start trending far higher. Investors could simply buy Nvidia, or another big chipmaker that’s already trending higher.

But Intel is a speculative play today on the potential future of the chip space in the coming years. That could make it a far better investment in the chip space today, especially compared to competitors.

 

To read the full analysis, click here.

Income investing

A Wealth of Common Sense: Hedging Your Portfolio With Options

Posted on by Andrew Packer

Market volatility has been on the rise. The past few months has seen stocks trade sideways overall. Most investors hope to buy low, grab an uptrend, and sell high. However, markets don’t always work that way.

That’s why it’s important to have tools that can help hedge your portfolio. Following a big run higher, a stock may need to trade sideways or pullback before the trend continues. That could be an optimal time for a hedging strategy.

The simplest strategy is to use covered call options. An investor can sell one call option on a stock for every 100 shares they own. That’s what makes the trade “covered.”

By selling a call option, a trader is willing to sell their shares at a set price in advance.

Say a stock rallies from $10 to $15 quickly but then slows down. A trader can earn extra capital by selling, say, a $16 call option from the trade.

While it’s not quite the same as earning a dividend, it can add extra income simply from owning a position.

Traders should look to sell covered calls after a stock has had a big move higher. That should translate into higher call option premium. Since option premium always goes to zero, selling calls after a big run gives traders a slight edge.

 

To listen to the full strategy for hedging your portfolio, click here.

Commodities

David Lin: We’re Entering “Greater Depression”: Brace For War, Sovereign Defaults

Posted on by Andrew Packer

Markets have seen some increased volatility in recent months thanks to geopolitical events. While Russia’s invasion of Ukraine drags on for a third year, escalating conditions in the Middle East could result in a wider global conflict.

That means that any market selloff we’ve seen so far could pale in comparison. And if war does break other, the reaction among asset classes could result in the economy teetering over into a recession.

That’s especially true is oil prices end up soaring.

While prices have been calm in the past few weeks, soaring oil prices have tipped the economy into a recession several times. That includes the oil shocks of the 1970s, plus the early recession of the 1990s, and in 2008.

Currently, the economy is still recovering from the pandemic. While the private sector has taken off, government spending has led to soaring debt levels.

Now, those debt levels pose a problem as interest rates soar. Debt from two years ago is rolling over at significantly higher rate. Governments face soaring costs to finance their existing debt, while still running massive deficits.

That increases the possibility of a financial shock. And at some point, governments may simply decide to print money rather than go into debt. That would be a de facto debt default.

Even worse, it could create another massive wave of inflation. Investors may want to allocate some capital to gold to protect from these potential dangers.

 

To watch the full interview, click here.

Stock market strategies

FX Evolution: Retail Investors Are Getting Squeezed Again

Posted on by Andrew Packer

Following the market’s selloff and bounce higher, investors may think that markets are back in bull market mode. With companies like Tesla (TSLA) soaring 40 points higher in a matter of days on positive news, it’s easy to see how things look bullish.

The good news? The options market looks bullish as well. Stocks are moving back to positive gamma with the S&P 500’s return to the 5,100 range.

With many investors expecting a market pullback, the 5% drop in the past few weeks may have been sufficient. In total, that small selloff took $2 trillion in value out of the markets.

Plus, with earnings season kicking off, companies are reporting better-than-expected data on average. This positive earnings surprise could help keep stocks moving higher.

The best positive earnings surprises have come from earnings and consumer discretionary stocks. However, energy has been an underwhelming sector.

With stocks performing well on a fundamental basis, there’s room for stocks to head higher. That’s good news for investors focused on growth stocks. And for companies that can grow during periods of higher inflation.

The downside to this trend is that companies that have missed on earnings have taken a much heavier hit. Going forward, markets will likely want to see more growth coming from the bottom 490 stocks in the S&P 500. That still makes the current market one where investors need to pick and choose carefully.

 

To watch the full video, click here.

Cryptocurrencies

Bitcoin Magazine: Blackrock Bitcoin ETF Enters Top 10 All-Time for Longest Inflows

Posted on by Andrew Packer

There are many ways to measure investor interest. Doing so can give traders an edge. By following where money is going, it’s easier for traders to follow the momentum.

Plus, when volume starts to slow down to a popular investment, traders can exit. Ideally, that occurs around the time prices start to turn. At the sector or market level, data about money flowing into and out of funds provides a strong proxy.

Currently, fund data for the new bitcoin ETFs shows that BlackRock’s bitcoin ETF (IBIT) reigns supreme. The ETF is now in the top 10 ETFs in terms of the streak of daily investment inflows.

In the first 70 days since its inception, IBIT has seen its total holdings increase from investor funds moving in. That means zero days of funds moving out.

Meanwhile, BlackRock, the world’s largest asset manager, holds over 270,000 bitcoin on its balance sheet. That’s currently valued at over $18 billion.

Most of the other new bitcoin ETFs have likewise seen strong inflows to their funds. That shows that investors are interested in owning bitcoin, without the hassle of a separate cryptocurrency account.

As long as these inflows continue, bitcoin should continue to see price appreciation. The recent halving reduces the new supply coming to market, which could lead to a big jump higher later this year.

 

To read the full analysis, click here.

Commodities

Kitco: Gold Is “Good Money” As a Hedge Against Inflation and Default Risks

Posted on by Andrew Packer

Gold prices have had some wild swings in the past few weeks. After closing over $2,400 for the first time last week, prices sold off slightly this week. However, the trends that make gold a popular investment remain in place.

Those trends include today’s inflation. With inflation still running hot, having some allocation to gold looks like a reasonable investment for most traders right now. If inflation unexpectedly soars, gold should protect a portfolio’s value.

Other trends make sense for gold right now as well. Unlike many other traditional assets, gold has no counterparty risk. In contrast, a bond depends on the other party honoring their commitment. And a stock relies on company management running a company well.

Gold offers the lack of a counterparty risk like cash. But since it tends to hold its value compared to inflation, gold has seen rising popularity in recent months.

Meanwhile, gold doesn’t offer the cash flow of a bond. While that’s a mark against gold, bonds may not be attractive if interest rates come down again.

Besides the lower interest payments, countries facing rising debts could end up paying down their debts with printed money, creating more inflation.

Overall, among the major asset classes, gold is having a moment in the sun. And it looks likely to continue.

 

To see the full analysis for a further move higher in gold now, click here.

Income investing

Dividend Growth Investor: Eight Dividend Growth Stocks Rewarding Investors With a Raise

Posted on by Andrew Packer

Markets remain near all-time highs but have pulled back recently. The economy shows signs of strong growth. While that’s keeping inflation hotter than expected, it also reflects corporate America’s strength.

With that in mind, it’s no surprise that overall earnings continue to rise. And as earnings rise, companies look for ways to reward their shareholders. Many successful companies offer dividend payments to reward their owners.

Recently, eight companies with a history of dividend growth increased their payouts. They include small, off-the-radar companies and large ones alike.

For instance, Maine-based Bar Harbor Bancshares (BHB) just increased their payout by 7.1%. Shares now pay a 4.7% dividend.

The bank has raised dividends for 21 consecutive years. Over the past 10 years, they’ve increased the payout by an average of 7.1% as well.

Looking at the other end of the spectrum, healthcare giant Johnson & Johnson (JNJ) just increased their dividend for the 62nd consecutive year.

JNJ pays a 3.3% dividend. And they’ve raised the payout an annualized rate of 6.1% over the past 10 years.

The most recent payout increase was slightly lower at 4.2%, but that’s still a level that beats inflation.

Today, investors have plenty of income-producing stocks to buy with a history of raising their cash payouts larger than the rate of inflation. That’s a good way to beat today’s inflation, and continue to grow wealth over time.

 

To view the full list of dividend growth stocks increasing their payout now, click here.

Economy

Michael Bordenaro: Fast Food Customers Have Had Enough of the High Prices!

Posted on by Andrew Packer

For decades, customers have flocked to fast food for its speed and convenience. Fast food companies have leaned into customer demand by creating services such as the drive-thru to cater to customers on the go.

However, while it was never expressly stated, customers also expected fast food to be cheap as well. Companies that offered value menus or dollar menus were able to lure in potential customers based on low prices.

Thanks to inflation, the costs of having such value menus has gone away. And many customers now going out for fast food are seeing sticker shock.

Most major fast food restaurants have increased their prices in excess of the inflation of recent years. Of all the fast food chains, McDonald’s (MCD) has increased their prices the most on average, while coffee chain Starbucks (SBUX) has raised prices the least.

Meanwhile, these companies are also using tools such as self-serve kiosks and robotic cooking devices to save on the costs of human labor.

While those cost savings are key, the overall high prices could lead to customers moving away from eating fast food as often as they have been.

It’s possible that the economics of the fast food industry have changed for the worst. And that investing in the stocks of these companies may not offer the great returns they’ve had in the past.

 

To listen to the full breakdown on rising fast food costs, click here.

Commodities

Game of Trades: The Great Turning Point for the US Economy Has Arrived

Posted on by Andrew Packer

It’s now been ten months since the Federal Reserve stopped raising interest rates. Typically, the central bank starts to cut rages eight months after its final hike, on average. That means we’re now in the “longer” part of “higher for longer” rates.

Meanwhile, the Treasury bond yield curve remains inverted. That’s also been the case for a record period of time. Typically, an inverted yield curve is a warning sign for markets.

Once that curve starts to revert, the real danger is typically near. We’re not quite there yet.

But the conditions needed for a recession to occur are in place, especially with higher interest rates finally weighing on the economy.

Meanwhile, the economic data shows expansion underway. But it will eventually flip to a contraction. That will take a catalyst.

One potential catalyst is an oil price shock. Despite rising geopolitical concerns in recent months, oil prices have remained muted. But oil price shocks led to big recessions in the 1970s and smaller ones in the 1990s.

Plus, oil prices surged 40% in 2007, topping $100 for the first time. That oil shock certainly didn’t help out the economy following the slowdown in the housing market. When consumers have to spend more on oil, they have less to spend elsewhere.

 

To look at the full conditions necessary to kick off a recession, click here.