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Warren Buffet Buys Gold Stock!

S&P 500 – Daily Candlesticks
Source: GKFX / MT4 (August 16, 2020)

If the S&P 500 breaks out to new record highs, a 161.8% Fibonacci extension of the March/April decline gives an upside price target of near $4150.
 

TAKEAWAYS

•    Warren Buffet buys gold miner stock, sells down bank stakes
•    US China phase one trade deal review delayed
•    Trump could target other Chinese companies, including Alibaba
•    DAY AHEAD: Japan GDP, NY Empire State Manuf., Treasury auctions

 

MARKETS


The buck dropped again on Friday, leading the US dollar index to its 8th weekly drop in a row. Concern that the higher number of coronavirus cases in the United States will undermine the US economic performance combined with no agreement on a new stimulus package has undermined the dollar. Headline retail sales for July rose half the amount expected at 1.2% month-over-month, but beat expectations when excluding automobile sales. 

The New Zealand dollar was the biggest currency decliner last week after a new outbreak of coronavirus cases prompted the Reserve Bank of New Zealand (RBNZ) to call for increased bond-buying and negative interest rates.

The S&P 500 fell short of a record high for a second time on Friday amid rising US-Sino tensions. The index could hit a new record this week (see chart above) but many downside risks remain. Shares in Asia finished the week mostly higher despite rising trade tensions.

Gold had its worst week since March, which is perhaps unsurprising following its best month in years. The market has got overbought and may be due a period of consolidation before the next up-leg in the price.
 

GURU WISDOM

"You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." - Peter Lynch
 

Buffet Gold


Warren Buffet’s Berkshire Hathaway bought shares of Barrick Gold, the world’s second largest gold miner in the second quarter. Buffet is not known for short term bets and news of the investment from the Oracle of Omaha saw the shares of Barrick jump. Buffet is known for being critical of gold as an investment in the past, calling it an ‘investment in fear’. That view appears to have changed and is a possible vindication for long term gold bugs. 
 

Trump Alibaba

Delaying a review of the US China trade deal is on the face of it bad news for financial markets and could hinder risk-taking. However, the delay could give China more time to buy the necessary amount of US agricultutal goods to keep the deal on track. The onset of the pandemioc has made the deal unworkable so investors mighty be inclined to think of a delay as bettter than a cancellation. 

Still even if the trade deal is on track, Chinese companies in America may still face troubled times. DonaldTrump has signaled other companies – not just ByteDance and Tencent - could face issues doing business in the United States. 
 

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