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Top links: Miners provide positive contrarian signal for gold

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.

The Financial Times reports that gold miners are using futures markets to lock in future sales, again hedging against declines in the bullion price. Historically, this has been a positive sign for gold – the amount of forward selling by gold miners has been a contrarian indicator.

Gold bulls deeply suspicious of hedging - Financial Times

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See also: Why gold is set to lose its shine – Inside the Market reports that Ford Motor Co. is recalling more than 100,000 vehicles for safety defects in yet another sign that the global auto industry is becoming far too competitive to support existing production capacity.

General Motors has already announced the recall of 29 million vehicles so far in 2014, a number so large that the Economist notes "they are running out of cars to recall."

With the best of employment-related intentions, governments across the world continue to provide corporate welfare for automakers, supporting capacity that makes it virtually impossible for non-luxury car companies to simultaneously make safe vehicles and profits.

Ford recalls 100,566 vehicles for safety defects – The Wire

Total recall, the sequel - The Economist

A story this morning throws cold water on economic optimism surrounding the rise in U.S. corporate borrowing. Previously, this was considered a sign of rising capital expenditure and an accelerating U.S. economic recovery. Insiders, however, have a different and far less bullish interpretation,

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"Loan growth doesn't seem to be driven by the underpinning of an economic recovery in terms of new warehouses and [capital expenditure]," said one senior corporate banking executive at a large US bank. "You don't see the foundation, the real strong demand."

Bankers Warn over U.S. business lending – Financial Times

I continue to believe that agriculture, and by extension water treatment and irrigation equipment, will be among the most dependable and profitable investment themes in the next decade.

Reuters supports this notion in a recent story warning of water shortages in China's northern agricultural regions,

"Industrial and water imbalances are worsening China's environmental problems. Northern China is already subjected to dust storms and far worse pollution than the south. Now the region is suffering from increasing water stress."

At some point, systems to more efficiently manage water usage will be required for China to support the people's higher-protein food demands. Companies like General Electric (through the GE Water subsidiary) will likely benefit.

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China's arid north feeds water-rich south – Reuters

See also: Not-Stupid Investing, Step One: Look for secular growth trends – Inside the Market

Tweet of the Day is from @londonartist77 "A glitch in the matrix on London Underground"

Diversion: 15 astonishing facts about Brazil's humiliating 7-1 World Cup defeat to Germany – Ampp3d

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About the Author
Market Strategist

Scott Barlow is The Globe's in-house market strategist. He is a 20-year veteran of Canadian investment banks, including Merrill Lynch Canada, CIBC Wood Gundy and Macquarie Private Wealth (MPW). He was a highly ranked mutual fund analyst for 10 years and then, most recently, the head of a financial adviser support team at MPW. More


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