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Trump Victory a Big Win for Cryptos, Small Cap Stocks — USD?AI-generated image of Donald Trump as 'roaring bull' with US dollar backdrop

Trump Victory a Big Win for Cryptos, Small Cap Stocks — USD?

Published November 7, 2024

Losers include all things renewable energy, bonds, China, and (for now) gold…

This post was originally published the morning of Nov. 6, 2024 in the Daily Contrarian.

The election is over. Trump won. That is going to have broad impacts, not all of which are apparent yet.

AI image of Donald Trump as raging bull against US dollar backdrop

The immediate impact of Trump’s victory appears to be a broad move to the riskiest of risk assets. Cryptos being Exhibit A. Small caps are forging ahead. You also have Tesla (TSLA) soaring overnight. Meme stocks are up too, but less.

The losers include all things renewable energy, with solar stocks taking it on the chin overnight. The Invesco Solar ETF (TAN) is down 9% at the time of this writing. Big oil, on the other hand, is gaining ground with Exxon Mobil (XOM) and Chevron (CVX) up 3% each at the time of this writing.

Financials are winners as well. Not just big names like JPMorgan Chase (JPM) and Bank of America (BAC) but regional banks. The SPDR S&P Regional Banking ETF (KRE) is up 8% overnight.

Another loser: China. The iShares China Large-Cap ETF (FXI) is down 2%+. Names like Alibaba (BABA), JD.com (JD) and PDD (PDD) are moving lower.

All That Glitters…

Just keep in mind that the immediate reaction to political events is not always the right one. In 2016 at this time there was a broad sell-off. One can expect things to be volatile, especially as retail investors take short-term gains…

That brings us to a first possible opportunity. There has been a pullback in gold overnight, a likely result of the ‘strong dollar’ trade ushered in by this Trump victory. There are three problems with this trade, however:

  1. Trump has railed against USD strength;
  2. Trump’s policies are widely expected to be inflationary. You’ve seen the resulting sell-off in bonds. That means a weaker USD;
  3. The Federal Reserve is cutting rates, which is also bad for the USD.

One would expect all of this to, in time, be good for gold. During Trump’s first term the precious metal rallied by 55%. Past performance is not always a guide to future results, but gold tends to do well under Republican administrations (+215% in eight years of George W. Bush).

Make no mistake, though: gold has been on a massive tear all year and only recently pulled back from all-time highs:

Still, if gold keeps dropping it may present a buying opportunity keeping items 1-3 above in mind.

Full disclosure: The Contrarian owns some physical gold as well as SPDR Gold Shares ETF (GLD) in a retirement account.

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Stagflation Is Coming Soon, Staying Awhile: Axel Merk (Szn 4, Ep 25)

Published September 21, 2022

This podcast episode was recorded on Sept. 16, with a short highlight clip containing the most actionable items released to premium subscribers that same day. The full episode was released to premium subscribers without ads or interruptions a day after recording. 

Axel Merk, president and chief investment officer at Merk Investments, joins the podcast to discuss his views on stagflation, the Federal Reserve, U.S. dollar, and why the bottom is not yet in for stocks.

Content Highlights

  • Printing money does not fix supply issues. Next stop: Stagflation (2:59);
  • The current environment simply is not conducive to taking risks (11:15);
  • There’s too much groupthink at the Fed and it’s time for Jerome Powell to step down (13:21);
  • The bottom for stocks is not in yet. The Fed needs to pivot first. What to watch for there (15:26);
  • Background on the guest (24:43);
  • The outlook for gold (31:20);
  • How high might the Fed go with interest rates? (34:09).

For More Information About Axel Merk

Quick Video Highlights From Our YouTube Channel

MoreStagflation Is Coming Soon, Staying Awhile: Axel Merk (Szn 4, Ep 25)
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Season 3, Episode 5: The Case for Precious Metals Miners, With Sean Fieler, Equinox Partners

Published March 4, 2021

Sean Fieler, president and chief investment officer at hedge fund firm Equinox Partners, joins the podcast to make the case for an unloved part of the equity markets: gold and silver miners.

This case is based on several variables, starting with unprecedented fiscal and monetary policy that has marked this particular epoch in global financial markets. “The idea that gold and silver wouldn’t do well in that environment are totally at odds with financial history,” says Fieler.

It goes a lot further than this, of course. Fieler discusses the variables and even presents some favorite stocks.

Content Segments
(Spotify users can click on the timestamp to link to the section directly)
  • The case for underlying gold and silver miners, including the compounding of fiscal and monetary policy. (3:03);
  • Why invest in miners rather than in the physical commodity, or futures contracts thereon? (7:26);
  • One concern with ETFs tracking prices of physical metals: the administrators are not necessarily reliable counterparties (9:00);
  • There are risks with owning miners as well, of course (11:41);
  • More information on the guest (15:17);
  • One surprising fact: West Africa is a good place to build a mine. Latin America is much more difficult (17:27);
  • Ghana’s fledgling securities market may be a good opportunity for investment (19:48);
  • One favorite stock: Endeavor Mining Corp (OTC:EDVMF) (21:35);
  • A microcap name to watch: RTG Mining (GREY: RTGGF), a copper and gold miner in the Philippines (25:19);
  • A little background on the fund, which predates the gym of the same name (27:52).
Not intended as investment advice.

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