Silver Comes Back to Life & Bitcoin Keeps Flirting with $20K
Silver was one of the best performing asset classes last week rising 7%, much needed as it has been a spotty stretch for the metal these last couple months.
As we highlighted in last week’s Navigator, we believe the disconnect between gold/silver & US real yields is too large for the market to continue to ignore, the divergence will correct (ie. gold & silver prices will move higher).
Weekly Silver Performance
Bitcoin keeps flirting with the $20K level, the digital currency was up 8% for the week. We believe Bitcoin is currently in a short term consolidation given the parabolic run that its had over the last 2 months.
Global Stock Market Clears the $100 Trillion
The global stock market has mashed through the $100 trillion market, this would be 115% of global GDP. Ben Hunt from Epsilon Theory said it best, this is the best definition of “financialization” – when all stocks in the world are worth more than all the goods and services provided.
Uzbekistan Joins Team Gold – Introduces a Parallel Currency
ZeroHedge reported the Central Bank of Uzbekistan has issued sealed gold bars with QR-codes in an effort to stimulate gold to be used as a store of value and promote its circulation. The country has 57% of it’s international reserves in gold.
Money Supply Growth & Inflation
Deutsche Bank published an excellent chart looking back 100 years at consumer price inflation and money supply growth (M2) – the two lines have always fit atop each other historically.
2020 is clearly the big abbreviation in the chart with the big spike in money supply and inflation remaining subdued (for now); we believe investors should bet with history on this one.
Gold, silver and copper are the hedges against inflation.
Call Option Volume Goes Parabolic
One of the best indicators for exuberance in the stock market is the volume of equity call options traded, the volume has literally exploded higher in 2020 relative to anytime in history.
This certainly provides an explanation for the euphorbia we’re seeing in certain sectors of the market, particularly electric vehicles (ie. Tesla).
US Equity Call Option Volume
Snowflake Cracks $100B with a Bubbly Valuation
One of the most hyped IPO’s of 2020, Snowflake (NASD:SNOW), has just passed the $100 billion threshold market. It’s trading on a 2020 price-to-sales ratio of 189x, a 55% increase from IPO P/S sales valuation of 122x.
Snowflake Market Capitalization ($B)
In comparison, Microsoft’s valuation in the 2000 dotcom bubble peaked at 30x forward price-to-sales. There’s no question tech is frothy.
Microsoft – Forward Price-to-Sales (2000-2020)
Green Metals – Commodity Charts Ready for Liftoff
In the latest edition of Capital 10X’s Green Metals in Focus series we analyze the underlying commodity charts of the key metals: copper, lithium, cobalt, vanadium and nickel.
Bottom line: There are strong levels of support for each of these green metals charts, all are positioned for strong breakouts. This one of the best catch-up trades to the red hot electric vehicle stocks.
U.S. House Passes Landmark Marijuana Legislation
On Friday, the U.S House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act of 2019 (MORE Act). This was a 228-164 partially bipartisan vote with 220 democrats, 5 republicans and 1 independent voting “yay”; 158 republicans and 6 democrats voting “nay”.
The legislation would remove cannabis from the Controlled Substances Act, effectively decriminalizing marijuana. A 5 percent tax would be levied on marijuana to fund community and small business grants to help alleviate the consequences of years of criminalization.
On the federal level, this bill will be dead-on-arrival in the Senate as the republicans still have control (at this moment). Two Republican senators (Kelly Loeffler and David Perdue), have a runoff election against their democratic opponents (Raphael Warnock and Jon Ossoff).
Georgia election rules called for a runoff when no candidate exceeded 50% of the vote in their race during the November 3rd general election. Republicans currently have 50 seats, while the Democrats have 48.
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