Gregory Bergman
Editor-in-chief, CapitalWatch
The saying on the Street goes: "Sell in May and go away."
Equities usually take a dive in summer when the people who really
move the market leave to do whatever it is that wildly rich people do.
But I didn't think that adage rang true this year, and so while many
in May sold off, I held tight and posted double-digit returns for the
Bergman Buy Index both for May and for June.
But now, it's time to sell, especially if you hold any indexes (I
have warned against that since February when we created the index on the
verge of the Covid-19 nightmare). Unless you want to hold for another 8
to 10 months, there is no reason not to sell most of your positions,
most of which you can buy back cheaper anyhow in a couple of months.
Stocks are on the way down for the summer, while Covid-19 infections are on the way up.
In other words, exactly the opposite of what most market experts said
months ago. If you stay in equities, stay in FAANG stocks or tech more
generally; Nasdaq isn't going to fall as far.
Go for Gold
I don't talk about gold or gold investing for a reason; I think it's
boring and better left to talented technical analysts making intraday
moves or grandfathers investing their savings in something tangible
after being persuaded by a commercial on Fox News. But it's time to get
out of some equities and get into some gold. With all the turmoil in the
near term, gold is a safe bet. Worst case, things do not totally
unravel, and gold goes up. Best case, the world really does come to end,
in which case it will go up even more.
The precious metal is up by around 16% since the start of the year,
and analysts see the broad rally continuing as uncertainty over the
virus, global trade tensions, civil unrest, unemployment--just to name a
few of the world's current crises.
Bank of America Chief Global FICC Technical Strategist Paul Ciana
said the uptrend in gold prices is set to test the 2012 highs of
$1,790-1,805 per oz in the next week. If it breaks past $1,800, bullion
might be poised to hit an all-time high of $1,920.70, Ciana said in a
note Wednesday.
"The breakout occurring now that is ending Q2 completes an eight week
trading range that has resumed higher," Ciana explained, according to
CNBC.com.
"The range breakout targets 1900 while the head and shoulders
continuation confirmed in April targets 1947. These patterns say gold
can make a new all-time high in the (second half of 2020) with Q3 on our
mind."
Golden Opportunities
If you are buying gold, there are several ways you can go about
it--from buying bullion in coins or bars to investing in a small-cap
mining company with big upside but big risk. Of course, there are many
more options such as exchange-traded funds (ETFs), mutual funds,
closed-end funds, futures contracts, etc.
If you really anticipate the end of the world, best to buy bullion
itself, bury it in the backyard with your guns, and await the
apocalypse. A middle ground safe haven is to buy an ETF like SPDR Gold
Trust (NYSE: GLD). For a less diversified but potentially more rewarding
ETF, look at VanEck Vectors Gold Miners ETF (NYSE: GDX).
If you want to bet on a mining stock but don't want to let it ride on
a small-cap that may go bust, I like Kirkland Lake (NYSE: KL), one of
the few mining companies not saddled with debt; it ended the first
quarter of 2020 with a net cash position of $531 million. The company
also posted free cash flow of $130.9 million, representing a
year-over-year increase of 29%.
Also, management offers gilded dividends, recently doubled, and they
are not shy about buying back shares. That recent dividend increase was
Kirkland's sixth in three years.
For some in-depth analysis of gold trading opportunities, check out https://www.sunshineprofits.com/.
Goodbye, Columbus...and Jackson, and Washington, and Lincoln and...?
"In 1492, Columbus sailed the ocean blue." He challenged conventional
wisdom claiming the Earth was round, not flat (though even the ancient
Romans knew that) when he set sail for India, accidentally "discovering"
America. Or so you learn in school.
Then, a little more schooling, you learn that actually Leif Erickson
who "discovered" the North American continent more than a
half-millennium earlier, naming the region of what is likely modern-day
Newfoundland as "Vinland," according to the Sagas which celebrate the
adventure (or misadventure--like Columbus, he found the "New" world by
accident).
Some historians insist that "Vinland' referred to the Cape Cod region
of Massachusetts. In Provincetown, there stands a stone wall attributed
to Leif's younger brother Thorwald who, it is said, traversed much of
coast of the Northeastern Seaboard.
After a skirmish with Native Americans, he and his crew were forced
to flee back to Iceland. That's right, the same Native Americans that
you learn after a bit more schooling, discovered "America" some 10,000
years prior. After spending 15,000 years living between the continents,
peoples of Siberian descent crossed a land bridge between Eurasia and
North America where today there is an oceanic waterway, the Bering
Strait.
And then, just when you think you know the story, new evidence
changes the picture yet again. Now, the consensus amongst historians is
that ancient Polynesians discovered South America by boat. Turns out
that, while those Native Americans made their way South, they probably
never made it to Peru. And if they did, they would soon have visitors.
Based on linguistic and genetic evidence, and some obscure details
about the cultivation of the sweet potato, researchers now believe that
Polynesian seafarers discovered the landmass of the Americas between 500
AD and 700 AD, centuries before Vikings like Leif Erickson. Oh, and
then there are the Chinese. In his 2003 book, entitled "1421: The Year
China Discovered America," Gavin Menzies laid out extensive but widely
disputed evidence that Chinese mariner Zheng He sailed to the east coast
of the modern-day United States in 1421, and may have left settlements
in South America. The fact that East Coast Chinese food is superior to
the rest of the United States may or may not be evidence of such a
voyage.
So, what is the point of all of this? The point is that "America"
(Columbus landed in the Caribbean, not New York Harbor), was discovered
and rediscovered several times. Teach this? Yes. But should we celebrate
the second European we know of who stepped foot in the New World after
the Native Americans and Polynesians did and maybe even the Chinese just
because, at one point, we thought he was the first?
The answer is no. And that is without even mentioning that on a scale
of 1 to 10 (1 being the Buddha and 10 being Eichmann) he was about an 8
½.
So, setting aside the feelings of the Italian-American community
(let's just make Amerigo Vespucci day a national holiday; he's just as
Italian and less of a jerk and, oh, America was actually named after
him), the avaricious rape / mass murder enthusiast Columbus is an easy
one to call. But what about the other statues being toppled around the
country?
Here is a list of criteria we should consider when we are thinking of
tearing down monuments and turning old heroes into new villains.
1) Where is it located?
2) Just how horrible was this person by contemporary standards?
What about by the standards of the time in which they lived?
3) What is it celebrating exactly? A specific accomplishment
like a victory in war or the person's influence more generally?
4) Did their bad deeds outweigh the good? Are these person's bad deeds related to their contribution to history?
5) How critical was this person to the founding, preservation, or improvement of the United States?
Let us start with someone like Henry Ford. Henry Ford was a complete
Anti-semite to the point of being a Nazi sympathizer. So, a statue of
him in Crown Heights would seem grossly misplaced. As would a statue of
him outside a federal governmental institution as he did not serve in
government. But a statue of Henry Ford outside an automobile museum?
Sure. Why not? The man is known for his influence over making
automobiles, not running over Jews in his Model-T. Think of it the other
way. Hitler was a vegetarian and an animal rights supporter. But does
PETA use his face on its logo? No, because he is more known for killing
Jews than saving jaguars.
Now, statues of Confederates are a no-brainer to me. And you do not
fully appreciate just how many schools and streets are named after this
schmuck until you visit the South. The ghost of this gruesome general is
everywhere.
Robert E. Lee was a traitor to the United States. He fought on the
side of a rebellion by several Southern States to prevent the federal
government from abolishing slavery. It was always about slavery. The
myth of the "Lost Cause" was a radically revisionist view of the
conflict which started in the South and was later adopted in the North.
When someone says the Southern rebellion was about "state's rights,"
the right they are referencing whether they know it or not is slavery.
And when someone says it was about "defending their way of life," the
way of life to which they refer is a way life built on the backs of
enslaved human beings. There must be another way to show Southern pride.
A Lynyrd Skynyrd T-shirt, perhaps?
So, when someone on the right mythologizing Lee as a kindly Southern
gentleman or someone on the left says that the Civil War was never about
slavery but about Northern industrialization versus the agrarian South,
remember the words of Frederick Douglas: "I shall never forget the
difference between those who fought for liberty and those who fought for
slavery; between those who fought to save the Republic and those who
fought to destroy it."
Toppling down statues like Lee's is a rejection not of history, but a
rejection of its once lauded heroes. Statues are celebrations or somber
commemorations--but they are not discussions. They are meant to
enshrine a person or an event. Why enshrine the Confederacy and its
traitorous generals? Commemorate the slaves, not the slaveholders. And
do not worry, replacing Lee with a statue of a slave won't make us
forget him. There are no busts of Hitler in Berlin, but people remember
the guy all the same.
Okay, so Lee is obvious in my mind. But what about Andrew Jackson?
Old Bigotry
He may have been a monster, but he did beat the Brits at New Orleans
(the same Brits that freed slaves during their attempted conquest,
however). And he was an influential president of the United States, not
the head of a cabal of traitorous revolutionary states. Should he go? I
say yes, but others I respect say no.
We can all agree that a statue of Jackson wielding a bayoneted rifle
in the Big Easy is more appropriate than a statue of Jackson donning a
headdress outside the entrance to an Indian Reservation. Context
matters.
Lincoln? He wanted to ship all the slaves he helped free to Africa.
Jefferson? This guy had the chutzpah to denounce slavery whilst owning slaves.
Washington? He was no prize either by current standards, but he is
the founding father, the hero of the revolution who could have wielded
all the power he wanted, but stepped down after two terms to set an
example. Plus, he was honest about that whole cherry tree incident.
The Re-United States
Perhaps, as some historians argue, we should have changed the name of
our nation at least once. After the Civil War, we should have created a
new republic. After the addition of the Thirteenth, Fourteenth, and
Fifteenth amendments to the United States Constitution, we really became
an entirely new country. And what would be wrong with that? France, as
an example, is on its Fourth Republic.
The downside of the United States' survival as a continuing Republic
is that any statue commemorating a figure from the past that is now
controversial is viewed as a contemporary national endorsement of that
figure.
Can you imagine Catholic Italians getting all worked up about the
bust of Nero? If we lived in the United States Part Deux, would we be as
upset when we see a statue of Andrew Jackson, president of the United
States Part One? Perhaps, but it is less likely.
So, topple the statues and tear down the portraits if you must; do
not tear up the history books. And leave literature alone. Better you
smash the bust of Mark Twain than take even the "N-word" out of Huck
Finn's mouth.
Or better yet, change the name of our Republic. And let us start anew.
But that's not going to happen. So, before all the statues fall, just
think about some of the criteria mentioned above. Because it will be a
sad day when statues of Martin Luther King, Jr. are toppled over his
view on homosexuality. And you agree that we should consider the time in
which he lived, then we should do likewise for other figures as well.
But even if we did, there were plenty of progressive figures who held
liberal views regarding sexual preference during his time, and even
going back centuries (Ben Franklin, George Washington, Alexander
Hamilton, Thomas Jefferson, and Abraham Lincoln all either held
progressive views on homosexuality and/or were gay themselves). Just as
abolitionist views circulated during Lee's era, progressive views on
homosexuality circulated during King's.
But here is the thing: Martin Luther King, Jr. did not fight a war to
enslave gays like Robert E. Lee did to enslave blacks. So, what
difference does it make what he thought of them?
And yes, Ulysses Grant, whose statue was also recently toppled, was a
racist. So were many of the Union soldiers, most of whom were drafted.
Still, they fought, as Grant did, for the right side. Are you really
going to topple the statue of the bad guy most responsible for stopping
the really bad guy from winning the war and perpetuating slavery?
As the proverb says, "the enemy of my enemy is my friend."
No matter how you feel about these statues, another question is
whether mobs of people, however well-intentioned, should unilaterally
topple public statues of historical figures, however monstrous? I say,
sure.
But does the state have a legitimate interest in protecting those
statues as well as a right to send police forces to thwart their
destruction? I say, of course.
The nation, like the S&P, is on the precipice. Statues and stocks
are going to fall this summer. How much and how many remains to be
seen.
In the meantime, if history does indeed repeat itself, look to gold and precious metals for the rest of the year.
We may say goodbye to Columbus, but we will never say goodbye to the gold he so ruthlessly sought.
Gregory Bergman
Editor-in-chief, CapitalWatch
(The opinions expressed in this article do not reflect the position
of CapitalWatch or its journalists. The analyst has no business
relationship with any company whose stock is mentioned in this article.
Information provided is for educational purposes only and does not
constitute financial, legal, or investment advice)
