Category: INO.com Contributors

The Market Is Looking Expensive

Posted on by Matt Thalman

If you are a trader, you don’t care how the market stacks up to past fundamentals.

But, if you are a long-term investor, knowing how the market appears today from a fundamental standpoint, compared to other times, is something you want to keep an eye on.

Knowing when the market is becoming expensive or even overpriced is essential because that tells you it may be time to start taking your foot off the gas. Or the other side of that coin is that the market appears cheap or underpriced.

These times are when the words of Warren Buffett, “Be greedy when others are fearful and fearful when others are greedy,” stand out the most to me.

Buffett is trying to tell investors that when others are buying, despite stocks and the market as a whole being very expensive, you should be concerned. He also says that you should be greedy when others are afraid, likely because of market turmoil and stocks are selling off. Buffett gives you a straightforward, back-of-the-napkin blueprint of when to sell and buy.

With that all said, I don’t believe there are hard-pressed rules on this is when to sell, or this is when to buy.

However, I think now is a time that you should start considering when you will sell or, at the very least, start planning your next moves based on how the market reacts to the coming weeks or months.

One reason I believe we may be hitting a peak is because of general market sentiment. Towards the end of the summer, most market participants, the talking heads on news outlets, and even Wall Street (i.e., the big banks) were saying a recession was very likely in 2023.

However, the market was rallying during that time, then we peaked in August and finally sold off in September. During the fall, the markets were mostly flat, and then things spiked in January. Now the thinking is we may not hit a recession, and inflation may be behind us. Is the market feeling like it could be getting greedy?

But what about the complex data showing us the markets may be overvalued right now? Continue reading "The Market Is Looking Expensive" →

Platinum Outshines Palladium, Yet Both Offer Opportunity

Posted on by Aibek Burabayev

Almost four years ago, I wrote about the supremacy of palladium over platinum, and we watched the Platinum/Palladium ratio fall below its long-term valley of 0.56 oz.

In contrast, today the Platinum/Palladium ratio is approaching a 4-year high of 0.7 oz, marking a doubling from its all-time low of 0.31 oz established in 2020.

Platinum-Palladium Ratio Monthly

Source: TradingView

On its way up, the ratio broke through a double barrier that included the 2001 valley of 0.56 oz and the horizontal resistance at the top of the range. There are no other barriers for the ratio until it reaches parity between the two metals, which will be a crucial resistance level.

This is because palladium was replaced with the cheaper platinum in the automobile industry due to palladium's abnormally expensive price.

It is estimated that the platinum substitution of palladium reached 340 koz in 2022, and it is predicted to increase to over 500 koz in 2023, more than twice the amount in 2021. Continue reading "Platinum Outshines Palladium, Yet Both Offer Opportunity" →

2 Small-Cap Names With World Class Deposits

Posted on by Taylor Dart

While the Gold Miners Index (GDX) started the year sharply in positive territory and raced ahead of the S&P-500 (SPY) despite its rebound to start 2023, the index has retreated all the way into negative territory as of mid-February, giving up considerable gains.

This has led to considerable underperformance vs. the S&P-500 (SPY), and this isn’t overly surprising given that sentiment was becoming overheated short-term in the miners heading into late January.

However, with the index down more than 15% from its highs, it’s time to start building watchlists for potential buying opportunities.

In this update, we’ll look at two small-cap names with world-class deposits aiming to become 250,000 ounce per annum producers post-2025.

Osisko Mining (OBNNF)

Osisko Mining (OBNNF) is a ~$1.0 billion gold developer based on an estimated ~465 million fully diluted shares, and it’s well known for being the proud owner of one of the highest-grade gold projects globally in Northern Quebec, Canada.

This project, known as Windfall, hosts more than 7.0 million ounces of gold at an average grade of 12.0+ grams per tonne gold, and would be one of North America’s highest-grade mines if it were in production today.

Once in production (2026 estimate), the mine is expected to produce upwards of 270,000 ounces of gold per annum at sub $725/oz all-in-sustaining costs, translating to ~61% margins at an $1,875/oz gold price assumption.

Windfall

(Source: Company Filings, Author’s Chart)
Continue reading "2 Small-Cap Names With World Class Deposits" →

When the War In the Ukraine Ends

Posted on by Matt Thalman

A recent publication from the Kellogg School of Management at Northwestern University discussed the benefits of the post-war reconstruction as a good investment. They use post-World War II as an example of how much money should be spent and how it benefits the war-torn country very quickly.

The paper pointed to specifically The Marshall Plan following World War II. The Marshall Plan had two goals; European economic recovery and the containment of the Soviet Union. Stabilizing Europe’s economies were vital to promoting income growth around the world and entrenching democracies in Europe.

Whenever the Ukraine War is over, I think the Marshall Plan should be adopted identically from what happened 80 years ago since we will essentially be trying to do the same thing in Ukraine as we did all over Europe back then.

However, it will be much more expensive this time around. Post World War II, American leaders sent roughly $130 billion (In 2010 dollars) to help with the European reconstruction of railways, utilities, roads, and airports, the same type of facilities that will need to be rebuilt in Ukraine.

However, economists estimate that restoring the lost infrastructure in Ukraine will cost at least $200 billion, and that figure will climb the longer the war continues. And remember, $200 billion is to rebuild Ukraine.

After World War II, the Marshall Plan not only gave funds to countries that had been friendly to the US during the war but also to Germany and Italy.

The belief back then and now is that not helping to rejuvenate all parties involved after the war ended would only cause more issues later down the road. That has some people thinking that Russia and even Belarus could see new investments from outsiders when the war ends, perhaps not in a straightforward financial manner but in other ways, such as new business opportunities and deals.

At this time, no money has started flowing back into Ukraine to help rebuild the country or increase business and the economy.

But, a deal has already been made between Ukrainian President Volodymr Zelenskyy and BlackRock’s (BLK) CEO Larry Fink that has BlackRock coordinating the investments to help rebuild Ukraine when the war is over. Continue reading "When the War In the Ukraine Ends" →

Higher Rates Are Here To Stay

Posted on by George Yacik

If you believe what the inverted Treasury yield curve is saying, you must believe that, eventually — but probably sooner rather than later — the Federal Reserve will start lowering interest rates in response to the economic recession it will have caused by raising rates by more than 400 basis points in the past year.

But based on the strength of the economy despite those higher rates, it’s looking more like rates well above 4% - and possibly 5% — are going to be around for a long time to come.

But that’s not necessarily such a bad thing. For all those younger than 40, 4-5% long-term interest rates had been the norm for decades.

It’s only in this century that we’ve become accustomed to super-low interest rates, engineered by an activist Fed to insulate consumers and the financial markets from seemingly one financial crisis after another.

But that era looks to be over. And it looks like we’re managing.

Even though inflation appears to have peaked and is moving steadily downward, the Fed is likely to keep rates fairly high for quite a while, certainly the rest of this year and probably 2024 and beyond, absent yet another global financial crisis, to make sure the inflationary beast is truly slayed.

Even on the unlikely chance that the federal government defaults on its debt later this year if Congress can’t agree to raise the debt ceiling, the Fed isn’t likely to start lowering rates for a long time, despite what many investors hope and the inverted yield curve would indicate.

As we know, an inverted yield curve is when short-term rates are higher than long-term rates, which is the exact opposite of the natural order of things.

Long-term debt usually carries higher rates because a lot more can go wrong over, say, 10 or 20 years, than it can over just a couple of years or less. But that’s not what we have now. Continue reading "Higher Rates Are Here To Stay" →