Dear New World Investor:
Gold and silver showed no sign of slowing their rise this week as investors continue to pour into precious metals. Gold futures touched fresh records on Monday, rising as much as 0.8% to hover near highs of $2,750 per ounce. Silver futures gained more than 3% before paring gains, briefly topping $34 per ounce, the highest level in 12 years.
Higher production costs and dwindling reserves mean gold could keep climbing. Increasing costs for labor and materials like tires are eating into margins. Look no further than today’s 14.7% drop in Newmont (NEM) stock, its biggest daily decline in more than two years, after they reported cost pressures hurt September quarter earnings, Plus, gold is scattered in the most politically unstable regions, where governments keep increasing royalties and taxes. I’ve been looking for another de-risked gold miner investment with proven reserves for greater stability. Major miners are on a buying spree, looking for smaller producers with proven reserves.
I’ve been writing about all the central bank buying of gold – over 1,100 tonnes in 2023, the most in over 70 years. That puts a steady bid under the yellow metal. But the real market movers are the massive pension, hedge, insurance, and sovereign wealth funds managing billions – even trillions. When they start buying smaller, less liquid assets like gold, even a small portion of their assets can significantly impact markets. The entire gold sector is smaller than Meta or Google. Newmont, the world’s largest gold miner with a $60 billion market cap, is smaller than 266 S&P 500 companies. If just 10 large fund managers each invested 1% of their portfolios into Newmont, they’d own 25% of the company, creating a buying tsunami in the gold market.
Click for larger graphic h/t @MarinKatusa
It’s an old saying that gold is the currency of kings, silver is the currency of gentlemen, barter is the currency of peasants, and debt is the currency of slaves. What’s more important is that gold bull markets tend to run much longer than this one has:
Click for larger graphic h/t @MarinKatusa
Although gold has been a winning position for us so far, we could be right on the edge of it going parabolic. Gold miners move more than the price of gold because they are operationally leveraged. That just means the cost of producing an ounce of gold doesn’t change with the price of gold, so higher prices fall straight to the bottom line. I’ve been looking for another gold miner to recommend, but it had to be in a safe jurisdiction, sitting on a big resource, with superb, proven management. Found it.
Buy: Dakota Gold (DC)
The area around Lead, South Dakota, once was called the richest 100 square miles on Earth. It was home to the Homestake Mine, one of the largest gold mines in history, producing over 40 million ounces of gold. But by the early 2000s, with gold prices barely above $300 per ounce, the mine was abandoned and the surrounding towns became ghost towns.
Today, gold is worth 10x more and one man—a legend in the industry—is bringing this mine back to life.
Robert Quartermain, Founder and Co-Chairman of the Board, turns forgotten projects into billion-dollar opportunities. Pretium Resources, his last company, was acquired for $3.5 billion. When he saw what was left in the richest 100 square miles on Earth, he couldn’t stay retired. This is a gold mine 500% richer than the average. Early tests show up to 6 grams of gold per ton of rock, compared to the global average of 1 gram per ton. This is a chance to get in on the ground floor of a project that could deliver massive returns—just like his past successes.
Quartermain oversees a very experienced management team:
Dakota Mining has over 48,000 acres surrounding the Homestake Mine.
Click for larger graphic
Click for larger graphic
Management owns 30% of the stock and they had $22.1 million in cash at the end of the June quarter, enough to carry them for years with no dilution. There are 105.1 million shares, fully diluted for options and warrants, so the real market capitalization at today’s close was only $251 million. I want to emphasize that although management is superb and the area rich in gold, this is a development-stage miner with the associated risks. Having said that, I want you to Buy DC under $2.50 for a $6 target in the gold bull market.
* * * * *
Since 1950, the US stock market has had 51 six-week win streaks. A year later, stocks were higher 86.3% of the time with an average 11.1% gain.
Click for larger graphic h/t @RyanDetrick
The stock market has been generally up over the past decade, with the S&P 500 posting an annualized return of 13%. Last Friday, Goldman Sachs published a research note projecting the next 10 years will be a lost decade. They expect the S&P to deliver an annualized return of only 3% over the next 10 years, mostly because more than a third of the index is concentrated in just 10 stocks, which has typically led to below-average returns.
They wrote: “We remain very confident in the long-term outlook for US economic growth. We remain very confident in the outlook for long-term corporate profit growth. We feel good about the long-term outlook for the average stock. The concern that we have is that concentration is extremely high, and when we put that in our models, it points to low average returns. The idea here is you have a few stocks that have an unusually large representation of market cap. And if their weight goes back to some kind of normal, that would weigh on the aggregate index as well.”
Right now, the 10 largest stocks in the S&P account for more than a third of the index, putting market concentration near its highest level in 100 years. Goldman said that using history as a guide, this has typically led to below-average returns for the following decade.
Well, maybe – or maybe this is trendline thinking at its worst. We are at a dramatic inflection point where the Top 10 mostly are developing AI applications that will spread through the bottom 490 over the next 10 years. Their weight in the Index probably will go “back to some kind of normal” by the 490 going up faster than the Apples, Nvidias, and Metas of the world.
Even Goldman recognized this: “The longer your investment horizon, the more uncertain all the catalysts that will take place during that horizon. And so just given the starting point of the concentration, history would tell us there is likely to be some catalyst over the next decade that causes that to revert.”
But they noted the caveat that the unwinding of market concentration “doesn’t need to happen within the next 10 years, and it doesn’t necessarily need to weigh on the equity market, because there could be dramatic strength from the rest of the equity constituents.”
Well, duh. Three percent annualized returns or worse only come when something very, very bad has occurred. The 36-year cycle (1929, 1965, 2000) tells us to look for the next top around 2036. Goldman see a roughly 72% chance that the S&P will trail Treasury bonds, and a 33% likelihood it will lag inflation through 2034. I think they are trend-lining when we are seeing an inflection point in economic growth and productivity.
I believe the next 10 years will see S&P returns at least as strong as the long run average of 10.6% and possibly better. There will be Price/Earnings multiple contraction, but it will be offset by healthier corporate fundamentals over the next 10 years as the impact of AI spreads through the economy.
In the short run, CNN’s Fear & Greed Index briefly edged into extreme greed territory.
Click for larger graphic h/t CNN
High Greed levels tell you how people are feeling and alert you to pay extra attention to developing negatives, but they don’t mean Sell right away. On the other hand, Extreme Fear lows tell you when to buy right away.
Click for larger graphic h/t @HumbleStudent
Our friends at Citi are warning that S&P 500 long positions are now at their highest level since mid-2023. At that time, that level of exposure to the Index was followed by a slide of over 10% in the next three months. But compared to the high positioning levels of mid-2023, the current levels aren’t as stretched as they were back then, so there is less risk. Also, Citi pointed out that “Investor conviction for the Nasdaq continues to be low with net positioning at neutral.”
The Bottom Line: This was a clickbait headline thinly supported by the facts. If the S&P drops 10% it would (1) not be a surprise to anyone because corrections happen all the time; (2) be a consolidating move to re-energize the fractal energy for another leg up; and (3) be a buying opportunity.
Market Outlook
The S&P 500 lost 0.5% since last Thursday, although it set another all-time intraday high last Friday. The Index is up 21.8% year-to-date. The Nasdaq Composite gained 0.2% as investors got positioned for Big Tech earnings reports. It is up 22.7% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) fell 2.1% and now is up 8.9% year-to-date. The small-cap Russell 2000 dropped the most, 2.7%, and is up 9.4% in 2024.
The election is just 12 days away. There isn’t a predictable pattern when it comes to the president’s party and the stock market. Stocks have soared when both Republicans and Democrats were in power. Stocks have tanked when both Republicans and Democrats were in power. Stocks usually rise regardless of who controls the White House:
Click for larger graphic h/t @DisruptionHedge
That’s because American businesses are money-making machines, which drives stock prices higher. And because of inflation, which the best US companies are great at keeping up with. The fractal dimension resumed its consolidating ways after last week’s head fake. Unless there’s a big post-election drop because we can’t identify the winner – always on my mind since the Bush-Gore disaster in 2000 – we are in for several more weeks of back-and-forth action to get to the fully-consolidated 55 level.
Top 5
Changes this week: None
Near-Term – chronological order
SCYX – ScyNexis – Data releases and resolution of the manufacturing problem
USL United States 12 Month Oil Fund, LP – crude should rise quickly
EQT EQT –natural gas price rebound
CMPS – Compass Pathways – Rebound from negative AdCom review of MDMA and Phase 3 data release in December quarter
FCX Freeport McMoRan – copper shortage
AKBA Akebia Therapeutics – Vafseo launch in January
Long-Term – alphabetical order
ABCL AbCelllera – Will become a huge pharma royalty company
UUUU Energy Focus – Domestic uranium supplier
EQT EQT – largest US natural gas company
IBIT iShares Bitcoin Trust – Bitcoin is headed for $100,000
META Meta – a (the?) leader in the metaverse
PLTR Palantir – a (the?) leader in AI applications software
RKLB Rocket Lab – #2 to SpaceX in space
SCYX ScyNexis –First new antifungal in 20 years
Economy
The Atlanta Fed’s GDPNow model ticked up to +3.4% growth in the September quarter, to be reported on October 30 before the open. The Blue Chip economists are a full percentage point lower at +2.4%.
Coming Events
All times below are ET, and most presentations and slides are archived on the companies’ websites so you can listen to them.
Monday, October 28
AAPL – Apple – Before the open – iOS18 with first AI features available
INO – Inovio – 4:00pm – World Vaccine Congress
Tuesday, October 29
PYPL – PayPal – 8:00am – Earnings conference call
GLW – Corning – 8:30am – Earnings conference call
EQT – EQT – After the close – Earnings release; call tomorrow
SNAP – Snap – 5:00pm – Earnings conference call
ENVX – Enovix – 5:00pm – Earnings conference call
Wednesday, October 30
September quarter GDP – 8:30am – First estimate, likely to be “strong” and “above consensus”
Business Employment Dynamics – 8:30am – Expect past monthly payroll data to be revised down
EQT – EQT – 10:00am – Earnings conference call
META – Meta – 5:00pm – Earnings conference call
Thursday, October 31
CMPS – Compass Pathways – 8:00am – Earnings conference call
Personal Consumption Expenditures Index – 8:30am – The Fed’s favorite inflation indicator
AAPL – Apple – 5:00pm – Earnings conference call
Friday, November 1
October payrolls – 8:30am – September was +254,000 – look for revisions to August and September
Big Tech: The Biotech & Digital Dominators MegaShift
There are at least four ways to make money in the stocks of these large, growing, dominant companies. You can:
* * Buy a stock and hold it
* * Buy a stock and write a call option against it
* * With a Level IV options account, write an out-of-the-money put option
* * With a Level IV options account, write an out-of-the-money put option and use part of the premium to buy an out-of-the-money call option
Apple (AAPL – $230.57) hit an all-time closing high on Monday and this week celebrated 10 years of Apple Pay. It is now used by hundreds of millions of consumers in 78 markets, at checkout on millions of websites and apps, in tens of millions of stores worldwide, and is supported by more than 11,000 bank and network partners. This is a great example of how Apple continually adds value to its ecosystem, which keeps people buying their hardware products to use proprietary features. For example, Lionel Messi makes his historic Major League Soccer Cup Playoffs debut tomorrow, as the best-of-three playoffs return to MLS Season Pass on Apple TV for a free prime time match.
Apple will introduce iOS18 with Apple Intelligence on Monday and then announce earnings after the close next Thursday. Analysts think revenues will be up 12.9% to $94.42 billion with earnings of $1.55 per share. Loop Capital, citing stronger-than-anticipated iPhone shipments, raised its iPhone revenue estimate from $48.6 billion to $49.3 billion and increased its unit sales forecast from 52.5 million to 53.5 million. They said the iPhone supply chain is performing better than initially forecasted, reflecting resilient demand. They maintained their Buy rating and $300 target price.
The company is seeing strong iPhone growth in China. According to Counterpoint Research, in the first three weeks since its launch, iPhone 16 sales have increased 20% in China versus last year’s iPhone 15 launch. Sales of the most expensive16 Pro and Pro Max models have increased even more, jumping 44% compared to the iPhone 15. AAPL is a HOLD – I expect to move back to Buy under $175 for new iPhones.
Corning (GLW – $46.81) announces earnings Tuesday morning. The consensus estimate is for revenues to be up 6.1% to $3.72 billion with earnings of 52¢ per share. Guidance is expected to be for $3.67 billion and another 52¢, which seems low. I expect an upside guidance surprise.
Corning and a unit of Japanese chemical conglomerate Shin-Etsu Chemical have a joint venture named Hemlock Semiconductor. The Commerce Department signed a non-binding preliminary memorandum of terms with Hemlock to provide up to $325 million as part of the CHIPs and Science Act. The grant will be used to expand the amount of semiconductor-grade polysilicon they produce and help support the construction of a new manufacturing facility on Hemlock’s existing site in Hemlock, Michigan. Polysilicon is vital for both the semiconductor and solar panel industries. The CHIPS Act was passed to reshore critical supply chains. GLW is a Buy under $33 for the 5G cellular buildout, followed by the smartphone upgrade to use 5G services. My target is $60 in 2025 .
Gilead Sciences (GILD – $88.78) will present more than 40 abstracts at The Liver Meeting 2024, hosted by the American Association for the Study of Liver Diseases (AASLD) from November 15-19 in San Diego. They’ll have 11 abstracts reporting new data on primary biliary cholangitis (PBC), including data on the efficacy and safety profile of the recently-approved Livdelzi (seladelpar) in people living with PBC and compensated cirrhosis.
Leerink upgraded the stock to Outperform on the growth outlook for lenacapavir, its PrEP treatment for the prevention of HIV infection. They raised their 12-month target price from $74 to $96. GILD is a Long-Term Buy under $80 for a first target of $120.
Meta Platforms (META – $567.78) will report strong numbers next Wednesday. September quarter revenues should be up a solid 20% from last year to $40.27 billion – an amazing rate of growth for a company of this size – with earnings of $5.24 a share.
BofA said they expect a double beat on both revenues and earnings. They are looking for revenue of $40.4 billion and EPS of $5.35. They maintained their Buy recommendation and $630 target price. They said Meta could lower the upper end of their 2024 expense guidance by $1 billion, from $98.2 billion to $96 billion—$98 billion, thanks to layoffs and a reduction in job openings.
December quarter guidance is pegged at $46.3 billion and $6.35. There’s no reason for Zuckerberg to guide higher than that, even though he’ll probably beat it. META is a Hold – I expect to move back to Buy, but probably not under $400.
Palantir (PLTR – $43.56) partnered with Flyby Robotics, an American-made Unmanned Aerial System (UAS) developer, to empower Palantir’s Visual Navigation (VNav). A UAS is the totality of everything that makes an Unmanned Aerial Vehicle (UAV) work, including its GPS module, ground control module, transmission systems, camera, and all the software. VNav allows navigation without GPS, using onboard cameras and computers. It’s easy to jam GPS signals, but VNav can keep flying when that happens, such as in a war.
Chad Walquist, Palantir’s Lead AIP Architect, talked about how Palantir’s technology is playing a big role in everything from corporate projects to government work.
PLTR is a Buy under $22 for a $100+ target.
PayPal Holdings (PYPL – $81.39) announces earnings early next Tuesday. Wall Street expect revenues to be up only 6.2% to $7.88 billion with earnings of $1.07 per share, down from last year’s $1.39. Those are low bars to beat.
The company signed another partnership payments deal with Global Payments to offer their US merchants enhanced PayPal and Venmo branded checkout solutions and accelerated guest checkout through Fastlane. Fastlane enhances the shopping experience for consumers and drives increased conversion rates for businesses leveraging the platform. Global Payments has collaborated with PayPal for over 15 years, delivering a range of PayPal’s branded checkout solutions across Europe, the UK, and Canada. PYPL is a Buy under $68 for a double in three years.
Snap (SNAP – $10.27) announces earnings after the close on Tuesday. Analysts think revenues will be up 34.3% to $1.36 billion with earnings of 5¢ per share. I expect stronger earnings to move the stock. The consensus for December quarter guidance of $1.56 billion in revenues seems right, but their 12¢ earnings forecast probably is high. SNAP is a Buy under $11 for a $17+ target.
Small Tech
Enovix (ENVX – $10.88) announces earnings next Tuesday with a conference call the same time as Snap. The consensus is forecasting revenues up 1,955% – not a misprint – to $4.11 million with a loss of of 20¢ per share. As always, it will be news on customers that moves the stock. ENVX is a Buy up to $20 for a 4-year hold to $100+ as their BrakeFlow lithium-ion battery takes market share.
Primary Risk: A new competitor invents a better battery.
Fastly (FSLY – $7.24) announced the general availability of Fastly DDoS Protection to provide automatic protection from Layer 7 and other application-level Distributed Denial of Service (DDoS) attacks. With a click of a button, organizations can enable Fastly DDoS Protection to automatically shield their applications and Application Programming Interfaces against highly disruptive data and query floods. Fastly uses the same software to protect their global network from massive DDoS attacks. FSLY is a Buy up to $10 for a 3- to 5-year hold to $80+ as Compute@Edge drives customer acquisition and revenue growth.
Primary Risk:Content and applications delivery networks are a competitive area.
Rocket Lab USA (RKLB – $11.19) grew revenues 50% in the September quarter and should print over 100% growth in the December period. No wonder the stock is on fire! You can still buy it under my limit and ride the steady expansion of the space industry, but probably not for long. They report on November 12. RKLB is a Buy up to $13 for my $30+ target as low earth orbit satellites and space exploration grow.
Primary Risk: A new competitor emerges.
Biotech MegaShift
If you can afford it – and it would not be too big a position in your portfolio – putting $2,000 into each of these speculative biotechs might be a good way to start. Buying these out-of-favor, fallen, or forgotten companies that can get important products through the FDA at very low market capitalizations seems like a good strategy to me.
Risks
Development-stage biotechs are subject to investor sentiment swings from wildly optimistic to excessively pessimistic – mostly the latter recently. After the Primary Risk for each company, I’ve added the clinical stage of their lead product, the probable time of their first FDA approval, and the probable time of their next financing.
As always, you need to think about an appropriate position size. You could buy a full position upfront and then just hold on, or buy some upfront and leave room to add more on the inevitable financings, transient clinical trial setbacks, and the like.
Akebia Therapeutics (AKBA- $1.58) signed another multi-year commercial contract with one of the nation’s leading providers of kidney care services, unnamed but with 200,000 patients at thousands of centers. I think that’s DaVita, one of the top two dialysis companies with 2,900 facilities (the other is Fresenius).These contracts enable their physicians to prescribe Vafseo to patients on dialysis as soon as it launches in January. Buy AKBA up to $2 for the vadadustat launches in the EU, UK, and the US.
Primary Risk: Vadadustat doesn’t sell in the US.
Clinical stage of lead product: Approved
Probable time of next approval: NM
Probable time of next financing: Never
Compass Pathways (CMPS – $6.43) reports next Thursday morning. Analysts expect them to lose 57¢ per share, and they can’t say anything about the Phase 3 trials except possibly enrollment activity. They may comment on PTSD or anorexia, but it basically will be a non-event. CMPS is a Buy under $20 for a very long-term hold to a 10x.
Primary Risk: Their drugs fail in the clinic.
Clinical stage of lead product: Phase 3
Probable time of first FDA approval: 2026
Probable time of next financing: Late 2025
Editas Medicine (EDIT – $3.18) held their investment update with a surprise (AUDIO HERE and SLIDES HERE and TRANSCRIPT HERE).
As I expected, they announced they achieved in vivo preclinical proof of concept of hematopoietic stem and progenitor cell (HSPC) editing and fetal hemoglobin (HbF) induction in humanized mice engrafted with human hematopoietic stem cells and lacking their own hematopoietic cells. They observed high levels of editing of the HBG1/2 promoter, leveraging their clinically validated upregulation strategy, utilizing a novel and Editas-proprietary targeted lipid nanoparticle (tLNP) formulation for extrahepatic tissue delivery.
This puts them on a clear path to develop a potentially first-in-class and best-in-class in vivo gene edited medicine for the treatment of sickle cell disease and beta thalassemia. In vivo is the Holy Grail in gene editing, and it would be great if Editas got there first.
But my interest is in their Intellectual Property licenses to the rest of the genomic editing industry. They need to conserve cash to get to the point that others’ programs are approved and require a license. Although it surprised me, they’ve started a process to partner or out-license reni-cel, their lead drug. It is not in vivo editing, but it’s a very good late-stage drug that should find a partner.
Editas has completed enrollment of the adolescent and adult cohorts of the Phase 1/2/3 RUBY trial for sickle cell disease and has dosed 28 adults. They will present a substantive clinical data set of sickle cell patients with considerable clinical follow-up in the RUBY trial at the American Society of Hematology (ASH) annual meeting, December 7-10. ASH is notorious for making partnerships and acquisitions.
Reni-cell could be approved in 2026 if they can find a partner quickly. Of course, they would get a substantial upfront payment, milestones, and royalties. In the meantime, this decision will cut their R&D spend substantially.
EDIT is a Buy under $6 for a double in 12 months and a long-term hold to much higher prices.
Primary Risk: Other companies’ gene-sequencing drugs fail in the clinic.
Clinical stage of lead product: Partnered: Approved; Owned: Preclinical.
Probable time of next FDA approval: 2026
Probable time of next financing: 2026 or never
Inovio (INO – $5.66) presented new data at the American Association for Cancer Research (AACR) special conference on Tumor Immunology and Immunotherapy. New immunology data showed the ability of INO-3107 to induce an antigen-specific T-cell response against HPV-6 and HPV-11 and drive recruitment of T cells into airway tissues and papilloma for recurrent respiratory papillomatosis (RRP).
At the International Society of Vaccines Conference they presented full safety and efficacy data from the Phase 1/2 clinical study in patients with RRP showing that INO-3107 was well-tolerated and immunogenic. Over 81% of patients in the trial required fewer surgeries post-treatment when compared to baseline.
Inovio does not have to do Phase 3 trials to get approval. They will file a Biologics Licensing Application by mid-2025 at the latest. INO is a Buy under $14 for a very long-term hold.
Primary Risk: Their drugs fail in the clinic.
Clinical stage of lead product: Phase 3
Probable time of first FDA approval: Early 2026
Probable time of next financing: March 2025 or after FDA approval in 2026
Inflation MegaShift
Gold ($2,748.60) broke a six-day winning streak Wednesday but bounced back today to all-time intraday and closing highs. The fractal dimension may be flipping back into trending mode, even though the trend should be exhausted at the 30 level. As the old Chinese curse goes: “May you live in interesting times.”
Miners & Related
First Majestic (AG – $7.82) produced 5.5 million silver equivalent (AgEq) ounces in the September quarter, consisting of 2.0 million silver ounces and 41,761 gold ounces. That was a 4% increase from the 5.3 million AgEq ounces produced in the June quarter, primarily due to increased gold production at San Dimas and Santa Elena.
They completed a total of 50,020 meters of drilling during the quarter, with 28 drill rigs – 14 at San Dimas, nine at Santa Elena, three at Jerritt Canyon and two at La Encantada. Financial results come November 7. AG is a Buy under $11 for a $23 next target price as production increases and the price of silver rises.
Primary Risk: Prices of precious metals fall due to US dollar strength.
Cryptocurrencies
Cryptocurrencies are a diversifying asset that offer a unique opportunity to make (or lose!) a lot of money quickly. You can easily buy bitcoin and other cryptocurrencies at Coinbase, Block, or Robinhood.
Bitcoin‘s (BTC-USD on Yahoo – $68,118.56) Open Interest surged past $40 billion on October. 21, hitting $40.5 billion, according to CoinGlass. Open Interest tracks the total value of all active futures contracts, and is an important sign of increased leverage and institutional participation.
Bernstein released Bitcoin Blackbook, aimed at providing institutional investors with a comprehensive understanding of bitcoin. They forecast bitcoin will reach $200,000 by the end of 2025 and characterized their prediction as “conservative,” emphasizing bitcoin’s limited supply amid rising US government debt levels, currently just over $35 trillion.
Bitcoin exchange-traded funds attracted about $2 billion in total inflows last week, according to CoinShares. That matched the largest total in bitcoin ETF inflows since July.
New accounting standards are set to go into effect this December. The Financial Accounting Standards Board (FASB) has updated its guidelines, requiring digital assets like bitcoin to be marked to fair market value. Previously, assets could only be marked down in case of depreciation, with no recognition of value increases unless they were sold. These new rules will allow companies to reflect gains and losses in their financial reports, which could shift how firms approach their bitcoin holdings.
BTC-USD, ETH-USD, IBIT, and ETHA are Strong Buys.
Primary Risk: Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.
iShares Bitcoin Trust (IBIT- $38.87) remains the cheapest and easiest way to buy bitcoin. IBIT is a Buy for the 2028, 2032, and 2036 halvings.
Primary Risk:Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.
iShares Ethereum Trust (ETHA- $19.25) remains the cheapest and easiest way to buy ethereum. ETHA is a Buy.
Primary Risk:Ethereum falls due to over-regulation or is surpassed by another cryptocurrency.
Commodities
One of the world’s best investors, billionaire hedge fund manager Paul Tudor Jones, just said: “All roads lead to inflation. I’m long gold. I’m long bitcoin. I think commodities are so ridiculously under-owned, so I’m long commodities. I think most young people find their inflation hedges via the Nasdaq; that’s also been great.” He also said hold zero fixed income or even sell short longer-duration bonds.
He pointed out that neither presidential candidate has a plan suitable for tackling US debt. He thinks inflation risk looms large after November’s election, as each contender has pledged tax cuts and spending proposals that turn a blind eye to Washington’s deficit problem. If left unaddressed, the US will need to inflate its way out.
He said: “Under Trump, the deficit goes up by $500 billion per year; under Harris’ plan, it goes up by an additional $600 billion per year. I have a feeling all those are just pipe dreams. The Treasury market won’t tolerate it.”
He thinks the bond vigilantes will revolt and send Treasury yields higher. He’s right.
Oil – $70.47
Oil has been stuck around $70 for almost three weeks, which included two weeks of crude draws and this week’s expected 5.5 million barrel increase. The market is rangebound because both the bull and bear arguments are compelling and believers in one side or the other (including me) have no reason to change their outlook. The bears are looking at:
* * Weak global oil demand
* * High OPEC+ spare capacity
* * Consensus expectation of strong non-OPEC supply growth
These three factors make the bears feel more confident than ever. They are arguing for a price drop into the $50s, followed by a severe supply response that would ultimately push prices back higher.
The oil bulls like me have similarly straightforward arguments. We have:
* * Low global oil storage
* * Decelerating non-OPEC growth
* * OPEC+ policy to help support balances
* * Low demand today should result in higher demand growth in the future
* * And – oh, yeah – Israel and Iran
I realize that means before the bears give up we need to see oil demand recover (the soft landing?) and OPEC+ to guide the market on what it will do with its production policy. Or Israel to unleash hellfire and brimstone on Iran. Time is on our side.
Regarding Israel, they just had a serious wake-up call. As The Washington Post wrote: “At least two dozen long-range Iranian ballistic missiles broke through Israeli and allied air defenses on Tuesday night, striking or landing near at least three military and intelligence installations, according to a review of videos and photos of the attack and aftermath.
“Videos verified by The Washington Post showed 20 missiles striking the Nevatim air base, in the southern Negev desert, and three striking the Tel Nof base, in central Israel. Analysts told The Post the visuals were consistent with direct impacts on the bases rather than debris from intercepted missiles. Other videos showed that at least two missiles landed near Tel Aviv in Cinema City Glilot, Hod Hasharon, close to Israel’s Mossad spy agency headquarters, leaving at least two craters.”
If the Iron Dome didn’t work completely, Israel has to go up the food chain and take out Iran’s ability to launch missiles. Got OIL?
The July 2026 Crude Oil Futures (CLN26.NYM – $66.81) are a Buy under $70 for a $200+ target. Only buy futures for all cash; do not use margin.
The United States 12 Month Oil Fund, LP (USL – $37.22) is a Buy under $40 for a $100+ target.
Vermilion Energy (VET – $9.79) is a Buy under $11 for a target price of $24 or more.
Primary Risk: Oil prices fall.
Energy Fuels (UUUU – $6.17) continues to benefit from recommissioning nuclear power plants. Thirteen reactors have been shut down since 2012. On their recent earnings call, NextEra Energy CEO John Ketchum said they are conducting engineering studies and speaking with federal regulators about the possible restart of its Duane Arnold nuclear power plant in Iowa. He said the site uses a boiling water reactor, which can be simpler than other systems to revive: “That gives us optimism of being able to do this at an attractive price and without as much risk.”
Got uranium? UUUU is a buy under $8 for a $30 target.
Primary Risk: Uranium prices fall.
Freeport McMoRan (FCX – $46.84) reported a pretty good September quarter, with revenues up 16.7% from last year to $6.79 billion, ahead of the $6.46 billion consensus estimate. Pro forma earnings of 38¢ per share were just ahead of the 37¢ consensus estimate. All three mining areas are performing well.
Consolidated production in the quarter totaled 1.1 billion pounds of copper, 456 thousand ounces of gold and 20 million pounds of molybdenum.
Click for larger graphic h/t Seeking Alpha
Consolidated sales totaled 1.0 billion pounds of copper at an average of $4.30 a pound (2% above revenue guidance), a very strong 558,000 ounces of gold at an average of $2,566 an ounce (17% above revenue guidance), and 19 million pounds of molybdenum.
Click for larger graphic h/t Seeking Alpha
Click for larger graphic h/t Seeking Alpha
On the conference call (AUDIO HERE and SLIDES HERE and TRANSCRIPT HERE), management said they expect December quarter consolidated sales of about 980 million pounds of copper, 340,000 ounces of gold, and 20 million pounds of molybdenum. That would bring the full 2024 year in at 4.1 million pounds of copper, 1.8 million ounces of gold and 80 million pounds of molybdenum.
September quarter net cash costs of copper production were $1.39 a pound, 34¢ below the September quarter and 32¢ below guidance. That probably won’t last due to lower gold sales in the December quarter and they guided for $1.58 per pound for the full year. They had $1.9 billion in operating cash flow in the quarter, far above the $1.2 billion in capital spending.
Last week, Freeport halted copper cathode production at its Indonesian smelter after a fire at a sulphuric acid unit. There were no injuries and repair costs are covered by insurance. Mining operations were not impacted. But the company expects to postpone sales of refined copper from Indonesia until the June 2025 quarter because the fire caused a further production delay. They are in talks with Indonesia’s government to extend their licenses to export copper concentrate and are “working with the Indonesia government to allow continuity of copper concentrate exports until smelter operations are restored.”
CEO Kathleen Quick said: “The company is seeing strong demand for power cables and building wire associated with electrical infrastructure and data centers in the U.S. Both the growing sectors more than offset weakness in traditional demand sectors.”
“Traditional demand sectors” means China, where Xi Jinping’s stimulus hasn’t hit copper demand yet – but it will.
Their important leach initiative is like finding another huge mine with low-cost copper:
Even though Freeport is a very large, stable company, it is quite leveraged to the higher copper prices I am predicting. Dramatically higher earnings will drive the stock steadily higher for many years:
And they plan to share the extra cash flow with shareholders, which also will drive the stock higher:
FCX is a buy under $44 for a $65 target within two years.
Primary Risk: Copper prices fall.
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RIP Mitzi Gaynor
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Your modeling bitcoin Editor,
Michael Murphy CFA
Founding Editor
New World Investor
All Recommendations
Priced 10/24/24. Check out the complete Portfolio page HERE.
Buys
These are the stocks everyone needs to own because transformative events are happening over the next year or two, and I expect to hold them long-term.
Tech Dominators
Corning (GLW – $46.81) – Buy under $33, target price $60
Gilead Sciences (GILD – $88.78) – Buy under $80, target price $120
Palantir (PLTR – $43.56) – Buy under $22, target price $100+
PayPal (PYPL – $81.39) – Buy under $68, target price $136
Snap (SNAP – $10.27) – Buy under $11, target price $17+
SoftBank (SFTBY – $28.83) – Buy under $25, target price $50
Small Tech
Enovix (ENVX – $10.88) – Buy under $20; 4-year hold to $100+
First Trust NASDAQ Cybersecurity ETF (CIBR – $60.91) – Buy under $60; 3- to 5-year hold
Fastly (FSLY – $7.24) – Buy under $14; 3- to 5-year hold to $80+
PagerDuty (PD – $17.92) – Buy under $30; 2- to 5-year hold
QuickLogic (QUIK – $8.71) – Buy under $10, target price $40
Rocket Lab (RKLB – $11.19) – Buy under $13, target price $30+
$20-for-$1 Biotech
AbCellera Biologics (ABCL – $2.70) – Buy under $6, target $30+
Akebia Biotherapeutics (AKBA – $1.58) – Buy under $2, target $20
Compass Pathways (CMPS – $6.43) – Buy under $20, hold a long time for a 10x return
Editas Medicines (EDIT – $3.18) – Buy under $6 for a double in 12 months and a long-term hold to much higher prices
Inovio (INO – $5.66) – Buy under $14, hold a long time
Medicenna (MDNAF – $1.61) – Buy under $3, first target $20, then maybe $40
ScyNexis (SCYX – $1.45) – Buy under $3, target price $20, then $50
TG Therapeutics (TGTX – $23.22) – Buy under $12 for buyout at $30+
Inflation
A Short-Sale or REO House – ($415,400) – Hold
Bag of Junk Silver – ($33.85) – hold through silver bull market
Sprott Gold Miners ETF (SGDM – $32.89) – Buy under $28, target price $50
Sprott Junior Gold Miners ETF (SGDJ – $41.35) – Buy under $39, target price $100
Sprott Physical Gold and Silver Trust (CEF – $26.02) – Buy under $18, target price $30
Global X Silver Miners ETF (SIL – $40.92) – Buy under $30, target price $50
Coeur Mining (CDE – $7.11) – Buy under $5, target price $20
Dakota Gold (DC – $2.39) – Buy under $2.50, target price $6
First Majestic Mining (AG – $7.82) – Buy under $11, next target price $23
Paramount Gold Nevada (PZG – $0.42) – Buy under $1, first target price $10
Sandstorm Gold (SAND – $6.30) – Buy under $10, target price $25
Sprott Inc. (SII – $46.30) – Buy under $40, target price $70
Cryptocurrencies
Bitcoin (BTC-USD – $68,118.56) – Buy
iShares Bitcoin Trust (IBIT – $38.87) – Buy
Ethereum (ETH-USD – $2,557.36) – Buy
iShares Ethereum Trust (ETHA- $19.25) – Buy
Commodities
Crude Oil Futures – July 2026 (CLN26.NYM – $66.81) – Buy under $70; $200+ target
United States 12 Month Oil Fund, LP (USL – $37.22) – Buy under $40; $100+ target
Vermilion Energy (VET – $9.79) – Buy under $11; $24 target
Energy Fuels (UUUU – $6.17) – Buy under $8; $30 target
EQT (EQT – $36.96) – Buy under $35; $70 first target
Freeport McMoRan (FCX – $46.84) – Buy under $44; $65 target within two years
Holds
These are holds but not sells – yet. They could get moved back to one of the buy categories if their prices drop or outlook improves, or they could become sell recommendations in the future.
Apple Computer (AAPL – $230.57) – Expect to move back to Buy under $175 for new iPhones
Meta (META – $567.78) – Expect to move back to Buy under $400
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New World Investor does not act as a personal investment adviser or advocate the purchase or sale of any security or investment for any specific individual. The recommendations and analysis presented to members are for the exclusive use of members. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time. Nothing in this presentation should be considered personalized investment advice. No communication to you by Michael Murphy or any of our employees or contractors should be deemed as personalized investment advice.
Copyright ©GwynRoseLLC 2024
Nice report MM. Thank you.
I don’t think I’m up for a development stage miner – DC.
I’ve been holding PZG for far too long – I understand that by all measures it’s very cheap but it’s been in decline for years even as gold rises. Is there a catalyst to move PZG My other mining stocks (GOLD and BTG) have move as expected, but not PZG.
Phillips 66 is closing their refinery in LA. Not that that is a big mover of oil prices but it will impact gas prices in California which are already the highest in the country. Newsom is further igniting the flames between him and the oil companies in California by adding layers of bureaucracy to his already bloated government to force oil companies out of California. Just FYI if you drive there! Or operate a business there with delivery vehicles.
Good points, thanks. I’ll repost your question near the bottom of the last board.
“I disagree with Powell’s take on wage inflation and its effect on inflation. Look at mortgage rates now over 7 percent. Boeing workers getting 35 percent pay raises, $7,000. Ratification bonus, reinstated incentive plan to retirement plans, $5,000. One time payment and up to 12 percent in employer contributions! The Longshoremen Union just got a 62 percent raise and it’s NOT over. More to come in January. Canadian pilots just got a massive raise as well. How the FED doesn’t get that I don’t know??”
My answer–Milton Friedman said that inflation is primarily caused by govt money printing. That was in the 1970’s, and he didn’t take into account productivity gains from technology to come later. But aside from that, he was correct. Labor unions getting huge wage increases doesn’t directly cause inflation. If the money supply remains constant, the extra money for wages steals the money away from other uses for the remaining money supply. That causes deflation for the other uses. But the deflation is politically and socially disastrous, so in practice the govt prints more money to avoid deflation. It is this extra printing of money that causes inflation, although pragmatically the huge wage and benefit increases are associated with more inflation. If Powell can keep the money supply constant or just 2% annual growth recommended by Friedman, he can keep inflation under control. But he has shown that he is swayed by political pressures to inflate enough to keep people employed and companies nominally profitable.
Adding bureaucracy reduces productivity. Whatever the growth in money supply is, lower productivity increases inflation further.
Yes , I totally agree. Inflation is baked into the cake . The crazy US debt is out of control. The FED has NO choice now but to print money, inflate the dollar (kill the value of the dollar) and hope to continue on the highway to hell. Gold will be the beneficiary of all that circus of insanity. Paul Jones is right on IMO. It took the US 200 years to get to a debt of 1 trillion dollars. Since then until now they have created 35 trillion in debt. Anyone with a third grade education can figure out that the train will soon go off the tracks.
AKBA vs SCYX I’m reminded of the “Tortiose and the Hare” story. I think Akba will do very well come Jan1/25. Scyx will improve once the hold is lifted, but that will be short lived action while we wait for results, a. Big IF. Money is to be made in the short term with Akebia, Give Scyyx about a year and then it’s a big gamble. Anybody agree or disagree?
Totally agree.
Sorry MM but your picker needs glasses. Look North to Canada for a superb gold pick. Keep in my RRSP (retirement fund). Agnico Eagle a mid tier company bought at $32 and is north of$120 cdn. Check it out.
MM–I finally listened to some of the video of that comedian on the previous RR. She is denigrating the quality of education and the intellectual level of people in community colleges vs 4 year colleges. She is telling the unfortunate truth and trying to be funny about it. She is a good comedian as far as her performance goes, but I don’t find the truth funny. I agree with your wife. Many people have lost their savings or are in poverty due to the socialist economy, so they have no choice but to go to a 2 year community college. Many single mothers are victims. I actually have more respect for 2 year colleges and trade schools which teach less socialist political “science” bullshit than 4 year colleges. Trade school students are there to train for a better job, and I respect them much more than 4 year college students who are engaged in anti-Israel protests and other forms of nonsense abetted by their stupid professors and politically “correct” administrations.
MM, How long before DC starts mining and refining operations?
Hi MM, recently I was going through a stock namely Luminar Technologies. LAZR. Looks like a very good EV play. Can you please take a look at it and give some analysis for us? Thank you for your time.
Stock seems to have reached the trough and may be dabbling around the bottom.
I agree. I recently bought it . I think Musk is finally going to have to use it and drop the camera only thing that he is using now. Cameras are just not that good in bad weather and Tesla has had some costly fatalities because of it. I think the government will finally step in and require it on all self driving vehicles.Even if they don’t, people are just going to feel safer riding in a self driving taxi with all the best technology. It’s cheaper than dirt at the current price. Google’s self driving taxi fleet uses Lidar in their vehicles and they are knocking it out of the park in only 3 cities. San Francisco (which has weather issues) LA , and Phoenix. If they expand into several other cities (and there is no indication that they won’t) they will be building multiple self driving taxis with LiDAR. IMO
Thanks John for your thoughts. I am not sure how to assess the financials of the company. Can you or some one give it a brief review and give us your thoughts on it please? Also I see that it LAZR has status of “Deficient” saying that it has not met the NASDQ rules for continuous listing. Looks like there may be some kind of reverse split soon. Is that a good sign? Should we wait till that happens? Thank you for all your thoughts and inputs. Very much appreciated.
MM has taught us for years that reverse splits are a bad sign. The latest example was VLD. In theory, reverse splits don’t change the intrinsic value of a company. For a 10 fold RS, a $1 stock price will become $10, but the number of outstanding new shares becomes 10% of that of the pre-split shares, so the market cap is unchanged. In practice, the reverse split is seen as a desperate financial move because if the pre-split price goes below $1, the stock gets delisted to an inferior exchange. The higher post-split price lets a company stay listed on a more prestigious exchange where more financial players can invest in the company. For VLD, this was a fiasco resulting in the post-split price quickly going below $1. Granted, VLD’s promised military orders didn’t come through, but I think that they could have stayed around longer if they had avoided the reverse split and moved to OTC. To me, this whole psychology of staying on a more prestigious exchange with more expensive compliance costs is the equivalent of eating the same hamburger at a fancy club. For the same money, I can treat 10 people to burgers at a plain diner. Stocks can be bought on any exchange. Who cares?
LAZR has lofty goals, but like VLD, their goals may take many years to get off the ground, and the stock could easily plunge to near zero just like VLD. If LAZR can partner with a large company, that would be better than doing a reverse split.
Waymo is now doing 150,000 rides a week. Google/Alphabet is dumping 5 billion into the self driving taxi business. And they are only in 3 cities. They started off with just service in the downtown areas. Now they have graduated to the freeways . 5 billion will buy a lot of Waymo taxis and each one of them will need LAZR (LIDAR). I am thinking that will light a fire under the stock not withstanding the current financial situation. Having said that it’s highly speculative. It all hinges on when Google starts putting their money into Waymo. Waymo has doubled its business in the last six months. Just IMO Do you own due diligence.
LAZR is risky on its own. Partnering with Google or another big company would be the best strategy. Almost 100% of reverse splits destroy company value. I think it is illogical, but that’s the way it is.
Cmps..ouch
Ouch for ENVX also. Where are the signed purchase orders? There are only speculations that big OEM’s want the battery. The timing of the orders is in the future, after sample testing by OEM’s. Meanwhile, ENVX’s high market cap discounts good real news. The stock is vulnerable to tax loss selling. I may buy at that time, way below $9.
ENVX had sales of $4.3M in the Q and have $200M in cash, expecting to double sales next Q. And will ship commercial scale orders late next year with perhaps $100M/Q at 50% margin. Today I considered buying more shares or 2027 LEAPs, but didn’t. Maybe tomorrow.
ENVX said several times in their Q3 Q&A, and has said the same thing previously, that getting the first customer is the hardest.
Once you have the first customer, the value proposition to the customer changes. Prior to the first customer, the risk for customers is: “Hey, this is a battery that nobody else is using. And if I use it and something goes wrong, then there’s a lot to lose.” But once the battery goes in a smartphone, it launches and it’s proven, then the equation flips. Then if you don’t use the newer, superior technology, you risk falling behind with an inferior product.
They now have that first customer.
The stock dropped today on dilution news, a roughly ~12M share offering. An analyst raised the issue of a capital raise in the Q&A on Tuesday and ENVX’s answer gave no indication that they were currently doing an offering. Seems kinda sketchy that they can be so deceptive about the raise.
https://ir.enovix.com/news-releases/news-release-details/enovix-announces-pricing-public-offering-common-stock
I have trouble believing what they say. How do you KNOW that they have the first customer? Samples were sent, OK, but samples have to be tested in the OEM’s phones. This takes 9-12 months, if you can even believe that. I don’t like the silence of the supposed NDA’s. Heck, even VLD announced who bought printers, and we had an idea of how much revenue was produced.
Regarding dilution at $9-10, why didn’t they raise money recently when the stock rose to $18?
New World Investor for 10.31.24 is posted. Removed CMPS from Near-Term Top Buys.