Top Stories This Week: Powell Gets Fed Nomination, Using Gold in a Market Correction
We’re back after a break last week with quite a bit to cover in the gold space.
After running up past the US$1,860 per ounce mark midway through November, the yellow metal has taken a tumble. At the time of this writing on Friday (November 26) afternoon, it was sitting just under US$1,790.
Gold’s losses this week have been attributed to elements like a stronger US dollar and better Treasury yields, although Jerome Powell’s US Federal Reserve chair renomination has pulled other factors into play — some market watchers believe he may move to taper and raise interest rates faster than anticipated.
If the Fed follows its previously laid out timeline for tapering, it will wrap up in mid-2022; the central bank has said it won’t raise rates until after that. It has also emphasized that its roadmap may change if necessary.
Looking at the larger picture for gold, I heard recently from Nick Barisheff of BMG Group, who believes the stock market is due for a major correction.
“The market is due for a major correction. What will cause it and when it will happen is anybody’s guess — it could be tomorrow, it could be six months from now” — Nick Barisheff, BMG Group
It’s impossible to know when this correction will happen, but Nick emphasized the importance of acting before it’s too late. He pointed out that investors are typically slow to get out of the market once a crash actually begins — they wait for a turnaround, and by the time it’s clear there won’t be one, they’ve experienced big losses.
In his opinion, the solution is to get out of the stock market early and transfer money into gold.
Here’s how Nick explained it:
“Instead of taking your money off the table and going into cash … you go to gold (because cash is devaluing daily). Gold will at least hold its own and probably appreciate … so by sitting it out in gold you can wait until the market finishes correcting and then buy back in” — Nick Barisheff, BMG Group
With gold’s future in mind, we asked our Twitter followers this week what price they think the metal will be at the end of 2021. By the time the poll closed, most respondents had voted for the US$1,800 to US$1,900 range.
Finally, in the cannabis space, INN’s Bryan Mc Govern spoke with Dan Ahrens of AdvisorShares to get his thoughts on 2021 trends and what’s ahead in 2022.
Dan was candid, and said if he had to choose one word to describe the cannabis market in 2021, it would be “painful.” Like many others, he’s been disappointed in the industry’s performance — while positivity initially ran high due to excitement about potential federal changes in the US, ultimately progress has been slow.
“Cannabis started with a big run-up in January and February … and things dragged from there” — Dan Ahrens, AdvisorShares
Still, Dan has hope for 2022 and said it will be a “huge year” for cannabis. He believes US reforms will come sooner rather than later, and in his opinion those widely anticipated changes will bring a wave of M&A activity.
Specifically, he expects to see alcohol, tobacco and other consumer packaged goods companies making deals with cannabis players, not just cannabis entities doing transactions with each other.
“Those big alcohol companies, tobacco companies, other consumer packaged goods product companies — they’re waiting. They’re waiting on the US” — Dan Ahrens, AdvisorShares
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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