Gold for June delivery closed at 2039.00 an ounce on the Comex today. That’s not too far away from the all-time record high of $2,070 an ounce. The move above $2,000 an ounce and any breach of the record at $2070 could trigger a rally as traders short gold buy to cover positions. That could well be true, but I’d note that this forecast of a gold rally is coming from traders long gold who are trying to talk a rally into being.
In Step #3 of my Special Report: 5 Moves for the Next 5 Months, on March 24 I added three Big Tech stocks–Microsoft (MSFT), Adobe (ADBE), and Nvidia (NVDA) to my Volatility Portfolio ahead of earnings season. My theory, explained in that post was that we were facing a tough earnings season for most stocks and that reliable earnings growth from Big Tech would make those stocks look like a safe haven in a period when the Standard & Poor’s 500 as a whole was projected to show a drop in earnings. (I also owned up to my mistake in selling Nvidia back on February 16. That was just wrong. More on why I was wrong and why I’ve changed my mind on that in a post tomorrow or so.)
Today’s Quick Pick is Barrick Gold (NYSE: GOLD). There are three big arguments for owning gold, and Barrick Gold specifically, right now. Number one is that gold always does well when the markets are volatile and people are unsure where else to put their money. Gold is the safe haven. Second, if the Fed pauses rates, gold will be back on the upswing. Gold generally doesn’t pay dividends, so if interest rates are higher, people will put their money where they can get a return through dividends (not gold), but as the rate hikes stop, gold will become more attractive. The third reason is specific to Barrick Gold because although it’s a gold mining company, it gets about 18% of its revenue from the copper it mines alongside the gold. The market for copper has been growing with the renewable energy transition. Electric vehicles use massive amounts of copper and copper miners haven’t been investing to keep up with future demand. Year to date (as of March 10), Barrick was down about 6.81% and Morningstar calculates it as 24% undervalued. While I mentioned that most gold stocks don’t pay a dividend, Barrick actually does, at about 3.23%, and they just announced another $1 million stock buyback. As the turmoil in the market continues, Barrick will continue to go up as people look for a safe haven from the chaos.
This week’s Trend of the Week is Voter Suppression…in China. During the most recent National People’s Congress in China, two people were notably not invited–entrepreneurs Tony and Pony Ma, the heads of Alibaba and Tencent. Other entrepreneurs were also notable for their absence. Xi Jinping has made it clear that entrepreneurs have a much smaller role in his economy going forward, as he looks to consolidate power in the hands of the Chinese Communist Party and prevent any potential competition from power centers. Xi’s new policies, coming out of the National People’s Congress, focus on spending by state-run businesses and emphasize consumer spending, as opposed to infrastructure, as a source of economic stimulus. So how should you invest in China? Despite Pony Ma’s absence at the People’s Congress, Tencent Holdings (OTCMKTS: TCEHY) remains at the forefront of Chinese innovation and technology. It’s clear that China will not adopt US-made chatbots and will develop its own. Tencent looks likely to take a leading role in that effort. The company is also the dominant game producer in the world and gets a lot of its revenue from outside of China. It’s the China stock I’d look at for the long term. In the short term, I’d look at JD.com, which is well-suited to get a bounce from the emphasis on consumer spending. The current price is a good entry point. I’ll be adding it to my JubakPicks.com portfolio tomorrow.
When I added Cameco (CCJ), the big Canadian uranium producer, to my Jubak Picks Portfolio on February 22, 2023, I argued that plans by China and India to burn more coal, despite a potentially catastrophic increase in global temperatures, meant that the world would have to put plans to phase out nuclear power on hold. And that a world desperate to avoid the worst climate outcomes would lead to a revived nuclear power industry–and higher uranium sales for Cameco. Now California has provided a roadmap for exactly how and why this will happen.
Oil prices fell again in February with crude dropping another $2 a barrel on the month. Crude prices really didn’t show much of a trend in February as worries over an economic slowdown caused by higher interest rates battled signs of tighter supply. The reading range for the month was the smallest since July 2021. Signs of increased demand from China and the continued bite of sanctions against Russia point to gains for oil in coming months.
On Friday, shares of Pioneer Natural Resources (PXD) fell on a Bloomberg story reporting rumored talks between the Permian Basin oil shale producer and Appalachian natural gas producer Range Resources (RRC). On Monday shares of Pioneer rebounded as the company denied that it was in acquisition talks. The lesson? Investors really don’t want Pioneer to spend money on acquiring more assets.
Wednesday, February 22, Pioneer Natural Resources (PXD) reported better-than-expected adjusted earnings for the fourth quarter of 2022 while revenues came up short of Wall Street estimates. Revenue was still up 18% year-over-year to $5.1 billion. Fourth quarter net income nearly doubled to $1.48 billion or $5.98 share, from $763 million, or $2.97 a share, in the fourth quarter of 2021. The company declared a quarterly total dividend of $5.58/share, made up of a $1.10 base dividend and a $4.48 variable dividend. The total annualized dividend yield is approximately 11%.Which is why I’m adding the shares to my Dividend Portfolio today.
So it wasn’t much of a surprise to most investors–although some of us were hoping that Intel (INTC) would hold its dividend steady after a big bond offering in the last few weeks. But today Intel cuts its dividend by 66% to 12.5 cents a share from a prior 36.5 cents. The stock dropped only 2.26% on that big news.
After the market close on February 21, cyber security company Palo Alto Networks (PANW) reported fiscal second-quarter 2023 year-over-year revenue growth of 26% to $1.7 billion. Billings in the quarter also rose by 26% to $2.0 billion. The rock-solid consistency of revenue and billings growth in this quarter and as projected for the rest of the year got a cheer from the market. In after-hours trading shares gained 8.56%.
Today I posted my two-hundred-and-thirty-ninth YouTube video: Quick Pick Cameco Today’s Quick Pick: Cameco (NYSE: CCJ). I’m not a fan of nuclear power. Relying on an energy source that produces waste that will remain radioactive for thousands of years when we have no real solution for long-term disposal, is, to me, not the best idea. However, we’ve waited so long to deal with climate change and we still haven’t upgraded the grid so that wind and solar can replace current baseload power sources, so nuclear power will remain in the mix longer than expected. And might even see an increase in its share of the electricity market. Cameco is one of the largest producers of uranium in the world. The company has a lot of capacity that it can bring back into production since it shut down a number of mines when demand for uranium was down. The stock is up about 35% in the last year, 30% year to date, and 16% in the last month. For the trailing 12 months, the company was actually profitable ($116 million), following a loss in 2021 and 2020. You may want to wait for another dip in the general stock market for this one, or dollar cost average into it, but for global warming solutions, this is a good play since we’ve dragged our feet until we’re in an emergency that will require non-optimum, shall we say, solutions. I’ll be adding the stock to my Jubak Picks Portfolio tomorrow, February 22.
Today, February 21, Walmart (WMT) reported s 76% year-over-year jump in earnings to $1.71 a share. Wall Street analysts had forecast earnings of $1.52 a share for the fourth quarter. Revenue rose 7.3% to $164 billion. Comparable store sales gained 8.3%. All that pushed the company’s shares higher today with the stock up 0.59% at the close. But Walmart’s cautious guidance for the rest of 2023 helped send the general market lower.
