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Opening Statement from the December 2020 Intelligent Investor (part 1)

Originally published on December 10, 2020 (pre-market release)

The month of November was marked by a tremendous boost in sentiment resulting in a very strong rally in global capital markets. After experiencing a selloff in late-October, many commodities mounted a solid rebound in November commencing with the U.S. “election rally.”

On Monday, November 2 the capital markets entered what would later progress into a very strong rally after having sold off in the final days of October in anticipation of the U.S. elections.

The trifecta of positive vaccine news from Pfizer/BioNTech, Moderna and AstraZeneca/Oxford delivered in three weekly installments led to tremendous gains in the capital markets for November, as investors see the latest coronavirus vaccine progress as the light at the end of the COVID-19 tunnel.

Just as the election rally began to run out of steam, on Monday November 9, Pfizer/BioNTech announced positive efficacy and safety data from phase 3 trials of its coronavirus vaccine. The following Monday on November 16, Modern announced similar results. Finally, on Monday November 23, AstraZeneca/Oxford released the results of its phase 3 coronavirus vaccine.

While efficacy of the AstraZeneca/Oxford vaccine is substantially lower than that of the Pfizer/BioNTech and Moderna vaccines, the price is significantly lower and does not have stringent storage requirements unlike the case with the Pfizer/BioNTech vaccines.

As you can imagine, since the first positive vaccine development was announced on November 9, crude oil pricing has surged. Crude oil price momentum remains strong as investors are now able to envision more clear signs of economic recovery in 2021. In contrast, gold and silver pricing have weakened and remain in an intermediate-term bear trend, as previously forecast.

The boost in sentiment fueled by progress in coronavirus vaccines has overshadowed the trend...