INO.com

2022 was a very tough year for investors, both big and small. All three of the major indexes ended the year down substantially. The Dow Jones Industrial Average fell the least, just 8.8%. The S&P 500 dropped 19.4%, while the technology-heavy NASDAQ sank 33.1%.
2022 was the first year in four that the major industries ended the year lower. Inflation and aggressive interest rate hikes by the Federal Reserve to combat persistent inflation weighed on the market as a whole but had a more damaging effect on technology stocks.
Out of the top-performing Exchange Traded Funds in 2022, two of the top five were ETFs that are short technology stocks, while two others were short Treasury Bonds.
It’s not very often that the best performing Exchange Traded Funds are ones that had bet against an asset class or specific industries, but that was the type of year we had in 2022.

Let’s look at the top five performing ETFs of the year and see what they had in common and if there is anything we can learn that will make us better investors in 2023 and beyond.
As mentioned, two of the top five best-performing ETFs were short, US Treasury bonds.
The best-performing ETF of 2022 was ProShares UltraPro Short 20+ Year Treasury (TTT) which rose 150.17%.
The third best-performing ETF was the ProShares UltraShort 20+ Year Treasury ETF (TBT), which increased by 93.29%.
Both funds were “short” or betting that they would decline in value, Treasury bonds that have 20 or more years until maturity.
The TTT was leveraged three times short Treasury bills. That means if a Treasury bill fell $1 and the TTT triple short leveraged fund had bet against it, TTT would be up $3. So for every $1 move lower Treasury bonds went, TTT was moving $3 higher.
The TBT fund was also short-leveraged, but it was only short two times. So if it were short a bond that fell $1, it would go higher by $2, not $3 like TTT. This also means that TBT carried lower risk than TTT, and still performed well in 2022.
The second-best-performing ETF of 2022 was the ProShares Ultra Oil & Gas ETF (DIG).
DIG invests in large-cap US-based oil & gas companies, and it is another leveraged fund. However, DIG is positively leveraged twice instead of inverse or short, like TTT and TBT. That means if the oil & gas companies’ DIG tracks move higher by $1, DIG goes ups $2.
Oil & Gas companies had a solid 2022 as oil demand which had fallen off during the early days of the pandemic, continued to rebound, and the conflict between Russia and Ukraine has strained the oil & gas industry.
The fourth and fifth best-performing ETFs of 2022 were both short technology.
The ProShares UltraPro Short QQQ ETF (SQQQ) and the ProShares UltraShort QQQ (QID) ended 2022 up 82.36% and 66.29%, respectively.
Like TTT and TBT, SQQQ is a three-times leveraged short ETF, and QID is a two-times leveraged short ETF. SQQQ tracks, well, shorts the popular QQQ ETF.
The QQQ ETF is the Invesco QQQ Trust (QQQ) which tracks a modified cap-weighted index of the top 100 NASDAQ listed stocks. Most investors use the QQQ ETF to get a good picture of the technology industry in addition to the NASDAQ index itself.
Technology stocks, especially the market leaders, obviously did not have a good 2022. And therefore, two ETFs that short just the top 100 technology stocks reaped the benefits.
It is easy to see how a leveraged ETF can easily beat a standard, non-leveraged ETF regarding total returns.
However, investors need to remember a few things. Leveraged means more risk. Things are great when three times, short-leveraged ETF goes in the direction you want.
But, if it reverses on you, that leveraged acts against you three times as strong. While leverage can help you make money two or three times as fast, it can take it away twice as quickly.
Leverage also means contango. If you don’t know what contango is, know that any leveraged fund must spend money daily to gain its leverage. That daily cost will eat away at profits or compound loss if the fund has already gone against you.

This is why all leveraged funds come with a disclaimer that they will provide two or three times leveraged daily. Any holding period of more than one day will be subject to contango.
I believe there is an argument to be made that the technology stocks and the Treasury bond ETFs could continue to fall in 2023, making TTT, TBT, SQQQ, and QID again winners this year.
But I am not sure the oil & gas companies can or will continue to rally, just because the price of oil & gas running higher in 2022 was a big driver in that sector performing well. I don’t see other catalysts that will push oil prices above $5 a gallon in 2023, but I could be wrong.
2022 was a challenging year in general, but remember, even when the markets are red, there is always a bull market somewhere.
Matt ThalmanINO.com ContributorFollow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

2022 was a year to forget for most sectors and certainly the major market averages, with the S&P 500 (SPY) declining 19% for the year and the Nasdaq Composite suffering an even more disappointing 33% loss.
While most investors certainly didn’t have the Gold Miners Index (GDX) in their cards to be an outperformer in 2022 after it found itself down 30% for the year in October with one quarter to go, the sector managed to recover and has started off the new year strong as well.
The strength in GDX can be attributed to the rally in gold prices ($1,650/oz → $1,850/oz) but also sentiment being the worst in years as of Q3, with many names trading at their cheapest valuations since 2015.
This gave the sector the fuel to significantly outperform gold if we saw any positive change in sentiment, and this is exactly what we’ve seen with the gold price back above key support at $1,800/oz.

While this rebound in the GDX is certainly positive from a momentum standpoint, it has made things a little more difficult from a stock-picking standpoint.
This is because many miners have already made 40-50% moves off their lows, and it can be dangerous to chase the lower-quality miners or sector laggards with them hovering well above key support levels.
In this update, we’ll look at two of the better buy-the-dip candidates sector-wide and highlight why these two names have the potential to outperform in 2023, making them attractive names to keep near the top of one’s watchlist if we see further weakness.
I-80 Gold (IAUX)
I-80 Gold (IAUX) is a $730MM company in the gold sector with multiple projects in the state of Nevada, including its Ruby Hill, Granite Creek, and McCoy-Cove projects. The company also has a processing facility with over $1.0BB in sunk costs in northern Nevada.
The company plans to employ a Hub & Spoke model and feed material from its three mines to its central “hub” or processing facility at Lone Tree.
Assuming i-80 Gold is successful, the company would enjoy an industry-leading production growth rate, with it aiming to increase gold production from 20,000 ounces in FY2022 to 250,000+ ounces by 2026.
Based on this current model alone, i-80 Gold can easily justify a $1.0BB market cap [US$3.65 per share], given that producers in Tier-1 jurisdictions typically command a premium, as do producers with industry-leading margins (50% or higher) and organic growth.
However, we saw multiple developments last year that changed the i-80 Gold story for the better, and they are as follows:

The company has delineated a new zone at its Granite Creek Project that it’s calling South Pacific. This zone dwarfs its current Granite Creek Underground deposit in size and could triple the resource base on the property with a new resource estimate due by Q2 2023 (~600,000 ounces to 1.6+ million ounces).
The company’s drilling at its Ruby Hill Project has continued to intersect much higher grades than those in its historical resource base, suggesting that the company could see a significant increase in resources and grades at this project (8.5 grams per tonne gold grades vs. 6.0 grams per tonne gold grades), leading to higher margins.

Notably, both of these discoveries are sitting right next to existing infrastructure, allowing for easy access to these high-grade ounces, a similar setup to Kirkland Lake Gold in 2017 at its Swan Zone, which allowed the stock to return over 1000% over the next five years.
However, the game-changer for i-80 Gold was the discovery of the Upper Hilltop Zone, a polymetallic discovery (zinc, lead, silver, gold) that lies just south of its previously mined-out open-pit deposit on its Ruby Hill Project. This zone appears to have gold-equivalent grades above 16 grams per tonne of gold.
The discovery is a game-changer because the company could build a processing facility at its Ruby Hill site for relatively modest capex (~$200MM) and process this high-grade material which could support a production profile north of 240,000 gold-equivalent ounces per annum.
This would double the company’s future production profile to ~500,000 ounces per annum, and a company with that production profile in Nevada could easily command a market cap of $2.5BB [$9.10 per share].
In addition, the company believes it may have a porphyry beneath its mined-out open pit, which could, in a best-case scenario, end up being similar to Bingham Canyon or Robertson.
These two mines have been producing for decades in Nevada and Utah and have been company-makers for their operators.
So, with multiple discoveries made in 2022, the potential for a new discovery at depth, and the ability to fast-track this polymetallic opportunity, I believe that i-80 Gold is significantly undervalued and isn’t getting anywhere near the respect it deserves.
Assuming the company delineates 12MM tons of material at Upper Hilltop, Lower Hilltop, and Blackjack (its polymetallic deposits), which I see as quite achievable, this project alone could support a US$4.50 share price with investors getting the Hub & Spoke gold production model for free.
To summarize, I continue to see IAUX as a top-3 producer sector-wide, and I would view any weakness in the stock as a buying opportunity.
For now, and assuming no major new polymetallic discoveries in its untested corridor, my 12-month price target is US$5.10.
Victoria Gold (VITFF)
The second name worth keeping an eye on is Victoria Gold (VITFF), a junior gold producer based out of the Yukon Territories in Canada with a market cap of $400MM.
Unlike i-80 Gold, Victoria did not have a great year, and this was the second year in a row that management disappointed the market by missing guidance.
In fact, Victoria looks like it will produce just ~150,000 ounces of gold in FY2022 at $1,450/oz+ costs, a massive miss vs. expectations of 180,000+ ounces at ~$1,200/oz costs.
That said, 2023 is shaping up to be a much better year. This is because the company is lapping very easy comps, which is a recipe for a strong recovery in the share price after a more than 70% decline from its highs at $17.00 per share.
For starters, Victoria had a very unfortunate conveyor belt failure last year that impacted its production.
Plus, its operating costs were much higher due to increased sustaining capital (truck shop construction, water treatment facility construction, mobile fleet rebuilds) plus a lower denominator due to fewer ounces sold.
The company’s costs were also impacted by much higher diesel prices which affected Victoria more than peers, given that it’s a low-grade and high-volume heap-leach operation that moves millions of tons of rock annually.
The result is that costs were much higher than expected this year and looked much worse than they should have, coming in well above the industry average.
However, 2023 has some benefits:
For starters, Victoria should have much lower sustaining capital in 2023 with lots spent on site in 2022, and it should have a much higher denominator as the company works on stacking more ounces in what’s typically a downtime period due to frigid weather in Q1.
Secondly, oil prices have pulled back considerably, which should positively impact its cost profile, and we’ve also seen some moderation in inflationary pressures, which could help its reagent costs.
Finally, Victoria should enjoy a higher price if gold stays above $1,825/oz.
The result is that we should see a strong recovery in margins and free cash flow generation, and I would expect this to improve sentiment for the stock and place it back in favor after two rough years.

To summarize, while Victoria is certainly not the best company in the sector and management has not met expectations, the 2023 expectations are so low after two disappointing years that I expect any positive news to allow for a strong rebound in the stock.
Based on what I believe to be a fair value of US$10.85, I see more than 80% upside from current levels, and I see Victoria Gold as a Speculative Buy below US$5.90 per share.
The kicker to the story is that this is an asset capable of producing 250,000+ ounces per annum at sub $1,000/oz costs once optimized.
For this reason, Victoria could be a takeover target if it stays at depressed levels. Hence, I see two paths to an upside re-rating.
The Gold Miners Index has had a solid run off its lows, but I don’t think this rally is over, and this suggests that any sharp pullbacks should provide buying opportunities.
That said, I see the most value in names like i-80 Gold and Victoria Gold if we do see a pullback, and I would view any pullbacks below US$2.81 on i-80 Gold and US$5.90 on Victoria Gold as buying opportunities.
Disclosure: I am long IAUX, VITFF
Taylor DartINO.com Contributor
Disclaimer: This article is the opinion of the contributor themselves. Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information in this writing. Given the volatility in the precious metals sector, position sizing is critical, so when buying small-cap precious metals stocks, position sizes should be limited to 5% or less of one’s portfolio.

It is time for my traditional yearly post to find out which fiat could beat the conventional store of value this year.
Let us see below how you predicted the future back at the end of December 2021.

The U.S. dollar was again the favorite bet for many of you. The next choice was the British pound, likely because it finished second in 2021. Among the top three bets, the Canadian dollar was an interesting choice that could be justified by the previous top ranking.

This time I changed the list of currencies to include only the top 5 currencies based on real foreign exchange turnover according to the Bank for International Settlements as per the table below.
Source: Bank for International Settlements
The following top 5 fiat currencies are listed in the table above: U.S. dollar (USD), euro (EUR), Japanese yen (JPY), British pound (GBP) and Chinese yuan (CNY).
It is worth noting some changes that I spotted in the table above. The most visible one is the tremendous gain in the share of Chinese yuan (orange highlight) from only 0.9% in 2010 up to 7% in 2022. This high velocity could help CNY take the #4 spot next decade.
Which one will give up? British pound’s share has been amazingly stable over the last decade, around 13% at #4. From 19% to 16.7%, the Japanese yen’s share is slowly declining. These two could be replaced in the rankings.
The euro is losing share even more sharply (blue highlight) than the yen, and a large part of that 8.5% loss could have contributed to the yuan’s gains. The U.S. dollar (red highlight) is still the “king currency” dominating the chart with 88.5%, and this figure is rising.   

 Loading …
Let us check the diagram below with Year 2022 results for these top 5 currencies.
Diagram by Aibek Burabayev; Source: IDC
The full ranking for Y2022 looks as follows:

US dollar is unchanged
Euro -6%
Chinese yuan -8%
British pound -10%
Japanese yen -12%

The aggressively hawkish Fed focused on raging inflation spurred strong demand for the U.S. dollar in 2022. The king currency has been moving the opposite way from gold – the dollar has been rising while gold is sinking.
In the last two months, the tables have turned, and we are seeing gold rising and the dollar weakening.
As a result, the net change for the whole year 2022 is zero and it takes the top place in the rating. It means that keeping either the U.S. dollar or gold was the right idea in terms of storing value.
Other currencies lost a lot to gold in 2022. Compared to other top countries, the main factor was the rapid tightening in the United States.

Among the specific factors for each currency are the energy crisis in Europe, the COVID-19 situation, chronic stress in the real estate sector in China, the death of Queen Elizabeth and a political crisis in the U.K., and negative interest rates in Japan.       Euro ranked #2 losing 6%, Chinese yuan has dropped 8% at #3 spot, British pound has weakened by 10% at #4 and the Japanese yen is the ultimate outsider with a huge loss of 12%.

 Loading …
I really appreciate your strong support and all your valuable thoughts shared last year.
I wish you good luck in the New Year 2023!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

Take a moment to reflect on how much you accomplished in 2022. There’s no limit to what you can do in 2023!
Here’s to wishing you and your family a wonderful year ahead.

Every Success in 2023,The INO.com Team

While the S&P-500 (SPY) and Nasdaq Composite (COMP) are on track for a significant losses this year, the Restaurant Sector has put together a solid performance, on track for just a 9% loss or an 1100 basis point outperformance vs. SPY.
This is despite starting off the year with a much worse performance, with the index briefly down 25% as of May, despite it trailing the S&P-500 and Nasdaq at the time.
The strong recovery in the sector can be attributed to the fact that inflation looks to have peaked, which is a huge benefit to restaurant margins.
Plus, valuations were already at their most attractive levels since March 2020 as of early 2022, with the index starting its bear market six months before the S&P 500 in July 2021.
Finally, while not all restaurant names are considered defensive, quite a few are lower-beta, pay attractive yields, and some benefit from a recessionary environment as they become trade-down beneficiaries.

In this update, we’ll look at two of the largest names in the sector and which looks like the better buy after this violent market-wide correction.
McDonald’s (MCD) and Burger King (QSR) have gone head to head for years from a competition standpoint regarding burger wars.
While McDonald’s has more than twice the number of restaurants globally and started out a decade earlier with Burger King being the copycat, there’s no clear consensus on the better restaurant operator among the two.
From strictly a same-store sales or wallet share standpoint in the United States, McDonald’s has been the undisputed leader, and Burger King has lagged over the past couple of years.
However, with similar prices, similar menus, and Burger King’s appearing to have more iconic fries while McDonald’s wins on burgers, it’s difficult to crown a leader.
That said, there are significant differences when it comes to investing in the brands, especially given that Burger King is just one piece of Restaurant Brands International’s portfolio, which also consists of Popeyes’s Louisiana Chicken, Tim Hortons, and the newly added Firehouse Subs.
In this article, we won’t try to answer the near-impossible question of which is the better burger chain, but we’ll highlight which stock looks healthier for one’s portfolio.
Business Model
Outside of the obvious difference that Restaurant Brands International has four brands, and McDonald’s has just one brand, Restaurant Brands and McDonald’s have very similar business models. This is because both companies are restaurant franchisors with over 30,000 restaurants globally, and more than 90% of their restaurants are franchised.
That said, Restaurant Brands takes the edge slightly, with 99% of its restaurant base franchised vs. 95% for McDonald’s, making it slightly more inflation-resistant.
However, from a simplicity standpoint, one brand is better than four, given that excelling at one thing is always easier than excelling at four.
This is true even if Restaurant Brands has done a phenomenal with the three new additions to its portfolio: Tim Hortons (which is flourishing in China) Popeyes (which is just beginning its international expansion), and Firehouse Subs (which was ranked #1 for food quality across the sandwich QSR category in 2021, and #1 for “Food Taste & Flavor” by the Technomic Sandwich segment).
Still, McDonald’s has executed flawlessly with one brand and is a consistent marketing leader, giving it a slight edge from a simplicity standpoint.
Restaurant Brands – 1 / McDonald’s – 1
Unit Growth
Regarding unit growth, Restaurant Brands has four brands with ~30,000 restaurants globally, while McDonald’s has one with ~40,000 restaurants, making it much more saturated than its coffee, chicken, sandwich, and burger peer.
Given that Restaurant Brands has more whitespace and younger brands which are still in the earlier innings of their growth stage, the company benefits from much higher growth. In fact, it hopes to grow to 40,000+ restaurants by 2028. Besides, this was before it acquired Firehouse Subs which immediately added 1300 restaurants.
In McDonald’s case, the company will be lucky to hit 50,000 restaurants by 2028, giving it a low single-digit unit growth rate vs. Restaurant Brands with mid-single-digit growth.
So, on a like-for-like basis, Restaurant Brands wins on growth.
Some investors might argue that McDonald’s continues to gnaw away at its competitor’s same-store sales and gain market share, and when combined with same-store sales and unit growth, McDonald’s is actually higher growth than it looks on the surface.
Although a fair point, Restaurant Brands has unleashed a Reclaim The Flame Plan at Burger King, planning to invest $150MM in digital and advertising and $250MM towards restaurant tech, kitchen equipment, building enhancements, and remodels.
This could allow Burger King to claw back any market share losses that McDonald’s has gained post-pandemic. Hence, I think Restaurant Brands has the edge with higher unit growth and its lagging brand (Burger King) getting a refresh to help with a slower-than-planned turnaround.
Restaurant Brands – 2 / McDonald’s – 1
Positioning In The Current Environment
Moving to each company’s position in the current environment, Tim Hortons is a juggernaut with over 75% of the market share for coffee in Canada and while giving up burgers and fries might not be easy, giving up caffeine and sweets is even more difficult for most consumers.
So, in terms of Tim Hortons and McDonald’s alone, Tim Hortons wins.
However, Tim Hortons is just one piece of Restaurant Brands’ portfolio, and on average, McDonald’s is lower priced and more of a value than Burger King, Popeyes, and Firehouse Subs, with the latter being considered a premium option to Subway.
With consumers pulling back and looking to treat themselves at the lowest-cost possible, McDonald’s stands head and shoulders above its peers.
Not only does it have more locations (higher density and more golden arches) to lure consumers in, but it also has exceptional marketing and the best prices, hands down.
This makes dining out guilt-free with a nearly unnoticeable hit to one’s wallet.
This is a huge advantage when consumers are looking for every reason not to spend with personal savings rates at their lowest levels in nearly decades.
So, while Restaurant Brands is certainly positioned very well as a trade-down beneficiary, it doesn’t quite have McDonald’s positioning, and McDonald’s takes the edge in this category.
Restaurant Brands – 2 / McDonald’s – 2
Valuation
Finally, when it comes to valuation, there is one undisputed leader, and it isn’t even close.
In fact, MCD currently trades at ~25.7x FY2023 earnings and ~23.6 FY2024 earnings, while QSR trades at ~21.3x FY2023 earnings and ~19.2x FY2024 earnings.
This is a massive difference, with investors paying more than four turns more for McDonald’s than Restaurant Brands on FY2024 earnings and an even higher multiple in FY2025, considering that QSR will continue to lead from a growth standpoint.
While this discount might have made sense before the appointment of Patrick Doyle as Chair, it makes little sense following the appointment, with QSR now having a sector giant at its helm, a company that delivered 1000%+ returns at Dominos, making it the top performing stock from 2010-2020.

Meanwhile, from a yield standpoint, investors are picking up an extra 1.1% yield per annum with QSR, with a 3.4% dividend yield vs. 2.3% for MCD.
However, with QSR having a very low payout ratio, especially with the addition of Firehouse Subs and a higher growth rate, I would expect a further rise in QSR’s dividend next year to push this yield closer to 3.8%.
Hence, not only does QSR trade at a deeper discount to fair value (24x FY2023 EPS estimates = $73.20 fair value), but it pays investors more to wait for this turnaround.
I see QSR as the clear leader on valuation, and with better growth at a more reasonable, I see QSR as the Winner between the two stocks.
Restaurant Brands – 3 / McDonald’s – 2
Final Verdict
To summarize, for investors looking for safety, an attractive yield, and a solid growth story at a turnaround-like valuation, I see QSR as the more attractive option, and I would view any pullbacks below $60.00 as buying opportunities.
Disclosure: I am long QSR
Taylor DartINO.com Contributor
Disclaimer: This article is the opinion of the contributor themselves. Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information in this writing.

Back in March I posited the notion that the S&P 500 would need to fall to about 2,900 before all of the froth that the Federal Reserve had injected into the market through its various monetary stimulus programs dating back to the Great Recession had finally burned off.
On Christmas Eve the S&P closed at 3844, which would put it 19% below its all-time high of 4,766 on December 27, 2021, or about a year to the day.
In recent days some market prognosticators have been warning that the market is poised to fall another 20%, which would put the index at about 3,000, or slightly above my guesstimate.
So do I feel vindicated, if that is the right word? No, and I hope I’m wrong anyway.

First, my guess was not a prediction, just a quick back-of-the-envelope calculation based on my assumption that the Fed was responsible for about half of the stock market’s 600% gain between the March 2009 bottom of 683 and the time I made my comment.
So, if we cut that 600% gain in half, that would reduce the S&P’s gain to a still respectable 300%, or a little below 3,000.
Not an educated estimate, maybe, but I thought a reasonable guess—a worst case scenario, if you will.
Second, we don’t know if these bears will turn out to be right. I hope they’ll be wrong.
I now believe the Fed won’t have to drive the economy into the tank in order to get inflation down to where it wants it to be, probably in the 2.5% to 3% range.
Remember, about two years, in what was considered to be a major policy shift, the Fed said it was willing to let inflation “overshoot” its long-term target of 2% for a time, as it indeed it did.
Now it looks like inflation is dropping a lot faster than most people thought, and the Fed itself is now forecasting that inflation will fall to 3.1% next year before declining in 2024 to 2.5% and 2.1% in 2025, i.e., putting it at its long-term target.
That, to me, is a reason to be positive about the market and the economy. Inflation is, in fact, coming down, and fairly quickly.
Of course, my March “forecast” didn’t assume that the solons at the Fed would see it that way. As we know, the Fed is often wrong, by wide margins and in terms of timing. Which is one big reason why the market has shown a predilection in the past few months to not believing the Fed when it makes a statement about monetary policy and inflation.
Why should it? We’ve been told countless times to “don’t bet against the Fed” or “follow the Fed,” even when our gut tells us it’s all wet.
So my latest “prediction” is that we are a lot closer to the bottom in stocks now than another 20% drop would warrant, and that 2023 could be a good year for the market.
As I noted in my previous column, there are many reasons to be optimistic about inflation. As the Wall Street Journal reported last week, “The Covid-19 pandemic might not be gone, but the global supply-chain crisis it spawned has abated. Goods are moving around the world again and reaching companies and consumers… Gone are the weekslong backlogs of cargo ships at large ports. Ocean shipping rates have plunged below prepandemic levels.”
“Chip inventories swell as consumers buy fewer gadgets,” another Journal article proclaims. “Semiconductor companies slash production plans amid weak demand. The world is now awash in chips.”
The Fed has already raised interest rates close to what it says will be their end point. Gasoline prices have plunged despite the ongoing war in Europe. Used car prices have declined. Home sales have plummeted. Rental prices have dropped, to the point where builders are holding back on adding more supply.

The main reason why inflation held so low and for so long—technological developments that increased productivity and competition—continue to benefit us.
The only institution that has not gotten the disinflationary message is the U.S. government, which continues to spend as if we are in constant crisis mode. Witness the recent passage of the $1.65 trillion omnibus bill, which apparently few people in Congress actually read even as they passed it, and President Biden will no doubt be happy to sign.
Can we expect any fiscal restraint when the Republicans take over the House next month? Probably not, but at least gridlock may constrain reckless fiscal spending at least a little bit.
Conclusion: The Fed’s job is almost done, barring some new unforeseen crisis. That should give us some optimism for 2023.
George YacikINO.com Contributor
Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

Silver futures continue to maintain leadership not only among metals, but compared to all futures as we can see in the leaderboard below.
Chart courtesy of finviz.com
The white metal has seen gains of close to ten percent month-to-date. None of the metals come close as copper futures, formerly the number two, has lost its shine lately as I shared the reason last week. When compared to silver futures, gold futures appear pale with gains of 2.62%.   

All last week, I observed a pattern in the making, watching to see when it would trigger. As a result, exactly at the end of last week, the expected event happened. Here is a visual representation in the daily chart below.
Source: TradingView
There are two simple moving averages in the silver daily chart above. The blue line represents a 50-day moving average and the red one is a 200-day moving average. We can see that last week the short-term blue line crossed above the long-term red line. This pattern is called a “Golden Cross”. It is a bullish sign as it indicates a change in the trend to the upside.
The silver market seems to be waking up from its long hibernation within a large consolidation, which was also indicated by flat moving averages and a deep crossover to the downside during the last leg down.
Let’s get down to measurements to find out how high the silver futures could skyrocket on this bullish confirmation pattern. History could be helpful for us. The last time this crossover pattern occurred was in the summer of 2020. The following rally, both in price and in the blue moving average, took silver futures price to almost $30 for almost $13 from the crossover price of $17.
The current Golden Cross appears at the price close to $21. The target is located $13 above at $34. It is over $10 or 42% potential gain for silver investors.
There is another alert we can see on the chart. Since the beginning of the month, the RSI indicator has not followed the price because it shows lower peaks that contradict the higher highs on the price chart. Such a pattern is called a Bearish Divergence and the outcome won’t please silver bugs.

Since the market needs a break to build up energy for the expected rally, it should consolidate. The price could retest one of its moving averages before resuming bullish growth.

 Loading …
The “Golden Pattern” for gold is on hold and here is why.
Source: TradingView
The blue line of the 50-day simple moving average is approaching the red 200-day simple moving average, however, it is still far from making such a coveted crossover to the upside.
The gold futures price sits on the 200-day moving average, while silver futures are much higher. This could result in sinking down to the blue 50-day moving average around $1,737 during anticipated consolidation as the RSI shows a Bearish Divergence here as well.  

 Loading …
Intelligent trades!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

On December 20th, the Commerce Department released data showing that housing prices remain high, renter demand is still strong, and the supply and demand imbalance appears to show no relief.
These economic data points indicate that the housing crash, or pull-back many expected to see with housing prices in 2023, may not be coming.
Let’s look at the numbers and then explain why a housing crash doesn’t appear to be on the horizon in 2023.
The December housing numbers showed US single-family homebuilding dropped to a two-and-a-half-year low in November 2022. Permits also fell in November by 7.1% for single-family homes and 11.2% for overall building permits. Overall housing ‘starts’ dropped 0.5% in November, with single-family starts falling 4.1% and multi-family units up 4.8%.
So essentially, we are seeing that construction of new single-family homes is slowing when we are already in a tight supply-demand situation with those types of units. This supply shortfall comes from data showing that from June 2012 to 2021, the US had 12.3 million new households formed, but only 7 million new single-family homes were built.

The pandemic played a role in making this shortfall wider, as it is estimated that in 2019 the US was only short 3.84 million units. But, labor shortages before the pandemic started, which worsened during the pandemic, and costs of materials and land, all pushed housing prices higher.
Higher housing prices make it harder for more people to afford a home. Thus, fewer homes get built. High housing prices were likely one reason we didn’t see more homes built in 2021. In 2022, the main reason was increasing interest rates. Again, higher interest rates push the overall cost of ownership higher, resulting in fewer people building homes.
Another interesting data point from December was the Homebuilders’ confidence levels also plummeted in December for a record 12th month straight. This data point only adds to the idea that single-family homes will continue to be underbuilt in the near future.
Remember, there are two sides to the equation of new home builds. First, the consumer decides they want a new home built and hires a contractor to build the house ‘custom’. The other way is a build track style homebuilder, which builds a bunch of homes in anticipation of consumers wanting to buy a new home.
If the home builders are confident they can sell what they build, they build before they have buyers. If their confidence is low, as it is now, they wait until they have a buyer who has already put money down before they build.
This matters because if the big home builders built up inventory now, while sales were slow, we could see that 5 million home shortfall begin to shrink. But if they don’t build above the last ten-year average rate, how will we claw back some of that supply shortfall?
With all of that said, my takeaway from the December housing numbers is this; in 2023, we will not see a massive drop in housing prices. Yes, we may continue to see low demand because interest rates are high, but prices will not take an enormous hit. Low supply and high costs of materials will keep housing prices at or near current levels in most US markets.
So as an investor, here are a few Exchange Traded Funds that you can buy and hold for the next few years as we watch the housing market work through these interesting times.
The first is the Residential REIT Income ETF (HAUS). HAUS buys REITS that generate 75% of their revenue from multi-family or single-family rental housing or at least 50% from senior living housing. HAUS does have a high expense ratio of 0.60%, but considering it is an actively managed fund offering exposure to roughly 25 different REITS, that is not a terrible price.

Another ETF option similar to HAUS is the Kelly Residential & Apartment Real Estate ETF (RESI). It has an expense ratio of 0.68% and focuses on the residential and apartment real estate sector. However, unlike HAUS, which is focused on US-based companies, RESI focuses on any company operating in developed countries. RESI’s goal is to have a portfolio of roughly 60 companies. A little more than double HAUS.
Another option is something like the Hoya Capital Housing ETF (HOMZ). HOMZ tracks a tier-weighted index of the top 100 equities representing the US residential housing industry. The fund is built on four segments; 1) home ownership and rental operations, 2) home building and construction, 3) home improvement and furnishings, and 4) home financing, technology & services. HOMZ is much broader than the other two but also focuses slightly less on the residential and rental portion of the housing industry, and more on the other business’s that benefit from increased supply.
As an investor, you need to remember that predictions that the housing market will stay strong in 2023 and prices will not dip dramatically are just predictions and could be wrong. But I still believe investing some money in this sector is a wise move over the long run, even if 2023 doesn’t play out the way I think it could.
Matt ThalmanINO.com ContributorFollow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

Our office will be closed on Monday, December 26th, along with the U.S. exchanges. We’ll be back on Tuesday morning.
No matter what you celebrate (if anything at all), our entire team wishes you health and happiness. We hope you get to spend time with family and friends, truly the greatest gifts.
If you haven’t joined MarketClub during the MarketClub Holiday Deal, you still have time. This great rate (only available until December 31st) is our gift to you.
Happy holidays to you and we are excited to help you reach your financial goals in 2023.
As always, thank you and best wishes,The INO.com Team