Crypto Flies while Gold Crashes (#611)

11/13/24 • 18 min

Market Overview

Crypto Surge, Gold Decline: Bitcoin rallies as investors shift from gold to crypto. Gold hit a recent high of $2,800 but is now pulling back, possibly towards $2,300-$2,400. Central banks continue to buy gold as a hedge against U.S. dollar dominance and geopolitical risks.

[caption id="attachment_43623" align="aligncenter" width="849"] Gold | Weekly | 13 November 2024

Rand Weakness: The ZAR weakened above 18 to the dollar, driven by strong U.S. dollar demand amidst market volatility. South African Rand overshoots due to its high liquidity, making it vulnerable to sharp moves.

Trump's Impact on Crypto

Market speculation suggests Trump may be crypto-friendly, unlike the current SEC chair Gary Gensler, known for his strict regulatory stance. Potential shifts in the regulatory landscape could benefit cryptocurrencies, particularly Bitcoin.

Simon holds Bitcoin and advises caution: ensure crypto is stored in a hardware wallet for safety.

Bitcoin | Weekly | 13 November 2024

Local Telco Sector: Vodacom & MTN

Both companies struggle with weakened African currencies like the Ethiopian Birr and Egyptian Pound. Profits are impacted when converted back to ZAR.

Despite attractive dividend yields (MTN ~4%, Vodacom ~5.6%), Simon remains bearish, highlighting high capex demands and sector challenges.

Raubex: Construction Sector Bright Spot

Strong results from Raubex, showing resilience in a struggling sector. Diversification into renewable energy and mining operations boosts performance.

Simon notes it as one of the few quality construction plays left, alongside Afrimat.

Consumer Market Struggles

Updates from AVI and BidCorp indicate persistent weak consumer demand, despite optimism from a possible government of national unity. Inflation has eased, but consumer spending remains subdued as households repair balance sheets.

Retail updates show mixed results: Truworths reported disappointing numbers, while The Foschini Group* performed better.

Tencent Results

Tencent posted strong results, though it did not significantly boost Naspers or Prosus stock prices. The market reaction was muted despite the solid performance.

Final Thoughts

The market remains volatile, with significant moves in crypto, gold, and the Rand. Simon advises a cautious approach, with a focus on quality stocks and long-term plays.

Remember: be kind and look out for others. Kindness is rule number one.

Simon Brown

* I hold ungeared positions.

All charts by KoyFin | Get 10% off your order

00:00 Market Overview: Crypto vs Gold 02:50 The Trump Effect on Gold and Crypto 06:01 The Future of the Rand and Emerging Markets 08:55 Sector Analysis: Vodacom, MTN, and Raubex 16:02 Consumer Trends and Company Updates

Market Overview

[caption id="attachment_43623" align="aligncenter" width="849"] Gold | Weekly | 13 November 2024

Trump's Impact on Crypto

Simon holds Bitcoin and advises caution: ensure crypto is stored in a hardware wallet for safety.

Bitcoin | Weekly | 13 November 2024

Local Telco Sector: Vodacom & MTN

Both companies struggle with weakened African currencies like the Ethiopian Birr and Egyptian Pound. Profits are impacted when converted back to ZAR.

Despite attractive dividend yields (MTN ~4%, Vodacom ~5.6%), Simon remains bearish, highlighting high capex demands and sector challenges.

Raubex: Construction Sector Bright Spot

Strong results from Raubex, showing resilience in a struggling sector. Diversification into renewable energy and mining operations boosts performance.

Simon notes it as one of the few quality construction plays left, alongside Afrimat.

Consumer Market Struggles

Retail updates show mixed results: Truworths reported disappointing numbers, while The Foschini Group* performed better.

Tencent Results

Tencent posted strong results, though it did not significantly boost Naspers or Prosus stock prices. The market reaction was muted despite the solid performance.

Final Thoughts

The market remains volatile, with significant moves in crypto, gold, and the Rand. Simon advises a cautious approach, with a focus on quality stocks and long-term plays.

Remember: be kind and look out for others. Kindness is rule number one.

Simon Brown

* I hold ungeared positions.

All charts by KoyFin | Get 10% off your order

Previous Episode

Trump wins, whats the trade? Also; AMSL, Nvidia and Crowdstrike all worth a look? (#609)

Episode Summary: Simon Brown dives into the week’s biggest financial and economic stories, covering Trump’s election win, Nvidia's inclusion in the Dow, rate cuts expected from the FOMC and BOE, and the latest updates on Murray & Roberts, palladium, and gold. Recorded after market open, this episode sheds light on key trades, trends, and the shifting global landscape.

Trump's Victory – What’s the Trade?

Trump’s presidential win sparks market reactions, with immediate rallies in the S&P, Nasdaq, and Bitcoin.
Simon discusses potential policy impacts, such as tariffs, technology restrictions on China, and implications for commodities, oil, and the South African economy.
Notes on the uncertainty of Trump’s policies and their potential effects on inflation, EVs, and cryptocurrency.

Nvidia in the Dow; Intel Out

Nvidia enters the Dow Jones, replacing Intel. Simon critiques the Dow's price-based index system but acknowledges Nvidia’s stock performance, fuelled by strong demand from major tech firms.
Discussion on how Nvidia's AI hardware demand could shape future stock gains.

Nvidia | Weekly chart | Close 06 Nov 24

Murray & Roberts Update

Murray & Roberts faces project downscaling from De Beers, revealing challenges tied to low diamond demand.
Simon examines the ripple effects across the mining and construction sectors, highlighting how competitor data can provide insights.

Palladium & Gold Trends

Palladium and gold face downward pressure; Simon explores reasons for the dips, including potential G7 sanctions on Russian palladium.
Simon highlights that gold’s long-term appeal remains strong, driven by central banks diversifying away from U.S. dollars into gold.

Gold | Weekly chart | 07 Nov 24

Bank Rate Cuts – FOMC & BOE

Rate cuts anticipated from the FOMC and Bank of England as central banks shift to a rate-cutting cycle. Insights on the potential impact on global markets and currency dynamics.

ASML and AI Hardware Market

ASML’s forward guidance disappoints, affecting semiconductor market outlook. Simon explains the unique position of ASML in the AI chip supply chain and its long-term value as a buy-the-dip candidate.

CrowdStrike Resurgence

CrowdStrike's recovery following a Microsoft update issue and Delta lawsuit. Simon assesses the stock’s growth potential in the cybersecurity space.

Listener Takeaway: Markets remain unpredictable but resilient, with global relations, tech policies, and central bank strategies driving shifts. Simon emphasizes informed trading and the long view in these uncertain times.

Simon Brown

* I hold ungeared positions.

All charts by KoyFin | Get 10% off your order

Disclaimers: The JSE Direct podcast is independent of JSE Limited and reflects Simon Brown’s views, not necessarily those of the JSE. Always consider risks when investing.