David Brady: Coming Pullback in Gold and Silver will be the Last Great Buying Opportunity

welcome back to palisade radio I'm your host Tom Bhadra vyx and joining me today is returning guest David Brady he's a money manager and spot money contributor and expert on all things gold and silver how are you today David I'm great Tom it's not to be on again great to have you back I wanted to get you back to have a little bit of an update on your call for a little bit of a pullback here why don't we start by getting a little bit of a general update and we can dive into a couple couple specific things all right well first of all given the cacophony of noise and response to that call first of all let me say that I'm a medium to long term bull in precious metals and miners and have been so since 2015 I mean anybody who's followed me on Twitter since that knows that you can also see in my articles and Sprott money over the past two to three years however my process enables me to remain objective and avoid getting pushed around by what I call groups Inc or hurting and it says the risks and the short term are to the downside and I stress to the short tire in the short term and I'm basing that on multiple data points and what do I mean by short term I mean the next to the three months not the next three days or two three weeks I'm not concerned about the daily noise I'm concerned about the big moves and why do I say next to the three months because I explain expect deflationary fears to soar again based on justified fears of renewed lockdowns an escalating trade war with China and this is all when the Fed is tapering its liquidity can injections the peak and fall in the stock market would confirm that those deflationary traders in my opinion and would likely weigh on precious metals and miners so with that in mind I just want to give that background because I get a lot of people saying he's wrong it's going up and so forth and you've you know he's be wrong before yeah I can I can be wrong but I've been long since 2015 and who's more objective the guy who's perennial oolong or the guy whose long and says withers wristed the downside that's called objectivity and so a best long-term but I trade both sides in the shorter that said we are in an uptrend we see a break of 1750 which is a key level for me in gold we could see higher highs ahead of that so why do I see risk in the short term to the downside okay so first of all it's listener with fundamentals as I said back in 2017 the Fed returning to QE on steroids and monetary insanity on steroids I said would mean that gold and silver are gonna take off well we've seen that we're at new the highest levels in eight years however the Fed just tapered liquidity recently we were on a three trillion run race we're down to a one trillion won rate meanwhile the government still spending more on creating more debt so that is by definition a taper well if massive massive money with printing is the primary fundamental reason for higher precious metals and miners what happens if they cut that liquidity I don't disagree that's going to go up much higher longer term medium term as I said I'm a long term bull but in the short term the risks are piling up to the downside on secondly technicals we're extreme we're seeing negative to vent multiple negative defective urgencies on the daily weekly and multicharts the monthly is the one that concerns me the most I mean the levels are at the highest since 2016 pre drop in 2008 and a similar RSI peak as in 2006 those drops respectively 2011 were 50% 2008 were 35% and 2006 25% and we're at the same levels of being overbought right now on their technical side so to argue for a five ten fifteen percent pullback to me is not unreasonable especially from these levels and then let's start talking about sentiment sentiment is most bullish it's been since the 2011 peak and this explains and I also get confirmation of this well on Twitter in response to my call for a pullback because I got a whole number of cantankerous responses saying this time is different and so forth that to me just emphasizes what the data is saying and that that sentiment is extraordinarily bullish so you got technicals are extreme overbought you've got sentiment that's extreme bullish you got the Fed tapering liquidity and at the same time now let's take a look at positioning you've got the banks are still significantly short gold banks don't like to lose money so for me if when you add up all the various data points they argue for a pullback in the short term the trigger on sa short term over the next few months until September October when the Fed turns on the monetary spigots full blast again ahead of the November elections and I noticed that the Treasury has built up a huge cash balance normally around 400 billion it's now at one point six trillion I believe and to me that tells me as I've said publicly that they're getting ready for a helicopter drop whether it's infrastructure spending tax rebates checks in the mail whatever it is ahead of the November election all to enable Trump to get reelected which not to go through too far down the rabbit hole which will confirm my E thesis that stagflation is gonna begin towards the end of the year because all that money's going straight into circulation in the economy and meanwhile the economy's gonna continue to headsails given the lock downs and the virus and so forth but you got money being rained down on the economy and stagflation begins and then hypercycle ation thereafter at 2021 or 2022 well that's anybody to remember since 1970s they are the ideal conditions for gold and silver but ahead of that you're going to see deflationary fears rise as those fears of lockdowns have already started renewed lockdowns and the Fed as I said is tapering liquidity so the risk to me is that we're going to get deflationary fears rise stocks go down and with that gold and silver suffer downside and the miners - now people say as I mentioned already that the consistent response to my car for downside risk in the short term is that this time is different we're in a not an uptrend we're only going up first of all nothing goes up in a straight line and yes in an uptrend the market can remain extreme bullish and overbought for quite a long period of time but they rarely stay extreme bullish and extreme overbought beyond that my point is that there is for an uptrend to occur the definition of a pro trend is higher highs and higher lows well how do you get the higher low less you get a pullback you do you don't and that's the most pullbacks are healthy in an uptrend and I'll give you a whole range of data points pull up a weekly chart and look up these dates for pullbacks within an overall of trend so if you go back to I'm just gonna read them off here May to June 2006 23% drop March to October 2008 35% drop febrile to February to April 2009 14% drop November 2009 to February 2010 15% drop June July 2009 9% re 2010 9% drop December 2010 to January 2011 9% drop April to May 2011 7% drop and for those with short memories fast forward that was true by the way that was during the bull market from 2001 to 2011 I just read from 2006 on there were plenty or before that for those are short-term memories and skip forward to 20 though since the bottom in 2015 July December 2016 18 percent drop April to July 2017 7% September to December to 79% January to August 2018 13% February to April 20 1960 September to November 20 nineteen eight percent and then the drop in March was 15 percent alone they are all in up trades so the idea that you don't get pullbacks in an uptrend is how do I put this politely simply not supported by the evidence I mean you've got so many data points so this is to me where emotional bias is exposed most clearly when you're a eighth year highs you got extreme technicals extreme sentiment extreme positioning and the feds not on your side and yet everybody and their dog is still thinking is going higher and are very emotional with in response to any comments to the contrary look guys I'm long like the rest of you but I focus on the data I don't let a mo get caught up in the emotion could we go up a little higher sure we could we could even go to New Hall time highest but the bigger week the higher we go the bigger they are the harder they fall meaning bigger the rally is before we get to fall the bigger that fall is gonna be I'd rather see a pullback now of maybe down to 1750 which is the key level of watching but more likely down to 60 and 70 which is a big key level if we go through there 14 hundreds but if we go to new all-time highs first that correction will be bigger and sharper in my opinion and those are the ones that shake the wheat lungs out what I really appreciate about your analysis David is that you're looking at multiple data points and and multiple ways of looking at like you say the objective data so what kind of timing are we gonna see for a rebound if we do hit let's say you know nobody wants to see it but the 1,400 level and is this possibly the last good buying opportunity before we really take off into real all-time highs well this is why you know it's a little disappointing that people get so upset about a call for a short-term pullback because as I've also said whatever I say that is that at that point I believe that if and when this pullback occurs it's more likely when that whatever level we bottomed at will be the last buying opera to great buying opportunity you get in gold silver and the miners put a different way you'll never see that price again in my opinion and the trigger for that for me is going to be the Fed turning on the monetary spigots again in association with that they're going to cap bond yields and this is critical they're gonna cap bond yields because they can't afford the interest cost of the debt to go up dramatically because they're already insolvent and solvency of the US government will become apparent to everybody and then it's game over so they will cap bond yields when they do that they cap real yields which if anybody goes by decades in gold silver gold in particular you will see that gold is inversely related to real eels so and really owes are capped ie they have an asymmetric risk to the downside gold goes up now why will they cap yields well as I mentioned ahead of the elections I expect a helicopter drop from the government's the Treasury specifically whatever form that may take that money goes into circulations stagflation starts to begin well you're gonna see yields go publish spike higher and that'll probably contribute to the downside in gold and silver but the Fed will formally come out and come out and formally state in my opinion that they're gonna cap on yields much like the Bank of Japan did and at that point it's game over then gold the silver take off and I think that will occur in the September October time frame because we got the elections in November they will want to do this helicopter drop and kick off the money printing again the day before the election they want to give it to him some time to sink in and also I do expect to drop in stocks here shortly the peak is coming and a significant drop and then for that money printing to have effect and get us a back up to new all-time highs ahead of the election you're going to need a month or two so preferring levels over specific dates but I think that September October time frame is going to be the bottom and stocks after the coming drop and will be the bottom either the same time are not long after gold and silver will bottom two and then it's see a time you can start passing around the champagne at that point because we'll all be trying to guess how high this is going to go so again I'm a long-term bull mega long mega bullish but displaying my objectivity there's a lot of data points a lot of headwinds here in the short term that we have to be ready for and I think if we do see stocks PE can start to fall I think you're gonna see gold and silver well maybe hang around for a bit because yields might fall in concert to begin with but when the fan turns on the spigots again you might see eel spike which will contribute to the fall he in gold and silver but again when they cap bond yields that's it it's game over so not sure if it's specific timing of the drop in gold and silver but giving the divergence is piling up on the sentiment and technical side and given that the banks are still short positioning I want to get out of those shorts I don't think it's gonna take too much longer before we see some downside here but thereafter it's something we should all welcome because you're gonna be able to buy the last dip before the the mega rally the follows in my opinion very interesting David do you think that there's the same kind of contributing factors that are going to to pile up into this next dip that we had in March as in the second wave lockdown and stuff like that and is it going to be as dramatic and pronounced as that that one in March I think it's gonna be more so I I've said this publicly on Twitter in my articles if and printed three trillion in space of three months since March I think they're gonna blow through ten trillion on the balance sheet I mean I've said that what happens next the Fed is going to literally buy everything and they're going to have to spend a lot of prints a lot of currency to do that and when that happens they'll also have to cap bond yields because it's going to be stagflation area the economy is not gonna benefit from any of this money printing I mean maybe in the short term you get a little spike in retail sales but you know the deterioration the economy given what's happening with these lockdowns is going to continue but it'll give temporary relief in the short term but then they're just when it fades again they just pile on even more currency more helicopter drops on until they get people to get to as Mike Maloney pointed out years ago until the retirees come out and start spending their 401k money there are erase and once they feel confident than doing so and that's when hypercycle ation takes place so to answer your question when we get this next go-round of Fed printing I mean you ain't seen nothing yet it's just you're gonna see ludicrous amounts of money printed in my opinion on top of fiscal stimulus which is basically mmt on steroids which if anybody again goes back to the 1970s stagflation era period is just going to be music to gold and gold bug and Silverberg ears I mean it's gold server just gonna take off at that point in a nutshell the same but much much much more so than emerging crazy times David before we move on to the general equity markets let's get your opinion on what silver could do when when we see that bounce back up well I I'd rather give watch my conservative that's based on empirical data that I'm getting from other people that and what happened in Venezuela where I think the number was it went to 17 thousand seven hundred and thirty-eight times or 438 times in three years III just expected to go to four hundred five hundred dollars conservatively speaking but you could go a whole lot higher here because if Gold's gonna go to five thousand or ten thousand or fifty thousand you've got a look at the gold silver ratio and silver always outperforms gold in a bull market 1974 to 1980 those six years called went up 24x silver went up 36 X in 2001 to 2011 gold went up 8 X civil right of 12 X and the reason for that it's the poor man's gold and somebody goes down to the bank with their $2,000 and you know wants to buy some precious metals because they see what's happening and they go into the teller and go hey I want to buy some gold there's $2,000 and the time it looks and that won't even get you what else would go well why can't I buy well you can buy you know 50 ounces of silver I take the silver and so that's the reason why silver when the mania really kicks in just blows Pasco and with the gold and silver ratio reaching a record high of 120 125 recently no where around 100 I mean the amount of investable silver on earth relative the gold is 4 to 1 4 ounces of silver investable it's eight ounces of physical but for silver is much more used in industrial practices than gold so you take 50% of that production coming out of the ground away you want to got 4 ounces of silver for everyone else of gold market Center over and eschewed on the downside too when this gold silver ratio goes down could you see 1 2 1 possibly but I'll be conservative and say say 20 to 1 we get down to on the downside well if gold gets to last 10,000 that puts silver at $500 spreads so I don't think those numbers are ludicrous but I'm looking you know 2 to 3 years old but if we get a Venezuela it's like hyperinflation hypercycle ation in the US I mean who knows how high these things could go because hard assets will be the most sought-after assets you can think of other than a when we're looking at gold and silver reacting like this it seems to be almost a counterweight to the general equity markets and I wanted to get your opinion on where we can see the s and P bonds and and oil like how all those things fit together and and why oil seems to be more of an inflationary pricing note to you well let me start with equities I've said that you know you know China and Russia had been buying gold and silver the headlines is mostly gold for over ten years I believe that they're doing that a hedge a crash in the dollar when this fed when the feds prints currency on steroids some would say they've already done it what happens next is just gotta blow people's minds at one point what size of the balance sheet of all people whose confidence of the dollar is it gonna be twelve trillion fourteen trillion or fifteen trillion twenty trillion balance sheet at the Fed at some point people are going to once they get their dollar starts spinning over like hotcakes when that occurs gold and silver take off but stocks love inflation they're going to go through the roof as well I believe ahead of the my expectation for the Great Depression the greatest depression to begin at twenty twenty three twenty four that we're gonna see a rally to new all-time high as I said this back in January for every 2018 that we'd at least hit four thousand on the S P we're not that far away from now absolutely so from the next pullback once the next pullback is done in SP and the Fed turns out the spigots again I expect will go up to that four thousand Merrick we could go a lot higher than that so I'd see the two of those going hand and handled on one another I see oil going to triple digits by 2021 latest 2022 how can you say that give them your views on the lock downs in the economy and the deterioration in the economy well Japan there's only one side of the equation when it comes to price the other side is supply an icy supply being curtailed by the Russians and the Saudis dramatically here in the next few months and at the same time you've got dollars which oil is priced in being printed into a Libyan well one of the reasons the 1970s occurred in the first place is the article lost faith in the dollar and they started ramping up you know slashing supply to ramp up the price of oil in dollar terms because the dollar was being so happy he demanded this was after the closure of the gold window in 1971 well what do you think is gonna happen when the feds turns on the monetary spigots full blast in September October you're gonna see oil start to take off now I do see oil like stocks have a pullback here coming to I believe around close the gap on the daily and weekly charts around $21 per barrel would go even a little below there but then it's just going to take off from there so I see a symbiosis developed between stocks oil gold and silver here over the next few months downside ahead but then they all go shooting higher the biggest casualty the dollar that'll be the for me that's the one that's gonna get hurt when the Fed caps heels bond yields and the stocks and oil gold silver all take off its the dollar gets crushed now bonds they've gone sideways they've done literally nothing except go sideways for a while there as you know Craig hamkke pointed out they're informally capping yields in the short term while the Fed turns on the monetary spigots again and maybe even ahead of that in September October time frame that's going to put pressure to the upside on bond yields and I think at that point it'll make it easier for them to cap those bond yields by formally coming out doing so much like the BOJ did then you've got an asymmetric risk to the downside and bond yields whether it's 1% one and a half percent half percent I don't know what it is but I don't think bonds are the vehicle to invest in that's supposed to be a safe haven but how is getting a coupon of 1% 1 a half percent over the next 10 to 30 years against 5 10 20 percent inflation makes sense it doesn't you're gonna lose so much money on a real basis however stocks will go up but they won't do anything is don't go anywhere near as much as hard assets like gold and silver interesting David anything else you'd like to mention as we wrap up here no I think we've about covered it I just wanted to say until you know I'll give some levels that I'm looking at on the downside as I said we could still see some further upside but you know again eventually these data points that I'm looking at catch up to whatever asset they're covering in this case it's gold silver and the miners and whether we go higher or not in the short term I'm not concerned about the daily noise and a few pips here they are play the big moves they will catch up to gold and silver here soon do I know when do we know exactly which exact level no but the levels if you want to you know preserve some of the gains that you have if you see 1750 you break on gold on the downside that's probably time to crop and run below there 1670 is critical to avoid a drop down to the 1400s I mean you could see 16 6 1660 1650 and then I go back up being a false breakdown but you know that's an area to watch if we get through 70 and 50 11 silver 18 17 and 16 16 is must hold and silver on the upside you've got massive resistance at 19 we could break through 19 and everybody gets all balled up and then down it goes the the banks like to you know pull the rug out from traders once everybody gets deliriously euphoric about the silver or gold GDX 31 20 30 years a huge level on the downside and then you got 10 25 and cylce which is my favorite vehicle to play a longer term in the silver space and in the methyls Minor space from a training perspective overall because if silver is gonna outperform gold and miners are going to outperform the metals and juniors are gonna outperform the seniors still Jay is your only place only port of call no individual miner Society I don't like companies specific risk but when this next bottom comes I'm gonna be loading or pontil J but it went up 150 percent in the space of weeks after the March low can only imagine what it the next low hits but on to those levels break and particularly 1750 in gold yeah we can still go higher the shorter but sentiment technicals fundamentals positioning are all working against us and if I was playing a game of poker and I had a full house in my hand I feel pretty confident that I was going to win the pot the odds are in my favor but you know could I be wrong yeah but a you know law of averages says I I win you know the odds are on your side if the odds are on your side you'll win out most of the time but you know sometimes you're gonna do something you have a straight flush in your toast but the odds are against us for move much higher versus the risk to the downside if we do go much higher because given all of these things piling up we could go higher and the higher we get the bigger the fall the subsequent fall thereafter if we do go to 1923 1950 in my opinion however if we get a pullback now that's much healthier because it'll be smaller in nature and enables to go higher thereafter because these bullish conditions and overbought conditions always get corrected in an uptrend they always do I gave you multiple data points earlier on just go back and look at the chart for those dates and then the market March is hiring it that's what lower highs are all about I'm sorry higher lows are all of it it's you know maintaining neutral but if we don't get that correction sooner rather later it just means that the correction when it does come will be more violence to the downside and I just wanted your listeners to be aware of that because you know put emotion aside for a second the data is working against us even and even more so the more we go up perfect David I think that's a great way to conclude of course we can find you at global protrader on Twitter and your Sprott money articles as well anywhere else no I mean that's mainly it but I'm fairly active on Twitter I try only it's a tweeze I'm only when it's meaningful these days and yeah I post my articles on spot money on a weekly basis is there's a comment section there if anybody has any questions or queries perfect thanks for your time today David we really appreciate it thanks Tom I really appreciate you having me back up this podcast is for general informational purposes only nothing on this podcast should be taken as investment advice guests on this show are not compensated for their appearance listeners are urged to educate themselves and make their own decisions do not base any investment decisions on the information contained if you are full disclaimer please visit our website you think you understand the junior mining sector and you think that the participants in the mining sector junior mining sector are good people and kind people it's a bit how violent that term could be it actually could be quite violent it could be a rip your face off uranium rally totally destabilized eight-eight role did you what's going on

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Id: 6bFPWYYYjQU

Length: 30min 1sec (1801 seconds)

Published: Wed Jul 08 2020