Underowned and Underloved

It is the Friday before the long Labor Day Weekend, as we conclude a summer of mostly tedious price action (and non-existent volatility) against the backdrop of nonstop political and economic drama-filled headlines. Thus, we should probably take virtually everything we see, hear, and feel today with a grain of salt since many traders are exhausted and/or away from their desks until the middle of next week. 

That said, AI chip player Marvel is down nearly 18% on disappointing data center numbers. Beyond that, MRVL seems to be a drag on the chips, with the SMH sector ETF down 3% as I write this. And to go one step further, NVDA is down 3.67% as I write this to slide more after its own earnings from Wednesday evening. 

Of course, when you consider the rally since April in tech/AI/semis, bulls understandably argue that today is nothing more than some mild profit-taking.

The true test, as usual this time of year, will come when the big money is back fully in front of their screens in September, ready to deploy or withdraw capital with size and vigor as they see fit.  

While we wait to see if tech has any follow-through lower, a higher conviction imminent view for me is that the precious metals and miners continue to be vastly underowned, underloved, and underappreciated. 

Without question the rise of crypto over the last fifteen years has impeded retail (and institutional) participation in what would likely be a much more popular bull market in gold, silver, and miners that we are currently seeing, given the underlying anti-fiat currency view of crypto bros which obviously competes with gold.

But even without any hype, gold is breaking to fresh highs today, which should act as prima facie evidence of just how strong the price action truly is. 

In other words, you can only imagine how potent the action will be in the precious complex once people actually start to own, appreciate, and love it. It may take years for that to happen, which is why my long-term gold target of $5,000 per ounce is likely too modest--A move to $10,000 seems more likely.

And even that may be too modest if politicians and central bankers have no stomach to actually fight inflation with the full intention of crushing it, something we still have not seen since Paul Volcker did it in the late-1970s. 

Enjoy your holiday weekend.