I hope everyone had a very happy Thanksgiving down in the US!
On the first hour I focus on the resource sector. Topics range from metals to energy and thoughts on the two multi-million to billion dollar deals in the resource sector. Please keep in touch by emailing me at Fleck@kereport.com.
- Segment 1 and 2 – Jesse Felder kicks off the show by sharing some of his research on the cannabis stocks answering the question; are these stocks finally trading at value levels. We also discuss the gold market and what will be the major driver in 2020. Click here to learn more about The Felder Report.
- Segment 3 – Josef Schachter joins me for a close look at the energy sector. He shares the stocks that he is watching and adding to his portfolio as we progress through tax loss selling. Click here to visit Josef’s site and learn more about his newsletter.
- Segment 4 – John Kaiser wraps up the first hour by looking at the Kirkland Lake deal to acquire Detour Gold and Newmont offloading the Red Lake Gold Mine to an Australian company. Click here to learn more about John’s service – Kaiser Research.
Exclusive Company Interviews and Commentary This Week
- John Rubino – Big news out of Kirkland Lake and Detour Gold. Also comments on Great Bear and Novo
- Goldplay Exploration – More Information On The Recent High Grade Silver Results At The Nava Target
- Brien Leni – It’s time to get your tax loss selling hit list ready – Here’s what we are considering for Zinc Stocks
Chris Temple kicks off today by focusing on the energy sector and more specifically oil. The oil sector has been boring all year after peaking in late April at $66/barrel and trading in a range the rest of the year. We look at the supply/demand metrics as well as discuss the balance of power that has shifted int he past few years. No longer just an OPEC news driven market now that the US plays a bigger role. However we need to be aware of potential bankruptcies of US companies that could shake the sector.
November 15, 2019
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Chris Vermeulen, Founder of The Technical Traders joins me to discuss the shift over the past few months away from the safe haven assets and into the more risk on equity markets. He points to the record outflows in some of the gold ETFs as a sign that the selling could finally be getting exhausted. We wrap the interview with a comment on the oil price.
I’ve been to Italy four times, including my most recent trip two weeks ago. So it’s really interesting to look at the different foreign exchange rates in place at the time of my various visits.
Just as an example, on this most recent trip I was getting roughly 21% more for my money than the last time I visited four years ago. That makes a huge difference!
Of course, unless they’re frequent travelers, most people don’t really pay attention to how well the greenback is doing against other world currencies. And that’s a shame … especially if they invest.
A Strong Dollar
After the Fed cut rates for the third time this year, the greenback slipped a bit, but the dollar is still pretty darn strong relative to a basket of the world’s major currencies.
So it pays to look at how that affects different types of investments …
For starters, a strengthening dollar can have a big impact on gold, oil, and other commodities.
Now, there are a lot of forces driving gold’s price at any given point in time.
But pull up a chart of the yellow metal and you’ll see that the dollar’s strength typically keeps gold down.
Pull up a chart of oil, and you’ll often see the same basic pattern.
Again, there are all kinds of other factors at play in the oil market – everything from seasonal demand, to geopolitical developments.
But the point is that the greenback has direct – and clearly visible – impacts on various natural resource markets.
It also affects many U.S. stock investments that are unrelated to resources.
Foreign Money, U.S. Companies
A lot of people assume that currency exchange rates don’t matter a whole lot, especially if they stick to domestic stocks.
That’s not necessarily true.
When American companies sell their products abroad, they typically collect the money in foreign currencies then translate those sales back into U.S. dollars.
That means their results can end up getting crimped by unfavorable exchange rates unless they’re using futures or other hedges.
Therefore, foreign exchange rates can become a big theme during earnings reports.
That’s especially true for big multinational companies, some of which derive more revenue from overseas markets than they do domestically.
Just a few that come to mind based on 2018 numbers …
- Apple Computer (63% of revenues from foreign markets)
- General Electric (61%)
- Johnson and Johnson (71%)
- Intel (80%)
The list goes on and on.
Meanwhile, a stronger dollar also makes a substantial difference for anyone investing in FOREIGN companies.
First off, it affects the value of your holdings as they’re translated back into U.S. currency.
In addition, if your foreign shares pay out dividends, a stronger dollar also affects the value of those distributions in the same way it affects a U.S. company’s earnings – i.e. payments initially issued in other currencies become smaller distributions when they’re translated back into greenbacks.
If you’re holding for the long-term I wouldn’t worry all that much about this. And I still think it always makes sense to have some of your money invested in overseas investments, precisely because it can provide a nice hedge for times when the dollar is falling.
Keep One Eye Overseas
My overall point is that it pays to watch what’s happening in the foreign exchange market– whether you’re planning to leave the country or not.
Not only can you directly profit from moves in the forex (foreign exchange) market through various types of investments – everything from exchange-traded funds to futures.
But understanding what the dollar is doing – and what it’s likely to do going forward – also has big implications for the various companies you might be invested in as well. So even if you don’t directly invest in forex, keep an eye on the dollar. It’ll pay to do so in the long run.
To a richer life,