VanEck ViewPoint: The rhyme of history

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08 April 2021

 

Video commentary for April 7th 2021

 

Eoin Treacy’s view

 A link to today’s video commentary is posted in the Subcsriber’s Area. 

Some of the topics discussed include: bitcoin continuers to pullback, Wall Street pauses, large caps outperform small caps when yields falls, China weak, Rupee weak but Indian market steady, Pound pulls back but UK stocks up,, Lumber extends uptrend, 

 

VanEck ViewPoint: The rhyme of history

Thanks to a subscriber for this report which may be of interest. Here is a section:

We expect a catalyst to emerge in the second half of the year that could drive gold higher. The most likely catalyst would be excessive inflationary expectations. Inflation expectations have returned to pre-pandemic norms, although a number of developments listed here suggest it could spiral out of control:

• US$1.9 trillion of additional fiscal stimulus is likely to be introduced on top of previous government spending, some of which has yet to be utilised;
• The US Federal Reserve (Fed) continues to buy US$120 billion worth of Treasuries and mortgage-backed securities each month;
• Lumber, oil, copper, food staples and other commodities prices have been on the rise, many reaching multi-year highs;
• Shortages of semiconductors, shipping containers and truck drivers have been documented;
• Many people are content to stay out of the workforce, collecting generous government handouts;
• Purchasing power of American families has reached record highs. Further into 2022, once the trillions of stimulus dollars have been spent, other systemic risk catalysts could emerge, such as a weakening economy, debt problems, US dollar weakness and/or black swan events caused by radical fiscal and monetary policies. We believe the long-term bull market remains intact and expect prices to ultimately surpass US$3,000 per ounce. We also note that gold miners remain cheap relative to the price of gold.

It is worth noting that since mid-2020 it appears that Bitcoin has replaced gold as the new gold. But as cryptos have continued to soar, US real rates have now undermined gold value. To remain long Bitcoin would require a belief that real rates are going to retreat.

 

Eoin Treacy’s view

A link to the full report is posted in the Subscriber’s Area. 

Mining companies are a hard sell in a world where investors are focused on ESG. As an extractive sector, miners can’t get around the fact that they are polluters. Even with remediation commitments, there is no way to avoid the moniker for polluter.

That also impacts the ability of the sector to source the funding they need for expansion via exploration. Finding somewhere to dig and build is an inherently uncertain prospect but the added obstacle of environmental regulations, protests and carbon costs mean the hurdles to exploration are increasingly high.

 

Hydrogen could be the future of energy – but there’s one big road block

This article from reneweconomy.com.au may be of interest to subscribers. Here is a section:

The hydrogen embrittlement challenge is a highly complex materials and engineering problem. There are many aspects that still need to be understood before tangible solutions can be proposed.

For example, what are the conditions for hydrogen entry into different metals? Can this be controlled? Is it possible to completely stop hydrogen entry in metals using coatings or other surface treatments? What if these coatings get a scratch? If the hydrogen does get in, under what conditions will it cause failure of the metal? How much hydrogen is too much? How quickly will it accumulate? Can we design new engineering alloys that can better resist hydrogen embrittlement for the global hydrogen economy? If so, will the new alloys be economically feasible?

These questions can only be answered through collaboration between researchers and engineers who have a deep understanding of hydrogen embrittlement.

 

Eoin Treacy’s view

An economy powered by liquid hydrogen is the end point of all renewable energy arguments. It is the only way that the energy by volume arguments can be overcome. The question is how to do get there from where technological solutions stand today?

 

Coinbase Will Be First Major Cryptocurrency Company To Go Public

This article from Investors Business Daily may be of interest to subscribers. Here is a section:

Its first-quarter results passed all of 2020. Coinbase reported revenue of $1.8 billion in the quarter, with net income of approximately $730 million to $800 million, according to the filing. Last year, it brought in $1.3 billion in revenue with a profit of $322 million.

Trading volume topped $335 billion in the quarter. For all of 2020, trading volume was $193 billion.

Total assets on Coinbase’s platform increased from $90 billion to $223 billion, a nearly 150% increase.

Its full-year outlook presented a range of possibilities, “given the inherent unpredictability of our business,” the company said in its report.

“To state the obvious, our business is hard to forecast,” Coinbase Chief Financial Officer Alesia Haas said after the earnings report. That’s because it can’t predict the prices of Bitcoin and other cryptocurrencies.

About 96% of Coinbase’s revenue comes from transaction fees. It has several lines of business in addition to its exchange services. Among them is Coinbase Commerce, which provides online retailers with software that lets them accept cryptocurrency payments.

 

Eoin Treacy’s view

Unlike many of the IPOs over the last year Coinbase has clear visibility of where it sources revenue and how that is likely to grow over time. It will be one of the few pureplays on the wider cryptocurrency market once it is listed.

 

Eoin’s personal portfolio: futures long opened March 30th

Eoin Treacy’s view

One of the most commonly asked questions by subscribers is how to find details of my open traders. To make it easier I will simply repost the latest summary daily until there is a change.

 

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