I mention here above all that I appreciate the ability for people to formulate theories and back it up with data/information. It takes a lot of guts to put things like that out there. Many look at things through a binary lens of “right vs wrong”. What you may actually find is that people are not oracles and cannot predict the stock market will go down 38% by November 16th, 2023. However, with the futurists out there like Michio Kaku (one of my inspirations for the below type of writings), you have people with complex backgrounds in a lot of different areas that can reasonably get you in the zip code of where things are going. They may see things through a different lens than you. And – again – these people are also not oracles, and will be off on a few things. What is interesting is to fall down their rabbit holes of thinking and allow yourself to see a problem from their perspective. Then, you can try and poke holes in things.
For most of what I wrote below, I enjoy engagement on things. I want people to poke holes, to agree – so that perhaps we might then all perhaps together be able to PROFIT on where things are going!
You have guys like Brent Johnson out there who come up with an idea, then are well known for that one idea. Often, people don’t completely get the idea. Most haven’t heard that he ultimately sees the DXY going down and he’s a gold guy at the end of that. On the flip side of this – you have Peter Schiff who said to Harry Dent (a Harvard-educated deflationist) that “if the end state is gold will go up, why get cute and try and risk the dollar will go up first? Dent is also known as a “gold to $800 guy”. You have David Hunter talking about a melt up and then a bust for 3+ years, but we are running head first into a possible depression. My contention is Hunter nailed it with the move up right after COVID shut downs, and this is the beginning of the bust – but he’s calling for even higher highs on everything. He’s a “contrarian” – but there are limits to being a contrarian. Imagine everyone believes the sun will come up tomorrow. Because you are a contrarian, you bet $10,000 the sun will not come up tomorrow. You will most certainly lose that bet. Meaning – the masses aren’t always wrong. You have to understand where the masses might be wrong and exploit that.
Often, these guys put themselves out there. I respect that. They deep dive an idea, then cling to it, for better or worse. I try to be “evidence-based” where I use the evidence to form a virtual crime scene, I extrapolate what I see, and make a reasonable hypothesis about what is to happen. During this time, I have also learned to appreciate the differences between “imminent” and “inevitable” – where I think the most egregious errors I had were not having a full appreciation about how far the scoundrels will go forcing the can down the road, again. $6T printed, and SLV changing the prospectus during silver squeeze were items I could not account for with my prognostications – but I have since adapted how I make bets. I look at it through a probability spectrum and I try to account for where I could be wrong. IF the evidence then changes, I have to adapt my thesis.
I like to point out to readers that Rick Rule and Dr. Michael Burry are very famous investors, but Rule was 5 years early to uranium and Burry was 3 years early to the housing short. During the times until then, they are wrong, until they are not. Meaning – until you experience the end result, calling someone “right or wrong” until the event is – silly. Meaning, I cannot say Brent Johnson is wrong about the Milkshake, but I can understand to AVOID the risk by just getting into gold and IF it happens, ride it out. So with these theories below – it’s either hard to prove or disprove with 100% certainty, but looking on a risk spectrum, I feel these things are highly probable.
Below I will briefly discuss the theory, what’s cooking, and where I could be wrong.
- Bitcoin is a NUGT of the NASDAQ – I wrote something 2 years ago in the mania of bitcoin that it had never seen a recession, and it acted like a NUGT to the NASDAQ. I tell people I’m a “buyer at $3000” and it pisses people off. Love or hate bitcoin, 2 years ago I had called for a strong pull back whenever the economy takes a turn for the worse. Where I could be wrong? Billionaires with too much cash and too little common sense somehow buy your air tokens for $1m each.
- There are three asset classes. One is money (as commodities), the second is “business” (yield bearing assets like rentals, pizza shops, and treasuries), and one is “property” (which accounts for things you buy with utility. You live in a house, you appreciate art, you play catch with a baseball glove). Recently, Zoltan Poszar said, “commodities are collateral, and collateral is money”. Where could I be wrong? Many don’t feel commodities are money.
- Inflation is monetary inflation combined with policies. Many really smart people don’t understand inflation. If you do not understand this concept, then any theory built on the wrong foundation will be incorrect. In this, I’m 99.9% certain I’m correct. How to know? Assume a financial system with no money, there cannot be inflation. Where could I be wrong? Many economists who took the same classes I did disagree. Rickards has a blind spot for inflation – LOVE the guy, but he focuses too much on the utility of something increasing. Imagine the $20 bill and an oz of gold in a safe 100 years ago. Open the safe today, the gold is worth $2000 and the paper is still worth $20. But housing went up like 90x too. It’s because of the consistent inflation year over year are tiny papercuts, but over a 100 year time frame inflation becomes obvious.
- Bitcoin is speculative beach front property. In my C4SM video, I went over my slide deck that talks about all of this. I put an asterisk there that down the road, this could change from speculative property to money, but today, it is not.
- Rates are the thing that is the pin that pops the everything bubble – nearly 2 years ago, as the Fed was denying inflation even existed, I saw where the puck was going to. That is, inflation was going to rage, and people would need much higher yield to hold treasuries. I saw how the Fed would have to raise rates, and with all of the zombie companies out there, higher rates would then eventually lead to a massive economic issue. Where could I be wrong? They dumped $6T into the economy. It is possible literally every dip is bought on the way down, but I believe there’s a capitulation event, sometime.
- Gold is the center of the financial universe – essentially, I finally understood the big deal. I created blogs and a video series to talk about how gold is where all other values are derived from. Where could I be wrong? We went off of the gold standard in 1971 and my theory presents that this is like looking at the solar system from a geocentric orbit as opposed to a gold-based heliocentric orbit. The fiat presents wild and spastic valuations of things, and with this, the fiat “white noise” eventually will be removed. How could I be wrong? The swamp creatures who tell you gold is worthless have stripped it from our educational system for 50 years – I went through 4 years of an MBA in 3 schools from moving and not one whisper of gold.
- Gold will back exchanges – Big picture here is a “gold backed currency” is not going to work in today’s banking age. However, valuing things in terms of fiat rather than gold is about to change. I believe BRICS+ exchanges will have items priced in gold. This will remove any one fiat currency from being the world’s reserve currency. With this, any country can buy into the exchange with gold, no one cares where you got it. Want to buy energy? Where’s the gold. Want to buy corn? Give me the gold. Where could I be wrong? Perhaps a gold-based BRICS+ currency is introduced – but in that case, I could see this exclusively used on exchanges, and it’s the exact same principle. No country wants their central banks tethered to a gold brick. Additional note – this is why I’m crazy about Kinesis. My thinking is that eventually, people will need to get gold to buy things. It might be a long time down the road, but Kinesis I think is set on the back end to service commercial entities. Not many understand the whole scope.
- DXY does not matter to me, today – when you start peeling back the layers of what is going on, big picture, the algo boys are focused on the DXY/gold buy/sell exchange for short term trades. However, as “things” get more expensive in terms of USD, due to the massive monetary inflation discussed above, gold will follow. So I don’t care if the socialist EU is printing more aggressively than the USD to make the DXY go up. Don’t care. What I care about is the BRICS+ countries buying up gold using USD while selling their treasuries to do so. There is a place and time coming where I don’t really care if Brent Johnon is right about a 150 DXY, because it is also entirely possibly gold goes all the way up with this move. Where could I be wrong? Magic Money Tree swamp creatures seem to now be making shit up as they go. They literally meet on the weekends now to re-write rules to keep their friends from getting shafted, meanwhile changing the rules so those who accurately bet correctly get wiped out. Confidence in our markets, is shaky, at best.
- Commerical Real Estate going down – Big picture here is telework showed companies that they can be productive and profitable with 97% telework. Now that COVID is over, many order people back into the office, but many people now leave for companies offering more TW and remote work. This is driving up wages. With margins compressing, my bet is they eliminate a lot of their office footprints to focus on retaining talent as long as they can. While unemployment rates WILL eventually go up, my bet here is that companies will focus first on wiping out commercial space. Even if they lay off lots of people, they will have empty desks everywhere. Makes sense to prune the office space first. Where could I be wrong? Companies are massively cashed up, and maybe they ride out this nastiness for another year into a recovery. However, my macro forecast for 2023 also had rates higher for longer than anyone is comfortable with.
- Only a handful of silver primaries left, and this is a catalyst for $100 silver – Many have ZERO CLUE how bad it is for “silver primaries”. Virtually none exist. Where could I be wrong? Perhaps we have a decade of $1 a month increases in silver and primaries come back online. But, we all know silver doesn’t play by those rules.
- Silver will have a palladium 5x move coming – I have too many articles on the supply/demand stuff here. Blog is filled with them. This is my Rule/Burry inevitable play here. Where can I be wrong? Maybe companies start re-engineering everything to copper? Maybe we find another comstock lode?
- TA is useless – I did a part 1 and part 2 here. What I’ve learned with TA over the last few years is that the patterns are interesting, and mostly can forecast compression and explosive moves from the compression. But big picture is that it appears in the metals markets, there are invisible hands that move things, despite how the macros feel it should go. For this reason, I have to look at this stuff with probability and not certainty. Meaning, if you choose a directionality from chart voodoo, you need to then understand risk management principles. However, it’s best to look at these things through a lens of probability, then perhaps use TA to make guesses as to how far a move can go.
- Dollar will lose world’s reserve currency status to gold. I wrote about this a lot – but big picture here is that the US seemed to overplay its hand with sanctions and weaponized the dollar with SWIFT. My thinking here is the lessons learned are that one nation will not WANT to be a world reserve status again – as it hollows out manufacturing in that country. It becomes too expensive to produce things in your home land so you offshore. No country wants that, and with the recent weaponization of the dollar, I believe countries will band together again to ensure no one currency can dominate everyone else. This is where gold becomes the universal currency. No one will care about your gold source, only if you have 1.2g per barrel I’m selling it for. I don’t care if the gold costs you $40 or $400. Not my concern how you screwed with your currency. For international exchange, give me the gold, or go home empty handed. Where can I be wrong? Possible that the belligerent regimes have regime changes for whatever reason, and these people fall in line with the dollar.
- Ghana buying gold from miners was genius – Where everyone thinks this is going in mine nationalization. But that does a few things history has shown to be really bad. First, you aren’t gold miners, you are tax collectors. If you nationalize anything, the experts leave and you are stuck with a hole in the ground you cannot operate. Second, nationalizing anything destroys foreign investment into your country. By Ghana requiring 20% of gold to be sold to them in cedi, it essentially stabilizes the local currency against the USD. The operator can use that cedi to pay his employees. This gets the country the gold they need as well without having to exchange cedi against the USD to buy. I believe in a world where BRICS+ is moving from the USD, this model will be replicated and these countries will not need to buy USD with their currencies. Demand for USD goes down. Where could I be wrong? It is possible mining companies worry about further nationalization and either cease production or stop exploration/development in their country.
- How USD will fare IF commodities are money and here– While the BRICS+ can perhaps sell items in gold, the COMEX can continue to sell in USD indefinitely. The main issue with this is producers may leave the COMEX to sell on BRICS+ exchanges for gold. This may eventually force the COMEX to price things in gold as well – but this might be 10-20 years down the road. Where could I be wrong? These guys have 400+ economists at the Fed with PhDs who basically do nothing every day than to figure out ways to kick the can down the road to the next administration.
- COVID killed brick and mortar colleges – while this is not a “done deal”, I posited that many people during COVID were forced to do online. Many then recognize that they might pay 2-4x as much for a “brick and mortar” school as you would for an online school, and the online schools may have been doing this for decades.
- Hunt Brothers had little effect on the silver squeeze of the 1970s. While they are widely blamed for “cornering the market”, silver had gone up 29x during the decade. However, the fun question I ask is “who cornered the gold market that went up 24x”. You could argue that their participation was at the margins
- Energy Cliff may get the snooze button – I wrote a piece here that discussed 10 reasons why I think the energy cliff could get pushed to the right, then did a talk with Steve St. angelo on it.
- Fed could raise rates higher and longer than anyone is comfortable with – from Jan 2022. While everyone was talking about “the fed is trapped” and they will pivot any day now, I took the contrarian look at this and suggested they may go to 5% and take mortgage rates to 6-7%. Re-reading this is sort of like a prophecy, but it was not a prediction.
- The two main drivers of silver which will lead to silver deficits for years to come – this was December 2021, then silver had a 200+ million oz deficit in 2022. Talked about EVs and solar in particular, and it looked like the deficits have started.
- While the dollar may die as the world’s reserve currency, I believe the US will come out of the other end of this 10 years from now stronger with massive industrial production with automation. This automation will take jobs from southeast Asia. The sheer ability to re-introduce manufacturing here to a highly educated society couldn’t really be done due to costs of things. But as the US loses world’s reserve status with currency, so manufacturing can come roaring back to life. The dollar is a going to lose out over the next decade, but we will be stronger on the other side of this.
In 2007 or so I was writing for a friend’s blog before I stood this up, and all the rage was talking about $15 per hour minimum wage. I took a picture of a kiosk to order from at a gas station along with robots on a line welding things and anticipated, reasonably, that $15 min wage is too expensive, and at that point, they will automate jobs which are cheaper than paying someone $15 per hour. At the time, this was kind of futuristic thinking.
Let’s wrap it up
I hope you understand here – again – I am not claiming to be some sort of person who can predict the future. However, you can understand a lot of the world, be curious about it, and have a ballpark understanding of where things are going. The best super computers cannot predict the weather tomorrow, but humans think they can predict exactly what’s going to happen five years from now. What you find is that there are certain people who may rhyme with what you think may happen. Listen, understand – but also don’t fall into an echo chamber. When you start to find many other people arriving at your same conclusions, but via different avenues, it then increases a confidence level for that type of prediction.
I’m an ideas guy. If you see me on shows, it’s not to talk about my 20 years of industry experience – which I do not have. I am crazy obsessed about items, and I dig in to understand the nuts and bolts of how things work. I am talking about macro strategies given the world around us, and I like to flesh out ideas and build on them. If there are details I’m missing, I love to learn and understand where I was off, so I can correct the ship.
Leave a Reply