Elon Musk Sold His Houses, but He Won’t Be Selling His Bitcoin and Ethereum

Own physical things instead of cash. That’s the high-level advice Elon Musk has for those seeking advice on where to store their wealth when inflation is running rampant.

The Tesla chief was tweeting in response to MicroStrategy CEO Michael Saylor’s prediction that inflation would persist at 40-year highs, and that investors’ flight from “cash, debt, & value stocks to scarce property like #bitcoin will intensify.”

Musk seemed to agree, saying that “it is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high.”

He added: “I still own & won’t sell my Bitcoin, Ethereum or Doge.”

As a general principle, for those looking for advice from this thread, it is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high.

I still own & won’t sell my Bitcoin, Ethereum or Doge fwiw.

— Elon Musk (@elonmusk) March 14, 2022

It’s an interesting comment considering that Musk, who welcomed his second child this month with musician girlfriend Grimes, has sold all seven of his California residences for a
reported $128 million and currently rents here in Texas.

And no, Bitcoin, Ethereum, Dogecoin and other digital assets are not “physical things.” But to Michael Saylor’s point, they are private property (unlike fiat currency), and they are scarce (like gold). Bitcoin supply is capped at 21 million, while no new Ether tokens are being produced.

And did you know that the Ethereum network moved a greater value of transactions than either Visa or Bitcoin in 2021? Some $11.6 trillion were settled on the network last year compared to $10.4 trillion for Visa and $4.6 trillion for Bitcoin, according to the Ethereum Foundation’s Josh Stark.

Cash Is Trash

Nevertheless, Musk’s advice is sound. The value of cash is disappearing at an annual inflation rate of 7.9% right now, though I believe that number to be much higher. Savings accounts are earning a measly 0.06% on average. Bond yields are underwater.

Whole countries, in fact, are dumping U.S. dollars from their forex reserves. Though de-dollarization has been happening for the past few years in places like Russia and China, I expect to see it accelerate following the former country’s invasion of Ukraine and the imposition of tough financial sanctions. This ought to benefit the Chinese yuan, whose profile was elevated this week on reports that Saudi Arabia is considering pricing its oil sales to China in the currency.

Homes and Used Vehicles Have Skyrocketed in Value

Meanwhile, U.S. home prices are up about 20% from a year ago, as measured by the S&P/Case-Shiller Home Price Index. The median cost of a single-family home is now north of $400,000 for the first time ever. The Wall Street Journal reports that homeowners earned more from their residences than their jobs last year.

As a comparison, renters in the U.S. saw their housing costs go up a whopping 17.5% during the 12 months ended February 2022, according to Dwellsy data. My guess is Elon Musk, the wealthiest person on earth, isn’t bothered by this increase.

Used vehicle prices have also continued to climb as the ongoing semiconductor chip shortage slows the production of new cars and trucks. In February, preowned vehicle prices rose 41% compared to the same month last year, according to the Bureau of Labor Statistics.

Unless we’re talking about highly collectible classic cars, used vehicles in general have rarely been regarded as stores of value, but such is the topsy-turvy nature of today’s economy. One Twitter user, Bloom Institute of Technology’s Austen Allred, even shared his belief that he could sell his 2019 Tesla Model 3 for “several thousand dollars more” than he bought it for. “I’m having a hard time wrapping my head around the current market,” he said.

I bought a Tesla Model 3 in 2019.

I put 20,000+ miles on it.

I could sell it today for several thousand dollars more than I bought it for.

— Austen Allred (@Austen) March 16, 2022

Delta Announces a 4% Pay Raise as Sales Jump

Musk stresses buying stocks of companies that you believe make good products. I agree, but I wouldn’t forget about companies that also provide good services.

This is why we like commercial airlines, which are seeing a strong recovery as we near the busy summer travel season. Delta Air Lines CEO Ed Bastian said this week that he believes “the Covid era is over” as far as travel demand goes, and indeed, the daily number of passengers in the U.S. is steadily ticking up, according to data provided by the Transportation Security Administration (TSA). The carrier said it would be giving most of its employees a 4% pay raise, the first such raise since before the pandemic, after it reported having its two busiest sales days last week in its nearly 100-year history.

Rate Hike(s) Set Up a Growth Buying Opportunity

On a final note, some investors may be wondering how this year’s rate hikes might impact their holdings. I’ve already shown that gold prices have historically performed well after the first hike in a new tightening cycle.

The same goes for stocks. That’s according to LPL Research, which looked at the S&P 500’s three-month, six-month and 12-month returns following the first rate hike of every tightening cycle going back to 1983. What the firm found is that stocks have been up on average—0.7% for the three-month period, 6.1% for the six-month period and 9.2% for the 12-month period.

It’s important to remember that rates are hiked to combat inflation, which ordinarily (but not always) correspond with stronger economic activity. These have been good times to invest for growth.

Piper Sandler seconds this. In a report this week, the investment bank said that it believes we’re moving into the growth phase of the market cycle as we put the worst of the pandemic behind us.

So what should value investors do? According to Piper Sandler, they should be as “growthy” as possible, focusing on companies that demonstrate growth at a reasonable price (GARP). That means an emphasis on factors such as realized earnings growth, low sale variance, return on equity and momentum in earnings. “Whether you’re in growth, value, or anything in between, these are the factors we believe are poised to outperform in this Phase 4 we call Growth,” the bank writes.

We believe gold is highly undervalued right now, but where is its price headed? Find out by watching our latest video here!

Index Summary

• The major market indices finished up this week. The Dow Jones Industrial Average gained 5.50%. The S&P 500 Stock Index rose 6.16%, while the Nasdaq Composite climbed 8.18%. The Russell 2000 small capitalization index gained 5.38% this week.
• The Hang Seng Composite gained 3.64% this week; while Taiwan was down 4.18% and the KOSPI fell 9.09%.
• The 10-year Treasury bond yield rose 15 basis points to 7.72%.

Airline Sector

Strengths

• The best performing airline stock for the week was United Airlines, up 5%. After system net sales were flat last week, the most recent data improved to -25.4% versus 2019 for the week, compared to -31% the previous two weeks. Leisure travel demand remains robust as this week’s volumes stepped up as well.
• Domestic volumes improved to -9.9% versus 2019 (versus -16.7% last week) with pricing down just -6.8% versus 2019 (versus -10.4% last week). With leisure demand back to pre-pandemic levels, there was more of an inflection in corporate travel as both corporate bookings through large channels and smaller channels improved.

• The U.K. government will remove all remaining COVID-19 international travel restrictions starting today, reports numerous financial outlets. This is a huge milestone for the airline industry as it continues its trek back to normalcy.

Weaknesses

• The worst performing airline stock for the week was Wizz Air, down 6.4%. Global airline scheduled capacity for March was reduced another 1% this week to 71% recovered versus 2019, with 2% cuts in Europe and APAC the main drivers. Underlying the March moves was another move lower in China domestic (up 117% versus up 123% versus 2019) while there was a notable reduction in Russia related flights (scheduled international flights were cut 15%).
• First quarter scheduled capacity ticked 1% lower to 68% recovered with sequential growth now only at 1%. Scheduled capacity was pulled in 2% for April (now at 78% recovered) with a 4% reduction in Europe the main driver (Russia scheduled international flights were cut 25%) though APAC also cut 2%. Two percent reductions in Europe and APAC in May also drove scheduled capacity for that month down by 1% (now 84% recovered) with 1% reductions in Latin America and North America as well.
• GOL reported weaker-than-expected fourth quarter results, missing estimates mostly on higher maintenance costs. On the top-line front, the company surprised on the upside – like its peers – supported by a decent yield environment in Brazil. Nonetheless, unit cost was pressured by an increase in maintenance expenses, a result of the investment needed to return idle aircraft and engines to operation. The company also updated 2022 guidance, overall cutting estimates versus the previous guide.

Opportunities

• The situation with Russia and Ukraine remains something to watch, but so far there appears to be minimal impact on bookings. International volumes improved to -25.5% versus 2019 and compared to -28.4% last week.
• S. airlines’ trailing seven-day website visits modestly improved this week to up 9% versus 2019 for the week. American Airline visits improved 35% versus 2019. JetBlue and Delta Air Lines were both flat this week compared to last and remain the only carriers below 2019 levels.
• For mainline U.S. airlines, pilot supply bottlenecks are expected to ease as early as the summer with the potential for regional shortage to linger for 18-24 months. Notably, mechanic supply garnered as much concern, although an issue that can be addressed faster than pilot supply issues due to shorter training requirements.

Threats

• Consistent with recent commentary from Azul Airlines and U.S. airlines alike, indicating near-term capacity is likely to be cut due to sharply higher fuel prices, GOL revised its 2022 outlook primarily reflecting a lower capacity plan. Notably, the two-point reduction in the revenue guide reflects a five-point cut in capacity partially offset by stronger yields.
• European airline bookings declined in the week, with lower intra-Europe and international net sales. Intra-Europe net sales fell by six points to -30% versus 2019 (versus -24% in the prior week) and declined by 5% week-on-week. International net sales were down by four points to -38% versus 2019 with a 1% decline this week. This led to a five-point decrease in system-wide net sales for flights booked in Europe.
• com reported a slowdown in European booking trends, which were down 10% versus 2019 in the first week of March from flat on 2019 in February. The decline is primarily driven by Eastern Europe, while Western Europe slowed but remained above 2019 levels.

Emerging Markets

Strengths

• The best performing country in emerging Europe for the week was Romania, gaining 4.2%. The best performing country in Asia this week was India, gaining 5.1%.
• The Russian ruble was the best performing currency in emerging Europe this week, gaining 28.67%. The South Korean won was the best performing currency in Asia this week, gaining 2.0%.
• Average gross wages in Poland are moving higher. Year-over-year wages increased by 11.7% in February vs. an expected reading of 9.9%. Month-over-month wages increased 2.6% vs. an expected increase of 1.2%.

Weaknesses

• The worst relative performing country in emerging Europe for the week was the Czech Republic, losing 1.6%. The worst performing country in Asia this week was China, losing 2.1%.
• The Turkish lira was the worst performing currency in emerging Europe this week, losing 0.10%. The Pakistani rupee was the worst performing currency in Asia this week, losing 1.1%.
• At the beginning of the week, the selloff in Chinese stocks was so intense that it erased all the gains in the largest China technology ETF in the United States. The KraneShares CSI China Internet ETF (KWEB) lost 40% year-to-date. On Wednesday, however, KWEB gained almost 40% on the news that China will provide more support to stimulate economic growth.

Opportunities

• Talks between Russia and Ukraine are continuing, but without a firm positive outcome yet. Once there is a peaceful solution, global equities should follow, and central emerging market equites should bounce. Year-to-date, the Warsaw Stock Exchange lost 20% of its value in dollar terms, the Budapest Stock Exchange recorded a loss of 20%, and stocks trading on the Prague Stock Exchange declined by 13%.
• Greater China stocks surged on Wednesday after the State Council said Beijing would take measures to support the economy and financial markets. The Hang Seng TECH Index rallied nearly 20%, recovering a big chunk of a prior three-day selloff. Chinese tech giants Alibaba and Tencent jumped more than 20% on Wednesday.
• China has experienced a large uptick in covid cases recently and is debating whether to exit the zero Covid policy. The worst could be over for China and Hong Kong. After the most recent Covid wave passes, China may set a more relaxed policy, reopening its border for travel later this year.

Threats

• Under current circumstances, Russia will run out on money soon. Due to the imposed sanctions, half of the country’s $640 billion reserves have been frozen. Finance Minister Anton Siluanov said that Russia plans to make bonds payments in rubles, but fixed income specialists say that paying in a currency different from the one established in bond agreements is widely seen as a default already. All of the major ratings agencies have downgraded Russia’s sovereign debt.
• Covid cases in China are growing. More lockdowns were imposed and as of mid-week the total number of people in lockdown was around 45 million. Widespread lockdowns in China may affect half the country’s GDP, taking out 0.8 percentage point of GDP growth. Hong Kong’s Covid death toll is higher than the mainland total, FactSet reports.
• Preliminary global PMIs will come out next week. Bloomberg economists predict the Manufacturing PMI may decline to 56.0 from 58.2 and the Service PMI may drop to 54.1 from 55.5.

Energy & Natural Resources

Strengths

• The best performing commodity for the week was cotton, up 4.82% amid strong demand for U.S. exports, while there is a large outstanding short position that could trigger a squeeze. China is the largest buyer and may be worrying about potential sanctions on its economy if the country is seen to support Russia.
• Chemical shipments on trains, called “rail car loadings,” are a measure of demand for products ranging from plastics to fertilizers – and these are trending upward. Chemical rail car loadings were up 17.8% on a year-over-year basis, reports the Association of American Railroads, and shipments year-to-date are 9.1% higher. March shipments are 13.2% higher year-over-year.
• Gasoline and diesel demand continue to improve, and jet fuel demand is picking back up as well. Consistent with mobility improvements, recent demand trends have continued to grind back to pre-COVID levels. Diesel demand is aided by the strong industrial indicators, while gasoline has returned following early Omicron-based fears in the beginning of the year.

Weaknesses

• The worst performing commodity for the week was nickel, down 12.55%. The London Metals Exchange (LME) suspended trading as prices surged 250% to a record in the prior week, canceling about $4 billion of transactions that stood to profit from short squeeze. The exchange is still functioning, but electronic trading has been problematic this week. It is expected that LME prices will fall another 18% to match up with where nickel is trading in Shanghai.
• China plans a massive increase in coal mining, a move that will dramatically reduce its reliance on imports and deal a blow to its near-term climate actions. The National Development and Reform Commission, the nation’s top economic planner, told officials from major mining regions at a meeting late last week that it wants to boost domestic production capacity by about 300 million tons, according to people familiar with the matter. It also plans to build a 620-million-ton stockpile of the fuel split between government, miners, and users.
• India is considering taking up a Russian offer to buy its crude oil and other commodities at discounted prices with payment via a rupee-ruble transaction, two Indian officials said, amid tough Western sanctions on Russia over its invasion of Ukraine. India, which imports 80% of its oil needs, usually buys about 2% to 3% of its supplies from Russia. But with oil prices up 40% so far this year, the government is looking at increasing this if it can help reduce its rising energy bill.

Opportunities

• Credit Suisse raised its 2022 Brent/WTI forecasts to $100/$96 and raised 2023 forecasts to $85/$82. The long-term forecast is now $65/$62. Even if the war stops in the near-term, sanctions are not disappearing anytime soon. Oil majors are exiting Russia – hurting supply, structurally. The world is almost 2 million barrels per day under-supplied for 2022 even with an Iran deal. OPEC & the International Energy Agency (IEA) had 2022 Russian production rising 1 million barrels/day despite it falling 2 million barrels/day.
• Ivanhoe Mines says it has secured options to use electricity generated from renewable, green, solar power together with liquified natural gas to power its Tier-One Platreef project in South Africa, reports International Mining. “We have committed to our stakeholders that we will explore every avenue available to minimize the environmental impact of producing metals that are critical to the electrification of the global economy,” said Executive Co-Chair Robert Friedland.
• Goldman Sachs raised its 2022 Brent/WTI oil price forecasts to $100/$96 (from $75/$72), citing tighter fundamentals in the near- to medium-term. It is also changing its longer-term Brent/WTI price forecasts to $65/$62 per barrel from $62/$59. Goldman says Russia’s invasion of Ukraine is a game changer for global oil markets, with Russia currently the world’s second biggest producer of crude (10.8 million barrels per day), and the group believes public companies globally will be pulling back capital from Russia leading to sharp production declines.

Threats

• JPMorgan Chase & Co. is the largest counterparty to about 50,000 of the 150,000 short nickel trades by Tsingshan Holding’s controller, Xiang Guangda. At the start of the week, Tsingshan was expected to post a $1 billion margin with the bank due to the price spike in nickel. If Tsingshan could not meet the margin calls, then the banks could lose billions of dollars. Credibility has been creeping into the managing of the meltdown of the LME nickel trading too. It appears that the exchange is going to walk the price of nickel back down via daily limits and protect Tsingshan and the banks from any loses.
• Price volatility is starting to seize up commodity markets as intraday swings in prices have forced traders to limit their exposure to loss. Combined open interest in crude and refined products have dropped to the lowest since 2015. Over 1 million barrels of crude futures were liquidated over a 16-day period where Brent traded with $5-a-barrel intraday swings for 16 consecutive trading days.
• Russia’s oil output may slump by about a quarter next month, inflicting the biggest supply shock in decades as buyers shun the nation’s exports following its invasion of Ukraine, the IEA said. “The implications of a potential loss of Russian oil exports to global markets cannot be understated,” the Paris-based agency said in its monthly report on Wednesday. “While it is still too early to know how events will unfold, the crisis may result in lasting changes to energy markets.”

Domestic Economy & Equities

Strengths

• February’s headline producer price index (PPI) increased 0.8% month-over-month, a bit lower than consensus for a 0.9% rise and down from January’s upwardly revised 1.2% monthly pace. Core PPI (ex food and energy) increased 0.2% month-over-month, but below forecast for a 0.6% increase and January’s upwardly revised 1.0% monthly pace.
• Weekly initial jobless claims came in at 214,000, below consensus for 220,000 and the last week’s upwardly revised 229,000. Continuing claims dropped to 1,419,000 vs. consensus for 1,480,000 and the prior week’s downwardly revised 1,490,000.
• EPAM Systems was the best performing S&P 500 stock for the week, gaining 40%. Its shares rebounded after a sharp selloff in the past few weeks. The information technology company serves consumers in the Unites States but has development centers in Russian and Ukraine.

Weaknesses

• The New York Fed’s March Empire Manufacturing Survey came in at a negative 11.8, representing the lowest level since May 2020. Moreover, the index came out below consensus for a positive reading of 7.5 and below February’s +3.1.
• Headline February retail sales were up 0.3% month-over-month against consensus for a 0.4% rise and January’s upwardly revised 4.9%. Retail sales ex autos were reported up 0.2% month-over-month vs. consensus for 0.9% and stepped down from January’s upwardly revised 4.4% monthly pace.
• Exxon Mobil was the worst performing S&P 500 stock for the week, losing 7.4%. Oil stocks sold off this week with weakening price of the commodity.

Opportunities

• The Financial Times reports that Russia and Ukraine are discussing a tentative, 15-point peace plan for a ceasefire and a Russian withdrawal founded on Ukraine’s accepting neutrality, foregoing NATO membership and accepting some limits on its armed forces.
• The Philadelphia Fed’s March Manufacturing Index came in at 27.4, above consensus for 15.0 and February’s 16.0. FactSet noted that general activity, new orders and shipments all rose after declining in the prior months
• Despite rising rates in the U.S., new home sales most likely will increase when the data is released next week. Bloomberg economists expect the new sales to rise to 815,000 in February from 801,000 in January.

Threats

• U.S. stocks had their best week since November 2020, wiping out nearly all losses since Russia’s invasion of Ukraine. S&P 500 stock index, which traded flat Friday, closed the week 6.2% higher. But most likely volatility will remain high until the war in Europe ends.
• Bank of America’s latest Global Fund Manager Survey showed cash levels are at the highest since spring 2020’s pandemic peak, up 0.6% month-over-month to 5.9%, while global growth expectations fell to their lowest in 14 years. The risk of global recession due to war in Europe, higher inflation and a shift toward tightening policies is rising.
• The Federal Reserve raised the fed funds rate by 25 basis points, and the bank guided that the ongoing increases will be appropriate. The Summary of Economic Projections showed a median of seven 2022 rate hikes to 1.875%, up from three hikes in December.

Blockchain and Digital Currencies

Strengths

• Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Playground, rising 727.67%.
• Galaxy Digital founder and CEO Michael Novogratz sees growing demand for cryptocurrencies and says there is “zero chance” Russia can use crypto to circumvent sanctions. Novogratz also maintains his $500,000 forecast for Bitcoin five years out according to Bloomberg.
• The mayors of New York City and Miami used a join appearance at a blockchain conference to brush off concerns about volatility in cryptocurrency markets and said they’ll continue to receive paychecks in Bitcoin. The friendly competition between the two mayors started last year according to a Bloomberg report.

Weaknesses

• Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was Defly Token, down 100.00%.
• Terra’s (LUNA) price has decreases 5.93% over the past 24 hours to $83.89, continuing its downward trend over the past week of -12%. The trading volume for the coin has tumbled 64% over the past week along with the circulating supply to 366.61 million, which makes up an estimated 36.66% of its max supply of 1 billion, writes Bloomberg.
• Bitcoin is unlikely to break above $46,000 anytime soon, barring a macro economic “vibe shift” like a change in risk-on sentiment, according to Wilfred Daye, head of Securitize Capita. The cryptocurrency’s trading range narrowed this week as the war in Ukraine continued and the Federal Reserve raised rates in line with expectations, writes Bloomberg.

Opportunities

• The major cryptocurrency exchange FTX said it received a virtual-assets license in Dubai and will set up a regional headquarters in the city. The firm will offer complex crypto-derivatives products with centralized counterparty clearing to institutional markets according to a statement made by CEO Sam Bankman-Fried.
• Mark Zuckerberg said that NFTs are coming back to Instagram in a panel at Austin’s South by Southwest (SXSW) Festival on Tuesday. According to Bloomberg, Zuckerberg added that he is “not ready to kind of announce exactly what that’s going to be today.” Zuckerberg also said that “hopefully” in the coming months, Instagram members will be able to mint their own NFTs within the app.
• Bitcoin spent the past few days in the tightest trading range since October 2020, a phenomenon some market watchers ascribed to long-term holders stepping in to buy the dip. Meanwhile, selling by short term investors has kept Bitcoin and other digital assets from mounting sustainable gains, writes Bloomberg. Bitcoin briefly spiked above $41,000 for the first time in a week as risk assets rebounded worldwide.

Threats

• Three European financial regulators, the European Banking Authority, European Securities and Markets Authority, and European Insurance and Occupational Pensions Authority, warned consumers of the risk of investing in cryptocurrencies. “Consumers face the very real possibility of losing all their invested money if they buy these assets,” the EU’s financial watchdogs said. The warning was prompted by the growing investor interest in crypto and the aggressive promotion of cryptocurrencies and related products, writes Crypto Briefing.
• Pixelmon, an NFT gaming project that sold $71.4 million worth of NFTs at the start of the month, has been accused of pulling the rug on its buyers. The project’s standard art and use of development funds to buy blue chip NFTs have generated a backlash against Pixelmon creator Martin van Blerk, writes Crypto Briefing. The NFTs have crashed over 88% from their initial mint price and serves as a reminder to the NFT community that the most hyped projects are not always the best.
• Binance, the world’s largest cryptocurrency exchange, has forbidden users in Ontario, Canada to open new accounts on the platform. The tension between the company and the local financial regulator peaked last summer when the former quit the region, writes CryptoPotato.

Gold Market

This week going into the close, gold futures were at $1,924.30, down $65.10 per ounce, or 3.27%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week lower by 2.76%. The S&P/TSX Venture Index came in up 0.90%. The U.S. Trade-Weighted Dollar fell 0.94%.

Strengths

• Going into the close, the best performing precious metal for the week was gold, but still off 3.27%. Ecuador’s central bank bought about $158 million worth of gold for its international reserves from local producers and had it certified with an international refiner for good delivery. The holdings will diversify the bank’s reserves and improve its financial position during uncertain geopolitical times.

• Gold is playing its age-old role as a haven in times of wars and crises, and people all over the world are piling in, writes Bloomberg. Geopolitical tensions have sent the price of the yellow metal higher and retail investors everywhere, from Vienna to Singapore to New York, are flocking to the safety of gold. Silver prices are also higher this week on safe-haven demand and perceived bargain hunting.
• The almost 10% surge in gold prices since the start of 2022 is turning into a boon for bullion dealers. Demand for bars and coins, especially in Western nations, hit 1,124 tons in 2021, according to the World Gold Council, the highest in a decade. That helped support prices at a time when institutional investors were not dipping in as much. Bloomberg reported Signet Jewelers Ltd., the owner of Kay Jeweler and Zales, sent shockwaves through the global diamond trade mid-week by telling suppliers they would no longer purchase stones mined in Russia, the world’s largest supplier of diamonds.

Weaknesses

• Going into the close, the worst performing precious metal for the week was palladium, down 10.88% as investors start to factor in the automakers switching back to platinum to avoid any purchases of palladium from Russia. Karora Resources Inc. said Monday that its adjusted earnings per share (EPS) for the fourth quarter of 2021 dropped year-over-year to $0.08 from $0.27. Analysts expected Karora’s adjusted EPS at $0.09. Revenue declined to $67.0 million from $69.3 million due to lower average realized prices, missing consensus forecast of $68.0 million.
• Russia spent years building a giant stash of gold, an asset that central banks can turn to during a crisis. But any attempt to sell it will now be a challenge just when it’s needed most, reports Bloomberg. Bank of Russia’s gold reserves is the type of asset it could sell to shore up the ruble, which has plunged as global economies isolate Russia following its invasion of Ukraine but doing so will be difficult with sanctions forbidding the U.S., the U.K. and the EU from doing business with the bank.
• Sibanye Stillwater Ltd. halted work at its three gold mines in South Africa from Wednesday evening after workers began a strike over wages. The Johannesburg-based miner implemented a so-called “lockout,” barring all workers, including those from the Solidarity labor union that accepted its wage offer, from accessing the sites, said spokesperson James Wellsted. Mining activities at Driefontein, Kloof and Beatrix mines were halted from Wednesday evening, except for essential services such as pumping water, he said.

Opportunities

• Merger and acquisitions are starting to surface again, despite the volatile price action surrounding the Russian invasion of Ukraine. MAG Silver announced it has entered into a definitive agreement to acquire Gatling Exploration, a gold exploration company whose primary asset is the Larder Gold project located in the Abitibi greenstone belt of Northern Ontario, Canada. Larder is a past producing gold mine that hosts a global resource of 1.32 million ounces.
• According to Jefferies, mining companies will outperform over the next three years as a result of consensus earnings upgrades and a rerating of their valuation. Jefferies noted that underinvestment in mine capacity, combined with decarbonization-driven demand and cyclical consumption growth, should lead to a tighter market and higher prices for some key commodities between now and 2025.
• In a surprise move, AMC Entertainment and Eric Sprott are each investing $27.9 million in cash into Hycroft Mining Holding Corporation. Each Unit purchased consists of a share and a full warrant. CEO Adam Aron of AMC commented that it might not seem that a movie theater’s core competencies would include running a gold or silver mine, but that AMC has had enormous success in navigating capital markets and bring that skill set to the mining professionals at Hycroft Mining. This transaction highlights that exploration and junior development companies are trading at prices where nobody cares, yet.

Threats

• Palladium may also fall victim to accelerating inflation and a slowdown in global growth caused by the war in Europe. Automakers consume about 85% of the supply to make pollution-reducing catalytic converters in gasoline engines and may also hasten efforts to switch to the much cheaper platinum instead. “We continue to see very volatile and extreme price action in the first half of the year—with price risk to the upside,” said Nicky Shiels, head of metals strategy at MKS PAMP SA. “But recession fears are rising with demand expected to be dampened into the second half,” at which point the price risk switches heavily to the downside, she said.
• In the meantime, as followed by IntelliNews, U.S. senators are now trying to cut Russia off from gold as a source of hard currency too, with new legislation introduced. Russia’s gold reserves are estimated at about seventy-four million ounces ($150 billion), according to the CBR, now making up over a third of its entire reserves.
• Gold’s rapid rise to near record levels is unnerving some buyers in India, who are holding off on purchases, and worrying jewelers in the country’s vibrant bazaars. Prices in India, the world’s biggest consumer after China, have rallied in the past month in line with the overseas markets as investors sought safe havens following Russia’s invasion of Ukraine. The country imports all the bullion it consumes, and costs are rising as the Indian currency trades near a record low. “Buyers have become very watchful of the price movement and only when a price level has been supported for a while will they return,” said Tanya Rastogi, director at Lucknow-based Lala Jugal Kishore Jewelers. Sales at her company have dropped 25% in the past two weeks as the rally hurt wedding-related jewelry purchases and investment demand has slowed to a “dull crawl,” she said.

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GOL Linhas Aereas Inteligentes
Azul SA
JetBlue Airways Corp.
United Airlines Holdings
Delta Air Lines
Tesla Inc.
Visa Inc.
Alibaba Group Holding Ltd.
Tencent Holdings Ltd.
Ivanhoe Mines Ltd.
Sibanye Stillwater Ltd.

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.

The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index.

The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months. The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange. The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges.

The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The S&P/TSX Venture Composite Index is a broad market indicator for the Canadian venture capital market. The index is market capitalization weighted and, at its inception, included 531 companies. A quarterly revision process is used to remove companies that comprise less than 0.05% of the weight of the index, and add companies whose weight, when included, will be greater than 0.05% of the index.

The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500. The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500. The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period. The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500. The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500. The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500. The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500. The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500. The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500. The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500.

The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

The S&P CoreLogic Case-Shiller National Home Price Index measures the changes in the sale prices of single-family homes across the U.S. It does this by tracking the purchase prices and resale prices of homes that have undergone a minimum of two arm’s-length transactions.

The NY Empire State Index is the result of a monthly survey of manufacturers in New York state. Known as the Empire State Manufacturing Survey, it is conducted by the Federal Reserve Bank of New York.

The Global Fund Manager Survey is a monthly report that canvasses the views of approximately 200 institutional, mutual and hedge fund managers around the world.

The Hang Seng TECH Index represents the 30 largest technology companies listed in Hong Kong that have high business exposure to technology themes and pass the index’s screening criteria.