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August Theme Update: Real Gold Beats Digital Gold (Crypto)
Note: This is marketing material. This article is not investment advice, capital is at risk.
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Zeitgeist: Real gold > digital gold
With August almost done, our Precious Metals theme (+14%) has had the best of the month, while the Crypto & Blockchain theme was beaten only by Cyber Security as the weakest performers, both falling over 8%.
Top Themes
Precious Metals – standout performances from some of the hottest names of the year with Fresnillo up 24% and Barrick Mining Corp rising 22%. Strong support came from 10% gains for Newmont, Anglogold Ashanti and Agnico Eagle Mines. Franco-Nevada rose over 14%. Gold and silver have had a good year – concerns about Fed independence could mean further gains, as my colleague Ole Hansen wrote about here.
Emerging Markets Growth – Sea Ltd and Nu Holdings both rallied 15% to drive a roughly 6% increase in the theme. Emerging markets have been gaining a lot of attention among investors lately – I wrote about this here.
Energy Transition Metals – this was all about rare earth metals as Australia’s Lynas Corp rallied 36%, while silver miner Hecla Mining rose 30%. MP Materials is another (not included in the theme) to look at.
Bottom Themes
Crypto & Blockchain – Bitcoin has not had a terrible month, but investors are showing a bit of concern about the stocks that are leveraged plays on the underlying assets. (Micro)Strategy has somewhat unnerved investors by changing its mind on raising fresh capital. In July MSTR said it would not sell new stock if its market value fell below 2.5x its Bitcoin holdings (mNAV), but two weeks later changed its mind and said it would issue stock at much lower levels. We’ve also seen a fair bit of the air come out of the Circle Internet bubble following its IPO earlier this year.
Cybersecurity – long-term growth potential but well bid up already and high expectations for several of these names has left them down for August by more than 8%. Fortinet was the main culprit, declining 25% after concerns about its guidance on firewall upgrades worried investors despite a solid Q2 earnings update. Check Point Software (-14%) and SentinelOne (-12%) were along dragging the sector lower. CrowdStrike fell yesterday after earnings as margins compressed. This is a hugely competitive space and companies leading one day could be laggards the next.
Honourable mentions
AI – a monster week for AI stocks after Nvidia reported earnings that beat expectations but were still not enough to satisfy investors with the stock having had a big run up. The AI theme is up 1% this month. Salesforce has been the big drag as Wall St seems to be throwing in the towel on this stock. That “AI is eating software” thesis put forth by Melius Reseach continues to weigh – is it time to replace CRM with CoreWeave in the basket? In many ways the lack of performance in the AI basket reflects the very dynamism of the sector – MongoDB had a great set of results. Alibaba reports at the end of the week.
Defence – two things to consider here. First, the White House has talked about investing in defence stocks like it did with Intel. That is a potential tailwind. In Europe, the French budget impasse could lead to the fall of the government and fresh elections. It could also delay or even scupper some defence spending pledges, which would be a big headache for the likes of Thales and Safran, and possible the whole “long European defence” trade. Rheinmetall, the main poster child of this trade, is more dependent on German fiscal expansion, however.
Luxury – still having a torrid time on the face of things but this is down to a 10% fall in heavyweight Hermes. Some of the other names in the theme are picking up a head of steam.
Find out more about Saxo Themes under the Research tab.