September 2020
The incredible year of 2020 just keeps throwing new variables into the investment landscape. Uncertainty is not only the norm, but it is becoming evident that broad uncertainty will continue to be the norm for the foreseeable future. Markets, politics, and the pandemic have combined to create an investing environment the likes of which we have not experienced for generations.
In this newsletter, we will return to the theme of "localism." Or as we call it, "small is the new big." It is our continued belief that some of the most important investments that will be made over the coming decade are in local economies. Technologies are emerging which will enable land to produce food in abundance as well as supplemental energy. Both can be distributed through local supply chains, which would dramatically alter the way people live and work for generations.
Sometimes when things are crazy in the short term, it's best to step back and take a look at the long term.
All the best,
The OWNx Team
X-cerpt
Greetings again from our office in downtown Lawrence, KS. The past few months have only added to the craziness of 2020. Anxiety with regard to the coming election combined with inconsistent and confusing responses to COVID-19 (individually and corporately) have created a challenging investing landscape. The gold and silver market is not immune. In the July newsletter, we set an expectation for a “healthy” pullback in precious metals prices and that is exactly what happened. We will go into more detail later in this newsletter.
Unfortunately, something we continue to see in this market is a great deal of fear. Whether it is fear of the unknown or fear of missing out (FOMO), we believe a more systematic and calm approach will prevail. That is exactly why we developed the OWNx platform: to give you a way to accumulate precious metals in a thoughtful and prescribed manner. We’ll leave the fear-based selling to others. As we move into the last three months of this year, volatility will likely remain. Stay the course knowing that we have your precious metal position covered.
If you recall, in January we announced our plans to invest in greenhouses in the nation of Nigeria. Our plan for the year 2020 was to, in partnership with Farmedia, have commissioned 100 greenhouses by December 31, 2020. Then COVID-19 happened, and like most every business, Farmedia had to recalibrate. Currently, there are 5 greenhouses and 1 nethouse that have been built. They have used the lockdown period to develop their capacity for designing and constructing the greenhouses, which they will share with the rest of the world as 2020 goals move into 2021.
Investments in local economies such as those being developed by Farmedia are growing rapidly. The COVID-19 mess has created new investment opportunities that did not exist six months ago. We would love to hear success stories from you about amazing people, companies, and local non-profits, etc. with which you are directly involved. Feel free to send a quick email to josh@ownx
Keep moving forward, everyone!
Josh McCleary & Jeremy Brakenhoff, Co-Founders
Gold and Silver Prices - acting as "normal" as we can expect.
In our July newsletter we stated that this bull market in precious metals was likely to be "a bit more wild" than the last one, and that it was likely that a pause was due to allow the prices to regain their uptrend channels. The price action since then has confirmed that suspicion. Gold blew through the $2,000 mark and didn't look back on the march to nearly $2,100. Normally, there would have been a battle to get above and hold $2,000. At the same time, silver shot to nearly $30 per ounce.
Where do gold and silver go from here? Again, we believe that history will be a guide, however, as we all know by now, 2020 is not a usual year. It seems as though a good approach may be to expect the general trends to hold, yet with more volatility in the price. It is with that view in mind that we examine the charts for gold and silver.
What Do the Charts Say?
As we said, the price of gold rose to nearly $2,100 per ounce where it immediately sold off to around $1,900. That recaptured the uptrend in the two year channel. A wedge formed (blue lines) over the next two months and the price broke down from that wedge. Again, this is not unexpected from a technical perspective and is, in fact, healthy price action. As of this week, gold is approaching the uptrend line in the $1,850 range. Could it fall below that line as it did in March? The answer is, yes. If the broader stock markets sell off, which is always a possibility (and particularly in October), then gold could fall with it. However, the charts say that it would likely be a tremendous buying opportunity.
The silver chart tells a very interesting story. Its price touched the bottom uptrend line exactly. It is quite probable that if gold pulls back to the $1,850 level or lower that silver will break that trend line. It would not be a cause for concern however, just due to the nature of silver being more volatile than gold. Once again, a $20 price would likely be a great buying opportunity should it happen.
The month of October should be quite telling. The price of gold and silver could move sharply either way. Once again, that is why we offer the platform that we do: the ability to buy 24x7 when sharp pullbacks occur, and steadily dollar cost average into this bull market.
Another Look at "Small is the New Big"
COVID Accelerates the Uberization of Food
Perry Marshall interviews Joel Salatin, advocate of alternate farming, on the massive changes COVID has made to the global food supply chain, and how it has set up local food production to become a global economic force. (Button takes you to Apple Podcast). Here is one for Spotify
COVID-19 Effects on the Food Supply Chain
Disruptions in the food supply chain are persistent and have raised enough concern that they will be re-worked in the years to come. "For those unaccustomed to supplying the retail channel, and in particular utilizing an unfamiliar ecommerce channel, redirecting sales to a new customers adds the complexity of modifying their current supply chains and internal organizations and also adds to costs. The flip side, of course, are new opportunities for revenue channels that did not exist before." This is exactly what we see happening.
Keeping an Eye on Inflation Expectations
Inflation expectations continue to remain elevated. The Fed seems okay with rising inflation for a period due to "low inflation" for a decade. Not that we agree, just reporting the spin. The linked article has an interesting chart.
On Your Radar
The Great Reset
We are not suggesting reading this as much as just putting this subject on your radar. There is increasing talk that we are in a "Great Reset." There are widely varying definitions of what this "Reset" actually means. Some see a restructuring of the global financial system. Some see it including economic models. Still others see it including both of those as well as a global governance body. It's important to be aware of what is being discussed so that you can use wise discernment in the coming months and years.
Note: The OWNx office will be closed on November 26th and 27th for Thanksgiving.