Speaker 1This is the Commodity Culture Podcast, where we interview prominent investors, fund managers, analysts, and company CEOs to give you an edge when it comes to investing in the commodity space. David Hunter, great to have you back on Commodity Culture. Let's start off with how you're currently viewing the broad market because you've been calling for a blow-off top followed by a major global bust, and we certainly have seen the big indices continue to rise higher since our last conversation, continuing to hit new all-time highs. Valuations continue to look very stretched here. How much higher could we go before it all eventually falls apart, in your view?
Speaker 2Yeah. Hi, Jesse. Great to see you again. Yeah, I remain very bullish. Since we last talked, I guess it's been six months. No, not six, but several months. I've raised targets again, so I'm at $10,000 on the S&P. I'm at $36,000 on the NASDAQ, $4,000 on the Russell, and the Dow, I'm up to $70,000. So, still a ways to go. I haven't done numbers lately, but you're talking in the range of 25% or 30%, I guess, depending on the index. Still to go. And I think those are. Those are targets for this year. I don't do year-end targets, but I think we'll get there this year. I think we're probably in the parabolic. If you look at it on a monthly basis, we have gone more vertical. We won't know until after the fact if this indeed is the parabolic or whether we consolidate again for a month or two and go higher, but I think there's a pretty good chance we just keep going here. There'll be one, two, three. There's four percent pullback, depending on the index. So, I'm not saying it's straight up, but pretty much clear sailing from here. And as you know, I've been saying for a long time that particularly institutional investor has fought this thing from the October 2022 low. They've remained skeptical, so there's been a wall of worry to draw from. That's the fuel for the next advance. And each time we sold off, they got more bearish. And that just meant as it turned back up, they'd be chasing. We're at the point now where you're starting to see targets raised more aggressively. So, there are seven or eight strategists out there, over 8,000 now. I've been way above the street for a long time and remain way above the street in terms of my targets, but you are seeing more catch-up now. You're seeing, at least on the sell side, the strategists starting to realize this thing. It has legs. They're still not at the point of understanding that the blow-off, the vertical part of this can cover a lot of ground in a hurry. But you're seeing, I think your Denny's got 8,400, and there are a couple guys out there at 8,200. So, you're starting to see it, and I think those numbers are going to continue to raise right into the fall and maybe a little beyond. So, to me, it's bullish as can be. There's trouble on the other side of this, but for now, I think there's a very strong
Speaker 1momentum ahead. If you had told most analysts before this war in Iran, before rumors of it starting were swirling, and before, of course, it kicked off, let's say we're back in 2025, mid-2025, if you had said, hey, there's going to be basically a full-blown war in the Middle East, the Strait of Hormuz is going to be closed effectively, we're going to lose 20% of the world's energy supplies, we're losing fertilizer and fertilizer inputs, I think most analysts would have probably said, well, we're probably going to see a big correction in the broad market at that point. And yet, that hasn't been the case at all. It's been pretty surprising to a lot of analysts out there. What's your take on why the market seems to be completely ignoring or discounting this conflict in the closure of the Strait?
Speaker 2Yeah, not to mention that, you know, if somebody told you two years ago, you know, you're going to have tariffs, and that they were going to be, you know, big tariffs, at least for a while, you know, people, just like they did in April 25, would have sold the market down and not expected it to go up. So, you know, it continues to fight all these things that can cause a lot of concern and worry. In this case, I think we entered this with oil. I mean, we were washed with oil around the globe. Inventories were pretty strong. Yeah, obviously, we've drawn down inventories, and you still hear a narrative out there that oil is going to go to 150 because there just isn't enough out there. That's all proving false. I mean, you know, OPEC's having to constrain oil because the prices go down. I think short term, you can get oil up into the high 80s, but I don't think it's going much. I don't think it's going to go up. You know, it's going to be a couple of years before they can come on. capacity meet nobody's talking about double ordering nobody's talking about um you know the fact that um it always gets like this and people always assume it's going to get extended and then all of a sudden stop short and everybody scrambles for the exit um so not just in some meet but in the market i think you'll see that again you know bear markets haven't been um they haven't gone extinct uh we will have a serious bear market um but we're just not there yet now are there are there warning signs in the economy sure i think you know the the issue and it's funny because people are focused on interest rates i think interest rates peaked yesterday you know topped yesterday so i don't think it's interest rates that are the problem i think it's more credit issues and you know there's a lot of stuff under the surface beginning of signs of private credit and private equity ai maybe getting a little frothy all those things but they're not at levels yet where it's you know you got to worry that you know you could wake up tomorrow and things are crashing at least i don't think so i think you've got months to run before you get to the real trouble spots um so i keep saying we could see a top this year and this year and i think we're getting ever closer gold has historically been
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Speaker 2of potentially picking up things on sale of potentially picking up things on sale yeah i do i do think that there are yeah i do i do think that there are yeah i do i do think that there are comparisons to comparisons to comparisons to um 1989 japan um i have said for a while um 1989 japan um i have said for a while um 1989 japan um i have said for a while that i think that the highs of this that i think that the highs of this that i think that the highs of this market cycle market cycle market cycle could stand for decades which is what could stand for decades which is what could stand for decades which is what happened in japan happened in japan happened in japan that being said um because i'm calling that being said um because i'm calling that being said um because i'm calling for a global bust which i believe for a global bust which i believe for a global bust which i believe is something bigger than 2008-9 in terms is something bigger than 2008-9 in terms is something bigger than 2008-9 in terms of credit crisis of credit crisis of credit crisis um it's there's only one thing that's um it's there's only one thing that's um it's there's only one thing that's that's the most predictable thing in my that's the most predictable thing in my that's the most predictable thing in my forecast forecast forecast is how how central banks and is how how central banks and is how how central banks and policy makers will respond policy makers will respond policy makers will respond they won't have a choice if you asked they won't have a choice if you asked they won't have a choice if you asked them today they them today they them today they say no way we're not doing that but they say no way we're not doing that but they say no way we're not doing that but they won't have a choice when things are won't have a choice when things are won't have a choice when things are when the financial system is free falling when the financial system is free falling when the financial system is free falling you will see money coming out of every you will see money coming out of every you will see money coming out of every corner of every central bank corner of every central bank corner of every central bank um to the tune of i think for the fed um to the tune of i think for the fed um to the tune of i think for the fed maybe 20 trillion dollars maybe more maybe 20 trillion dollars maybe more maybe 20 trillion dollars maybe more um because it's you know if you truly um because it's you know if you truly um because it's you know if you truly have a free-falling have a free-falling have a free-falling financial system we almost got there in financial system we almost got there in financial system we almost got there in 2008-9 pulled back from the cliff just in 2008-9 pulled back from the cliff just in 2008-9 pulled back from the cliff just in time if this time we go over that cliff time if this time we go over that cliff time if this time we go over that cliff there's only one thing that moves there's only one thing that moves there's only one thing that moves quickly and that's liquidity in the quickly and that's liquidity in the quickly and that's liquidity in the system you know system you know system you know printing money so i think it's the most printing money so i think it's the most printing money so i think it's the most predictable part of the forecast is that predictable part of the forecast is that predictable part of the forecast is that ultimately we're going to see money like ultimately we're going to see money like ultimately we're going to see money like there's never been money printed before there's never been money printed before there's never been money printed before um in at least in the world um in at least in the world um in at least in the world um and that means um um and that means um um and that means um you know you will have a recovery on the you know you will have a recovery on the you know you will have a recovery on the other side you will have a bull market other side you will have a bull market other side you will have a bull market on the other side but it won't be a on the other side but it won't be a on the other side but it won't be a secular bull market we secular bull market we secular bull market we we will see a secular top this year we will see a secular top this year we will see a secular top this year meaning highs meaning highs meaning highs for a long time but if you go down 80 for a long time but if you go down 80 for a long time but if you go down 80 or anything close to 80 or anything close to 80 or anything close to 80 and just using the s p number i have you and just using the s p number i have you and just using the s p number i have you know it's 10 000 down to 2 000. that know it's 10 000 down to 2 000. that gives you a lot of room if they're gives you a lot of room if they're gives you a lot of room if they're printing 20 trillion dollars in the us printing 20 trillion dollars in the us printing 20 trillion dollars in the us um that gives you a lot of room for that um that gives you a lot of room for that um that gives you a lot of room for that to go 2 000 back to to go 2 000 back to to go 2 000 back to let's say it goes back uh you could let's say it goes back uh you could let's say it goes back uh you could quadruple and go back to 8 000. quadruple and go back to 8 000. you're still 2 000 short of the where it you're still 2 000 short of the where it you're still 2 000 short of the where it topped out so topped out so topped out so so i think and then from there you know so i think and then from there you know so i think and then from there you know and that might take a year and a half or and that might take a year and a half or and that might take a year and a half or two years uh or less depending on how two years uh or less depending on how two years uh or less depending on how fast it happens fast it happens um and then beyond that it starts you um and then beyond that it starts you um and then beyond that it starts you know lower highs and lower lows know lower highs and lower lows know lower highs and lower lows uh at least lower highs and then uh at least lower highs and then uh at least lower highs and then ultimately probably out in the mid 30s ultimately probably out in the mid 30s ultimately probably out in the mid 30s lower lows lower lows lower lows um so um you can have um so um you can have um so um you can have um a period where you can make a lot of um a period where you can make a lot of um a period where you can make a lot of money money money but if you just buy and hold and and but if you just buy and hold and and but if you just buy and hold and and follow the mantra that's been in place it's been the correct it's been the correct it's been the correct mantra and the correct strategy for the mantra and the correct strategy for the mantra and the correct strategy for the last 40 years last 40 years last 40 years but if you follow that through here but if you follow that through here but if you follow that through here you're digging out of a very big hole you're digging out of a very big hole you're digging out of a very big hole and you may not get your money back and you may not get your money back and you may not get your money back uh so this idea that we always go to uh so this idea that we always go to uh so this idea that we always go to new highs new highs new highs if you just you know buy and hold and if you just you know buy and hold and if you just you know buy and hold and don't worry about it don't worry about it don't worry about it uh and passively invest or what have you uh and passively invest or what have you uh and passively invest or what have you you're just gonna you know you're just gonna you know you're just gonna you know benefit from the constant higher highs benefit from the constant higher highs benefit from the constant higher highs you know secular bull markets when you know secular bull markets when you know secular bull markets when they're 40 you know years old this one's they're 40 you know years old this one's they're 40 you know years old this one's 40 going on 44 years now 40 going on 44 years now 40 going on 44 years now basically 44 years right now um basically 44 years right now um you know 44 years is an eternity you know 44 years is an eternity you know 44 years is an eternity for most people in markets and certainly for most people in markets and certainly for most people in markets and certainly there's an awful lot of people in these there's an awful lot of people in these there's an awful lot of people in these markets that weren't around 44 years ago markets that weren't around 44 years ago markets that weren't around 44 years ago so it looks like you always have a bull so it looks like you always have a bull so it looks like you always have a bull market a circular bull market market a circular bull market market a circular bull market but i think it's coming to an end and if but i think it's coming to an end and if but i think it's coming to an end and if it is and if we get that bear market it is and if we get that bear market it is and if we get that bear market that i'm talking about that i'm talking about that i'm talking about um that buy and hold strategy is going to um that buy and hold strategy is going to um that buy and hold strategy is going to fail you fail you fail you um and then the other piece of it is um and then the other piece of it is um and then the other piece of it is every cycle not secular but every cycle every cycle not secular but every cycle every cycle not secular but every cycle market cycle market cycle market cycle uh is new leadership so this one's been uh is new leadership so this one's been uh is new leadership so this one's been obviously tech and ai and obviously tech and ai and obviously tech and ai and uh some other things um but it's been uh some other things um but it's been uh some other things um but it's been very much tech um the next cycle very much tech um the next cycle very much tech um the next cycle is going to be i think old industrial is going to be i think old industrial is going to be i think old industrial commodity so that you know the commodity so that you know the commodity so that you know the caterpillars of the world will work caterpillars of the world will work caterpillars of the world will work the deers of the world will work but so the deers of the world will work but so the deers of the world will work but so will um you know silver gold copper will um you know silver gold copper will um you know silver gold copper uh and the producers of that um uh and the producers of that um uh and the producers of that um and the reason for that is because all and the reason for that is because all and the reason for that is because all that money that gets pumped in that money that gets pumped in that money that gets pumped in will with a lag of a couple years will with a lag of a couple years will with a lag of a couple years jump start a very big inflation cycle jump start a very big inflation cycle jump start a very big inflation cycle the likes of which we haven't seen in the likes of which we haven't seen in the likes of which we haven't seen in you know 50 years basically or 45 years you know 50 years basically or 45 years you know 50 years basically or 45 years um you know going back to the early 80s um you know going back to the early 80s um you know going back to the early 80s um um um and it will be and it will be and it will be you know it'll start gradually you're you know it'll start gradually you're you know it'll start gradually you're coming out of i think the bust will be coming out of i think the bust will be coming out of i think the bust will be deflationary so deflationary so deflationary so you're going to come out of a year of you're going to come out of a year of you're going to come out of a year of deflation deflation deflation um and then from there you know low um and then from there you know low um and then from there you know low single digits and then high single single digits and then high single single digits and then high single digits digits digits by you know by the turn of the decade by you know by the turn of the decade by you know by the turn of the decade you know early next decade you'd you know early next decade you'd you know early next decade you'd probably be in double digits maybe probably be in double digits maybe probably be in double digits maybe it's earnings that outstrip that inflation it's earnings that outstrip that inflation it's earnings that outstrip that inflation so so so it's going to get harder and harder to it's going to get harder and harder to it's going to get harder and harder to own grow stocks or to own slow growing own grow stocks or to own slow growing own grow stocks or to own slow growing uh stable companies uh stable companies uh stable companies and it's gonna it's gonna behoove and it's gonna it's gonna behoove and it's gonna it's gonna behoove investors to be in those things that are investors to be in those things that are investors to be in those things that are really really really moving up with inflation you know i moving up with inflation you know i moving up with inflation you know i think silver can go from think silver can go from think silver can go from you know i'm i'm calling for silver now you know i'm i'm calling for silver now you know i'm i'm calling for silver now you're not you're not you're not i'm jumping ahead probably but i'm calling i'm jumping ahead probably but i'm calling i'm jumping ahead probably but i'm calling for silver to go to for silver to go to for silver to go to 200 this cycle fall back you know could 200 this cycle fall back you know could 200 this cycle fall back you know could fall back fall back fall back 50 60 70 75 percent in the bust 50 60 70 75 percent in the bust 50 60 70 75 percent in the bust and then go from there so let's say it and then go from there so let's say it and then go from there so let's say it falls back to 50. falls back to 50. falls back to 50. um you could go from 50 to a thousand um you could go from 50 to a thousand um you could go from 50 to a thousand in the next cycle um gold could fall in the next cycle um gold could fall in the next cycle um gold could fall i'm calling for 7 000 gold this cycle i'm calling for 7 000 gold this cycle i'm calling for 7 000 gold this cycle could fall back to could fall back to could fall back to 3500 50 retracement or 4 000 3500 50 retracement or 4 000 3500 50 retracement or 4 000 and then you know i'm calling for 20 and then you know i'm calling for 20 and then you know i'm calling for 20 000 thousand thousand uh next cycle probably 20 32 or uh next cycle probably 20 32 or uh next cycle probably 20 32 or three somewhere out there three somewhere out there three somewhere out there so so those are the kind of things and so so those are the kind of things and so so those are the kind of things and copper could go to 20 or 30 dollars copper could go to 20 or 30 dollars copper could go to 20 or 30 dollars who knows um you know Because the demand for commodities is going to be huge. And the price, you know, we don't have the supply. There hasn't been a lot of new greenfield production. So it's going to be a case where demand far outstrips supply. You goose the system with, let's say, $50 trillion in global money. That produces demand in those areas that are being built out, which is power and AI and reshoring here in the U.S. and et cetera. As that demands commodities in big ways, as that demands outstrips supply by a big amount, the only thing it can give is price straight up. So the point is that next cycle will be a very different cycle in terms of leadership. And those are able to be nimble and go from today's leadership to the next cycle. To the next cycle's leadership will be in good stead. Those that just kind of sit passively in an S&P, for example, what people don't realize is that the old leadership dominates, because it moved up so much for a decade or two decades, you know, it becomes the highest percentages of the portfolio, right? If you're in an S&P, because of the price moves, you know, tech is a much bigger percentage of the S&P. Certainly, than our commodity stocks, certainly than our gold or silver producers. And so, next cycle, if you just stay with the S&P, your weightings are all backwards. You're in your most heavily weight, even with the correction, the bear market, you're most heavily weighted in those things that are going to underperform, and most lightly weighted, generally, in those things that are going to become the leaders. So it's, again, important to understand that. Understand how the dynamics of a portfolio work, and be structured for that.
Speaker 1Great thoughts overall. I just want to pull on one thread there. You mentioned we've been in a bull market for 44 plus years. So are you looking at the dot-com bust and the great financial crisis as more secular, or sorry, cyclical downturns within a longer secular bear market? And if so, how will this bear market, you know, differ from those two, which were cyclical?
Speaker 2Yeah. So, so, good question. It, yeah, we, we, I think it has been a secular bull market going back to August of 1982. That's why I say we're right at 44 years. You know, the Dow, just to give people a perspective, the Dow, and because I was, I was running money in a, in a Textron at that time was new to them. I'd been hired six months prior, and I said, keep your powder dry. We're heading for, you know, we're in a bear market. We'll get a bottom. And so August of 1982, I went to the investment committee and the, the Dow was at 780 slightly below that, but 780 and, you know, Dow's now, you know, high 50,000 sales. So the moves are incredible in terms of how much it's, it's advanced over that time. And obviously the NASDAQ even more SP a lot. So but that's, that's where the secular bull. Started and it was kind of the beginning of disinflation. It was a peaking of inflation and a lot of the, the secular bull was driven by P multiples expanding as rates went down. It's an inverse correlation. Um, and so we're at that point where, um, in the next year or two, we're going to reverse that where, um, you know, rates, I think can get to zero in the bust and then begin a long climb from zero. Well, I'm talking. I'm talking about the 10 year, a long climb from zero to almost 20% as inflation goes from negative to 25%, uh, and T bills probably go almost to 25%. So you'll get the exact opposite of you've had the last 44 years where P multiples get compressed. So you capitalize the earnings at a, at a much higher interest rate because of compressed P multiples and the, so that's why you have that 44 years. Um, and, and even though rates have two more years, maybe another 18 months to go or more to a new lower low, um, the market, the equity market peaks out because it's driven by not just interest rates, but also earnings and earnings will roll over with the economy and, uh, you know, global bus. So, um, the market cycle, the stock market cycle peaks, I think this year or certainly soon after that. Um, the bond market, secular bull market peaks probably late next year or early in 28. Um, and so in, in that secular bull market, you had many cycles, you know, you, you did have the.com cycle. You had, you know, you had the housing cycle into 2007, eight, um, you know, we've had, um, periods, you know, again, different leaderships during different periods in there, but we had recessions, um, certainly 2008, nine was a great recession. Um, what I think we'll have here, a bust is something I call not a depression because it happens fast, but something bigger than a recession.
Speaker 1Let's dive into commodities a little bit and your price targets there. Uh, you mentioned silver, you're, you know, there's only about four people on this show who've mentioned $1,000 silver that come to mind, Michael Oliver, Lynette saying Francis hunt and yourself, uh, Michael Oliver. It was very bold with his goal. He believes silver could go to a thousand within one year. He didn't call for that. He said it wouldn't shock him. So I just want to clarify that for people who are piling on and saying, this guy's crazy. He said it wouldn't shock him, but he has pretty high targets. Um, could you unpack that a little bit for us? You said you think it's going to go to 200 this cycle, eventually correct in the bust and then rise again, potentially up to a thousand. Is that correct?
Speaker 2Yep. Yeah. I, I, um, can't get there myself. To Michael's numbers, but I don't think he's crazy. And I certainly don't discount his experience and knowledge. And it's certainly possible to exceed my expectations for this cycle. But right now, 200 is as high as I can get. I had it at 125, um, I think going into January, um, and then raised it, um, to 170, I think, uh, and then raise it again to 200. So, but that's, you know, I'm, I'm, I, I'm pretty confident with the 200, I just can't get to the three, four or 500 that Michael's talked about. And certainly not a thousand, the thousand for me is probably a 2032 or three type period, but, you know, you could drive a truck through how much you can miss that by, you know, it could be two years either way, but, um, but it's, it's the next cycle really getting driven. Um, and it comes from a lower potential. It's a lower level in the bust. I do think the metals will, as they always do get hit in a, in a big market correction in a recession or a, you know, in this case is a bigger than recession type downturn. Um, but you know, those that are very turned off by the fact that, you know, silver got to 122 and rolled over and has been down for months. Um, and it shook out a lot of weaker hands. Uh, as you know, cause we've talked about this for years, I was bullish on silver and gold, you know, two, three, four years ago. And it took a while to get gold, gold got going before silver, but silver, you know, I took a lot of heat because I, when it was in the mid twenties, uh, just couldn't get out of its own way with trade, you know, particularly in miners, but between, you know, mid twenties and the high teens. And then it got up to 30 and then backed off again. People just. Didn't believe that it had the kind of legs that I talked about. And then when it finally broke out and took off, um, that's when people jumped on the bandwagon. So they didn't buy it at 30 or 40. They bought it at, you know, 60, 70, 80, and then they're now they're really upset because they lost money. Um, but that's markets once, once things get too bullion, um, the market has a way of basically bringing back to discipline. Shaking out the weak hands. And because the run from 50 to one 22 was parabolic and happened. So, so dramatically, um, it, it took months to correct. And I can say that looking back, I didn't know that it was going to take six or eight months to get going, but I'm confident now that that 55, six level was the, the correct correction bottom. Um, and that we have begun the turn, obviously. Today, it's coming out of a little bit of a pullback yesterday and it looks like you can go higher. There's still going to be pullbacks. It's still going to be, you know, you have to be careful with it. Um, but I do think once it breaks above a certain level, I'm not sure whether that's, you know, I, I see 72 right now is the next stop, but I know Michael's probably talking higher than that, but, um, there'll be, there'll be corrections along the way, but I don't think they're gonna be long lasting. You know, they might last days. But not, not months.
Speaker 1Yeah. And it's interesting to point out the back when silver was range bound between around that 20. $30 level, people would call you crazy for saying silver would get to $50, let alone $100, let alone $120. So people who are upset about the silver price today, I mean, what do you want? We're at $65 here. Tell somebody, you know, the beginning of last year, silver is going to $65. They would have said, you're either lying or, you know, it's life changing. But now everybody's crying. So I think that's funny. Gold, how much of the gold story do you think is a currency debasement story? And how much of the broad market rising do you think is a currency debasement story? Because obviously, the extreme example we could look at is in hyperinflationary environments such as Zimbabwe. I forget what year that was, the stock market went absolutely ballistic. I believe Weimar Republic in Germany stock market goes ballistic because of the currency depreciation at such a rapid scale. Do you think currency debasement is a currency debasement story? I think it's a currency debasement story. Do you think currency debasement is behind the rise in gold and the broad stock market as well, to some extent? And if so, how much?
Speaker 2Yeah, for sure. It plays a role. I mean, if you price gold in various currencies, you'll see differences in returns because the currency matters. Obviously, the dollar in the last year has been up. And, you know, gold has a nice run. So it hasn't been the case near term. But I do think, the big move from, you know, 4500, 4400, 500 here to 7000, a lot of that is going to be currency. I mean, the dollar, I have a dollar going to 83, something like that over the course of, you know, the next six or nine months or less. And if that happens, it's a big part of the move to 7000, I think. It's more than that, though. Obviously, rates coming down, which, as I said, I think rates peaked yesterday. I don't usually try to call things to the day, so, and I didn't call it, but I mean, I don't usually pinpoint things like that. But it looks to me like you finally got to max pain, max bearishness. And then, obviously, what Besant did today, announced today, helps. But I have rates going down from here for the next 18 months. It'll start gradually, but ultimately, like I said, you could get 10-year down to zero. And that first move down, let's say, from, you know, the 460, 70 area down below four, I think is going to help gold. That'll be trading down well. The rates will be trading down well while gold's moving up and silver's moving up. And then I think you can get a faster move from there down to three or even below. That will be, kind of, a big move. Kind of that final move up towards those numbers. And I, you know, as I said, I can only get 7,000 on gold and 200 on silver, but it won't surprise me if those numbers prove conservative.
Speaker 1How much trouble is Japan in right now? Because we just saw the U.S. essentially intervene in the yen market. A lot of people talking about this was to stop Japan from selling off a bunch of its treasuries, considering it's in a pretty precarious situation right now. It's a net oil importer. I think it imports the vast majority of its hydrocarbons and it gets a lot of those. I believe most of them from the Middle East. So it's been hit a little bit hard, although I believe they have made some deals with Iran to get some oil through the strait. And then, of course, the yen dropping and Japanese bond yields rising to very high levels historically. How much trouble are they in? And if things really go wrong there, could it reverberate throughout the global economy as well?
Speaker 2I have said they are kind of the wild card in the bust. You know, we don't really know what's going to trigger the bust or what's going to be the most dramatic piece of the bust. But certainly Japan is right up there as a candidate. I mean, you know, they have maintained zero interest rate policy forever and have basically kind of looked like you had made monetary theory extinct, you know, forever and not have inflation. And I'm a monetarist pretty much. And I just think what we're seeing now is what should have been expected is that at some point, yes, they are more homogeneous society and they had lots of things that they could kind of help them keep inflation in check for a while. But now it's breaking out. And so will rates. Rates track inflation. And you know, for decades, they maintained this policy and thought they could get away with it. Well, guess what? Now it's, you know, you postpone the monetary response or the response to the monetary, but it's coming now. And I think during the next year, you will see rates keep pushing up there. And they just don't have, I don't think they have the leeway. To deal with that. And I mean, I have, I have the yen going and I do yen dollar, not dollar yen, but the end of the dollar I have going to 0.0085 and it's down around 0.0063 something, 635 say. So I have the yen going pretty high here over the course of the next six, eight months. And, you know, dollar obviously is going to be down against the euro, the yen, even the, you know, the other dollars, you know, Canadian dollar and Aussie dollar, et cetera. So, but I, but I do think that in the bust, Japan's going to be probably one of the places where it's just over leveraged, you know, very over leveraged to that, to that policy. And as I have preached over and over, leverage works both ways on the way up. It enhances returns. We're in our, you know, in, in everything we do and leverage decimates you as we found out in 2008, nine on, on the other side. So that's basically my reason for having a bust is we've got 330 trillion plus in global debt out there. And, you know, certainly China's a big part of that. Certainly the U S is part of that. And Japan's part of that. Um, all, you know, all Western, countries are part of that. It's, I'm not calling for a sovereign crisis because they have the, the printing press, but there's a lot of private debt out there that I think is going to have a problem. You know, certainly commercial real estate. We'll, we'll find out there's another shooter drop there. Um, private equity, private credit, et cetera. There's just, there's plenty of candidates where once this thing rolls over, once something triggers, uh, you're going to see other things show up.
Speaker 1And given everything we've discussed so far, where would you be looking in the market today for potential opportunity? Because obviously we're in a very uncertain market environment. You believe that the broad market's going to continue rising. That could be difficult to time for your regular average retail investor who doesn't know how to look at charts and doesn't understand a lot of the macro behind it. That's the issue we've come to in today's investing world is this passive investing. As you were speaking of people now believe that the stock market is a high interest savings account that you put money in it and then you just wait. And over time, you're just going to keep making more and more money. And, um, I think that pair, I agree with you that paradigm is rapidly changing. So with all that in mind, where would you be looking to invest today? I know you, you mentioned long dated us treasuries before. Is that an area you're bullish on and anywhere else where you're seeing potential value?
Speaker 2Yeah. So it's, it's a little tricky and people, people jump ahead. Cause I am, you know, I do have my 0% treasury call. Um, but it starts very slow. So there's a period in here. And again, everybody has to figure this out for themselves based on their own experience and risk of, um, tolerance, et cetera. But we're in a funny place where, um, I mean, I, I have a 90 number for XLF, the financial ETF. Um, and I'm not sure where that is now, but that's more than a 50% move from here, I think. Um, and there are still, I mean, when you figure the numbers, there's two and three year returns still ahead of us that are going to happen in a matter of months. So you have to look at both time and, you know, what, what the upside is. And so I just caution people, even though, and again, some people should probably, because I could be wrong, you know, lots of, lots of the call could be wrong. But I think it's a good idea to look at both times and see what's going on. And I think it's a good idea to look at both times and see what's going on. So you have to understand the risk we're at when we're this late in the game. However, if I'm right, and there's, you know, 30, 40, 50% returns left in some of these areas, you run the risk that you jump out now saying, I'm just not smart enough to time the top and I'm nervous. Uh, as you've been nervous since, you know, since 2020, a lot of these people have been nervous all along, particularly institutions. Um, but, uh, if you jump out now, if you get this final parabolic run, it's going to, you know, psychology being what it is, it will suck you back in. a lot of people and they'll end up getting out understanding what's coming but then getting sucked in by the fact that hey how do how do I know this is the top I was wrong I missed on 30 40 50 percent returns and people are telling me there's two and three years to go on this I got to get back in and then you get back in at the top so so I just caution people and again it's not advice everybody has to kind of figure out for themselves but just know if you if you decide you're getting out early don't get swept up into the emotion of it secondly and and treasuries will be I think at the top of the list of things that will protect you in the bus there are very few things that aren't going to go down and treasuries I think are going to be one and that's both from the very short end all the way out you know if in fact rates are falling during the bus as they should the long duration is where you're going to make the most money but it's not going to be a long duration it's going to be a long duration it's also the place where if I'm wrong you're going to have more volatility so but treasuries I think will top the list FDIC insured savings which means up to the 250,000 per institution should be safe with the printing press I can say with confidence that they will fund FDIC to whatever is necessary to meet their obligations their liabilities so you don't have to worry about oh gee the government might fail and they won't be able to cover it not this cycle another cycle yes but not this cycle and that's why I'm not so concerned about a sovereign debt crisis you know we could have some sovereigns that are you know in trouble but they have the printing press the so those are really the things obviously people with more experience can think about shorts and things like that but for the basic person out there that doesn't have investment experience treasuries will stand up I think in the bust savings accounts will as long as you don't get beyond that you know will there be bail-ins possibly in Europe we've seen that before meaning that they you know the the deposit holder in the banks has to eat the loss you know suffers here I think it's far less likely you know we saw in 2008-9 they'll step up but again they'll print money like there's no tomorrow to make sure that they're going to be able to get the money they need to get the money they need to make sure that they can you know hold hold the consumer together if you're in a pension fund that gets in trouble we don't know if you're in a money market fund you know the president is there that they went to the we won't break the buck last time in 2008-9 I suspect we'll see that again just because I expect we're going to be printing money and looking for any place we can put it to hold the economy up so but we don't know that it's not anything we can say for sure um but those are kind of the places I think if you're in if you're in junk bonds if you're in equities you know just know what happens in these kind of conditions they they can lose a lot of
Speaker 1money for you great thoughts overall an excellent conversation today David tell us about contrarian macro advisors that's your letter how can people subscribe and what's on
Speaker 2offer there sure um I write a quarterly macro letter um you know it's basically my forecasting letter and I I am I am on Twitter all the time or X all the time so you know people can get a lot of my views there um the letter just allows me it's a longer form obviously uh where I can uh explain my rationale better and and people can better understand it so it's not for everybody you know there's a cost to it um I think it's pretty reasonable cost given my track record but that's for people to decide um and uh I'm more than happy to put out what I put out on X I get I get people who subscribe once while saying you know you give away so much for free and I go yeah but I will say my my um subscribers basically quarter to quarter I hold on to 75 to 80 percent of my subscribers so um yeah it's pretty good and that business I think tells you that people do see value in it you know I've got people have been with me for five or six or seven years so um but anyway I um you know letter is a macro letter it's not doesn't provide advice I I as I say all the time I don't provide advice I forecast the markets and the economy and then
Speaker 1people can sign up by direct messaging you on X correct to it to inquire about
Speaker 2it yeah thanks yeah if anybody has interest um all they have to do is send a direct message to me and what they call uh X chat now um and I will provide details on the subscription what you know what information I need from you and how much it'll cost etc great
Speaker 1well I will put a link to your X account in the description below David as always thank you so much for coming on the show yeah thanks for having me Jesse thank you for joining us today on commodity culture earn up to a four percent annual yield on your physical gold paid in gold ounces through monetary metals go to monetary-metals.com slash commodity to find out how to put your gold to work for you link is in the show notes below
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