US stocks fell a bit last night.
However, Australia’s futures contract, SPI 200, managed to rise 11 points and approach the green.
The action is now elsewhere … and where we thought it would be.
Today’s topic is …
- Monday Daily Reckoning Australia It started with the idea that the gold sector is being prepared to continue rising. Yesterday’s deal was perfect proof.
Gold inventories have increased significantly.
For example, Ramellius Resources and Resolute Mining were up 7.8% each, Northern Star was up 6.5%, and Evolution Mining was up 5.3%.
Momentum is really starting to build now.
Again, this is not what I started saying yesterday.
In February, I wrote an article for paid subscribers entitled “Sexy Bottoms Appear in the Stock Market Too.”
The idea was that Australian gold stocks, which had been hit in the last six months, would bottom out.
That’s because they made a lot of cash and had a strong outlook for gold.
This was not a theoretical exercise. I handed out free trading tips in the presentation at the time.
It was a gold stock … and now it’s up about 20% and wants more.
What I like about this trade is that if the idea went well, the upside was great … but I quickly knew if it was off the base.
That’s important. I like to quickly find out if I’m wrong and be able to move to more eco-friendly meadows.
When I think about it later, I was a little early. The bottom of the gold sector came in March.
Now that the uptrend looks so strong, the gold sector is beginning to attract strong buyers and technical analysts.
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One of the things that keeps me from making more money on this subject is that I’m not a full-time gold analyst.
I have only enough knowledge about the few selected Goldies. The same is not true for my colleague Greg Canaban.
He currently has seven gold stocks on his nomination page, including his latest one, which just came out last week.
- When I started this business in 2012, the big problem at the time was the prospect of a ghost town in China and the bursting of a huge Chinese housing bubble. It scared many analysts.
The recently released book summarizes what has happened since then. China: A bubble that never pops out..
The bubble is still inflating. See this report …
‘House prices in China rose at the fastest pace in the eight months of April, after curbs failed to curb buyers’ enthusiasm.
‘New home prices in 70 cities, excluding state housing, rose 0.48% from March, when they rose 0.41% last month, National Bureau of Statistics figures said yesterday.
‘The value of the secondary market, with less government intervention, rose 0.4% at the same pace as last month.
‘Investors are using real estate as a hedge against global inflation, and buyers’ euphoria continues.
‘As a result, authorities have begun to issue a series of statements designed to cool price expectations.‘
I also had to laugh after reading this bit …
‘Last week, policymakers signaled that efforts to introduce a country’s real estate tax postponed through a trial may be reinstated.‘
I will not make you a child. I have been reading the same “plan” on land value tax in China for seven years. As far as I know, it’s never approached.
China has the same problems as Australia. Real estate speculation is allowed to infect culture. It is now almost impossible to suppress it without offending the middle class, which has brought wealth to the property market.
Real estate ownership in China as a percentage of personal wealth is even more extreme than in Australia. It’s for those who can afford the entry price.
The rest of the country is locked out of much of this “wealth” creation because they are too poor to buy.
By the way, China’s real estate sector is closely tied to the outlook for iron ore. Construction uses a lot of steel.
And what are we looking at about this?
‘OCBC economist Howie Lee said banks expect iron ore to test $ 250 per ton in the next 12-18 months.
‘Lee said real estate investment, building sales and floor space under construction in China all recorded strong growth in the first quarter, adding that car sales are close to pre-pandemic levels in the country.
‘“China’s new infrastructure projects are estimated to total RMB 10-20 trillion between 2021 and 2025, which means that demand for raw materials is still in its infancy,” Lee said. Also mentioned.‘
nice to meet you,
Editor, Daily Reckoning Australia
PS: Our publication The Daily Reckoning is a great place to start your investment journey. Let’s talk about the big trends that drive the most innovative stocks in ASX. Learn all about it here.
Gold rally wins legs!
https://www.dailyreckoning.com.au/gold-rally-gets-legs/2022/01/05/ Gold rally wins legs!