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This week brings a wealth of news investors won’t want to miss. We dive into silver market developments, examine warnings from the Buffett indicator and insider activity within the S&P 500, and assess the likelihood of a U.S. "Minsky moment." Additionally, we cover the rising wave of layoffs among Dutch companies, the criticism from De Nederlandsche Bank on the rental law, and the role of platinum in Germany's ambitious hydrogen plans. Finally, a surprising agreement between India and China at the BRICS summit.
Last week, we discussed the strong price movement in gold, and this week it's silver's turn. Last Tuesday, silver nearly breached the €1,040 per kilo mark, bringing it closer to the all-time high of €1,057 per kilo from 2011. Investors appear increasingly aware of the historical effect of silver prices following gold’s lead, often more vigorously. Paul Buitink, director of Holland Gold, recently discussed this in De Telegraaf.
Analysts from Heraeus foresee a further rise in silver prices now that silver has broken through the $34 per ounce resistance. Additionally, the Chinese government’s stimulus measures are having a positive impact on industrial demand for silver, according to Heraeus' latest update.
Chris Mahoney, manager of the Jupiter Gold & Silver Fund, also believes that silver has long been overlooked. He argues that the market underestimates silver demand, pointing to the rapid growth of data centers for artificial intelligence as a major driver.
Currently, the gold-to-silver ratio is around 79, whereas the average over the past 30 years has been between 55 and 60. According to Robert Kiyosaki, now is the best time to invest in silver.
Beyond concerns over persistently high inflation in a low-interest environment with war threats, Kiyosaki also points to technical indicators suggesting further price increases in silver. Technical analysts at Tostrams support this view, with a target of $36 per troy ounce achievable as long as silver does not fall below $26 per troy ounce.
Despite the S&P 500 experiencing its best nine months since 1997, well-informed insider investors at companies within this index seem less enthusiastic. According to Insidersentiment.com, net insider purchases are at their lowest in a decade. Followers of insider sentiment believe the behavior of insiders has a predictive effect. After all, executives and board members should be well aware of their companies' outlooks.
This isn’t the only warning sign. Investment firm Berkshire Hathaway, led by Warren Buffett, has been increasing its cash reserves. Buffett himself likely observed the Buffett Indicator, which compares the total value of all publicly traded companies to a country's GDP. This indicator, which he considers one of the best market valuation measures, suggests that the U.S. stock market is currently highly overvalued.
Tech leaders, including Jeff Bezos of Amazon and Mark Zuckerberg of Meta Platforms, have sold billions of dollars worth of shares this year.
"Insider trading is a very strong predictor of future aggregate stock returns," says Nejat Seyhun, professor at the Ross School of Business at the University of Michigan. "The fact that they’re below average suggests that future stock returns will also be below average."
Seyhun, an advisor at InsiderSentiment.com, believes corporate insiders are concerned about a recession, which typically leads to significant declines in stock prices.
Paul Tudor Jones, a renowned hedge fund manager who accurately predicted the 1987 crash, has joined the growing group of investors increasingly worried about the U.S. government’s financial health. Should the government fail to control its spending in time, a "Minsky moment" could occur, as Jones explained in a CNBC interview. Named after American economist Hyman Minsky, a Minsky moment refers to a sudden collapse of financial markets.
Renowned economist El-Erian also highlighted that people are increasingly losing trust in the U.S. as a responsible manager of the international monetary system.
The UWV (Dutch Employee Insurance Agency) received 36% more reports of layoffs so far this year. Additionally, 26% more companies could no longer pay salaries, often resulting in bankruptcy. The UWV attributes this trend to the deteriorating economy.
Real estate investors have long warned of the negative effects of the Affordable Rent Law, and now Klaas Knot, president of De Nederlandsche Bank (DNB), has joined the discussion. According to Knot, the Affordable Rent Law introduced by former minister De Jonge has been counterproductive and should be reversed. "Better to turn halfway than go completely astray," he concluded in an interview with ANP during the International Monetary Fund's annual meeting in Washington. Lex Hoogduin has also urged the government to abandon the law immediately.
Germany is investing heavily in a "core network" of hydrogen pipelines, totaling €18.9 billion. This investment will support a 9,000-kilometer network by 2032 to transport the sustainable energy source throughout the country and to neighboring countries like the Netherlands.
Germany’s increased investment in hydrogen highlights the importance of platinum. As a catalyst in converting electricity to hydrogen, platinum plays a crucial role. Investment analyst Karel Mercx notes that platinum consistently traded above gold from 1980 to 2015, suggesting it has a significant catch-up potential.
India and China have agreed on patrol arrangements along their disputed border in the Himalayas to reduce tensions. This agreement addresses issues that arose in the Galwan Valley in 2020, where the two countries clashed, resulting in casualties. This move marks a remarkable shift for India, which had maintained an anti-China stance for years.
