Daily Commentary

MarketMinder’s View: If you can tune out the incorrect use of the word “bubble,” this piece makes some salient points about gold’s recent rise and historical tendency to boom and bust spectacularly when the alleged reasons to own it prove hollow. Now, we take issue with calling these “bubbles,” as a true bubble happens when speculative demand leads to a massive, unsupported supply increase—think Dutch tulips, dot-coms 25 years ago, baseball cards in the early 1990s, NFTs earlier this decade and the like. Gold doesn’t qualify because supply is relatively fixed, with a glacial growth rate in the long run. You just don’t get the massive investment in new mines that you get with other cyclical commodities that have industrial uses. If there were an ocean of securities being created tied to gold, then we think you could maybe make that case better, but that doesn’t appear to be happening today. So no, not a bubble. But gold is prone to sentiment-fueled booms, which the article notes this has all the hallmarks of being. Yes, people today cite fundamental use cases, but those don’t hold up. Consider: “The basic case for gold is that the world needs an alternative to the dollar. The shift into gold started with the freezing of Russian reserves after Russia invaded Ukraine, prompting central banks in developing countries to question how secure claims on Western governments would be in a crisis. Investors joined in this year as they worried about the independence of the Federal Reserve, the scale of government debt and the risk that politicians take the easy route and choose inflation over repayment. Other currencies bring their own political risks, as the French government is demonstrating. All these worries were around in the past two big run-ups, though. Both times the fears proved unfounded. In 1980, Fed Chairman Paul Volcker jacked up interest rates and used double-dip recessions to crush inflation. In the 2010s, it turned out even negative interest rates in much of the world weren’t enough to generate inflation.” And we would add that, as 2022 proved, gold isn’t even a reliable inflation hedge anyway. And with people bandwagon-jumping on gold’s rising price, at some point, there will be no more “greater fools” willing to buy gold at a higher price, and the bust will start. When is unknowable, but that is how this always goes.

MarketMinder’s View: Some politics early on here, so please note MarketMinder is nonpartisan, preferring no politician nor any party, and we don’t believe in generalizing based on state or ZIP code. Our only focus here is the overarching theme: Relocating for retirement can be pricier than you think. This piece starts by running through one couple’s experience, which included multiple unexpected moves tied to several previously unconsidered factors. Though data suggest this problem is actually quite common. “According to research from the Transamerica Center for Retirement Studies, almost 40 percent of U.S. retirees move after they retire. HireaHelper.com, a platform that offers moving resources and advice, found in a 2021 survey of its users that 28 percent of those who moved for retirement in the previous year regretted it.” So, if you are planning to move for retirement, we would check out the tips at the end here. To summarize them, soon-to-be retirees should set realistic expectations for their new lifestyle after moving, plan for potentially unseen costs associated with the move (e.g., rising insurance premiums) and ensure their destination has the resources they need to live healthily and happily. The article’s tip to test-drive a new locale by staying at a short-term rental for several weeks during the worst weather of the year is particularly handy and could be a necessary reality check. So is the reminder to factor in high utility bills if you are moving from a place where you didn’t need to run the heater or air conditioner much. Doing these things can help avoid another move and save some of your hard-earned cash, as well as the disappointment of reality not living up to the idealized vision in your head.

MarketMinder’s View: Moods among Canadian business owners and consumers sank in Q3, according to the Bank of Canada’s (BoC) latest survey. About 33% of businesses noted they are planning for a recession, up from Q2’s 28%, while many reported they have halted hiring and allocated investments to repairs rather than increasing production. Moreover, a majority of firms now expect slowing sales growth in the next 12 months, marking the survey’s weakest outlook since Q2 2023. Other worries include rising input costs and weak demand that prevents businesses from passing them on to customers. The survey’s consumer side roughly mirrored this, with around two-thirds of households anticipating a recession tied to a weak labor market. So … some pretty poor results here. Crucially, however, none of this is predictive for markets or the economy. Sentiment is at best a coincident indicator. Surveys like this capture peoples’ feelings about the present or recent past, which are influenced heavily by what has just happened and what the news says is happening. Canada’s economic data have wobbled recently, including negative Q2 GDP, bouncy retail sales and rising unemployment. That is well-known to stocks, whose day job is pricing all the data that affect sentiment. Data and surveys tell us what happened, not what will happen. But they do show where expectations are, and this piece demonstrates that they are quite low in Canada. That sets the bar for positive surprise much lower, building a taller wall of worry for Canadian stocks to climb.