Gold gains keep coming … The autonomous vehicle trend sees another milestone … And readers weigh in on legalized marijuana
Monday’s Digest featured the emails of three readers who had taken issue with our coverage of the legal marijuana trend.
The volume of emails we received in response to that issue dwarfed anything we’ve seen in the history of the InvestorPlace Digest.
A sincere “thank you” to everyone who wrote in to share their opinions. We value your perspectives and genuinely appreciate your time in writing us.
We’re happy to share some of that feedback at the end of this issue — as you’ll see, our readers hold strongly divergent opinions. But first, since our priority is helping readers grow their wealth, let’s turn to recent market news.
***Yesterday, gold hit an eight-month high, and two key indicators are pointing toward more gains to come
This past Friday, gold climbed past $1,300. This is important as an indicator because $1,300 is a key psychological level and has been a resistance point in January.
The chart below shows the price of gold since November. On three separate occasions in January, gold challenged the $1,300 level yet failed to break through (marked by red arrows).
That changed last week as gold hit $1,304. As I write, it’s trading at $1,311.
***Why is passing this $1,300 level significant?
Gold isn’t like a stock or bond. With stocks and bonds, we can look to various valuation metrics (like a price-to-earnings ratio) or cash flows (like a dividend or bond yield) to get a feel for whether the stock or bond is overvalued or undervalued. As you’re aware, gold doesn’t have any earnings or cash flows to help us put a market price on it.
What moves the price of gold then?
To put it simply, it’s investor sentiment. Investors rotate into (or out of) gold based on how they feel. These feelings typically relate to a number of things — perhaps the perceived strength or weakness of the stock market … fears over geopolitical tensions … speculative guesses about the Fed and interest rates (as of the time of this writing, the Fed has not announced its decision on interest rates and its balance sheet plan)… All of these factors influence investors’ feelings about the future price of gold.
Through much of January, the collective sentiment on gold wasn’t bullish enough to push it past the $1,300 mark. Big, round numbers like $1,300 are often key resistance points (again, notice gold’s failed three attempts to pierce $1,300 earlier this month in the chart above). But gold has now breached $1,300, and that’s a big mental barrier gone.
Helping gold punch through the $1,300 level have been two key issues: fear over the prolonged trade war with China (which, despite what occasional headlines say, doesn’t appear to be near a true, significant resolution), and a reversal in Fed-speak which now hints at no more rate hikes in 2019 (with some analysts even speculating about more quantitative easing). Neither of these factors appears to be changing direction anytime soon.
Furthermore, because gold’s price climbs or falls based on sentiment, we wouldn’t be surprised if this bullish move is noticed by other investors … which leads to more gold purchases … which pushes the price higher … which gets noticed by even more investors …
For better or worse, gold’s moves are often, in part, a self-reinforcing loop. For now, that loop appears bullish.
***The second bullish indicator involves something called “The Golden Cross”
As we wrote in last Friday’s Digest, when evaluating markets and investments, there’s fundamental analysis and technical analysis. Think of technical analysis as studying patterns in charts and market data to identify trends and the direction of the overall market.
A “Golden Cross” is a term taken from technical analysis. It refers to what happens when the 50-day moving average of an investment crosses above its 200-day moving average. Investors typically view this event as a bullish signal, pointing toward more upside.
Last week, gold entered this “Golden Cross” set-up. In the chart below, notice how the green line (50-day moving average) has now pushed above the red line (the 200-day moving average).
***In our January 9th Digest titled “There’s a Stealth Bull Market in Gold. Are You Missing It?” we highlighted the bullish move in gold and discussed ways to play it
In that issue, we pointed toward GLD (the SPDR Gold Trust ETF. It’s the largest and most heavily traded gold ETF) and GDX (the VanEck Vectors Gold Miners ETF) as investments you could consider for a gold trade. We then provided our wrap-up …
So, what’s the takeaway?
Greenlight for a long-term gold investment, yellow light for a short-term trade …
… slowing rate hikes and the threat of a weakening global economy may prove to be major long-term growth drivers. Plus, gold has been sawtoothing for years, so there’s plenty of room for gains far greater than 10%.
Despite this longer-term support for gold, in the short-term, prices could see downward pressure …
GLD’s down-trending RSI indicator, optimism about the US/China trade talks (which, if successful, would lure investors out of “safe haven” investments), and a stock market that seems to be picking up steam again are all gold headwinds. So, if your typical trade length is only a few weeks or months and you get into a short-term trade today, the factors above might put you underwater for a bit.
As you can see below, gold did drop a bit after that Digest before taking the leg higher last week.
We’ll continue updating you on gold’s market action, but for now, our opinion remains the same — look for more gains to come as 2019 progresses, though don’t necessarily expect them in a straight line.
***Meanwhile, the autonomous vehicle trend continues to gain momentum
Regular Digest readers know we believe self-driving cars — aka “autonomous vehicles” (AVs) — represent one of the biggest, most disruptive investment opportunities of the next 20 years. This innovation will transform huge portions of our economy and create trillion-dollar ripple effects.
It turns out, this trend isn’t just limited to cars …
Last week, Boeing reported that it had completed the first test of its autonomous air taxi.
The Wall Street Journal reports …
The autonomous airborne vehicles under development generally take off and land like a small helicopter that could carry a handful of passengers. They would shuttle between predetermined sites, such as building rooftops.
The article goes on to say that we might be using flying cars sooner than we might think.
… industry leaders predict flying cars and taxis will become part of the urban transit mix sooner than skeptics expect.
“The future of mobility — moving goods, moving cargo, moving people — that future is happening now and it’s going to accelerate over the next five years,” Boeing Chief Executive Dennis Muilenburg said during a panel discussion in Davos, Switzerland, on Wednesday.
Matt McCall, editor of Investment Opportunities, has been updating his readers on this growth for months. From Matt’s September issue …
The car as we know it is on the verge of a transformative change not seen since Karl Benz invented it. In fact, the whole transportation sector is now poised for its version of 2.0. I’m not exaggerating when I say this will lead to trillions of dollars in money sloshing around in the coming decades.
For most of the more than one billion cars on the road around the world, people still have to fill up the engine with petrol before they drive, just as people did a century ago. The introduction of electric vehicles (EVs) is changing that …
As exciting as the future of EVs is, self-driving cars will make us even more money … Autonomous vehicles (AVs) are already on our roads in limited numbers, and the story is just now beginning …
It will be a process that will kick off in 2021. That will be a banner year because individual buyers like you and me will be able to buy an automated vehicle, making it the first year of measurable AV sales. Realize that’s only two-and-a-half years away. IHS Markit predicts 51,000 AVs will be sold that year.
As the adoption of AVs spreads around the globe, it will lead to 20X growth in a matter of only four more years. By 2025, the number should expand to one million unit sales annually.
If you’re looking for help on the best way to play this trend, you can subscribe to Matt’s Investment Opportunities newsletter to get his stock picks and investment updates.
***Finally, another “thank you” to all the Digest readers who wrote in to share their views on the legalized marijuana issue
Given how much feedback Monday’s Digest elicited, we thought readers would be interested in a sample of the emails we received. Below are a few out of the hundreds that came in. Please note we’ve changed all names to preserve readers’ anonymity.
***”Mr. Jeff Remsburg, you just don’t get it. Yeah …You just sell stock market advice! You just want to have intelligent conversation. This is precisely why you don’t get it. Marijuana, like other stupefacients, harms people; it can cause schizophrenia …Yet you sell it. You just don’t care about the spiral degradation this country is in due to drug use. Marijuana sold to the public as “medicine” is a betrayal to our young people; it is like the starting gate into more potent drugs. If you are a responsible company don’t blatantly advertise harmful things. You cannot take a “neutral” stand on this.” – Paul
***”Jeff, great reply! My mother is 91 years-old and in good health except for acute/chronic back and generalized body aches and pain. She was introduced to CBD and after a couple of times taking CBD the pain is now gone. She needs to continue taking CBD to maintain remission. Also, my father who is 87 years-old has severe glaucoma, medications stopped working and surgery was the recommendation. My father, after vigorous research, he decided to sign up for medical marijuana and now his eye pressures are normal. – Bob
***”Please take me off your list. I am vehemently against the legalization of marijuana nor do I believe medicinal benefits exist and am very tired of hearing about a gateway drug with dangerous second-hand street smoke destroying communities. Thank you.” – Mary
***”Soon you will be describing the profits to be made by the New York firm Planned Parenthood Inc. and its subsidiary, Fresh Baby Parts Overnight, LLC.” – Janet
***”I am a reasonably well-educated physician and attorney (AB Johns Hopkins, MD University of Pennsylvania, JD Harvard) who has followed the literature for more than 40 years, represented medical marijuana users pro bono in criminal proceedings and drafted ballot initiatives to decriminalize medical use. In fact, cannabis is less toxic, less addictive and in virtually all respects safer than alcohol, tobacco, and many prescription drugs. All should be available to adults who have been educated in the appropriate therapeutic (and recreational) use of these substances, and in their potential adverse effects and contraindications. At last, it seems, that may soon become possible in the United States. IBD is to be congratulated on its thoughtful position. The angry former subscriber referred to in your communication should do some more thorough fact-finding and think again. – John, M.D., J.D.
***”No matter how indifferent you feel about marijuana you might like to read this. I am retired pharmacist that also has strong feeling about marijuana and it’s (sic) byproducts. Marijuana has become a political controversy I feel to raise money for states with little regard to what it is doing to our young people. Research in New Zealand show that teen agers in New Zealand have over a 10% reduction in their IQ results after prolonged use of marijuana compared to no users. We know it decreases our initiative and drive. Evidence is coming to light that violence and suicides go up with it’s (sic) use. I have researched marijuana for 40 years and it’s (sic) benefits are meager and it’s (sic) problems many. I have a niece who has a doctorate at WSU school of nursing who is currently doing research in this area, a grand daughter who currently is a senior in medical school at the U of Washington, a niece’s son who is a infectious disease specialist in Victoria, BC that all share my sentiment. The MD is Victoria’s brother committed suicide in the bay area about 30 months ago and a psychiatrist in the bay area felt that his use of marijuana was definitely a contributing factor and told him we are seeing more and more of this. I’m afraid knowing all of this I would have trouble sleeping at night knowing I was contributing to it’s (sic) success. – Andrew
***”To all that want to stop the legalization of recreational weed, I ask why are you not in favor of outlawing beer since it is the gateway liquor?” – Pam
***”Mr. Remsburg, your above marijuana arguments are invalid. The Federal government declares it a controlled substance, that is, it is illegal regardless of State laws decriminalizing or ‘legalizing’ it. The fact that you consider and give advice regarding marijuana as an investment is de facto promotion of marijuana. If you try to argue otherwise you have no credibility. Why would I take investment advice from such a shallow self-serving ‘thinker’ with no credibility?! Hint: I don’t!” – Greg
***”Rubbish. Retract the marijuana endorsement or I cancel the subscription.” – Clark
***”Wow. Ironically, the complainers would benefit from chilling out with a little pot!” – Seth
As we wrote in Monday’s Digest, our belief is that we best serve our readers by providing insights and research into the most significant investment trends shaping the markets. In our opinion, legalized marijuana certainly falls into that category, so we’re looking forward to helping readers navigate this opportunity in the coming months and years. Given this, for readers who remain opposed to legalized marijuana and don’t want to read any more, we respect that position and appreciate your taking part in this discussion.
For readers who are curious about the investment opportunities surrounding legalized marijuana, our resident expert on the subject is Matt McCall. If you’d like to learn more about Matt and his approach to profiting from the legalized marijuana trend, click here. Just today, he’s released a new video presentation showing why February 19 is the next big day for investing in this trend.
As always, we’ll continue to update you on key developments here in the Digest.
Thanks again to everyone for making this such a lively discussion.
Have a good evening,