Vince Lanci: China Buys More Gold In February Update on NVIDIA | Arcadia Economics

➡ Arcadia Economics talks about how China’s central bank has been buying gold for 16 months straight, increasing its safe assets due to geopolitical concerns and a need for reserve diversification. This trend is expected to continue throughout the year. Meanwhile, Nvidia, a tech company, has seen its stock price soar, with its market cap now larger than all other companies in the semiconductor index combined. However, there are concerns about a potential bubble, as Nvidia’s competitors are investing heavily in the same technologies, which could eventually lead to a market correction.

➡ China is regularly buying gold and letting everyone know about it, which could be a sign of their economic strategy. The Chinese government is also pushing out foreign tech, requiring state-owned companies to replace foreign software by 2027. Meanwhile, the U.S. is facing potential issues with banks and inflation, and there’s a push to remove TikTok from app stores unless its Chinese owner sells it. Lastly, President Biden is warning that Russia’s aggression may not stop at Ukraine.

China buys more gold in February. China’s central bank added gold to its reserves for 16th straight month in February as reserve diversification and geopolitical concerns push central banks to increase their allocation towards safe assets. We believe this is ing talking. We believe this is likely to continue this year. Welcome to the morning markets and metals with Vince Lancey where each morning Vince brings you the financial and precious metals news to get you ready for your day.

And now, here is Vince. Good morning everyone. I’m Vince Lancey and in today’s market rundown we’re going to talk about China’s gold mine and the Nvidia bubble, what to make of it. We will also look at market driving news, which I think are significant, especially after the state of the union. But first, let’s run through the markets. The dollar is down one at 1278. Bond yields are four six nine stable.

The S and P 500 is 51 47 down five. The VIX is 1451. Gold is up 670 at 21 66. Silver is 24 47. Bitcoin is up 700 and change at 67 spot 678. Ethereum is almost 4000 up 2%. Alt season continues WTI down over a dollar at 78 46. Nat gas is 175 down a penny. And grains are mixed with wheat being positive. Corn and wheat, a violent spread there for them.

Okay. Yesterday, macro funds are back. Miners are on deck. I think people appreciated that the bitcoin, a serious optimistic assessment of the situation. There’s some interest in that and it’s not just because of bitcoin. But let’s get to what we have to talk about today. China keeps buying gold and Nvidia is insane. Let’s start with Nvidia and then we’ll go to China because just something to be careful of.

We also have some of that in the premium. Us equities yesterday rallied ahead of the jobs report on Friday. You’re probably going to be seeing this at between nine and 930. Some of you. NFP is out today. Non farm payrolls are out today. So a strong employment number would be traditionally bearish for stocks, bearish for gold, bearish for anything that benefits from the Fed. Easing interest rates. A weak report would be bullish.

I’m not so sure the market cares right now. So you could see this market have a strong non farm payrolls number. Unemployment come in very low, stocks dip a little bit and then rally afterwards. I don’t have a strong feeling for it. But speaking of stocks, let’s go to Nvidia. Nvidia isn’t saying. Why do I say that? Nvidia closed Wednesday 42% above its 50 day moving average. It’s the highest close above its 50 day moving average since 2003.

Back then, 2003, when Nvidia closed that high, relative to its moving average, it was a $2 stock. Nvidia is now a $2. 3 trillion market cap. Apple’s market cap is about 2. 6. So we’re a couple of big days away from Nvidia being worth more than Apple. Think of that, right? I mean, whether you think it’s right or not, it’s kind of impressive. How big is Nvidia’s market cap now? Well, it’s bigger than the other 30 names in the semiconductor index combined, right? So AMD, avgo, QCom, Intel, TSM, et cetera.

That’s how big Nvidia is now. By the way, those insights are from Goldman Sachs’s institutional trading desk. So thank you for that. We’re going to put this in perspective for you. Let’s look at the chart first. Right? There’s the chart. There’s your 50 day moving average. There’s what the market is, basically. If you believe that all things every so often regress to the mean, well, this one is really getting away from the mean.

Make of it what you will here. We’re going to put this in perspective for you, but not necessarily tell you what you should be doing with your portfolio. Chips, which I have been a big proponent of, and I started pushing those. Pushing is not the right word, but I started alerting readers to those last year, a year and a half ago. They are a commodity. And what I mean by that, they’re money, they’re a commodity.

I’ll put this word out here for you. Nvidia’s competitors are rapidly expanding investment in the same technologies. Companies like Kuwait, I’m not sure how to say their name, are quietly investing tens of billions of dollars into chip manufacturers that over time will revert semiconductors back to their qualities of the previous cycle. A commodity. But we’re in a hardware innovations phase, and vidy is the only thing out there that has it.

So people are pauling into it. So on a relative value basis, if you had deep pockets and you had a lot of patience and you had some good analytical skills, you’d be saying, I would want to short Nvidia and buy these other companies. The reason you would not do that unless you were completely in control of everything in your life is because if Nvidia drops, when Nvidia drops, I should say it’s going to take everything else with it.

And you don’t really know how much everything else is going to go down. So this might be a five year trade, not a five month trade. You could blow out in five minutes. Anyway, that’s the status of our bubble. That’s the state of the equity bubble right now. Nvidia is where it’s at. Partnet will probably have something to say about that as well. All right, China. China buys more gold in February China’s central bank added gold to its reserves for 16th straight month in February as reserve diversification and geopolitical concerns pushed central banks to increase their allocation towards safe assets.

We believe this is ing talking. We believe this is likely to continue this year. Now, I have some more data on that. I’m going to read this to you, right, so you have it on the transcript and then I want to go through the chart of them acquiring gold because I don’t think you’re going to hear what I’m about to tell you anywhere else. And I’m pretty sure it’s right.

So anyway, last month, China’s central bank added gold to its reserves for a 16th straight month. The People’s bank of China now owns 72. 58 million troy ounces, equivalent to 2257 metric tons. After adding about 390,000 troy ounces last month. The commodities fee, China buys more gold in February. We have that attached continuing. Central banks bought 1037 tons of gold last year, just shy of the all time high of 2022 as shown by data from the World Gold Council as reserve diversification and geopolitical concerns push central banks to increase their allocation towards safe assets.

All right, that continues in the report. You’re not going to hear what I’m going to tell you in any report anywhere. Maybe it doesn’t make sense, but it does to me. I’ve had conversations with Bai Zhaojun over the last year and we’ve talked about China’s politics and China’s desire to play nice in the sandbox when the other players play nice back. Well, I want to take a look at this chart in context of that comment.

You’ll take a look and you see for. Oh, I don’t have the dates on there. Here. I’ll have to make it a little bit smaller. Okay. So between the 1970s and 2000, China was not interested in buying gold. Between 2000 and 2005, they bought a little bit, announcing it occasionally. Between 2010 and 2015, they bought a significant amount of it. That was announced all at once. It wasn’t announced on a monthly basis.

Between 2015 and 2020, it was mostly bought all at once with some announcements between 2022 thousand and say 22, there was no buying. Right. That’s this area up here. And now every month they’re announcing it for 16 months. So what’s the first thing that you see from this chart? You see them buying a lot of gold and you see them continually buying. Now, what’s different now compared to back then in the past? China culturally does not like to rock boats.

They play well in the sandbox. Doesn’t mean they’re to be pushed around. They’re very strategic in their thinking and they’re not interested in pissing someone off just to get the upper hand in the press. That’s the Russia America dynamic. China is violently neutral but self interested. So during the era before 2022 onward, China would buy gold quietly. They would buy gold and announce it on the back end.

Now some people would say they’re being sneaky. You know what, maybe they are a little bit. But the fact of the matter is they weren’t telegraphing to their people, they weren’t telegraphing to the world that they wanted gold, they were just buying it and then announcing it periodically. Now they’re telegraphing it every month. That’s what’s different now. And every month they telegraph buying gold. That’s a change in their style.

That’s like them saying, we want you to know we’re buying gold. Now, who are they telling that they want to buy gold? They’re telling their fellow BRICS people, they’re saying, hey, we’re doing what we said we do. We’re doing what we said we do. They’re telling the rest of the world, hey, gold is going to be important and the US, and the US is just catching on to that, I think this week, sadly and ironically.

But anyway, the point of this is the announcements of the gold being bought on a monthly basis on top of the accumulation. The change in presentation of the gold coming out is as important, if not important, as the gold being bought itself. China is coming out. China is letting you know they’re not getting in your face, but they’re saying, hey, we’re buying it on a monthly basis and we’re letting you know now.

And why would they let you know? Either they want to sell it and they’re trying to get people to pump it up. China isn’t Nvidia, China isn’t a hedge fund manager. China is letting their trade partners know that they’re making good on their promise and they’re showing slow and steady progress. We would be well advised to know that when they started announcing on a monthly basis. That’s when we should have started buying.

If we haven’t bought before, then China buying on a monthly basis is an important signpost in the bigger picture of what’s going on in gold. Okay, that full report is attached at the bottom. Moving on to a comment on the markets. Gold, steady as she goes. It’s a trend week higher. New all time highs every day. Silver, creeping acceptance. Miners are close. Oil, if gold holds, oil should rocket.

Bitcoin. Gold Jr. Is ahead of the game. Stocks? No comment. Bonds, big problems ahead. That’s another conversation that we’re going to have. The banks are pushing back against the government. The dollar is mixed. Here’s the market news. The market news is basically about mercantilism. Again, I’m sorry, but it is all right. So mostly China. For american tech companies in China, the writing is on the wall. It’s also on paper.

In document 79, the 2022 chinese government directive expands a drive that is muscling us technology out of the country, an effort some refer to as delete. A for delete America, document 79 was so sensitive that high ranking officials and executives were only shown the order and weren’t allowed to make copies. It requires stateowned companies in finance, energy and other sectors to replace foreign software in their it systems by 2027.

Biden, in a State of the Union address, seeks to make healthcare tax credit permanent. That’s inflationary. Federal Reserve chairman Jerome Powell on Thursday indicated that interest rate cuts may not be too far off if inflation signals cooperate. That means he’s more interested in PCE and CPI than he is in GDP. The number of problem banks in the US has jumped by 18%, regulators warned, as New York Commodity bank was stabilized by a $1 billion capital raise led by former us treasury secretary Stephen Minuchin.

Temo Timo, I’m not sure how to say the international arm of the chinese ecommerce giant. I’m not even going to try to say that is flooding Google with ads for absurdly inexpensive goods. China is a manufacturing economy, and like the Japanese in the 80s, dumping chips on us to get market share, temo is dumping cheap goods on us. I see the ads everywhere now. In order to get us to buy from them, to establish the relationship, to open an account, it’s the free razor.

You have to buy the blades, right? And then down the road you’re going to buy more upscale stuff. They’re fostering a business relationship at the consumerist level, just like they fostered business relationships at the corporate level. They’re just ignoring the government. And as a counter to that, a powerful us congressional committee has passed a bill that would remove TikTok from App Stores unless its chinese owner divests the video sharing platform, brushing off a lobbying campaign that had enlisted thousands of its users.

Meanwhile, President Biden just joined TikTok and is using it to market and get votes anyway. Geopolitics, you can see that there. US President Biden announced that the US military will construct a port to get more humanitarian aid to Gaza, which is interesting considering that we were just dropping aid by parachutes. Israel’s our ally. I’m not sure how that works if you have to drop things by parachute. Biden stated during that State of Union address that they are facing an unprecedented moment and he assures that Russian President Putin will not stop at Ukraine, while he added they can stop Putin by helping Ukraine with weapons.

And his message to Putin is that they will not walk away and will not bow down. Rhetoric ramp up doesn’t mean he’s wrong. You may not like the guy, doesn’t mean he’s wrong. Do you really think Putin’s going to stop there? Take a look at the Black Sea. Look at the countries that circle it. Those countries are on his radar anyway. Data on DAC non farm payrolls today and you can see what the premium is attached.

I’m Vince. Happy Friday. It’s been a great week. Let’s see what happens after that number comes out. Thanks for watching this morning’s markets and metals update with Vince Lancey, brought to you each day by Miles Franklin precious metals where this week 1oz silver canadian maple Leafs from the Royal Canadian mint are only 339 over spot. The silver maple leafs are one of the most popular silver products and also come from one of the major sovereign mints.

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