Gold Sets Best Week in 12 But Nvidia Soars as 'AI Hits Tipping Point'
Friday, 2/23/2024 16:36
The PRICE of GOLD BULLION rose Friday in London, marking its best week in 12 but lagging the fresh all-time highs in global stock markets after AI chip-maker Nvidia posted quarterly earnings even stronger than the tech-stock darling's analysts expected.
"Accelerated computing and generative AI have hit the tipping point," claimed Nvidia (Nasdaq: NVDA) founder and CEO Jensen Huang in
Thursday's press release.
"Demand [for artificial intelligence applications] is surging worldwide across companies, industries and nations."
With NVDA now trading over 236% higher from this time last year,
information technology stocks in the US-listed S&P500 index have risen by 57.0% over the past 12 months.
The rest of the index has added 17.7%.
Added together,
the 'Magnificent 7' – coined by celebrity stock picker Jim Cramer for Microsoft (Nasdaq: MSFT), Apple (Nasdaq: APPL), Nvidia (Nasdaq: NVDA), Amazon (Nasdaq: AMZN), Alphabet (Nasdaq: GOOG), Facebook (Nasdaq: META) and Tesla (Nasdaq: TSLA) – opened Friday worth almost $13.5 trillion in total.
That tops by more than $1 trillion the combined 2023 economic output of Germany, Japan and India – the world's 3rd through 5th largest GDPs – and it matches over 99% of the total value of every corporation listed on the Shanghai, Shenzhen and Hong Kong stock markets in China, the world's 2nd largest economy and No.1 export nation.
The market cap of the Magnificent 7 also comes within 3% of the spot-market value of
all the gold ever mined in history, now
estimated at a little over 212,000 tonnes.
Steel mills worldwide
turned out more than 199,000 tonnes every hour of that metal in January.
"Nvidia is the story everywhere," says strategist Nicky Shiels at Swiss precious metals refining and finance group MKS Pamp, comparing the AI chipmaker against natural resources stocks and finding that its market capitalization is now "equal to 5 Exxon Mobils (when net income of NVDA is $30bn vs XOM at $36bn), 9 BHPs and 77 Barricks!"
"[Such] super low sentiment in commodities is nothing new...with comparisons to mid-1990s, 2000-2002 and 2015-2019. [But] gold is also being wrapped up in the 'commodity-off' sentiment even though it's sitting just beneath all-time-highs [and] fundamentally, physical demand remains insatiable, steady and increasingly price insensitive."
Trading 1.5% higher from last Friday's closing price in London, gold bullion rose into today's afternoon benchmarking process, suggesting strong demand over supply in the first round of the auction and fixing above $2027 per Troy ounce.
Silver prices in contrast lost 1.3% over the 5 sessions to Friday's noon benchmarking in London, reversing almost all of last week's 35 cent gain to stand $1 lower per ounce across 2024 so far at $22.70.
So-called crypto currency Bitcoin meantime dropped 1.8% from last Friday
"A surge of interest in
Bitcoin exchange-traded funds is prompting some investors to swap out holdings in gold-backed ETFs,"
claims an article at Reuters.
Giant
gold-backed ETF the SPDR Gold Trust (NYSEArca: GLD) yesterday shrank in size for the 9th session in 15 so far in February, reaching a new 4.5-year low needing less than 828 tonnes of bullion backing.
The
UK gold price in Pounds per ounce today rose back above £1600 while the
Japanese Yen price of gold set yet another new high and the Euro price of bullion edged close to 2-week highs at €1879.
Pushing back against "big tech" with its
new Digital Markets Act (DMA) competition laws from 7 March, the European Union – now targeting US tech giants Google, Amazon, Meta and Microsoft, together with Chinese-owned TikTok parent ByteDance – is
expected to fine Apple €500 million for highlighting its own streaming music service over Swedish competitor Spotify on its mobile-phone apps store.
Watch or listen to our Gold Market Reports on YouTube.
Alongside Nvidia's earnings results this week, UK-listed commercial bank (and London bullion market maker) Standard Chartered (LON: STAN) beat forecasts with an 18% rise in annual profits. But shares in HSBC (LON: HSBA) fell hard after it reported a heavy write-down on its investment in a Chinese bank.
Germany's Pfandbrief bank is meantime seeing
"serious credit stress" with its Tier 1 bonds trading at just 20 cents on the dollar amid
a 62% stock crash driven by its exposure to US commercial real estate.
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