Is This It?
It’s not fun to talk about controversial topics, but if left unchecked and unaddressed, they might bubble under the surface and erupt out of nowhere later on.
Weeds are to be plucked immediately or you’ll have an entire generation of uneducated morons walking around campuses and pretending to be scholars of TikTok videos.
I don’t like leaving things loose and open. If I can publish my insights on a matter, I will do it at the outset. I want to talk about gold’s path forward after breaking the non-inflation-adjusted all-time high in USD.
The price of gold has been dramatically pulled forward thanks to adjustments in market sentiment over the likelihood of rate cuts in 2024.
From an expected two cuts (one in June and another in Q3 closing 2024 with a FED funds rate of 4.75%), the probabilities have become far more dovish.
The market now believes the first cut to be in March 2024 and that the FED will actually slash rates to 4.00% by the end of 2024!
These forecasted rate cuts have not only benefited gold but the stock market as well. Many of the rate-sensitive industries have begun breaking out, with more to come. November’s move was the best in 43 years!
When I explained that gold loves situations of easing and loosening, I meant it. Powell’s change of stance coupled with Wall Street’s new assumptions are the equivalent of four rate cuts, and that means the market is already operating on the future.
After this barrage of good news for gold and stocks, everyone is asking the question: is this it? Was this the top?
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So, let’s address the question and close the chapter on it.
In the last few weeks, retail investors have gone from very bearish to not bearish at all. The drop is visible even from a historical perspective.
Most conventional wisdom analysis would tell you that it’s a sign of a top, but it’s not!
When you see all of these freaks of nature on Black Friday storming Walmart to get their hands on TV sets or items of clothing while ripping the store apart and gorging on discounted goods while trampling over other shoppers, you get a sense of mania.
Right now, there’s NO MANIA.
This drop of bearish sentiment is akin to the first people gathering outside the doors of the closed Walmart. The crowds aren’t there yet, and the store isn’t open.
Does that mean gold is headed to $3,000 in 2024 and the NASDAQ 100 is about to double from here?
I don’t think so…
Gold is certainly in bullish momentum, but for goodness’ sake, look at silver and the mining stocks. They haven’t even begun moving and aren’t close to any major highs. Gold might dish out a nice 10%-15% move next year, but I don’t get excited over that.
That’s where the opportunity is, especially in the sectors that haven’t recovered yet: banking, real estate, domestic stocks (not multinationals), FinTech, Japan, China, and natural resources.
As I do every year, I’ll be releasing my portfolio in the first few days of 2024. I expect to be having another record year just as this one has been.
Some portfolio companies are trading at all-time highs right now: Cintas (CTAS), Fair Issac (FICO), Axon Enterprises (AXON), Roper Technologies (ROP), and FactSet (FDS).
Many others are trading at 52-week highs and multi-year highs, but don’t forget that the opportunity is in the sectors that have barely started to head higher…
Gold has not topped (of course it hasn’t), but eyes should be on the prize: silver and mining companies. Gold will do its job, but feast your eyes on silver.
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