Cannabis Weak as Gold Achieves Another High

James West

If we are all unanimous on the desire to achieve a sustained gold price to spark a rally in Canadian resource stocks, we need only hope that the US’ aggressive and bi-polar approach to global economics continues unabated. With infantile statecraft that is the fuel for smirks and jokes among the erstwhile allies of the United States, America’s glaring bipolar reversals of sentiment toward China – is nonetheless becoming a bankable trade in markets.

Too bad for the cannabis industry that it depends on a positive broad market environment for its own issuers’ health. Since that would appear to be off the table for the time being, cannabis stocks appear poised to head lower in this final week of August.

Not that shrewd investors won’t thank the market gods for such a wonderful opportunity to pick up well performing stocks at increasingly attractive prices. But in some cases, the plummeting share prices present an existential question.

While CannTrust Holdings remains the poster child for how not to become a billion dollar cannabis company, others – like James E. Wagner Cultivation and Organigram Holdings – are building solid businesses with real revenue and – get this – EBITDA and profit! I know…amazing.

Gold, on the other hand – the immediate and direct beneficiary of Trump’s own brand of Doublespeak – hit yet another 7 year high overnight in Asian markets, touching a high of US$1,554 before dropping back to $1,530.

Why should you care if you’re a cannabis investor who has no interest in gold? As stated above, the cannabis stocks need a background of broad market stability to rise against, and gold’s increasingly muscular moves to the upside (higher highs and higher lows – technically a textbook case for further upside) portends more broad market weakness. Meaning, stocks ain’t gonna catch a bit til gold retreats.

In the meantime, resist the temptation to become a sector-centric victim; the market will teach you time and time again that sector agnosticism is the only dogma worthwhile for a real trader to hold.

Another week of lower lows and lower highs among cannabis issuers signals continuing weakness as the continued geopolitical vandalism of Trump’s open mouth precludes any joint solution from the G7 summit.


James West

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
More Info...

[email protected] | |

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.