Cannabis Weak as Gold Achieves Another High
If we are all unanimous on the desire to achieve a sustained gold price to spark a rally in Canadian resource stocks, we need only hope that the US’ aggressive and bi-polar approach to global economics continues unabated. With infantile statecraft that is the fuel for smirks and jokes among the erstwhile allies of the United States, America’s glaring bipolar reversals of sentiment toward China – is nonetheless becoming a bankable trade in markets.
Too bad for the cannabis industry that it depends on a positive broad market environment for its own issuers’ health. Since that would appear to be off the table for the time being, cannabis stocks appear poised to head lower in this final week of August.
Not that shrewd investors won’t thank the market gods for such a wonderful opportunity to pick up well performing stocks at increasingly attractive prices. But in some cases, the plummeting share prices present an existential question.
While CannTrust Holdings remains the poster child for how not to become a billion dollar cannabis company, others – like James E. Wagner Cultivation and Organigram Holdings – are building solid businesses with real revenue and – get this – EBITDA and profit! I know…amazing.
Gold, on the other hand – the immediate and direct beneficiary of Trump’s own brand of Doublespeak – hit yet another 7 year high overnight in Asian markets, touching a high of US$1,554 before dropping back to $1,530.
Why should you care if you’re a cannabis investor who has no interest in gold? As stated above, the cannabis stocks need a background of broad market stability to rise against, and gold’s increasingly muscular moves to the upside (higher highs and higher lows – technically a textbook case for further upside) portends more broad market weakness. Meaning, stocks ain’t gonna catch a bit til gold retreats.