PDSNET Market Snapshot

The gold price has been in a persistent correction since its record high on 28th January 2026. It has been in what technical analysts call a descending flag formation which we have drawn you attention to on several occasions. As with any formation we are looking for the direction of the breakout from that formation to give a clear idea of the future trend. In the case of gold, we have always been confident that it would break to the upside – and that is what it did last week on 19th August 2026. Consider the chart:

The chart shows the US dollar price of gold since August 2022. It broke up out of a long-term sideways pattern in March 2024, and we drew your attention to that in the Confidential Report at the time. The chart shows how the upward trend was paused in 2025 until the precious metal broke above resistance at $3424 and it shows the all-time record high of $5305 on 28th January 2026.

The flag formation has taken place between two parallel downward sloping trendlines, showing how gold lost about $1000 over 5 months then found support before breaking to the upside.

As a private investor you should be thinking about which shares would have enabled you to capitalise on gold’s amazing run – and one of the best was Harmony. Of course, gold shares are always going to be speculative and risky, but under the right circumstances they can provide an excellent long-term investment.

In the case of Harmony, the key, for us, was its purchase of the Mponeng gold mine for $200m in September 2020. This was a very brave, potentially dangerous acquisition and we waited for some time before recognising that they were making a success of it. Mponeng is the deepest mine in the world. It is currently mining at depths of around 3800 meters with plans to go deeper to 4200 meters. This means that it is operating 2 kilometres below sea level from the Highveld near Carletonville. At those depths the grade is excellent - around 11,27 grams per ton – more than double the average grade for South African gold mines. The problem is that mining at those extreme depths is expensive and potentially very dangerous. It is the very definition of a high-risk, high-return investment.

We added Harmony to the Winning Shares List (WSL) on 16th November 2023 at a price of 9920c per share. It reached an all-time high of 40841c on 28th January this year before falling back as gold corrected. Since 3rd August 2026 it has been moving up strongly again as gold recovered. Consider the chart:

Harmony published an excellent trading statement on Friday last week, predicting that its headline earnings per share (HEPS) would increase by between 90% and 105% in US dollars. 

Altogether, Harmony has risen by more than 250% since we added it to the WSL nearly 3 years ago and we believe it will continue to perform well – but it remains a commodity share and hence both volatile and risky.

A couple of weeks ago we wrote an article about the sideways market that the S&P500 was in at the time. In that article we pointed out that while the market had been moving sideways for three months, the actual companies which the market represented had been continuing to grow and develop. We anticipated that the market would break to the upside out of that flag formation and that when it did it would have to catch up the growth of the previous three months. Consider the chart:

The chart shows how the S&P was moving sideways between the previous record high of 7609 made on the 6th of June 2026 and the low of 7267 made on the 10th of June 2026. Then on the 4th of August 2026 the S&P broke strongly to the upside and made a series of new record highs – just as we expected.

From a fundamental perspective, lower-than-expected inflation and a slower level of job creation gave the market hope that the Federal Reserve Bank would not raise interest rates again at the next meeting of the monetary policy committee (MPC) on the 15th and the 16th September 2026. The consumer price index (CPI) fell to 3,4% in July 2026 from June’s figure of 3,5%. The drop gave investors hope that the worst of the effects of the Iran fuel price hike were behind and that inflation was again moving down.

The producer price inflation figure for the year to the 31st of July 2026 was also encouraging at 4,7% - significantly lower than June’s figure of 5,5% and reflecting the drop-off in the oil price. We believe that interest rates in America will probably remain unchanged until the end of this year.

The stalemate in Trump’s war and its impact on world oil prices appears to have stabilized with North Sea Brent Oil hovering roughly $15 per barrel above where it was before the war began. While developments in the war are still a factor, investors’ attention is back to focusing on the figures coming out of the companies which make up the S&P, especially the so-called Magnificent Seven.

In Q2 2026, Apple was the hero with earnings per share (EPS) up an impressive 29% year-on-year, followed by Microsoft’s 32% gain. Alphabet, Amazon, Meta, and Tesla delivered solid revenue, above forecast, but this was heavily counterbalanced by massive capital expenditure increases mainly for artificial intelligence infrastructure.

Nvidia is reporting its results for the second quarter in a few days’ time on the 26th of August 2026. Wall Street is anticipating another blowout quarter with analysts looking for exponential growth fuelled by the relentless demand for artificial intelligence infrastructure.

What is also clear to us is that Americans are expecting Trump and the Republicans to perform very badly in the coming November mid-term elections, almost certainly losing the House of Representatives and possibly even the Senate. If this happens, it will make Trump into a “lame dog” president, unable to pass any legislation against Democrat opposition. There is also now the clear possibility that he could be forced to resign as a result of increasingly poor health or because he is impeached.

Whatever happens it is clear that his influence over the stock market is declining rapidly. The market has lost interest in his interminable erratic announcements on Truth Social and is instead caught up in the excitement over the productivity benefits of new technologies.

We expect that the S&P will continue to climb to further new record highs and take all world markets up with it, including the JSE. 

Everyone in South Africa knows the Spur chain of restaurants. It has been one of the strongest South African brands for decades. Over the years Spur has branched out into a variety of other well-known brands, built its own manufacturing base to supply raw materials to its restaurant chain and expanded internationally. More recently, it has been capitalising on the move towards online ordering of food with many of its restaurants now participating in what it describes as a “virtual kitchen”.

From an investment perspective, the business has the disadvantage of having a working capital element (stock and debtors) and a large staff throughout the country. These risks are substantially mitigated by the fact that most of its restaurants are owned and run by franchisees who are required to buy all their materials from Spur. An important factor is that at 31st December 2025, Spur had over R400m in the bank and almost no appreciable debt. This means that it is well-positioned to take advantage of any opportunities, while being insulated against external shocks.

Of course, the restaurant business is dependent on consumer spending. So, the company’s 753 restaurants need to be constantly patronised by people looking to eat a meal which they have bought rather than cooked themselves. A large proportion of this is sit-down meals in restaurants, but a growing percentage is take-away food ordered online and then delivered.

The restaurant business is based on the reality that everyone has to eat every day and that a good proportion of people will choose at least several times a month to get a ready-made meal even though it is more expensive. Their ability to do this is dependent on their available discretionary cash – and that depends on such things as the increase in real salary levels and the demands on their take-home pay like the cost of fuel and interest rates.

So, Spur’s business is generally aimed at higher income groups, and its success is a function of their perception of how well-off they are. When times are tight, they cut back on dining out – something which happened earlier this year when Trump decided to start a war with Iran resulting in a sharp increase in the cost of fuel and then later a 25 basis point hike in the level of interest rates.

In our view, the impact of the war in Iran is gradually subsiding. This can be seen in lower price of oil, the rands strength and the fact that the monetary policy committee (MPC) decided to keep interest rates on hold at its most recent meeting on 23rd July 2026. We believe that the oil price will continue to decline steadily over the coming months and years as the world economy adjusts to the new situation and moves more and more towards renewables. In other words, this external shock is really just a “bump in the road” for investors and hence probably represents a buying opportunity.

It their results for the six months to 31st December 2025 the company reported revenue up 8,5% and headline earnings per share (HEPS) up 13,6%. In a trading statement for the year to 30th June 2026 the company estimated that adjusted HEPS would increase by between 5% and 13%. The share trades on a dividend yield (DY) of 6,11% and a price:earnings ratio of 11,26. The DY, particularly is of interest to private investors. Any quality company on the JSE trading on a DY of 5% or more is worthy of your attention.

We first added Spur to the Winning Shares List (WSL) on 8th August 2023 at a price of 2488c. Since then, it has been in a steady upward trend paying good dividends which keep growing and maintaining its strong balance sheet. Consider the chart:

We wrote an article about Spur shortly after we added it to the WSL on 16th October 2023 in which we said that we believed that it was “an excellent addition to any private investor’s portfolio”. 

We continue to believe in its long-term investment potential, and we also believe that consumer spending in South Africa will recover as the year progresses and the benefits of our relatively low inflation rate become more apparent.