Surprise! Gold Prices Are Beating the Market

Surprise! Gold Prices Are Beating the Market

Spot gold finished July up more than 2 percent, its best month since February, when it returned 3.7 percent.

The yellow metal responded to a struggling U.S. dollar, which has lost more than 10 percent so far this year relative to other currencies and is currently at a 15-month low. The dollar could very well continue to slide on additional political uncertainty surrounding President Donald Trump and his administration. This would mean further upside for gold and gold stocks.

Also contributing to gold’s price appreciation was lackluster economic data that, I believe, lowers the likelihood of another interest rate hike in 2017.

The yellow metal is now trading above its 50-day and 200-day moving averages, ordinarily seen as a bullish sign.

More impressively, the price of gold has outperformed the S&P 500 Index so far this century, returning 86 percent more than the market if we index both asset classes at 100 on December 31, 1999. Over the past 17 years, the S&P 500 has undergone two major contractions, both of them resulting in a loss of around 40 percent. Gold, meanwhile, has held its value well, boosting its appeal as a portfolio diversifier.

Our two gold funds have similarly outperformed the market so far this century, as you can see above. The Gold and Precious Metals Fund (USERX) and World Precious Minerals Fund (UNWPX) are co-managed by myself and precious metals expert Ralph Aldis. Not only do Ralph and I rely on fundamentals to make stock selection and weighting decisions, but we also maintain close, productive relationships with mining company management teams across the globe.

Related: Is Another Crisis in the Works? Gold Stocks Could Be a Safe Haven

Gold Could Be the Solution for a Vulnerable Stock Market

In a telephone interview with Reuters this week, DoubleLine Capital CEO Jeffrey Gundlach, known on Wall Street as the “bond king,” said that he still has exposure to gold, which he predicts will see continued upward price momentum in the short term.

“Gold looks cheap compared to markets that have rallied a lot, including bitcoin and including Amazon,” said Gundlach, whose firm oversees $110 billion in assets.

Indeed, information technology stocks such as Amazon, Facebook, Apple, Microsoft, Google (Alphabet) and others—the imprecisely named FANG or FAAMG stocks—have been on a tear so far this year, propelling the market higher. This has been a detractor for gold, as many investors have moved out of “safe haven” assets and into risk assets.

I should point out, though, that the stocks I just mentioned disproportionately account for up to a third of the market’s gains in 2017, according to CNBC. As of August 1, the S&P 500 is up around 10.5 percent. But if we remove tech stocks, it’s up only 7.5 percent. The market is moving higher nearly every day, but on the backs of only five or so tech stocks. This makes the market particularly vulnerable, should those stocks see a correction, and adds to gold’s investment case as a potential store of value.

What’s more, we’re only weeks away from India’s two most prolific gold-buying sprees, Diwali in October and the wedding season late in the year. Historically, now has been a good time for investors to enter the gold and precious metals market to capture the potential price appreciation that has often occurred during these important festivals.

Frank Holmes
Global
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Frank Holmes is the CEO and Chief Investment Officer of U.S. Global Investors. Mr. Holmes purchased a controlling interest in U.S. Global Investors in 1989 and became the firm ... Click for full bio

NBA Player Carl Landry Demonstrates the Value of Persistence in Life and Work

NBA Player Carl Landry Demonstrates the Value of Persistence in Life and Work

Written by: Jon Sabes

When you meet Carl Landry, stand-out college basketball player and nine-year NBA player, you imagine that becoming a professional basketball star was a straight forward run for the 6-foot-nine-inch power forward. 


However, when you go deeper into Carl’s background, becoming a NBA professional was less than certain and little came easily to the 33-year-old from Milwaukee:

  • He was cut from his high school team as a freshman and averaged less than ten points a game when he did play as a senior.
  • He started his college career not at Purdue, but a junior college where it was not clear he would play.
  • When he finally got to Purdue, he tore his ACL in his knee his first year and reinjured it the next year.
  • While his family held a party for him the night of the NBA draft, he slept in the Philadelphia airport after missing a flight following a workout for the 76ers.
  • In the NBA playoffs, Carl had a tooth knocked out, but came back in the same game to make a game-winning blocked shot as the Rockets beat the Utah Jazz 94-92.
     

Landry, who I interviewed on my podcast, Innovating Life with Jon Sabes (www.jonsabes.com), is a remarkable example of the value of “persistence.” In a time where technology creates the image that anything is possible at the touch of a button, persistence is an under-appreciated trait. When I spoke with Carl, I clearly saw someone for whom success has only come through a force of will that made him a NBA player, but it also made him a better player every year he played. That’s the kind of personality that has produced greatness in business as well as sports.

Carl was, in fact, drafted that night he spent in the airport. The Seattle Supersonics chose him as the 31st overall pick and then traded him to the Houston Rockets where he rode the bench for much of the first half of the season. When All-Star teammate Yao Ming was injured, he stepped in and played a key role in the Rockets astonishing 22-game winning streak (the third longest streak in NBA history). And, that season, after sitting on the bench for 33 of the first 36 games, he was named to the All-Rookie second team.

Carl was the first in his family to go to college. “I told myself that this was my ticket out, so I did everything I possibly could to be the best person in school and also on the court,” he said.

His family life in Milwaukee showed him what he didn’t want to do. “Just being honest with you, seeing some my cousins, peers, they went to work for jobs paying six, seven dollars an hour or they didn’t go to work at all and then living off welfare. I didn’t want that.”

When he was first injured, he had to contemplate the end of a career before it even got started. “When you have an ACL tear, it’s over…no more basketball,” he told me. “I said, God, give me health again and I’ll do everything I can to leave it all out on the line and be a successful individual.”

On my podcast, Carl pointed out another interesting lesson he learned in the NBA: Not doing things just to fit in.

“Fitting in was easy,” he said. “Doing everything that everybody else does was easy. If I stood out in some type of way, I’m going to have different results. I’m going to have stand-out results.”


That’s called the “Law of Contrast” and it produces that exact effect of changing the outcomes that everyone else is experiencing.  Carl is smart, he recognized that differences make a difference, and doing whatever it takes is what is required to make real, meaningful differences.

Every off-season for the last 11 years, he has run a camp for kids in Milwaukee where he tells youth his story of hard work and persistence. “I always tell the kids to apply themselves and always be persistent,” he said. “If you dream, apply yourself and be persistent. With hard work, man, the sky’s the limit.”

When Carl says the sky’s the limit he means it.  He is smart to recognize that it’s important to dream big, because if we don’t – we may be selling ourselves short. “You have to dream bigger than your mind could ever imagine,” he said. “I wanted a nice house. I wanted a nice car. I said, and I got all of that. So, what do I do, do I stop now? Maybe I didn’t dream big enough.” That’s a big statement coming from a kid who grew up to be the first in his family to graduate college and go on to be not only a top NBA basketball start, but a good businessman, father and someone who gives back to the community.

I’m convinced that in whatever he takes on as a basketball player or in his post-hoops career, Carl Landry is not going to stop getting better at whatever he does, and in the process of doing so, make the world a better place.

GWG Holdings, Inc.
Investing in Life
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GWG Holdings, Inc. (Nasdaq:GWGH) the parent company of GWG Life, is a financial services company committed to transforming the life insurance industry through disruptive and i ... Click for full bio