From the Desk of Ethel J Davis
Dear Valued VZD Capital Management Family,
I’m reaching out to provide an in-depth perspective on the recent correction in the gold and precious metals sector, explain its impact on your portfolio strategies, and highlight your portfolio’s resilience amid market fluctuations. While corrections can be concerning, they often present opportunities for strategic rebalancing that can reinforce your confidence in your long-term goals. Part of my role is to separate facts from market noise so you can stay informed and confident. This year has gotten off to a swift start, marked by both geopolitical developments and new political announcements, but our focus remains on your long-term stability.
Gold posted its most significant four-decade decline yesterday, and silver saw a record drop, reversing the rally that pushed prices to all-time highs. Gold fell more than 12%, dropping below $5,000 an ounce and marking its most significant intraday decline since the early 1980s. Despite this, demand for precious metals surged in January as investors sought safe havens amid concerns about currency debasement, the Federal Reserve’s independence, trade tensions, and geopolitical risks. These declines can be viewed as opportunities to rebalance strategically, aligned with your long-term goals.
Friday’s selloff was the biggest shock to the rally, driven by news that the Trump administration was preparing to nominate Kevin Warsh for Fed chair. The dollar rebound, fueled by the report, undercut investor sentiment for metal purchases. While the news triggered the decline, markets were already poised for volatility, and such reactions are a regular part of market dynamics. The metal route drove down shares of major mining companies, including Newmont Corporation, Barrick Gold Corporation, and Royal Gold, whose shares slid more than 10%, a level considered a correction. Even after Friday’s pullback, gold remains 13% for the month, and silver is up 19%, illustrating typical market fluctuations. Metals have been a safe-haven asset for investors as geopolitical tensions, currency weakness, record government debt, and trade wars in the US, China, and Europe escalate.
The million-dollar question is whether this is a buying opportunity or the start of something bigger down the road. At VZD CAPITAL MANAGEMENT, we believe in diversification, active rotation, and fundamental analysis of each client’s portfolio. Our active management approach aims to navigate market changes effectively, helping you stay positioned for opportunities. We have locked in profits in gold and mining companies and will continue rotating into new, undervalued areas of the market with significant growth potential. For example, we are shifting some assets from gold into technology sectors to capitalize on emerging growth trends. Remember, the market does not move in tandem, so rotating into financials, industrials, technology, and fixed-income instruments can turn the “one-day” Titanic around slowly over time. We value your trust and are committed to working together proactively as we continue to digest the new Federal Reserve Chair.
As a fee-based, discretionary Registered Investment Advisory firm, we can pivot quickly when needed, a key advantage. Unlike larger institutions with many layers of bureaucracy, we can move to cash or adjust our strategies promptly in response to market conditions. We do not believe in timing the market but in spending time in it. Given the current level of economic uncertainty, we are disciplined advocates of dollar-cost averaging and tailored strategies. Your success is our priority, and our ability to adapt strategies swiftly is designed to protect and grow your investments as market conditions change.
Thank you in advance for the trust and confidence you have placed in me. I will continue the rotation cycle as we move forward through these uncertain times, actively managing your investments to adapt to market conditions. Please stay warm, and remember, this too shall pass.
With Gratitude,
Ethel
