Summer Rally Intact; A 10 Bagger in Gold

The stock market shrugged off the malaise of the early year under-performance that when stock prices fell about 7% in the January - April period. The S&P 500 Index is used in this post for the stock market comparisons.

Aside from the early April short-lived Trump tariff tantrum as some called it, the event was a non-starter for the bears, as stocks recovered quickly. April showed a mere 1% loss. Then May thru August strung together a big rally as prices rose all 4 months; a total of +16% ! The average (mean) gain for this period the past 5 years (2021-2025) was +8.9%, a full 7% lower than 2025. 

Our model portfolio that we track each month since 2018 is also 'holding its own' against the stock market. Each month it holds cash/bonds, stocks, and Gold/Silver investments in varying allocations, so it won't match the stock market normally in rising markets - but it won't fall as much in ugly bear markets. Year-to-date thru August, our model is ahead +8.5%, vs the stock market's +9.8%. 

Our September model holdings include Technology, Industrials and Communications stocks in the form of exchange-traded funds, or ETF's for short, which are baskets of stocks that hold many positions in those sectors. We also hold 15% in cash earning about 4%, and 20% in Gold/Silver. Silver and Gold were about even in July, then shot up last month +7% and +5% respectively. We like Sprott Physical Gold and Silver Trust, ticker CEF, which holds 70% in gold bullion, and 30% in silver bars. The shares trade on the New York Stock Exchange and the Toronto Canada stock exchange. You could Buy GLD and SLV as alternative separate investments if you want a pure play in Gold or Silver, respectively. With such diversification, a portfolio mix like this is suitable for most investors.

My 10 Bagger in Gold

A 10-bagger is an investment that has increased 10 times, or +900%. They are somewhat rare, and actually finding one and realizing that gain is difficult. I'll say that either you're taking tremendous risks and are very lucky, or you are a long-term investor, which reduces your chance of failure a lot. Some popular stocks that have been 10-baggers, and the time to reach that status as of today's pricing: Apple, 9 years; Tesla, 6 years, Microsoft, 10 years, Meta (Facebook); 11 years. Mutual Funds are familiar to us all as a way to diversify your risks of owning stocks. Most mutual funds buy and sell stocks, and have turnover of 40-50-60% each year. That's a difficult way to get a 10-bagger as their ownership is a short period of time in mutual funds. Individual stocks have the greatest chance of a 10-bagger; but the ride can be harrowing along the way. 

My Dad was a silver bullion dealer in the mid-1970's in addition to his money management business started in 1973. He bought a couple hundred ounces of silver bars and 1 ounce round coins for his personal stash; I have a few of them still. He gifted my children some silver bars in the 1990's after their births; about $500.00 each then. I got tired of moving the bars around and storing them in safekeeping. I decided to trade the silver bars for 3 ounces of Gold in 1997. I paid $358 an ounce for 3 'rounds' of South African 1 ounce Krugerrands. Here's two of them.

My trade worked out a bit better than holding the Silver bars - at least so far. May, 1997 through yesterday. 

GOLD  $358 to $3,640 today, up 10 times
Silver  $4.87 to $41.00 today, up 8.4 times

Since Gold and Silver pay no interest or dividends, they are at a disadvantage to owning a stock or a bond which do pay interest and dividends.

So what did stocks do over that 28+ year time-frame? They did outperform after including dividends payments added to the mix. 

 The S&P 500 Index rose 14.8 times during that time; quite a bit more as you held 100% stocks, collecting dividends along the way. That was enough for a +10% average gains per year; Gold's was +8.5% and Silver +7.8%. Important point; both stocks and Gold have experienced sizable bear (down markets); Gold prices declined in 9 of the 28 years; 1/3rd of the time, while stocks had losses in 7 years, 25% of the time.

So the lesson here after all this number crunching? Be an owner of stocks and Gold/Silver if you want to grow your estate and investments over long periods of time, and have some cash on hand if an opportunity presents itself. If the 8.5% rise in Gold continues, the next 10-bagger would occur in 28 years; year 2053 at $36,500. President Nixon took America off the Gold standard in 1971. The $35/ounce Gold to Dollar convertiblilty ended; and Gold skyrocketed. Fast forward to my 1997 Gold buy, 26 years later at $358, and that's a 10-bagger. I think I see a pattern here.  

Hopefully some of you reading this can then share my story, and yours with your children and/or grand-children some day.

Thanks for reading; pass it along if you found this helpful.

~Barry  

 

 

 

 

 

 

First Half Results - Handicapping Rest of Year

 

General Stock Market Commentary, 2^nd Quarter and Year-to-Date, 6/30/25

Stock prices generally fell during the 1^st quarter; between 4% for the S&P 500 and down 10% for the Nasdaq stocks. The Dow Jones lost 1%. Then the
landscape changed.

If you were out-of-touch or asleep for all of April, you would not have noticed the tumultuous month starting the 2^nd quarter as President Trump announced his initial trade tariffs on April 2^nd. The quick 12% sell-off in stock prices lasted just 5 trading days! The monster stock rally of +10% on April 9^th should show you that timing the market accurately is very difficult.

April ended about break-even for stocks (S&P 500 down 1%). The paper losses have now been erased, and stock prices had a superb May and June. With those ups and downs, stocks are ahead +6% this year through June 30^th.

Bonds likewise had a wild ride post tariff maneuvering but are essentially unchanged since year-end as of June 30^th. The 10-year Treasury yield only declined 1/3rd of 1% this year to 4.22%. The Federal Reserve is not compelled to lower interest rates, while inflation and employment numbers continue to improve. The results of the tariffs have not translated to higher inflation in the US Economy - yet. The last Fed interest rate cut was last November, and the stock market has advanced about 5% since then. I would keep cash not invested in shorter term (3-6 month) U.S. Treasury bills or money market accounts; those pay 4% to 4.3% annually, and have been steady income for all of 2025. Warren Buffet’s Bershire Hathaway company owns $328 Billion of US Treasury debt in their last reporting. Let’s follow Warren!

In the commodity area, Gold continues to add to its gains from last year. It was up $500 an ounce in the 1^st quarter, and then added $180 more in the April - June stretch. That’s $680 by my calculation, or +27% so far this year, greatly helping your portfolios. No major stock category (sector) beat Gold this year; the closest challengers were Industrial’s, +11%, Telecom, +10%, Utilities, +9%, and Financials (banks), +9%. I’ve harped on this for 10+ years now, and continue to believe a weighting in Gold, or the precious metal investments that own physical Gold, can offset risks in the stock and bond markets. Three years ago; Gold was $2,000 or so; 5-years ago, near $1,700. Gold prices ended June at $3,303 per ounce. As I pen this on 7/21; Gold's within a dollar or two from $3,400!

What’s in store here as we enter the third quarter? Earnings are in focus now. Can they deliver as expected, or beat the estimates? First quarter numbers were fabulous. Management’s commentary on the second quarter results, and for the rest of the year will no doubt impact share prices up or down.

Then there’s the Federal Reserve’s decision – on if and when to lower interest rates. Inflation has been declining steadily for 3+ years (see chart for year-over-year inflation), signaling broad labor market stability.

 

Will the recently passed "Big Beautiful Bill" and its tax policy ignite our economy and raise the tax revenue, or will the tariffs offset or mitigate those benefits? 

As I say, there’s always something to worry about with the stock market, bond market, and other investments.

Controlling my anxiety and handicapping this all are my goals; in effect, I am a financial odds-maker, to benefit my family and my clients. 

Contact me if you have questions or comments.

~Barry
(954) 560-3622.

 

 

Markets Update; Challenges for 2025; Bright Spots

A lot has occurred since my last post in mid-March. If you were asleep for all of April, you would not have noticed the tumultuous month starting the 2^nd quarter as President Trump announced the initial tariffs on April 2^nd. The quick 15% sell-off in stock prices has now been erased and stock prices have stabilized and show a small loss of 1-2% year-to-date on the S&P 500 and Dow. Stock sectors that  have bested the general market (S&P 500) this year include Utilities, Financials, Staples and Telecom. Under-performers include HealthCare, Energy, Technology and Consumer Discretionary stocks.

Bond prices likewise had a wild ride post tariff maneuvering but are essentially unchanged since year-end. Shorter maturity U.S. Government debt (Treasury Bills) pay 4.25% or so on your cash not used for other investments.

Interest rates are not falling either, which is not favorable for borrowers for cars and homes. Housing and shelter costs are still elevated at +4% over one year.

Overall inflation is coming down for many items; the latest report last week showed an annual rise at +2.3% rate. Gasoline prices fell for each of the last 3 months, and are down 12% year-over-year, and the most affordable since Memorial Day, 2020 (see table below). Medical care is +3% over the same time period. The just approved budget bill by our Congress calls for more spending and some tax cuts, so we’ll see how that affects our economy and interest rates.

The one bright spot making money this year is Gold, as it continues to add to its gains from last year. It increased $500 an ounce in the 1^st quarter, and another $230 since then as of this writing. That’s $730 by my calcs, or +27% so far this year, greatly helping your portfolio during stock and bond price stagnation.

We advocate owning some physical gold coins and some exchange traded funds you buy like stocks; GLD or SGOL that track the gold price daily. Gold trading ended today at $3,357 per shiny ounce.

  

Using a model portfolio of $100,000, if you were allocated this year at 50% stocks, 30% bonds (Treasury bills paying 4.25%), and 20% Gold-related holdings, you would be up 6% year-to-date to $106,000.  This allocation is mainly based upon my position that stocks and Gold are very unlikely to both decline together over the longer (6-12  months) time-frame, and gains in both Gold and stocks are likely if held long-term. 

I wish everyone a safe and joyous Memorial Day weekend.

~ Barry Unterbrink, C.R.P.C.

 
Memorial Day gasoline futures prices (market price, no taxes).
  2017   $1.57
  2018   $2.14
  2019   $1.80
  2020   $1.03
  2021   $2.21
  2022   $4.02
  2023   $2.43
  2024   $2.49
  2025   $2.13  close (5/23/25)