George Noble

Gold miners are undervalued and poised to rise significantly due to central bank buying, underownership by Western investors, rising earnings, cheap valuations, and de-equitization via buybacks. The GDX/GDXJ are the broad vehicles, but picking individual miners adds alpha.

The most recent numbers we saw out of the mining companies, they reflected on average like $4,100 gold, $4,200 gold. Gold's 5200 today. They're incredibly cash flow positive... guess what the miners are doing? They're buying back stock. Because miners are modeling their businesses on lower gold prices, current spot prices will result in massive earnings surprises. Furthermore, using this excess cash flow to buy back shares creates a constant bid under the stock, driving EPS growth and multiple expansion. LONG. The combination of extreme earnings leverage to the gold price and aggressive share buybacks provides a strong fundamental tailwind for miners. A sudden collapse in the spot price of gold or operational/geopolitical failures at specific mine sites.

"Go to the RSP, which is the equal weighted... that's going to outperform." The S&P 500 (SPY) is inextricably linked to the "Mag 7" and the AI trade. Since Noble is bearish on Tech/AI, the Equal Weight index avoids that concentration risk while capturing the rotation into "real economy" sectors (Energy, Industrials). Long Equal Weight S&P as a relative value trade against the Cap-Weighted S&P. Tech continues to lead the market higher, causing RSP to underperform.

Semiconductor stocks are in the largest bubble in history, surpassing the dotcom era. The sector is completely overcooked on valuations, positioning, and massive capacity coming online. Hyperscaler capital spending is unsustainable, and when one announces a cutback, the entire semiconductor food chain will collapse. The pattern mirrors shipping stocks, where temporary supply inelasticity and high margins get arbitraged away. Despite 30-40% declines, positioning remains stale and crowded. The trade is to short semiconductor stocks.

US Treasuries are unattractive as long-term bonds are in a bear market. Yields have hit 30-year highs in Japan and 20-year highs in Europe, and the US 10-year is around 4.5-4.6%. With rising inflation, exploding deficits, and the bond vigilantes awakening, he expects yields to go to 5% or higher. He has more conviction in this view as price now confirms the narrative.

Copper is a core reflation asset. The combination of a worldwide capex boom, supply chain re-shoring, and underinvestment in new capacity creates a bullish supply-demand backdrop. It should be owned as part of the rotation into real assets.

Silver, alongside gold, is part of the reflation and hard-asset trade. Coeur Mining (CDE) is a silver-focused stock that provides alpha, and silver benefits from the same monetary debasement and fiscal profligacy driving gold higher.

Energy sector profits and free cash flow are surging, with energy representing 3.5% of the S&P but 13% of free cash flow, heading to 20%. Specific oil service and E&P names are cheap: Valaris (VAL) was written up as an oil service play, CRGY (Crescent Energy) recently written up, and Schlumberger (SLB) will do well. They stand to benefit from the reflation trade and capex boom.

Gold is in the process of a major bottom after a washout of tourist positions. Fiscal dominance, uncontrolled deficits, and the inability of the government to allow rates to rise without crashing the economy will lead to more money printing and a soft default. The dollar will keep losing value against gold over the long term. Rising rates in a country that cannot afford them are ultimately bullish for gold because central banks will be forced to ease aggressively.

The oil market is primed for a squeeze. Chinese imports have been artificially depressed and are likely rebounding. Inventories are way down, strategic petroleum reserves are depleted, and speculative short positioning in oil is near all-time highs. The recent one-off factors that suppressed prices are reversing. Oil is expected to be flat to up, with a high probability of a sharp rally as shorts are forced to cover.

Tesla (TSLA) is a short because it is dramatically overvalued at a trillion-five market cap despite declining revenues, negative cash flow, and a sum-of-parts valuation of only $50 per share. The self-driving and robot promises are not materializing.

Noble says, "I love energy... particularly like the oil service companies." He explicitly names Schlumberger (SLB), Tidewater (TDW), and Valaris (VAL). The sector is under-owned (3% of S&P). Global depletion rates (~5% annually) necessitate constant drilling activity regardless of short-term oil price fluctuations. Service companies have pricing power due to equipment shortages. Long Oil Services for a valuation mean reversion and activity super-cycle. A deep global recession crushing energy demand.

Noble says, "I love energy... particularly like the oil service companies." He explicitly names Schlumberger (SLB), Tidewater (TDW), and Valaris (VAL). The sector is under-owned (3% of S&P). Global depletion rates (~5% annually) necessitate constant drilling activity regardless of short-term oil price fluctuations. Service companies have pricing power due to equipment shortages. Long Oil Services for a valuation mean reversion and activity super-cycle. A deep global recession crushing energy demand.

Gold miners are a levered play on the rising gold price and are incredibly cheap. Specific picks: SSRM trades at 7x earnings with 25% of market cap in cash; Coeur Mining (CDE) adds silver/gold alpha. These mining stocks could double or triple as gold resumes its uptrend.

Energy sector profits and free cash flow are surging, with energy representing 3.5% of the S&P but 13% of free cash flow, heading to 20%. Specific oil service and E&P names are cheap: Valaris (VAL) was written up as an oil service play, CRGY (Crescent Energy) recently written up, and Schlumberger (SLB) will do well. They stand to benefit from the reflation trade and capex boom.