Central banks - Gold to grow as reserve asset

5.31.23 - Central banks - Gold to grow as reserve asset

Gold last traded at $1,963 an ounce. Silver at $23.53 an ounce.

Just 5 stocks including Nvidia account for 96% of the S&P 500's gains this year -Yahoo! Finance

Be careful when following averages in the financial markets; especially when it comes to the S&P as well as the Dow. They have been selectively removing and adding stocks for years based on performance to make the numbers look good. The S&P has five stocks that comprise 96% of the gains for the year, so the average had a 7.6% increase for Q1; that is if you picked the right five stocks.

On May 30, Nvidia stole business headlines by reaching the super-exclusive $1 trillion club for the first time. The maker and designer of A.I. hardware and software touched the milestone by raising its valuation an astounding $280 billion or almost 40% since May 15, achieving a moonshot virtually unequalled in the annals of capital markets (it closed just below that mark).

But the Nvidia phenomenon has a dark side. It epitomizes the epic, oversize jump in market cap this year for all members of the Trillion-Dollar Club. Indeed, the five members now sporting 14-figure valuations are virtually devouring the S&P 500 index. That's not a good thing. Their synchronized surge is the sole force that's lifted the big cap index this year. And because it's made enterprises that were expensive before their recent takeoff even pricier, it's extremely unlikely that they can carry the the markets higher on their fewer than half a dozen shoulders going forward. Most likely, their valuations are already stretched beyond the max, and bound to snap back. And the ultimate example of the froth that's overtaken the Trillion-Dollar Club is the rise of Nvidia.