Gold vs. Fed’s “Tools” in the Fight Against Inflation - Pick Your Player
“Powell is bluffing when he says the Fed has the tools necessary to fight inflation,” shared David Einhorn at today’s SOHN conference. His advice to investors? Choose Gold.
Friday, June 10th, 2022
Happy Friday! Welcome to the Goldiggers Weekly Wrap Up Newsletter, where we dig for the Golden Stories to help you navigate today’s market.
Wrapping up the week with:
CPI - Inflation jumps 8.6% from the same month last year, marking the highest reading since December, 1981
Precious Metals - why SOHN Conference speaker, David Einhorn, is picking gold as his weapon against inflation
Commodities - Jim Cramer is saying it’s time to buy cheap energy stocks - specifically natural gas - could he be right this time?
Tech - Tesla’s fall from grace could be coming to an end
Crypto - the NFT market is looking less like the wild west with the Fed starting to enforce regulations
CPI
Economists predicted the CPI to rise by 8.3%, but were met this morning with news of an 8.6% rise, marking the highest reading since December of 1981.
This caused US stocks to fall across the board and the US dollar to jump with investors anticipating that the Fed will act aggressively to the higher than expected inflation reading with raised interest rates.
Here’s how the major indicators are stacking up year-to-date:
Dow Jones Industrial Average: -13.34%
S&P 500: -18.05%
Nasdaq Composite: -27.51%
Russell 2000: -19.81
Bitcoin (BTC-USD): -34.91.%
Ether (ETH-USD): -53.60%
Precious Metals
Greenlight Capital founder David Einhorn shared with his audience at the all-virtual SOHN Investment Conference that gold is his choice when it comes to fighting inflation.
Though things are looking dark now, he believes that the price of gold will move up substantially higher as we head into 2023.
Einhorn further predicts that Powell is bluffing when he says the Fed has the tools to fight inflation, comparing the central bank’s inflation-fighting program to “...clearing off your snowed in driveway with an ice cream scooper.”
Poll of the Week
Do you trust the Fed to have the right “tools” to fight inflation? Or is gold the better warrior to protect you in today’s market?
Pick Your Player: The Fed vs. Gold
Commodities
Gas might be hurting your pockets at the pump - but experts are predicting it will benefit your portfolio in the long run if you can afford to buy at the dip.
Jim Cramer and Jeff Marks shared on CNBC yesterday morning that now is the time to add cheap energy stocks to your portfolio, an opinion that was echoed by Rafi Tahmazian of Canoe Financials. Both parties believe gas and oil stocks to be “recession-proof” due to the world’s insatiable dependence on such commodities.
Tech
Tesla shares haven’t been so popular this year. The EV stock fell by more than 31% and is trading today at nearly 42% below its November record high. But investors are starting to redirect their attention back to the EV behemoth.
Why?
R&D resulting in superior absolute growth
Heightened global interest in EV to combat fuel costs
Low current stock price
Tesla’s aren’t just looking like a good option for your portfolio, they’re looking like a good option for your ride, and experts are predicting this change of heart by consumers and investors alike is going to drive the low stock price back up (maybe Elon will be able to buy Twitter after all…).
Crypto
If there’s nothing in place to enforce laws, they should probably be broken. This mentality has been governing the relatively unmonitored crypto market since its inception, but the most recent criminal case filed against Nate Chastain by the Fed is proving that there are laws in crypto - and they can be broken - and there will be consequences.
Chastain’s crime of choice? Insider trading. The former head of product at OpenSea allegedly purchased NFTs he knew could be sold on the marketplace’s homepage, and ultimately profited 20 ETH (roughly $40,000 at the time) based on this trade inspired by his knowledge as an insider. He now faces up to 20 years in prison.
Many predict this to be the first criminal case of many within the crypto community as the Fed ramps up its efforts to regulate crypto crime.
Key Takeaways From The Week:
CPI - higher increase than anticipated - stocks are down - dollars up - investors anticipating aggressive interest rate hikes
Precious Metals - gold has your back going into 2023 - the Feds are only bluffing
Commodities - buy cheap oil and gas stocks, they’re “recession-proof”
Tech - reconsider Tesla - both as a vehicle and as a stock
Crypto - the Fed is cracking down on Crypto crime - play nice
Tweet of the Week
Source: @rebeccakerswell
That’s all for this week’s updates. If you enjoyed what we dug up for you, register for our newsletter through the subscribe button below and we’ll continue to drop golden nuggets of market info into your inbox.
The opinions shared in this newsletter are not intended to serve as investment advice, and are not to be used as the basis for any sound investment, these are the opinions of the individuals mentioned in this newsletter as covered by the creators of the newsletter.
We cannot guarantee the accuracy of all the information shared above and advise you to do further research if you are interested in the investment opportunities shared in this post.