🎙 A Golden Moment

Bring on Q4. The third quarter is in the books.

Today’s charts further prove that Big Tech no longer drives this stock market. Utilities, Real Estate, and Industrials heated up in the past few months, helping the broader market pick up the pace after a brief mid-summer slide.

Will a broadening of the market beyond the Magnificent Seven continue?

— Matthew & Shawn

Here’s today’s rundown, all figures year-to-date through three quarters:

Today, we'll discuss the biggest stories in markets:

• Behind Silver’s golden moment

• As semis rise, Intel falls

This, and more, in just 5 minutes to read.

Chart(s) of the Day

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In The News

🪙 Behind Silver’s Golden Moment As An Attractive Asset Today

Gold isn’t the only precious metal on a hot streak. Silver is having a golden moment of its own. 

The commodity’s price has jumped roughly 32% this year, beating out gold, which is hitting record highs. The Wall Street Journal reported that about $856 million has flowed into the iShares Silver Trust. 

According to some estimates, the demand for silver has been outpacing supply for the past three years. Others say it’s been five years. 

Electrification: Silver's unique properties as an industrial commodity are largely driving the move. As mine production remains weak, demand for industrial use has risen. Solar panel manufacturing, in particular, has boosted silver’s case. Unlike gold—which has its own unique characteristics making it a valuable commodity—silver’s supply is largely used for industry. 

• The global economy is getting greener, a key tailwind for silver. Solar-sector demand for silver rose 158% from 2019 to 2023 and could grow another 20% in 2024.
  

• “The electrification of the world is really providing a boon to silver,” said the CEO of the Silver Institute, noting that most industrial uses of silver don’t have viable substitutes.

Store of value: Investors also want a part of silver because they’re looking to precious metals as a store of value to diversify from stocks. Plus, expectations of lower interest rates: Demand for noninterest-bearing assets rises when rates fall. That’s partly why gold prices have soared this year, and silver prices are generally linked to gold. 

China’s aggressive push into solar energy and electric vehicles is also driving the trend. As WSJ points out: “This differs from commodities such as oil, which are negatively affected by China’s so-called bifurcated economy, and other metals such as gold, which enjoy retail demand from weakened property prices but not so much from the clean-energy transition.”

Rotation? In August, China implemented new gold import quotas for several banks, which may redirect retail investment toward silver. Citi indicates that China's silver-bullion imports, which indicate retail demand, have surged from negligible levels to over $100 million earlier in the year. 

Citi also suggests that if China's silver purchases reach just 10% of its gold buying rate, it could result in demand equivalent to about 20% of the global mined silver supply.

Why it matters:

It’s about time we paid some serious due to silver, which has outperformed the S&P 500 in 2024 after struggling or treading water during most of 2022 and 2023.

Moving forward, the Federal Reserve’s next steps will impact precious metals. It’s unclear exactly how. More rate reductions could boost demand for both gold and silver. Lower rates also could stimulate U.S. industrial activity, particularly in debt-dependent sectors like solar energy projects, (potentially) increasing silver demand.

It’s all relative: According to some analysts, silver appears undervalued vs. gold. The gold-to-silver ratio is about 83:1, meaning one troy ounce of gold can buy about 83 troy ounces of silver. That’s much higher than the 20-year average: 67:1. 

• It’s worth noting that despite its gains, silver remains well below the peak levels of 1980 and 2011. 

The outlook: Silver's performance may stay strong. Potential increased demand from China, favorable monetary policy, and its current undervaluation relative to gold could contribute to its ongoing appeal.

This isn’t investment advice. But as WSJ’s Jinjoo Lee writes: “Silver seems poised to sparkle a while longer.”

Read more about investing in silver

More Headlines

📈 The U.S. wants to triple nuclear power by 2050

💰 Sam Altman tells OpenAI staff he didn't receive a 'giant equity stake'

💡 What it’s like to get an investment from Nvidia's CEO

💸 Mark Zuckerberg joins exclusive $200 billion club, closes in on third-richest person worldwide

🤔 Stock comparison: Magnificent 7 vs. 2000s tech bubble

📝 OpenAI sees roughly $5 billion loss this year on $3.7 billion in revenue

📉 How Intel Fell From Global Chip Champion

Even as the semiconductor industry has taken off in the age of artificial intelligence, Intel—the once—dominant chipmaker—has been sputtering. 

This year, Intel CEO Pat Gelsinger and Co. have encountered the most difficult period in their 56-year history. The chip pioneer has seen its share price cut in half. Over five years, it has not fared much better: Shares are down 54%. 

Meanwhile, many semiconductor companies have enjoyed surging valuations, notably Nvidia, which has eaten Intel for lunch. In 2021, Intel was three times the size of Nvidia in revenue. This year? Nvidia is on pace to double Intel’s revenue. 

Takeover target: In 2021, Gelsinger took the helm, promising to bring the company back to the cutting edge of the industry. But after years of market share loss and a lack of innovation, his comeback plan hasn’t panned out. Intel has been cutting thousands of jobs and slashing spending. It also suspended its dividend and planned to reduce costs by $10 billion next year. 

Intel, which reported operating losses of $2.8 billion last quarter, is on pace for a worse year than projected. Intel's market value is about $81 billion, so it’s no longer among the top 10 largest chipmakers.

• Now, Intel is a takeover target. The AI boom and a series of missteps have cost the firm tens of billions in market value.

There have been manufacturing setbacks, a costly turnaround strategy, and a failure to embrace AI appropriately. Specifically, Gelsinger tried to bolster Intels’ manufacturing operations and sell that capability to design-only chip companies like Qualcomm. It proved costly and didn’t work. Now, he’s reducing spending again and further separating the design and manufacturing operations. 

• “We need to fight for every inch and execute better than ever before,” Gelsinger told employees. “Because that’s the only way to quiet our critics and deliver the results we know we’re capable of achieving.”
  

•  “The AI surge was much more acute than I expected,” Gelsinger has also said, calling job cuts “the hardest thing I’ve done in my career.”
  

• Noted one veteran industry analyst: “Over the past two to three years, the shift to AI was really the nail in the coffin for them. They just didn’t have the right capabilities.”

Why it matters:

Intel’s fall from its perch is pretty extraordinary for long-time semiconductor investors and analysts. For decades, it was the world’s most valuable semiconductor company. Its chips were everywhere in personal computers and servers. It designed and manufactured its own chips (rare) and dominated both worldwide. 

• Intel stock has fallen ~70% since its early 2020 level, its highest point since the dot-com bust. Over the same period, Nvidia's shares have been up about 18-fold. 

Analysts say the cost-cutting could work to a degree, but it’s likely too little too late. The pace of change is rapid, and its core chip business isn’t expected to recover amid the rise of AI chips.

“We can argue whether the strategy is right or wrong, but the problem is that the core business doesn’t support the path,” an analyst observed. At this point, though, “it may be too late for them to stop.”

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_{*Investing involves risk. Past performance not indicative of future returns. See Important Regulation A disclosures at masterworks.com/cd.  The content is not intended to provide legal, tax, or investment advice. “Net Annualized Return” refers to annualized internal rate of return net of all fees and expenses, calculated from the offering closing date to the date the sale is consummated. For additional information regarding the calculation of IRR for a particular investment in an artwork that has been sold, a reconciliation will be filed as an exhibit to Form 1-U and will be available on the SEC’s website. Masterworks has realized illustrative annualized net returns of 17.6%, 17.8%, and 21.5% on works held longer than one year (not inclusive of works held less than one year and unsold works). \*Contemporary art data based on repeat-sales index of historical Post-War & Contemporary Art market prices from 1995 to 2023, developed by Masterworks. There are significant limitations to comparative asset class data. Indices are unmanaged and a Masterworks investor cannot invest directly in an index.} 

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