The dollar is toast.
That’s not just us saying it anymore. That’s the view from Goldman Sachs and host of other major players on the Street. The virus situation is objectively worse in the US than anywhere else on the planet other than Brazil. The US mishandled a crisis, and now it has lost significant ground to developed-world rivals.
In addition, the Fed is maxed out – a point that was reaffirmed during Mr. Powell’s presser on Wednesday. That dynamic puts the onus on politicians to stimulate on the fiscal side. In an election year. Sure, the Dems will message one way, and the GOP will message another. And each side will try to target different points of entry into the economy. But the one thing they will all agree on is: Here, Have some Free Money – Vote for Me!
The combination of America in tough times compared to the EU, the political divisiveness of the most polarizing administration in US history coming into an election, betting sites already showing strong odds of a contested vote, and trillions in fiscal stimulus working in step with a Fed that is already pedal to the metal and fully quarantining the fixed income markets – all of these themes in combination have been driving the dollar lower and driving gold through the roof.
Bank of America has a $3,000/oz price target out now to lead the pack.
If you didn’t buy GLD a few months ago and you still want a ticket to the party, there are some other interesting options. We take a look at a few here, including: Kinross Gold Corporation (NYSE:KGC), Signet Jewelers Ltd. (NYSE:SIG), Clikia Corp (OTCMKTS:CLKA), and Newmont Corporation (NYSE:NEM).
Kinross Gold Corporation (NYSE:KGC) is an obvious choice to take advantage of the gold bull in its glaring stages. The company engages in the acquisition, exploration, and development of gold properties principally in Canada, the United States, the Russian Federation, Brazil, Chile, Ghana, and Mauritania.
It is also involved in the extraction and processing of gold-containing ores; reclamation of gold mining properties; and production and sale of silver. As of December 31, 2019, its proven and probable mineral reserves included approximately 24.3 million ounces of gold, as well as 55.7 million ounces of silver. The company was founded in 1993 and is headquartered in Toronto, Canada.
Kinross Gold Corporation (NYSE:KGC) just recently announced the results of a pre-feasibility study for its Lobo-Marte project in Chile.
According to the release, Lobo-Marte offers the potential of a cornerstone asset with attractive all-in sustaining costs1, 2 to enhance Kinross’ long-term production profile. The project adds a significant 6.4 million gold ounces, representing an approximately 25% increase, to the Company’s 2019 year-end mineral reserve estimates in a favorable mining jurisdiction. The reserve addition also increases Kinross’ reserve life index3 by approximately 2.5 years.
If you’re long this stock, then you’re liking how the stock has responded to the announcement. KGC shares have been moving higher over the past week overall, pushing about 4% to the upside on above average trading volume.
Kinross Gold Corporation (NYSE:KGC) generated sales of $1.2B, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -10% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($1.6B against $958.1M).
Signet Jewelers Ltd. (NYSE:SIG) promulgates itself as a seller of diamond jewelry, watches, and other products. As such, it likely holds a large inventory of gold, and those holdings have likely been moving sharply higher in terms of asset valuation.
The company’s North America segment operates jewelry stores in malls and off-mall locations primarily under the Kay Jewelers, Kay Jewelers Outlet, Jared The Galleria Of Jewelry, Jared Vault, Zales Jewelers, Zales Outlet, Piercing Pagoda, Peoples Jewellers, Gordon’s Jewelers, and Mappins Jewellers regional banners; and JamesAllen.com, an online jewelry retailer Website. This segment operated 2,639 locations in the United States and 118 locations in Canada. The International segment operates stores in shopping malls and off-mall locations, principally under the H.Samuel and Ernest Jones brands. This segment operated 451 stores in the United Kingdom, the Republic of Ireland, and the Channel Islands. The Other segment is involved in the purchase and conversion of rough diamonds to polished stones, as well as provision of diamond polishing services.
Signet Jewelers Ltd. (NYSE:SIG) recently announced details about how it is reimagining the jewelry buying experience since temporarily closing stores to help stop the spread of COVID-19.
According to the release, over the last 10 weeks, the century-old company has accelerated its transformation into a channel-agnostic retailer, enabling store staff for the first time to serve customers from home using technology such as chat, video, social media and virtual by-appointment private shopping consultations. Signet is the parent company of Kay Jewelers, Zales, Jared, Piercing Pagoda, Peoples, H. Samuel, Ernest Jones and digitally native Jamesallen.com.
It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things. Shares of the stock have powered higher over the past month, rallying roughly 20% in that time on strong overall action.
Signet Jewelers Ltd. (NYSE:SIG) generated sales of $852.1M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -60.4% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.1B against $1.7B, respectively).
Clikia Corp (OTCMKTS:CLKA) is a much smaller and more speculative option, but it represents an interesting window on this theme. Through its wholly owned subsidiary, Maison Luxe, the company deals in ultra-high-end watches and jewelry. According to company materials, we aren’t talking about “really expensive watches”. We’re talking about by-appointment type stuff – a watch you could trade for a new Tesla. That sort of thing.
And business appears to be booming right now. The company is already talking up the potential for multi-million-dollar sales in 2020 (from no revenues last year). In its latest release, the company also notes that it is starting to build a “strategic inventory” to take advantage of the massive price appreciation endemic to the super-high-end watch and jewelry space.
Clikia Corp (OTCMKTS:CLKA) noted in the release that the Rolex Submariner line increased in price over 500% from 1957 to 2014 (adjusted for inflation), which is typical in the space. And these price moves are even larger in the secondary market, which is the more important gauge because the most sought-after pieces aren’t accessible at the retail checkout counter at any price.
More to the point, the Rolex Submariner Ref. 116613 soared 8.4% higher from 2019 to 2020. That was on the retail pricing side. But an article in Robb Report notes that the Rolex Daytona Ref. 116500 has been selling at more than a 90% premium to the retail MSRP. This is symptomatic of a market suffering from chronic undersupply. Given that this has been going on for over a half-century, management quite rightly sees this as a very stable and dependable trend.
The company notes that, as a consequence, Maison Luxe will be building an inventory of the most sought-after timepieces through its “A-level relationships”.
According to its CEO, Anil Idnani, “Building a strategic inventory will drive value for our shareholders in several important ways: it will allow us to generate a return through appreciation over time, it will open up more customer relationships on the wholesale side because we will be able to demonstrate we have rare items in stock consistently, and it will amplify our margins because we will build it through volume purchasing at discount pricing.”
Which makes a great deal of sense.
Clikia Corp (OTCMKTS:CLKA) is already publicly talking about being on pace for over $2M in revenues in 2020 with its new business now firing apparently on all cylinders. That suggests upcoming financial filings will represent a qualitative shift from currently available records, which refer to the pre-pivot reality for the company.
Shares of the stock have been powering higher of late as traders and investor discover it, with CLKA up nearly 400% in the past month on growing volume and testing the $1/share level over recent days.
Newmont Corporation (NYSE:NEM) is the most obvious option here. As one of the largest gold miners in the world, the company engages in the production and exploration of gold, copper, silver, zinc, and lead. The company has operations and/or assets in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, and Ghana.
As of December 31, 2019, it had proven and probable gold reserves of 100.2 million ounces and land position of 68,300 square kilometers. Newmont Corporation was founded in 1916 and is headquartered in Greenwood Village, Colorado.
Newmont Corporation (NYSE:NEM) just recently announced that its Board of Directors declared a quarterly dividend of $0.25 per share of common stock, payable on September 24, 2020, to holders of record at the close of business on September 10, 2020.
According to the release, the declaration and payment of future quarterly dividends remains at the discretion of the Board of Directors and will depend on the Company’s financial results, cash flow and cash requirements, duration and impact of the Covid pandemic, future prospects, and other factors deemed relevant by the Board.
And the stock has been acting well over recent days, up something like 4% in that time.
Newmont Corporation (NYSE:NEM) pulled in sales of $2.6B in its last reported quarterly financials, representing top line growth of 44.7%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($3.9B against $2B).
