Bill’s Blog | July 11, 2024
There is no end to the issues astute investors must follow in 2024. A record 60 countries are holding elections this year, and we are seeing a changing of the guard in many countries. Second, the two devasting wars persist and have a real risk of escalating. Also, the ongoing conflicts in the South China Sea and China are constantly threatening Taiwan. Third, the world has created record debts, and many governments run huge deficits. These factors slow the economy, downgrade credit, increase interest costs, and increase taxes, and everyone feels the impact of inflation and devaluing currencies. It’s crucial to be informed and aware of these economic factors. Fourth, at home in Canada, real estate struggles with record listings and slow sales due to unaffordability. There are still 45% of Canadian mortgage holders that need to refinance in the next two years. Lastly, inflation is cooling, and interest rates are moderating, but many Canadians are still struggling with high home costs, whether purchasing or rentals (especially in BC and Ontario). We also see a surge of people leaving BC and Ontario due to the housing crisis.
Now, let’s take a quick look at markets and opportunities. Markets continue to want to go UP!
Q2 IN NUMBERS Apr. 1 – Jun. 30
TSX: -0.5% (+6% YTD)
S&P 500: +4.4% (+15.2% YTD)
Nasdaq: +8.1% (+17.3% YTD)
Bitcoin: -12.6% (+45.6% YTD)
Magnificent 7: +16.9% (+37% YTD)
Bloomberg Commodity Index: +2.9% (+5.1% YTD)
Silver: +31.2% YTD
Gold: +15.96 YTD
Oil: +16.02% YTD
Let’s break this down. Canada continues to lag economically behind the USA, with slowing growth, rising unemployment, and many anti-business policies both federally and provincially, especially here in BC. Due to government policies, Canada has lacked capital inflows and has become significantly less productive than our US counterparts. Canada is on par with the EU and emerging markets with modest growth.
Bitcoin will lead the race for performance in 2024 with EFT approvals, and Ethereum EFTs will be approved this month. Big institutional money will continue to flow into these assets. The recent pullback is normal after the halving event in April. We should see the bull rerun in late summer or fall. Remember, the crypto market is still highly speculative and extremely volatile. For the brave in heart, a small risk capital allocation will pay off over the next year to 18 months (if history repeats). I anticipate Bitcoin surging past 100K in the next year.
The Magnificent Seven (IA trend) has propped up the S&P and Nasdaq again this year. These seven companies make up two-thirds of the gains on these exchanges. These gains have mainly been driven by speculation, AI adoption, and huge revenues. This differs from the Dot.com era when companies had little to no revenues.
I have been educating people for over a decade about the importance of having precious metals in their portfolios. Why? Gold and silver protect your wealth against geopolitical risks and inflation (loss of purchasing power of your currency) and stabilize a portfolio. Let’s take a look at the last 24 years and performance.
2000: Gold USD 283; 2011 $1900, Today $2423.70
2000: Silver USD 5.30; 2011 $49.50, Today $31.70
Both assets have provided outstanding returns from 2000 to 2024. As long as governments run massive deficits and build huge debts, wars, and inflation issues, I recommend you have a sizable position in both metals. Eastern and Asian nations have been buying at record paces as they understand gold and silver’s role in uncertainty and to protect their wealth and a valid saving vehicle. Second, many central banks continue to buy large quantities of gold to diversify and stabilize their balance sheets. Central banks are also privy to what is happening behind the scenes and fully understand the market and economic risks.
Price appreciation will continue, and we will see gold over $3000 an oz and silver over $50 an oz over the next year or two. Please let me know if you need help building a position in one or both metals.
A well-diversified portfolio should include carefully selected stocks, bonds, gold/silver, commodities, cash or equivalent, select private equity, and a small allocation to crypto. One must be very careful in the real estate market for the next few years. I recommend segregated funds/insurance contracts due to their many advantages and guarantees for part of your wealth and income needs. I also like actively managed portfolios, especially in uncertain times.
Building wealth is complex and requires ongoing adjustments as the market and economies change rapidly. Please don’t hesitate to contact me if you need guidance in wealth strategies. If you need life insurance in BC (life, critical illness, disability, travel, group benefits), don’t hesitate to contact me.
Bili Westmacott owns Fivefold Financial, a Life Insurance Broker in BC, and Wealth Solutions.
PS, I also love to provide complimentary financial education to companies and organizations.