David Hunter: Leverage will Create the Largest Global Financial Crisis in History

we live in a fantasy world now reality has been destroyed this is the time that you really need to pay attention the probabilities are overwhelmingly on gold's side that is the best environment to see gold increase its value [Music] welcome to palisades gold radio i'm your host tom bogefix joining me today again is david hunter or better known as dave h contrerian on twitter he's a contrarian macro strategist with 47 years experience he also writes a quarterly letter by subscription david thanks for joining me today yeah hi tom thanks for having me so we're coming up on almost a year since you and i first spoke hard to believe so looking back over that time period we've seen biden take office interest rates rise the s p and dao make new highs and also the dollar starting to grind lower has there been anything that has taken you by surprise over this over this last year um well certainly the last year itself was a surprise when it first happened i mean the pandemic and and all that's happened um since last march uh has certainly been beyond anything we've seen in our lifetimes i think so that's been surprising in terms of the markets not so much i was probably seen as kind of crazy when i talked about significant new highs in the market last march when the market was at 2200 and here we are you know 4 200 plus so so um that not so much i would say um the length of time is taking gold to reemerge from its consolidation i had a great run you know last march through early august and i thought maybe you'd get a few months consolidation and pick up before the end of the year and it's certainly been a much longer consolidation um i don't see it in anything other than that as i like to say markets don't do what we always want you know markets have their own timing so sometimes they do things on schedule and sometimes they they take longer i it doesn't cause me any concern uh in terms of it not coming around at some point it's just really been you know a longer consolidation i think part of that uh has been the you know last several months uh rising interest rates so as i know you say that we're headed for a spectacular melt up into the second quarter of this year and that rally is is being led by the semiconductor and fang stocks so is this due in part to all the currency that's been injected into the system for sure it's definitely you know all the liquidity both you know from from the uh central banks and and in our case the fed um and and certainly the physical stimulus as well that's all gone into it um it's also keep in mind we had such a um horrific hit last march and all through this what's what's kept my conviction high is all through this this climb in the last year uh spectacular as it's been um investors have remained relatively restrained you know there's been skepticism all the way up there's been a real wall of worry to climb um now you're starting to see that lift up more you do have you know more signs that people are believers as the economy is recovering um but there's still a healthy amount of skepticism every time we get a few day pullback people come out of the woodwork saying okay there's a big correction coming yeah not so much there's still plenty of bears out there but it's not so much that as people calling for bigger corrections and i think we're going to get i think the market's been self-correcting all the way up and every call for a bigger correction has been you know it's it's been far short of what they expected so i think that's a sign that people have one leg out the door um everybody's looking for a top um i think at the true top uh you're gonna have many many more true believers saying oh this is you know a cycle it's just getting started so i you know even though i think we're not very far away time wise um you know you get a you get another 500 point five or six hundred point move in the s p and psychology can be very different than it is right now so what markets will all be kind of converging and making new highs in this scenario david i'm still looking for obviously the equity markets to make new highs commodity markets to make new highs i think oil is right now in the process of a correction that's not done but that will come out of that correction and probably make new cycle highs here i mean new um you know since last march so you you could see 75 on the oil by this summer um gold and silver certainly new highs um and significant new highs i think in both cases uh well not not new not new all-time highs in silver but certainly gold um and and um bonds not at all you know bonds i think can rally here but um i i think in the course of this next few months um you know bonds are gonna see rates backing up again after this this run um down the road in what you know i'm pretty well known for my global bust call in that bust yes but i think bonds will make new highs or at least treasury bonds so as you were talking about the having the let's say the psychology of having one foot out the door david you've been making the prediction that we're going to see an 80 correction in the stock market is is there a particular event that will be a catalyst for this by chance sure and i would say you know 80 is the potential it might be 65 or 70 percent but i think the potential is there for an 80 uh bear market which would make it the biggest bear market in the post-world war ii era and it basically comes down to a combination of the massive leverage in the system um the pandemic the fragility in the system as a result of the pandemic and the leverage um and and i think we're kind of converging on a period of time where the fed can get caught between a rock and a hard place you know they they want to talk about transitory inflation but everything i see in my work says inflation's going to get a lot hotter here in the next six months and and i think the fed's going to have a hard time ignoring it so you know if they even i i like to point out that last july we were barely a quarter or barely a few months removed from from the swoon you know from from a second quarter disaster and yet they felt comfortable enough pulling several hundred billion dollars out of the off the balance sheet you know they they pulled money out of the system um and i think you could see that you know certainly if you have and at that time we had no inflation and certainly if you have inflation picking up even more here you know they could they could easily pull a half a billion maybe a trillion dollars out of the system i don't think people realize how fragile this system is it you know it needs more new liquidity just to keep it going and i i also think that fragility that leverage is going to surprise people in terms of the extent to which you can speed up any kind of a you know sell-off and make it a lot you know exacerbated i i'd like to explore that a little bit more david um why why is it let's say that this leverage is such a such a or or can can speed up this process so much and and talk to us a little bit about how big this derivatives market really is yeah i i talk about um leverage being both debt and derivatives and i think we talk about leverage typically in in terms of debt so you hear people throwing around the you know the the tremendous debt that we all know is in the system but the derivatives is a phenomena that really you know from the late 80s on started growing and it's so much bigger today um than it was in the 2000 eight nine uh decline so the fact that you've got a much more uh you know a far bigger percentage of of the markets involved in derivatives means you know it's it's a tail wagging the door the dog the derivatives can really um speed up things and and you know obviously markets are tied to the derivatives so when things start unwinding you know it pushes the market so i i just think it's kind of from a simplistic standpoint um we know leverage is one of the reasons we've seen this bubble blow up and it's going to be just as much responsible for why the thing can deflate very quickly so david could you explain to us your view on on the inflation deflation cycle over the coming years and and kind of give us a timeline and uh um let's say a 5 000 foot look at how you see this this cycle with inflation and deflation developing sure um it's important to remember that we haven't had a widespread deflationary downturn since the 1930s since the great depression so really in the entire post-world war ii era we've had you know inflation and disinflation but not deflation and i think people throw terms around and i think they get confused i even hear economists sometimes throw you know they mean state disinflation and they say deflation if this inflation as you know is inflation um [Music] coming at a ever lower rate so you know we had inflation at 15 percent and 20 percent in the early 80s and it's ratcheted down over the last 40 years from there to where we got down very close to zero and now we're reversing that to some extent um and i think we are so we are so late in the cycle uh and i do think you know the global bust is what the end of the cycle is we are so late in this cycle it started in 2009 that uh with inflation you know a year ago at close to zero and picking up here so that it could be three to four percent i think this year um but still relatively low this late cycle if they have to tighten because of um the overheating of the economy you can easily tip into negative territory if you know if through a policy mistake and the combination of that and the pandemic after effects um you end up with a pretty deep downturn um we're just you know we're not we're not having a downturn start with inflation at seven or eight percent we're having a downturn start with it very low and really a lot of the inflation is commodity inflation so uh that can reverse in a hurry when when demand drops so so that tells you that you're pretty close to a point where it's it's funny because you've got so many people worried about inflation this year including myself and what the fed's gonna have to do to deal with that but same time i think you're very close to on a you know longer bigger picture bigger cycles um perspective from longer perspective you're very close to deflation so having the fed deal with what they think is a breakout inflation on the eve of what i think is we're set up for because of the leverage deflation makes it a very complex situation for any central bank to handle and i'm not sure they understand how fast we could slip into deflation if if um policy mistakes are made so so i just think we're in a very unusual time where normally these things play out over years and where just a small misstep can take you from worrying about inflation say oh my god we haven't been here before you know we haven't seen this in our lifetimes there's not any real precedent for this uh certainly in the last in the in the post-world war ii era and as we all know central bankers rely a lot on precedent i mean they you know they're they're client-blind in a lot of this so um so anyway i think we could see before this year's out that downturn begin and that downs earned slip into deflation very quickly as i say you know the great depression was a long drawn out downturn where deflation was there for several years this deflation is probably going to be contained within a a year and the downturn is probably going to be contained within something like that so otherwise i use the term bust it's really not a depression because it's not gonna be long and drawn out but it's gonna have some of the characteristics of a depression some of the damage with depression in terms of the size of the the banking crisis the size of the involuntary debt liquidation because of the massive leveraging again you know we're speaking about the us but it's really a global story so and i think in some some respects europe's a much more um precarious position than we are financially so so i think this thing's going to trip across the globe um and i i think we have the potential here we'll see but i think we have the potential here for this to be the largest financial crisis in the history of the world so not not the largest downturn in the economy but the largest financial crisis because of the massive leverage in the system because the banks are you know there's so much um risk across the spectrum um and and uh so i you know i just think between the fourth quarter this year and the middle of next year could be you know maybe the roughest roughest time in my i've been in this 48 years and maybe the roughest period we've seen so david is it possible that we can kind of parse this out um you're saying that we're we're going to see inflation and deflation but if we look at different sectors of the economy could we see um deflation and inflation happening happening simultaneously i don't think so anything's possible and because it's going to be very quick and certainly they're going to come back the other way with all kinds of liquidity it's hard to know whether you know everything's going to deflate i it's it's going to be not like the deflation of 30s where you know it just played out year after year so that everything just kept getting more gloomy this will be fast enough it's possible i would say you know for example you may be thinking of real estate you know we have no inventory in real estate and it'd be easy to make the case that yeah you could have real estate soften a little bit but you're not going to get any big decline in real estate because this isn't going to be down long enough or because they're going to be pumping liquidity up fast you know soon enough that's possible but more likely this thing unwinds so dramatically i just tell people go back and look at last march and how fast we went into this second quarter swoon i mean it it was scary i mean we didn't know where we were and i realized it was forced shut down so that was part of it but but that should tell people both from a market perspective and an economic perspective that things can can go from seemingly pretty good to very bad in a hurry because of that leverage because of this the way the system is set up um so my at least my my primary forecast would say most things are going to deflate um you know most assets anyway certainly um but you know is it going to be long and drawn out no because and the other thing is don't forget there's a lag to when the money is created to when it you know turns things again so even if they were quick to turn the spigots back on um you're still talking you know probably nine months before it really impacts the economy and maybe another year and a half before it impacts you know inflation in a big way so so i i do think yeah i think there's a tendency out there um particularly in the retail public to think in these linear terms where everything happens being bang boom and so yeah well how how can you have a bear market if the fed knows they have to print money how you know since they've already learned this lesson how are you gonna have a bear market and i don't think people realize you know pauses in this kind of a leverage situation can be eternities you know if you have if you have a few months where they're not sure what to do because they're facing inflation that few months of misstep can feel like an eternity so if if the fed starts to to really try and combat this inflation are are we going to see some type of yield curve control and and that ultimately leads to the to the bust yeah i don't think so i'm i'm not in the camp where i i will say for sure yield curve control on a longer term basis is a myth there's no such thing because it because inflation is going to force their hand in the short run sure they can try i don't think yield control trolls are the issue because rates are going to be dropping because of the the um bust and then on coming out the other way rates aren't going to be the issue you know you're you're probably you know let's say the bus starts late this year and carry through at least first half of next year maybe all next year um you're probably looking at 2024 before you really have another inflation concern like we have right now you know where where you're pushing above four percent and people are starting to say hey this thing's getting going it's going to take a while coming out of deflation to just get back above zero uh at least several months and maybe a year uh and then you're going to be in very low single digits for a little while because you're you know i think we can use last year as a microcosm or some kind of a you know can get some understanding of what it will look like on the other side of the bus and so you know the real inflation story i think is out 20 you know mid decade 20 beginning in 2024 but really 20 25 6 is when i think you're starting to push high single digits into double digit inflation and that's when you know you can talk about yield co yield curve controls at that time having lived through the volcker era you know and the g william mill area prior to that that got us there you know thinking you can control interest rates the only way you control interest rates is by pouring more fuel on the fire by pouring more fuel on the fire you're going to have even a bigger inflation problem that's exactly what got us in trouble was g william miller thought he was tightening because rates were going up gradually and but he was having poor money and to keep rates from going up faster you know he was trying to manipulate the market and i'm not sure he saw it that way but but that led to inflation getting more fuel and you know it's a monetary vent ultimately and you get an overheated situation and once you get above a certain lift oil point it really becomes very very difficult to control the inflation it takes a real much bigger type you were mentioning the basically the speed at which uh the interest rates are going up so why does this matter so much to the fed um well interest rates obviously impact economic activity uh particularly in housing um and so um and and auto purchase etc some some big parts of our economy are very much interest rate sensitive more so today than ever i mean these low rates you you move them a percent and it can shut down refinancing it can shut down um home buying etc so people are really dependent on very low rates so they they do worry about that i have to say i'm much more of a a monetarist where i think money is what matters most and that the price money will ultimately follow you know the market will determine that but in the in the shorter run um you know certainly the fed feels the control over the economy is really um you know rate control so in that vein david where do you see the dollar going from here is it going to continue to to to kind of grind lower at this at this pace or or how do you see this dollar scenario developing i think the last time we talked i had an 85 target on the dollar got down to i think 89 and then it's you know spent most of this year uh going back from there back to you know 1993 or almost 94. um i think we've rolled over again um i've actually lowered my target which had been 85 for quite some time i think there's a you know 85's a minimum but i think there's a pretty good chance we could go down to 82 um and so i think we've started that move back down i know there's still a lot of people out there talking stronger dollar and thinking that you know it can it can get up into the mid 90s i don't think so i think we've broken back down or you know we finished the consolidation the approach consolidation um so uh and part of the part of my um calls based on what i see in the other currencies um you know the euro looks like against dollar looks like we get up to a dollar third up to 130. um i think a canadian dollar i've raised my target i had an 80 you know 1.85 target it looks like get up 0.90 uh the aussie dollar can get up to maybe 0.85 and maybe even higher than that so so i'm looking at you know other moves and other currencies and it tells me the dollar's gonna be weaker than i even expected so that will help fuel the inflation help fuel the commodity run here and i think that move is between now and labor day i mean and maybe sooner you know it's it's starting now and it's not going to be slow it's not going to be you know there'll be days where you get the counter moves and or flatness but but ultimately i think the move from here down to 85 and maybe 82 happens in a matter of months so as i as i know that timelines are really hard to pin down david do you still kind of have that that end of second quarter timeline for this for this bus to start well not the bust i have said for quite some time uh certainly coming into this year that the bust is the second half event probably a ladder part of the year event so you know i don't i don't expect the bus certainly to start in security now i have to um kind of make clear the bear market is refers to the market obviously to the equity market the bus refers to the economy the stock market typically leads the economy by several months so if we get a top in the stock market this quarter and i'm still saying i think that's likely um a top doesn't mean you know you hit a top and then you're on your way down the next day so that top could could reverse quickly often times though as you will know it it reverses and then has a secondary rally back up and re-test that high maybe doesn't go all the way back up so you could be you know midway through the third quarter where you really before you really start seeing the market online or it could unwind quickly i have no way of knowing but you know if the window of the top is let's say um end of may to you know early july and and that top then stretches out into you know much of the third quarter you know your bus may not start until late this year um if the top is is may and we reverse pretty quickly you know bust is probably more likely a late third quarter or early fourth quarter event so you know i i still think the bus starts this year but i don't know whether it's you know starts in september or december you know type of thing um and that's that's the economy we'll feel like we're there because the bear market will be you know on its way before that so so i'm i'm really just talking about what what you know what will the economic um statistics show was the actual peak in the economy and it might be it might be third quarter so as as the let's say the market correction um proceeds what happens to the metals and miners in that scenario david yeah my guess is that they they definitely correct as with most assets um in in the bear market or in the in the bust but probably far less than the equity markets do um partly because i think the fed will be coming back in um with both fee you know meaning easing aggressively you know once they start seeing this thing unwind pretty pretty fast so so i think the timing on gold and silver going back the other way back up will come before the stock market because i think people will be more attuned to hey when the fed's really aggressively easing we want to get into those precious metals but i'm guessing probably you could have a 30 pull back in the metals maybe a little more in silver um so if you know my forecast on on gold is 2500 for you know the next several months um probably a third quarter top um and if if you get a 30 move from there yeah you're basically back here um silver you know i think you can get 45.50 let's say it's a 40 move back or 30 you know 35 40 percent move back um you're you're talking about something back here you know so so it's not like there's a lot of downside from here i know there's still a lot of people that are talking lower numbers on on both gold and silver but i tend to think we're you know you may come back and retest this during the bus but i don't think you're going a lot lower than these levels now you know a couple years ago i was in the camp that said you know gold gold could see you know 500 or 800 in in the bust but i'm i'm not there anymore i just don't think it's possible it could get down towards a thousand but i doubt it i i think it's probably i think this time spent this last many many months spent in that um 17 1800 area may serve as the floor so typically we hear that real rates are closely related to the gold price so why have they uh become disconnected over the past couple months yeah it's funny because i think people and we use the cpi or a lot of people use cpi um as a measure of inflation when they're talking about real rates and they they've been talking about real rates rising but in fact if you if you were more um you know just looking at what inflation's done in this you know first part of this year there's no doubt when you look at certainly when you look at a lot of the you know across the board commodity complex or you know in cost in other areas you know auto costs housing costs etc it's very hard to argue that cpi is an accurate measure of inflation right now right i mean we uh you know for years people have said the government's manipulating that number but i'm not necessarily in that camp as much as just saying you know if you really want realistic inflation you can't be looking and saying it's one and a half or two percent it's it's certainly in the last many months has has gone much higher than that so i think you know whether it's the algos or whoever's judging real rates i think they're using an artificial um number as your as your denominator to argue that you know rates are rising along with nominal rates i think nominal rates obviously you've risen and i was probably the first one out there to when when uh the 10 year was 0.6 i was talking about it going to one 120 to 140 and then i raised it to 150. um and so um the rate rise didn't surprise me but the call that the real rates are still rising i think is just false i think real rates but but that's what the market believed or that's what the algo believe so i think they they did that now you know going forward i don't see how anybody can believe real rates are rising um unless unless nominal go up a lot um and i think so even though i'm calling for a 120 10 year um this quarter in the next month or two um and so if the nominal goes to 120 clearly real rates are dropping and dropping fairly fast and then i'm calling for a a two and a half ten year um as the fed begins tightening and as inflation begins to take off um but even there i think inflation is going to be outpacing that rise from 120 to two and a half so it's hard to it's hard for me to see a scenario between now and labor day where you make the case that real rates are rising i think they'll be they'll be falling even more nominal rates are going up david as we take a step back to look at the financial landscape at this time what in your view are some of the biggest bubbles that will suffer in this in this bust as you have coined it are we going to see let's say house prices really really come down uh crypto where do you see these the let's say the biggest declines um or or the biggest bubbles that are going to pop yeah i would say certainly the equity market i mean i think it's been a a remarkable run as i've said for a long time i believe we're we're coming on a secular peak that started back in 1982 and i could even make the case started in 1974. so it's been an amazing run but there are so many signs that were in that and i started talking about this several years ago we're in that final parabolic stage so not not many markets are in parabolics like like equities are and parabolic just tells you i think you're in a very speculative stage that's the end the end stage of a long-term market that tells me that equities are the you know probably the prime area prime asset uh that's going to get hit hard junk bonds also um and um you know to lesser extent certainly some of these other assets like um you know real estate real estate's a funny one because i do think we may be making a secular top here um and in fact probably likely are but i just don't know how how fast and how hard things are gonna fall um you know i think in in the states anyway you know we got hit so hard in 2008 nine is this going to be a lot like that one we don't have some prime issues this time but we have other issues um canada and australia or some of the you know those kind of markets i think they're where we were in 2009 so yeah i think those are going to be huge bubbles that break big um but and and i think i think the u.s housing can get hit hard i just don't know if it's gonna be 2009 hard i just i doubt that so as you as you use the term super cycle david does this apply to your view on commodities in general for the coming years um for sure you know we're in you know we're in a super cycle and i define a super cycle as between two depressions so if the 1930s was your last depression i believe the 2030s are likely to be the next depression um so that's why i say this is a bust not a depression so we still have one more recovery cycle after this bust to get us to what i would think will be the end of the super cycle um and so by the end of the super cycle for sure commodities i think are are in for a huge run um in the post-bust era um it's not a straight line as i like to caution people you know the the moving commodities this year has been a great run and you got a lot of analysts out there calling for a super cycle in commodities from here that bust is going to interrupt the commodity cycle um and so just be careful as i use the analogy you know it's like standing on the south rim of the grand canyon looking across the north rim and thinking it's a straight line across when there's this huge canyon in between so you know thinking you can buy commodities today that there'll be no um just on them right on through you've got that bus is going to be a big canyon for commodities um and so but starting in say 20 um you know latter part of 2022 through the end of the decade commodities are going to have a run like they've never had in history you know oil can get to 300 plus you know gold can get to 10 000 plus silver can get to 300 plus and i think those pluses may make my numbers look silly he'll silly low when we get there so i think it's you know i just can't see anything beyond those numbers to give a number but but i think i have unbelievable runs copper you know copper go up tenfold or or you know seven or eight fold you know um so there's uh i think there's big moves coming in the next cycle because of the massive money that the whole you know the whole world's going to be putting out there to deal with the financial crisis um but yes it's a super cycle like i said equities in my opinion again talking about u.s equities but probably to a great extent other places too um yeah you're you're going to make a secular top here meaning that the recovery cycle in equities after the bust you won't come close to these highs the highs we see whether it's this quarter or next i doubt that we come close to those so if it's 4 700 on the s p or maybe it's 5 000 when you get into parabolic i'm not you know i'm not pretending to know exactly where it stops but it's we're in the area somewhere 4700 to 5000 probably a pretty good guess about the top next cycle you could if you have an 80 drop and you get back to a thousand you could you could triple the s p out of that bottom or or even quadruple it and you're still falling far short of the top so it's not to say that quiz won't have a run next cycle but i think you're you're making a a secular top that's probably going to stand for decades and i don't know whether that's two decades or many more decades than that but decades whereas gold and silver and other commodities next cycle they go on to much much much higher highs um so it's you know there'll be a great opportunity following the bus that's just not going to be in the same areas um not the same assets not the same sectors as the stock market you know social media stocks and the fangs and and um you know growth stocks in general they're going to be dealing with a tremendous headwind of inflation meaning inflation and high interest rates as rates move from let's say i'll just use a 10-year from zero at the top of the bond market in the bust you could see the 10-year back to 15 by the end of the decade how how do you buying index funds how how do you think that rise from zero to 15 and rates is going to impact pe multiples it's an inverse relationship it's going to impact them pretty negatively so so it's going to be very hard for indexes to do well next cycle overall but that doesn't rule out the sectors that really benefit from inflation so as a macro voice david you you actually speak quite a bit about oil and i wanted to ask how important is the oil price in today's economy and and do you use it as a particular tool uh let's say in your in your tool kit to to analyze other markets as well i i look at it certainly i don't it's not a primary driver i mean because we've had um you know oil and gas prices under control here so it's been a benefit to consumers in general obviously of late gas prices have moved up and you know oil's moving up but or had moved up but um but really i i think longer term it's it's a big factor in the next cycle i mean that's why i think the next cycle is going to be an industrially led cycle the consumer's going to be on the one hand digging out from a horrendous bust that's you know they're they're not strong going into it um you know financially we've had decades of you know people really struggling and we all know the story about the haves and the have-nots there's a big part of the world economy that they have not and so they're going to be struggling and then you add on to that you know if oil prices go to 300 plus a barrel you know what's that due to gasoline price they're going to be easily double-digit what's that you know heating oil prices etc so i think the consumer is going to have you know a real problem even if wages finally begin to break out they're not going to be able to keep pace they're going to be following inflation not leading it by any means especially the kind of fast commodity cycle we're going to see so yeah i mean oil is in in a bigger picture way something i look at all the time in terms of how that can impact my longer forecast in terms of you know my my last year's forecast it wasn't a big big driver we've spoken about you know looking at something like a like a banking crisis going into this david and i i'd like to get your thoughts on you know there's there's a lot of analysts out there talking about currency resets and and new digital currencies or or a world currency how do you how do you see that um developing um yeah i'm not big on the reset i think if we're going to have a reset i think it's late in the decade um you know i don't believe we're you know i know there's concerns about um what china's doing with uh crypto etc now um i i you know i just don't see anything poised to be able to take over the dollar's rule as a reserve currency in the next five years you go out beyond that and that's anybody's guess um i do i do think the dollar's going to be in trouble within that five-year time horizon you know i have we talked about my view that the dollar's going to the low 80s here i also think the dollar is going to be 120 plus uh in the bust that it will be the currency everybody runs to during the bus because they don't know where else to run um and don't have anywhere else to run but then starting from that wherever that high is over 120 um i think the dollar begins a long-term erosion through then to the end of the decade where it could be you know less than 50 cents i mean it could be a lot a lot lower than 80. um and so the dollar is not you know i'm not a bull on the dollar beyond the bust or you know that period um but it's not going to be replaced as a reserve currency i don't think until you get later and you know much later in the decade my do i do believe that you know you talk about high inflation you know 15 20 inflation rates interest rates at 15 uh and short rates probably you know like they were in the early 80s up around 20 um you know those are all things that argue that you know the bust is going to seem not to be the big deal once because that takes all the central banks out of the game if you don't have you know that's why i've been such a bull um even last march uh i said you know the fed's not out of bullets they're not even closed out of bullets because in deflation or low inflation they have unlimited ability to print um you get to the opposite situation where you have interest rates you know high and inflation high as i said before they can't pour fuel on the fire because it just exacerbates what they're trying to fix um so that takes them out of the game the treasury will be long out of the game because nobody's to want to buy treasury paper well we can't service that debt so you get the end of the decade and basically there's nothing to prop up things when they roll over you know there's there's no way the fed can intervene and so that's when you can get the collapse of the system you know what i call the you know the collapse of the ponzi scheme that's built up over you know five decades um and not you know i speak of the us mostly but it's really a worldwide event and what comes out of a collapse of the last 50 years is anybody's guess but i don't think it's something that anybody should look forward to because it more likely is a totalitarian response you know it's more likely to be something so i just people want to talk about resets and stuff that's your reset and that's nothing you can predict or or plan for you know it's just going to come yeah there's i mean you you can design any currency you want if you get that kind of a collapse it doesn't matter i'd like to turn a little bit to talking about investor psychology with you david why is it so hard for most investors to buy at bottoms and and why is it hard as well for for some of them to take profits at these euphoric tops that we're going to see yeah it's a it's a great question it's yeah i've spent 48 years as a contrarian studying that stuff and i don't have any scientific answer for you what i do have is i can tell you from being one of those that fought the crowd that the vast majority of people just are not comfortable being outside the crowd you know there's a lot of people today you know when i was a contrarian back in the early 70s you know it was a rare event there weren't very many and it wasn't something you trumpeted it wasn't you know today everybody wants to tell you they're contrarian because they've they've been books out there talking about you know how it's it's wise to be opposite to what the crowd is etcetera but we can go back in history to the tulip bulb to you know all kinds of various times and there have been books written on it you know the madness of crowds is just a psychological truth that the vast majority of people whether they know it or not are not comfortable being outside the crowd and are influenced by the crowd you know they they can say i'm a contrarian but in the end when push comes to shove um it's a very small percentage of people who feel comfortable with conviction being against that crowd most of the time you know they can do it in in verbiage but if you look what their actions are they're you know they're hedged every which way because they're not comfortable so so it's just a um you know the crowd is is going to be most excited at tops and least excited at bottoms and so they're and and you know interestingly and this probably only made it worse is with with the advent of computers and everybody being a technician today and everybody being a relative strength technician it just follows it they go with the momentum you know so as you recently tweeted perspective is important in investing but often lacking among investors the perception that the miners behave terribly or or the perception is that the miners behave terribly sentiment is very negative so how do you look at this david and why is it or how does it inform your decisions here yeah i guess probably the way i'd answer that is to me a lot of times people become too myopic and and so that's what i mean by perspective is sometimes you have to step back broaden out the chart broaden out the time horizon um and you know for example i mean gold and silver a great example you know um everybody loved it back in early august and you know were people who didn't like it a few months earlier were starting to really talk bullish and like i said even i thought okay i'll have a few months rest because it's gone too far but you know when it didn't happen after a few months people lose more and more faith because they say well i thought you know i thought it would have turned right now and they lose all perspective if you step back and and here's a good example um gold this happened to me on twitter gold about the um fourth week of march the one-year anniversary was passed of the soon of the you know the big pandemic break so i had people coming to me and saying you know gold's gold hasn't hasn't gained anything in the last year yeah but if you step back another week to the bottom you know gold gold had gone down to 1460 and when they were saying that gold was you know 1700 or 1680. so you know perspective is that one year versus one year in one week gave you two different pictures and they'd lose that perspective because they're only caught on the one-year chart you know so it's really important i think sometimes to kind of step back and see where you are i you know i've i've caught a lot of grief in recent months because i go i love the gold chart i love the silver chart you know they they are in flag formation when they break out they're going to break out vertically and they're going to go a long ways and yet people only see the fact that gee gold was 2100 and now it's 1700 you know back a few weeks ago and and you know it's lost a lot of money for me while everything else is going up so you know again timing timing is part of the story but perspective and and having a little bit broader uh perspective can can make a big difference are there any tools or processes that you use to guide your decision making on when to take profits in an investment david not really it's really um you know i don't want to say it's feel uh obviously if i see it's i say sentiment drives me more than anything um you know if i see sentiment really to an extreme in either direction that has probably as big an impact on me as anything else um but you know fundamentals matter to me macro matters to me i just it's really putting the whole thing into a you know mixer and saying how does it shake out excellent so david as we kind of wrap up here um can you give us some of your price targets uh let's say towards the end of the second quarter here before we really have to put our seat belts on sure yeah i'll start with the stock market and i i do think s p my current target i've raised it uh in the last month but my current target's 4 700 and like i said and i've said this several times on twitter i won't be surprised if my numbers are too conservative so well people think i'm insane with these numbers i think i'm probably going to be low so s p 4700 um dow 38 000 nasdaq seventeen thousand um and uh then on on um the bonds um i think you could like i said you can get to an interest you get to a 120 here this quarter uh and then start pushing back up to two and a half the 30 year i think can get down to say 195 and then start pushing back to 3 gold 2500 is my top um no you know and again i might push beyond that but that's kind of my target um silver 45 to 50. um longer term beyond that you know as i said those things have a lot of upside but it's just not going to be a straight line um oil probably can get down to the low 50s here the jury's out right now but i'm my best guess i mean it's possible we've had our consolidation oil and it starts running again but i think more likely it gets down to somewhere between 50 and 54 before it makes another run at 75 and then in the bust i expect oil down to you know below twenty dollars maybe ten dollars again um before it starts the big you know the big move coming out of the bus um let's see what have i missed um gdx gdxg oh yeah sure yeah the miners themselves gdx um i've raised my target i've been saying 55 i think 60 uh is a better target gdxj my target's a hundred um sil which is a silver etf um probably 75 and silj i've been using and i have been using 30 and i think 35 and i think that's probably improved low if if silver goes 45 or 50 i wouldn't be surprised to see if these numbers get exceeded so um we'll see but i i think it's we're very close i think you know you're starting to see the downtrend being broken the recent downtrend and i i do think that gold and silver are going to start acting better as we move through this quarter excellent david do you have anything else that you'd like to share with us before we wrap up um let's see what haven't we touched on you know obviously uh from a longer term standpoint you know the junk bond area is an area that's very frothy you know people because of these low yields we've had have really reached out on the risk curve to get income and i would just caution people that um you know not equities are probably number one but i think junk bonds are right behind them in terms of the two areas that are going to get hit the hardest in terms of the bust you know they are they are you know the exact example of what leverage means and and if if i'm right about oil you know if we get oil back from 75 down to 10 you know as you all know there's a lot of leverage in in the shale oil area that kind of got bailed out in march you know in the second quarter of last year that i think is going to um have real problems you know in the bust and and won't be bailed out excellent david and as always we can get more of your uh your updates and and um you provide great analysis on your on your twitter at dave h contrarian and also tell us about your uh quarterly newsletter that you put out yeah i read a a quarterly letter that um if people are interested it's basically my macro in a bit broader perspective on twitter obviously you're limited by what you can put out there so um if people want more on my forecasts um they go out quarterly and people wonder why i don't write more often i said you know i'm a big picture guy you know i think one of the things i push back on is trying to get people to be not not so trader oriented and be like i said that broader perspective bigger picture perspective so i purposely don't put things out uh more than quarterly so i quarterly letter uh if people have any interest in that they can inquire uh by making you i'll just direct message me on twitter um and again my handle there is at dave h contrarian excellent david thanks so much for your time today really appreciate it okay tom yeah i think we're gonna have some fun this this quarter absolutely it'll be it'll be really interesting to see what happens okay thank you 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 to view our full disclaimer please visit our website

Channel: Palisades Gold Radio

Views: 55,018

Rating: 4.9211268 out of 5

Keywords: Palisade Radio, Collin Kettell, buy, sell, invest, gold, silver, precious metals investment, QE, QE4, QE5, Stock, Market Crash, low, high, best, worst, trump, central, banks, freedom, bitcoin, blockchain, uranium, potash, expert, alpha, beta, fortune, billionaire, ounce, pound, mining, energy, independence, freefall, rise, fall, outlook, private placement, warrant, decline, increase, value, price, Monthly Report, Update, millionaire

Id: 2nOkdG03o6E

Length: 56min 28sec (3388 seconds)

Published: Tue Apr 20 2021

Reddit Comments

[u/TheNicholsonBlade]

He doesn’t believe in silver squeeze. If it’s not a base case then he can’t be right by logical deduction unless we are all wrong, also don’t listen to the time frame David says. According to him the S & P was supposed to be 4K 2 years ago. Smart guy but PLEASE don’t trust his timing!

[u/TeamDiamond3]

These charts explain everything to back up what they are talking about.

https://www.advisorperspectives.com/dshort/updates/2021/04/19/margin-debt-and-the-market-up-another-1-1-in-march-continues-record-trend

[u/pamdemick]

Blimey, a deflationist! They're an endangered species.

I wonder if he's wandered into one of those things they call shops lately.