Posted November 06, 2023
By Matt Insley
A Bounty of Buyout Benefits
Several readers responded to our gold-centric issue last week, including Jon S. who writes: “The fundamentals regarding gold are straightforward. Central banks are buying, China is buying. The Polish are buying. India is buying, etc.
“I have bought gold for decades, but I distributed it all (or most) to my children a couple of years ago. I am 86-years old and do not, for obvious reasons, invest for the long-term.
“I do have some long-term positions, but no new ones. I do speculate in options. They, like myself, are short-term.
“Gold needs to break above $2,000 and go on to greater glory. If it does so, I will invest. I would suggest other people do the same.”
Plus, a couple readers have a few questions:
- Steve D. asks: “I have been buying and following gold and your advice for over 15 years now, and my question is why do I not read anything about the U.S. buying much gold?”
- And Marguerite L. says: “Where does all this gold (which central banks buy) come from? I presume it is bought and stored in gold bars? Or ingots?”
We’ll do our best to answer our readers’ questions on Wednesday… Come on back!
Send your opinions to, email@example.com
Your Rundown for Monday, November 6, 2023...
In the meantime, Paradigm’s income-investing authority Zach Scheidt notes: “Looking at the current state of buyouts, the main thing to realize is that there are companies that have a lot of cash.
“This gives big companies much more incentive to buy up smaller rivals,” he says, adding: “Small companies can’t compete because they don’t have the ability to scale production.”
Another incentive for large companies? “A stock trading lower can trigger a buyout, which always happens above the market price.
“In other words, I hate to see our buyout targets trading lower. But it means a company like Microsoft or Alphabet can afford to offer a 50% premium on the buyout.
“And this could finally lead to a buyout deal, resulting in a big jump in the stock once the announcement goes public.
“One other thing that’s important to note from the broad market perspective is that interest rates have been rising. And higher interest rates naturally drive the prices of growth stocks lower.
“We don’t need to get into all of the mathematical reasons why this happens,” says Zach. “Just understand that high interest rates put pressure on growth stocks in particular.
“The Federal Reserve has recently paused two times in a row, which means we’re starting to see rates peak before rolling back over.
“Once that rollover starts to happen,” he says, “that’s when I believe there will be more pressure on large companies to pull the trigger on buyouts.
“Because if they don’t, they risk having to pay more for an acquisition once the stock prices rebound. Remember, a buyout will always happen above the current market price of a stock.
“Bottom line,” Zach says, “I believe we’re approaching a turning point for buyout activity in the market.
“Over the next several weeks, as we see interest rates level out and potentially trade lower, we should see an uptick in buyout activity.”
Market Rundown for Monday, Nov. 6, 2023
The S&P 500 is up 0.30% to 4,370.
Oil is up 1.70% to $81.90 for a barrel of WTI.
Gold, according to Kitco, is down $6.80 per ounce to $1,985.40.
And Bitcoin is up 0.40% to $35,200.
Send your comments and questions to, firstname.lastname@example.org