Market Update – December 19
OCM Gold Fund 2023 Capital Gains Distribution – Zero
There will be no long-term or short-term capital gains distribution for OCM Gold Fund shareholders for 2023
Fed Rate Cuts and Gold
We’ve shared this chart several times but it is timely to share again due to The Fed’s indication of rate cuts.
Dating back to 2000, the last three times The Fed has reversed course, the gold price has entered into a bull market.
While historic pricing isn’t a guaranteed indicator of future price moves, gold’s positive price action on December 13th displayed conviction in this historic data.
Fed Rate Cuts and the S&P 500
While Fed rate cuts are bullish for gold, the opposite could be said for the S&P 500.
Previous rate cuts dating back to the 1970’s have resulted in massive drawdowns for the broader market. In our opinion, it will take gold’s divergence from the market in order for gold and gold equities to gain serious traction with Western markets.
The top 10 precious metal companies by market cap are worth a combined 2.4% of the combined market cap of the 6 major tech stocks that many investors have piled into (Alphabet, Amazon, Apple, Meta, Netflix, and Tesla). Quite bullish for gold because if we see any type of sector rotation into precious metals equities it won’t take much to see higher prices.
Gold and 10 Year Real Rates
From Nick Pocrnic and John Cole at ScotiaBank:
”The USGGT10Y on Bloomberg…10-year real rate. When you hit MAX on the chart it goes back to 1996. I’d point out to points over the below timeline…Jan 2009 and Jan 2019. Both times the 10-year real rate rolled over and broke the 200 day. That set-in motion multiyear bull runs in the price of gold…125% over a two-year run starting in 2009 and 60% over two years starting in 2019. The 10-year real rate broke the 200 day yesterday.”
Investors should carefully consider the investment objectives, risks, charges, and expenses of the OCM Gold Fund. This and other important information about a Fund are contained in a Fund’s Prospectus, which can be obtained by calling 1-800-779-4681. The Prospectus should be read carefully before investing.
The Fund invests in gold and other precious metals, which involves additional risks, such as the possibility for substantial price fluctuations over a short period of time and may be affected by unpredictable international monetary and political developments such as currency devaluations or revaluations, economic and social conditions within a country, trade imbalances, or trade or currency restrictions between countries. The prices of gold and other precious metals may decline versus the dollar, which would adversely affect the market prices of the securities of gold and precious metals producers. The Fund may also invest in foreign securities which involve greater volatility and political, economic, and currency risks and differences in accounting methods. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual stock volatility than a diversified fund. Prospective investors who are uncomfortable with an investment that will fluctuate in value should not invest in the Fund.
XAU Index is the Philadelphia Gold and Silver Index. It is an unmanaged capitalization weighted index composed of 16 companies listed on US exchanges involved in the gold and silver mining industry.
HUI Index also known as gold BUGS index is the NYSE Arca’s index measuring gold companies that do not hedge their gold production beyond a year and a half.
The S&P 500 Index, a registered trademark of McGraw-Hill Co., Inc. is a market capitalization-weighted index of 500 widely held common stocks. You cannot invest directly in an index.
Investments cannot be made in an index. Unmanaged index returns do not reflect any fees, expenses, or sales charges.
A cryptocurrency is a digital representation of a stored value secured through cryptography. Although Bitcoin might be one of the most widely known cryptocurrencies today, there are many others. The markets for cryptocurrencies remain highly volatile and risky. Before turning your hard-earned cash into crypto, use the resources below from FINRA and other regulatory authorities to learn more about these markets and products.
Past performance is no guarantee of future results
OCM Gold Fund: Advisors Class Best Fund out of 17 eligible investment companies for the three and five-year periods and 15 eligible investment companies for the ten-year periods ending 11/31/2022 based on consistent annualized total returns.
The Refinitiv Lipper Fund Awards, granted annually, highlight funds and fund companies that have excelled in delivering consistently strong risk-adjusted performance relative to their peers. The Refinitiv Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is a risk adjusted performance measure calculated over 36,60 and 120 months. The fund with the highest Lipper Leader for Consistent Return (Effective Return) value in each eligible classification wins the Refinitiv Lipper Fund Award. For more information see lipperfundawards.com Although Refinitiv Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Refinitiv Lipper
Past performance is no guarantee of future results. There is no guarantee that the Fund will achieve its objective. Diversification does not ensure a profit or guarantee against loss. The prices of securities of gold and precious metals producers have been subject to substantial price fluctuations over short periods of time and may be affected by unpredictable international monetary and political developments, such as currency devaluations or revaluations, economic and social conditions within a country, trade imbalances, or trade or currency restrictions between countries. The prices of gold and other precious metals may decline versus the dollar, which would adversely affect the market prices of the securities of gold and precious metals producers. Because the Fund concentrates its investments in the gold mining industry, a development adversely affecting that industry (for example, changes in the mining laws which increase production costs) would have a greater adverse effect on the Fund than it would if the Fund invested in a number of different industries.
The thoughts and opinions expressed in the article are solely those of the author as of December 7, 2023
|Funds are distributed by Northern Lights, LLC, FINRA/SIPC. Orrell Capital Management, Inc. and Northern Lights Distributors, LLC are not affiliated.