Markets & Metals Navigator (November 8th, 2020)

Biden Presidency Lifts Markets

The U.S. presidential election on November 3rd provided a much needed positive catalyst for the markets, giving investors a level of clarity and certainty for the next 4 years.  The Associated Press and other major news outlets had officially declared Joe Biden president on Friday after a very close election.

The Nasdaq charged ahead 9.4% for the week, followed closely by S&P 500 which was up 7.3%.  Investors also bid up safe heaven assets: gold, silver and bitcoin were up 4.0%, 8.2% and 7.5% respectively.

The Republicans will likely keep control of the Senate, while the Democrats are projected to retain control of Congress.  This outcome potentially limits the ability for a Biden presidency to push through a larger stimulus bill.

However, with the US unemployment level at 7.9% and coronavirus cases spiking, the Senate and Congress will need to get checks in the mail sooner than later, while the Fed will continue to flood the system with money.

In this loose fiscal and monetary environment we believe gold, silver and bitcoin will all perform very well relative to cash and bonds.

Gold mining stocks are one of the most attractive ways to play this trade, as they have significantly underperformed the gold price since 2008.

Vanadium: Driving Carbon Reduction in Steel & Buildings

As part of our Green Metals Series, Capital 10X identified vanadium as essential in increasing industrial efficiency and battery storage.

A ground-breaking study conducted by Texas A&M University has crunched the numbers on the energy savings when vanadium is added to steel reinforcement bars. Steel-reinforced concrete is used in construction worldwide.

For a typical reinforced concrete building made with vanadium alloy, it results in a 26% energy savings and 19% carbon savings.

Vanadium is clearly an integral part of an energy sufficient, sustainable future, and a key element in the Green Industrial Revolution.

Among the three global producers Largo Resources (TSE:LGO) has highest vanadium head grade and concentrate grade. Largo Resources head grade is 1.2% V205, double that of the next closest mine (Bushveld at 0.6% V205).

Democrat Presidency the Elixir for Cannabis Stocks

Over the last several months Capital 10X has repeated stated the U.S presidential election was set to be the biggest 2020 catalyst for the cannabis sector.

Like clockwork as soon as the market understood that it would be a Biden presidency cannabis stocks took off.

The most interesting take away from last week’s strong performance was the massive bid for Canadian cannabis stocks, the Horizons Marijuana Life Sciences ETF (focused on growers in Canada) rose +28% last week. Aurora Cannabis was up +137%, clearly a combination of short covering and extreme bottom fishing drove these moves.

Grow Generation (NASD:GRWG), a U.S. cannabis growing equipment retailer, rose 38% last week.

The AdvisorShares Pure US Cannabis ETF (focused on U.S. producers) rose 19%, the lowest among the three major sub-asset groups in cannabis.

U.S. investors are clearly bidding up assets that they know well and are on the big American exchanges (NYSE & NASDAQ), we expect this trend to continue.

Capital 10X continues to believe that U.S. cannabis stocks offer very compelling risk/reward for investors, they trade at a deep discount relative to high growth technology stocks and have similar levels of top line revenue growth.

 

0 0 vote
Article Rating

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Editor
Capital 10X gets down to the real money business, actionable financial insights for traders and investors. We analyze company earnings, interview management teams and help teach the fundamentals of financial analysis and options trading. Our mission is to hunt for genuine 10 baggers.
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments