The political lines have been drawn, it’s Clinton verses Trump. I written several pieces evaluating the massive sell-offs in the biotech sector. Utilizing the iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) as a proxy, I proposed a loose correlation between opportunistic political posturing by political front-runners and the chronic price suppression of IBB. I content that political posturing played a significant role in the sell-off of the healthcare cohort and more specifically biotech stocks. Drug pricing was used as a centerpiece as the scapegoat for political gains. Throughout this political process, this rhetoric has negatively impacted the sector. IBB fell from $401 in July of 2015 to $240 in February of 2016 or alternatively a 40% hit. This sell-off coincided with political rhetoric aimed at the collective cohort of healthcare and biotech companies. I strongly felt that these events were seasonal and would eventually subside without any significant impact to the underlying stocks within IBB. I felt this political induced sell-off presented a great buying opportunity after the 40% decline. I put my money where my mouth was by purchasing two tranches of IBB at a strike price of $250 in February and June during the market-wide sell-off and the Brexit, respectively. I feel that this is great entry point for any long-term investor that desires exposure to the biotechnology sector.
As Brexit wreaked havoc on international financial markets, it presented a brief opportunity to capitalize on the collateral damage fallout within the biotechnology cohort. This event may continue to offer entry points as the reverberations are felt throughout the markets. I didn’t factor in the possibility that a major economic power within the EU would vote to relinquish its membership and move forward as an independent nation. However as Brexit became reality, I utilized this opportunity to deploy capital in the biotechnology cohort via the iShares Biotechnology Index ETF (NASDAQ:IBB) as a long-term investor within the space. As the UK proceeded with its divorce from the EU, markets sold off in a meaningful way. Brexit introduced instability throughout the region thus negatively impacting financial markets abroad. I largely view the Brexit as an extraneous event unrelated directly to the biotechnology cohort; thus I utilized this brief opportunity to add to my position in IBB and may continue to add in periods of weakness. Continue reading "IBB: Brexit Collateral Damage Provides Brief Buying Opportunity"→
Donald Trump and Hillary Clinton may have very little in common, but Barry Allan, vice chair of mining for Mackie Research Capital, says if either moves into the White House, the U.S. dollar will fall and gold will rise. A higher gold price bodes well for gold equities, and in this interview with The Gold Report, Allan and his colleague Ryan Hanley share the names of some of their top picks for this environment.
The Gold Report: Barry and Ryan, welcome back to Streetwise Reports. I'm excited to get your thoughts on the market and a few stocks. We've had the first wave of a possible uplift in the precious metals markets. The presidential election is coming up in the U.S. in November. What do you think a Donald Trump or a Hillary Clinton win would mean for gold, gold equities and the Canadian dollar?
Barry Allan: Looking at the election from north of the border and as it pertains particularly to gold bullion, we have taken the view that either a Clinton outcome or a Trump outcome would probably lead to a weaker dollar and, hence, a stronger gold price environment. From where we sit, either of those outcomes, whether it would be Trump, which seems to be controversial to say the least, or Clinton, which would result in a much more Canada-like budget, would probably not play well for the U.S. dollar. We see either outcome as being supportive of the gold price.
We also would layer in there oil prices, which we think are probably going to go higher. That will strengthen the Canadian dollar, but it will hurt the U.S. dollar as well. We see all those things conspiring to put us in a reasonably good gold price future.