ARTICLES

Uncertainty Soars

Investors are by their very nature risk takers, but they are always trying to reduce the risk which they have to take to a minimum. Donald Trump, with his threat of an international trade war and his on-again, off-again tariffs has significantly increased the level of risk in markets across the world. This can be seen in the extraordinary volatility in the S&P500 index since his wild and illogical Liberation Day announcement on the 2^nd of April 2025.

On the evening of Tuesday the 8th of April 2025 there was a run on the US bond market where central banks were dumping US T-bills and moving either to German T-bills or into gold. Trump’s more conservative advisors were telling him that his policies would ultimately result in a 7% drop in global gross domestic product (GDP) and that he was pushing Japan, Europe, India, South Korea and other important US trading partners towards stronger relationships with China.

Things came a head when central banks around the world began to dump US treasury bills and moved into other secure assets. This caused the US bond market to tank. At the same, Jamie Dimon went onto Fox News (8am Washington time on Wednesday) and said that a recession in America was the “likely outcome” of Trump’s actions.

Then Trump went onto Truth Social at 9.30am and said, “NOW IS A GREAT TIME TO BUY DJT”. Of course, DJT is the stock market code for the Trump Media and Technology Corporation. Then at 1pm Trump announced his 90-day postponement of all tariffs on all countries except China. DJT shares rose 21,7% from 1774c to 2163c over the next 4 hours.

Immediately before his announcement at 1pm there were a number of large “put” contracts purchased on DJT shares. Put options are normally geared 10-fold so the anyone who took advantage of Trump’s message in this way would have made more than 200% - in a single day. Later that day Trump was filmed celebrating with his billionaire friends and senior staff  because of how much money they had made by this blatant insider trade.

Normally, such illegal insider trading would be investigated by the Securities and Exchange Commission (SEC), but Trump, through Musk’s Department of Government Efficiency, has gutted the SEC firing many of its experienced staff and preventing others from continuing with critical investigations.

The Trump administration is divided into a radical protectionist faction which includes his economic advisor Peter Navarro, Jamieson Greer and Stephen Miller and then a more conservative faction which includes people like the Treasury Secretary Scott Bessent and Kevin Hassett who is a director of the US National Economic Council. Trump oscillates between these two groups which explains why his policies are so erratic.

So, the issue for private investors in South Africa is how to take advantage of the current volatility and uncertainty in world markets. One very good answer has been to invest in gold. On Friday last week the price of gold closed at an all-time record high of $3236. South African gold producers like Harmony receive rands and so they are benefiting from both gold’s rise and the fall of the rand. The rand price of gold has reached R62000 per ounce.

Harmony has been a favourite share of ours for more than 18 months, but recently, its upward trend has become meteoric. Consider the chart:

Here you can see that Harmony was added to the Winning Shares List (WSL) on 16^th November 2023 at a price of 9920c. We then published an article about it on 25^th March 2024, by which time it had risen to 14997c. Since then, it has more than doubled again to its close last Friday at 32609c This means that over the 17 months that the share has been on the WSL, it has been rising at a rate of more than 150% per annum.

Obviously, Harmony remains a commodity share and this makes it volatile, but it has undoubtedly been the best option on the JSE during this period of international uncertainty as investors world-wide look for safe havens. What Trump does is almost impossible to predict, but the gold remains the world’s most secure asset - as it has been for at least the past 5000 years.  

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PDSNET ARTICLES

Rand Strength

The strength of the rand is both a critical and a complex issue for private investors on the JSE. Our currency is influenced by two primary forces:

1. Our local economy’s prospects
2. The rand’s role as a leading emerging market currency

These, in turn, are

Sibanye Revisited

In these uncertain times, when nobody really knows to what extent Trump will back down on the international trade war which he has initiated, many investors are moving into precious metals as a hedge against the weakness of paper currencies (especially the US dollar) and paper assets like equities and bonds.

The problem

Smart Local Investors

The last two months have been wild on the markets – mainly because of Trump’s ill-advised, on-again, off-again tariff policies. The issue now is:

Will this morph into a full-blown bear trend? Or is this correction almost over?

From his election victory on the 6^th of November 2024,

Jerome Powell

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Liberation Day

Trump has done the unthinkable. He has deliberately engineered the collapse of the US and world stock markets in the nonsensical belief that somehow an international trade war will make Americans richer. Nothing could be further from the truth. His actions have taken the S&P down from its all-time record high of 6144.15 on 19^th February 2025 to Friday’s

The Creation of Money

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V-Bottom is likely

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Normally, corrections in the market

The Trump Correction

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Dividends

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Quarterlies

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