Top Stories This Week: Gold Breaks US$1,800, Stocks at “Bargain Basement” Levels

Precious Metals
1800 basement

Catch up and get informed with this week’s content highlights from Charlotte McLeod, our editorial director.

The gold price made it back above the US$1,800 per ounce mark this week, breaking above that level for the first time since late February.

The yellow metal’s move came on the back of a weaker US dollar and lower 10 year Treasury yields.

Gold’s price activity has no doubt been encouraging for gold investors, but as we’ve discussed previously, many market watchers aren’t concerned that it’s corrected after last summer’s all-time high.

I recently had the chance to speak with Adrian Day of Adrian Day Asset Management, who said this retracement in the gold price seems normal to him.

What’s more surprising to Adrian right now is that gold stocks remain so depressed. He pointed out that most gold miners have made operational improvements since the yellow metal’s previous bull run, but they largely aren’t seeing those changes reflected in their share prices.

“Investors today in my mind have a compelling opportunity when the outlook is so good and at the same time the prices are so low” — Adrian Day, Adrian Day Asset Management

He didn’t give any specific stock picks (although we know from previous conversations that Adrian likes royalty and streaming stocks), but did suggest that with major companies still at “bargain basement valuations,” it may not be necessary to look much further down the food chain.

With gold’s price activity in mind, we asked our Twitter followers this week if they think the metal’s rise above US$1,800 is sustainable. Overall, a very firm majority of 80 percent said they think it is.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

Taking a step away from precious metals, this week INN’s Priscila Barrera published the latest in her series of articles on the electric vehicle (EV) supply chain in Europe.

Notably, Europe surpassed China last year as the top EV market — the switch came as emissions-reducing legislation helped drive uptake in Europe, while China cut initiatives to incentivize EV purchases.

Moving forward, one question market watchers have is whether Europe can continue to outshine China. Despite Europe’s dominance last year, there are obstacles to further EV adoption, including pricing, range anxiety and the installation of charging infrastructure.

The experts Priscila spoke to agree that it’s too soon to tell what will happen, especially because EVs are highly integrated into China’s future plans.

“But in China, everything is big, everything is massive, and you never know. One of the differences between China and the rest of the world is that the development of EVs and their technology is an essential part of the economic plan for the whole country in the coming years” — Felipe Munoz, JATO

We’ll be continuing to publish additional articles related to the European EV supply chain over the next several weeks, so stay tuned for that!

Finally, in the marijuana space I want to touch on an interesting story that actually came up last week. Philip Morris International (NYSE:PM), the company behind Marlboro cigarettes, revealed that it’s keeping its options open when it comes to cannabis. Management said firm is analyzing the industry, although it doesn’t have any concrete plans to jump in just yet.

“We are doing all this work and will determine one day what avenues to pursue. But our priority is what we’re doing with our smoke-free products, and that’s where I would stay on cannabis” — Andre Calantzopoulos, Philip Morris International

It’s worth noting that Philip Morris is not the only large tobacco company that’s expressed an interest in cannabis — British American Tobacco (NYSE:BTI,LSE:BATS) recently secured a product partnership with well-known cannabis producer Organigram Holdings (TSX:OGI,NASDAQ:OGI).

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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