Gold and Gold Stocks Keep Shining

Gold Stocks and Gold Price in AUD
Gold and Gold Stocks Keep Shining

Boof! NAB shareholders just really copped one in the guts.

The big bank came out yesterday and said it needed another $830 million to cover remediation charges.

The total cost of the whole debacle is now over $2 billion. The stock closed down over 2% for the day.

It wasn’t alone. All four big banks are under pressure — something I’ve been warning about for a while.

Back in July I wrote the following:

Bank stocks aren’t the most exciting place to dance right now.’

NAB just gave the perfect example of why.

The outlook for the banks is one reason I’ve been flagging a more subdued performance for the Aussie market in the second half of the year.

That’s relative to the barnstorming first six months of 2019.

It’s playing out so far.

Gold stocks in the spotlight…

It also puts gold stocks right back in the spotlight where they began the year, too…

You can thank the Aussie dollar. It just keeps making new lows. I can’t say I called that one.

Regardless, that keeps gold shining bright for our miners. It’s back over $2,200 an ounce.

That’s very good margins for unhedged producers.

I’m sending a hat tip to my friend Greg Canavan.

He’s been calling for a big rally in gold since last year. He’s got a bunch of ideas on how to cash in right here, too.

Let’s not go all doomster, however. There’s been multiple dips in the markets over the year.

Thus far they have proved excellent buying opportunities for stocks you might have your eye on for other, individual reasons.

You can also use these down days to ‘stress test’ stocks when the market is under pressure.

I have a little medical tech firm on the radar.

It sold off at the open yesterday, but was bought back up by the end of the day. That implies strength. Let’s see if it can hold today!

Another housing record for LA on the cards

What else do we see casting our eyes around the world?

A very tidy pad for sale in LA — at a lazy US$77.5 million.

You’ll know we’ve been on the hunt all year for signs of the extravagance and excess that can mark the peak of market cycle.

Hollywood producer Joel Silver is selling his mansion — and it will set a record for the neighbourhood if it gets what he’s asking for.

US$77.5 million. For a house.

Granted, it’s a big one I suppose!

He may not be selling in the best market as far as the luxury buyer goes.

The Financial Times reports that over in New York, luxury apartments are flooding the market.

This is happening at the same time that prices suffered their worst fall in a decade over the third quarter.

You might recall we’ve talked before about the ‘mansion tax’ that New York State brought in — at the worst possible time in terms of the property cycle.

It’s not helping sales, that’s for sure.

Don’t forget that property developer Extell is well on the way to completely the tallest apartment tower block in the city.

We’ve talked before about the skyscraper curse, too.

Profit Watch covered this way back in January.

Extell was struggling to sell apartment then. And no wonder. A good chunk of them are over US$60 million each.

Back in January, Extell needed to sell $500 million in apartments by December 2020 and pay down a third of their US$900 million loan.

The market is not looking any better now…and apparently Extell is keeping mum on how many sales its making.

Even if there’s no problems at Central Park Tower, New York is full of empty apartments and a lot of them luxury ones at that.

This may seem obscure to us here in Australia.

Failed real estate projects can flow back to the financiers that backed the developers — and cause disruptions elsewhere.

We’ll keep monitoring things on this front. 2020 sure is shaping up to be a most interesting year.

It’s certainly not a time to be gung ho about the risks you’re taking, however.


Callum Newman Signature

Callum Newman,
Editor, Profit Watch