The Hunt for Gold

For those of you who have been reading our blogs, you know that White Raven Financial is big on sustainability and that the people connected with White Raven Financial make being kind to the planet is a part of their daily lives. Thus, we find Diane and her husband, Mike, once again out combing the foothills for their favorite mushrooms, Chantarelles^1, this October. Picking mushrooms in the wild is a skill onto itself: You need to know where to find them and the people in the know often do not share. While you are searching for these treasures, you may find yourself wandering through the deep forest without a road-sign pointing back to your auto! And if you wish for another golden patch of Chantarelles in following years, the cut (not pulled) mushrooms should be placed in an open netted bag allowing the spores to spread on the forest floor while wandering from one golden treasure to the next.

We haven’t had any clients ask about gold lately, although there have been questions about it in the past. But we have had queries about cryptocurrencies and the infrastructure that makes them. And there have been questions about private placements and loans. Cryptocurrencies are and have been very volatile (big gains and/or big losses)² and lack in both transparency and Securities and Exchange Commission (SEC) regulation³. If a person wishes to invest in private placements, the SEC requires⁴ that the person must be an accredited investor. For a single accredited investor⁵, that person should have a net worth or 1 million (not counting your home) or an income exceeding $200,000 in the two most recent calendar years. Private loans come with their own risks as one can imagine. Even with lots of due diligence, research, and the verification of risk tolerance. … one could become lost in the woods.

In the U.S., our economy is still dealing with a multitude of items: Inflation, the COVID-19 delta variant, ongoing supply chain problems and the congressional debt ceiling/infrastructure bills to name a few—and no current news about gold. Good news did appear on the first of this month, September ISM Manufacturing Index checked in at 61.1%⁶ which marked the 16^th straight month of expansion for the manufacturing sector. Even though manufacturing demand is strong, there are still supply chain issues⁷ with long lead times for basic materials. Meantime, we have congress struggling on a variety of issues with no clear outcome on several items in their agenda. In a recent Charles Schwab Insight⁸, Randy Frederick wrote about the volatility and how the market sometimes reacts to the outcome of congressional decisions.

Looking across the ocean, history facts⁹ note that in 1931 Great Britain became the first to drop the gold standard. Also, across the ocean, we are seeing Covid 19 vaccination rates¹⁰ increasing beyond that of the United States. Russell Investments in their Global Market Outlook – Q4 Update¹¹ noted that with vaccination rates accelerating globally, they believed that the broader economic reopening should continue through the rest of 2021. Further in their update, they felt that Europe’s exposure to financials and cyclically sensitive sectors along with its relatively small exposure to technology gives it the potential to outperform as delta-variant fears subside, economic activity picks up and yield curves steepen.   

Golden would not be used to describe the major market indices in September. They were more like the dog days of summer: The blue-chip barometer (the Dow) whimpered and ended with -4.29% retreat. The S&P 500 (SPY)* also acted like a wet dog and posted a -4.76% loss. The tech-rich Nasdaq Composite (COMP^TR)* got thoroughly soaked when compared to its peers and lost -5.31 for the month of September. (*After linking, click on Quarterly & Monthly Total Returns, “Monthly” tab). On Tuesday, September 28^th, the Dow Jones Indices released the latest S&P CoreLogic Case-Shiller¹³ report. The report showed that for the reporting month, Seattle had another month for being one of the top 3 areas for the large increases in housing prices for July, posting a 25.5% annual increase. The July 20-city composite Home Price Index¹⁴ reported a 19.9% annual gain; up .8% from the previous month year-over-year posting. Before seasonal adjustments, month-over-month data had the month of July showing a 1.5% increase over the prior month of June for the 20-city composite index.

Regards and thank you (as always) for reading,

The Team at White Raven Financial

Advisory services offered through White Raven Financial Services, Inc. a Registered Investment Advisor in the State of Washington.

*Indexes are unmanaged and do not reflect service fees, commissions, or taxes. You cannot invest directly in an index. Past performance is not necessarily indicative of future results. Returns for the DOW, S&P 500 and the NASDAQ are the total return (price only) provided by Morningstar as September 30, 2021. Diversification and asset allocation do not assure or guarantee better performance and cannot eliminate the risk of investment loss.

*The Standard and Poor’s 500 is an unmanaged, capitalization weighted benchmark that tracks broad-based changes in the U.S. stock market. This index of 500 common stocks is comprised of 400 industrial, 20 transportation, 40 utility, and 40 financial companies representing major U.S. industry sectors. The index is calculated on a total return basis with dividends reinvested and is not available for direct investment.

*The Dow Jones Industrial Average covers 30 blue chip U.S. companies selected by the editors of the Wall Street Journal. The Dow represents about 25% of the NYSE market capitalization and less than 2% of NYSE issues.

*The NASDAQ is a market-value weighted index that measures all NASDAQ domestic and foreign common stocks.

Sources:

1. https://en.wikipedia.org/wiki/Chanterelle
2. https://monkedoodle.com/top-winners-losers-of-september-defi-rises-exchanges-drop/
3. https://www.npr.org/2021/08/20/1029436872/tougher-rules-are-coming-for-bitcoin-and-other-cryptocurrencies-heres-what-to-kn
4. https://www.sec.gov/smallbusiness/exemptofferings/rule506b
5. https://www.sec.gov/smallbusiness/exemptofferings/faq?auHash=rh5WfJi9h3wRzP6X2anOmgYLdhPHNuo-3Vw0YNZyR_M#faq2
6. https://bankingjournal.aba.com/2021/10/ism-manufacturing-increases-in-september/
7. https://www.barrons.com/articles/ism-manufacturing-industrial-stocks-51633100015
8. https://www.schwab.com/resource-center/insights/content/active-trader-market-outlook
9. https://www.history.com/news/how-did-the-gold-standard-contribute-to-the-great-depression
10.  https://www.cnn.com/interactive/2021/health/global-covid-vaccinations/  
11. https://russellinvestments.com/Publications/US/Document/global_market_outlook_quarterly_update.pdf?utm_campaign=NA
12. * https://Morningstar.com (index)
13. https://www.prnewswire.com/news-releases/sp-corelogic-case-shiller-index-reports-record-high-19-7-annual-home-price-gain-in-july-301386852.html
14. https://www.prnewswire.com/news-releases/sp-corelogic-case-shiller-index-reports-record-high-19-7-annual-home-price-gain-in-july-301386852.html