Transcription
And so at the bottom of that sell-off in April, I raised target to 8,700. And then in October after we had the big rebound, I looked again and I said that's not enough. So I raised targets again to 9500. So my S&P target right now is 9500.
>> That is a huge move. And you think that could happen in this calendar year?
>> In fact, I think it could happen in the first half of this calendar year. In my opinion, this is, you know, the end of a super cycle that I define as the long cycle between two depressions, the 1930s and what I think will be the mid 2030s. So, 100-year um cycle. And it basically is the end of a Ponzi scheme. You know, we we've ramped it up every cycle more. It's just, you know, it's a sine wave type thing where it just gets bigger and bigger each time. The excesses get greater. The response to bring the excess excesses down get greater and you get to a point where it just gets out of control and our politicians will have zero control over this.
Let's articulate the moment the Fed loses control of the printing press because that's that's a huge uh fundamental component to your thesis playing out. When will that happen? How will that happen?
Before we get started, this podcast is not investment advice and I'm certainly not a financial adviser. Before investing, do your own research, speak to a licensed adviser, and remember, risk is part of the game. It's my pleasure to welcome back David Hunter to the show. For any viewers who don't know, David is a seasoned Wall Street strategist with over 50 years of experience navigating bull and bare markets, but he's best known for his bold macro forecasts and contrarian calls, understanding the psychology and sentiment behind some of these moves in the market. And while the market has climbed a wall of worry for years, David has probably been the most outspoken bull. So, we spoke at the end of April last year, and you laid out a very specific road map, a final meltup in equities and precious metals followed by a major deflationary bust, and then a policy response so large it would change the world forever. Let's start with the meltup. Where are we at today?
>> Yeah, I I think we're probably going to see a little bit more uh correction here. It's been kind of since late October and the sideways consolidation at the, you know, high end of the the market, but I think we've probably got a little bit more to go. I don't know whether, you know, something happening in Iran will be the catalyst or but it it seems to kind of push up against the highs and then back off. So, I think it's waiting for some resolution there at least. Um, but I I'm not looking for There are people out there calling for big big corrections, 10 20% or more, and I'm not looking for that. I think, you know, the S&P could get back down to 6700, maybe a little below that if it wanted to, which would be four or 5% off the highs. Um, and obviously NASDAQ and Russell could do a little more than that. But but uh after that's out of the way, I think it is off to the races and we we go through what I think is going to be the final final meltup, final parabolic piece of uh what I call 43-year secular bull market.
>> Yeah, the S&P seems to be kind of bouncing up against that 7,000 level, you know, the last few months and and just can't quite get there. So, you think a little bit of a reset downtrend? Is your target still 8,000 in this calendar year for the S&P?
>> Yeah, it's interesting. That's why I'm thinking we we haven't talked since April. I've raised my targets uh at least two or three times since then. So 8,000 was my target um and they that I put in there I think early last year or yeah early last year. And then with the tariff announcements in April and we got that swoon while everybody else was cutting targets and getting a lot more bearish as a contrarian I I saw sentiment really turn south. And so at the bottom of that selloff in April I raised target to 8700. And then in October after we had the big rebound I looked again and I said that's not enough. So I raised targets again to 9500. So my S&P target right now is 9500.
>> That is a huge move. And you think that could happen in this calendar year.
>> In fact, I think it could happen in the first half of this calendar year. Doesn't have to. It may stretch out. Everything I do seems to, you know, I anticipate that it it takes a little longer, but I would not be surprised if this goes parabolic that we get there by this summer.
>> That's incredible. Uh what about the medals? Do the medals go for the ride? I mean, they've been the they've been the outlier. They've been incredibly resilient. Talk to me about gold and silver and how you see them performing.
>> Yeah, I've I've raised there, too, a few times, so it's it's hard for me to keep track of when I did what, but um I am now and my I came into this year I ra I raised I think last October. I usually raise up my um in my quarter letters, quarterly letters.
>> So, I raised um silver. Well, I'll start with gold. gold. I think I raised from um 4,000 to 5,000 last I don't remember whether that was last October or whether I um
>> Oh, you've been bang on when it comes to gold.
>> Yeah. So, I raised it again um just recently. Well, yeah, that's right. I raised it to 5,000 last from 4,000 last se October. Then I raised again in my first quarter letter in January to uh 5,500. And I just raised on this last selloff. Again, I tend to do it not with momentum, but the opposite. In this last sell-off, I raised it again at a 6,800.
>> So, I'm now at 6,800 on gold. Silver, uh, I'm now at 180 and, you know, went through a few I was at 75 for the longest time, for several years.
>> Raised it to 100. um probably in October raised it to 125 I think in uh January and then you know a month later I'm raising it to 180. So
>> um I am clearly bullish on the metals I think and I actually um the the week before the sell off or you know when we had that spike to 122 on silver I said we could see a very quick 30% selloff. It's not this isn't the peak. It will rebound from that while we got more than 30%. And I do think this thing is also those targets could be seen by this summer.
>> I'll I'll never forget that 75 silver call that you had um in early April when you came on. Silver was trading at 32 $33 and even I was giving you a bit of strange looks there when you said it's going to 75. I mean it it didn't even pause to to say hello to 75. It just And I that 75 was my target three years ago when people thought I was crazy. I mean, yeah, you're not going anywhere near that. So, it took a while to get going. Gold get going sooner than silver, but once they got cooking, it really ran.
>> What really got me on on the David Hunter um bandwagon as it were, was your S&P call, right? I think the first time we came on, you know, a year and a half, two years ago, you know, S&P was 3,500. You said it's going to 6,000. and it's going to 6,000 and it was at 33 3500 and it just the way it moved there so quickly. So what is it about your ability to make some of these forecasts when the market is experiencing weakness when people are starting to get pessimistic you're all of a sudden getting bullish and then you know do what do you see in the sentiment? How do how do you know it's going to switch back?
>> Yeah, a lot of it is sentiment driven. I've been, you know, I've been doing macro for 50 plus years. So, I feel like my my macro uh capabilities are really strong. Um, and I have a lot of they allowed me because I have been through so many cycles and have been, you know, have gotten to feel very comfortable with my abilities there. It allows me to have conviction when most people do not. So, so a lot, you know, sometimes people misread that as cockiness or, you know, being too sure of myself, and it's not that at all. It's conviction based on years and years of doing this. Um, and in terms of sentiment, I, you know, some of it's probably God-given, uh, but certainly over 50 years, I've developed. I I've been for many cycles um very comfortable being basically alone against the crowd. You know, when when the crowd is I'm I'm at my my convictions are at their highest when the crowd is all in agreement and I'm way over on the other side of the room. I'm going, "Nope." Um so, you know, it's it's it's a funny thing. Like I said, some of it I think is developed and some of it is just God-given. I just don't need to be with the crowd. The crowd doesn't influence my thinking. And obviously from a market standpoint, it's been proven over and over that when everybody's in agreement, you don't want to be there. So, um it's funny because I'm getting challenged on on X now because obviously my my silver and gold coal is not, you know, momentum is what drives most people. So, silver and gold call is not contrary at all.
>> And I'm starting to get plenty of company on the bullish side of the stock market. And so people go, "You're not a contrarian." I go, "You misunderstand what a contrarian is." For me anyway, I'm most contrary at inflection point. So when everybody's all in, I'll be bearish. When everybody's all out, like they were in October of 2022, you know, I'll be I'll be very bullish. So it's in between. There's actually a period in there where the consensus is very right. And right now that's that's the case.
>> And and that's the case for Gold Lake Gold because I mean Goldman Sachs has a 6,800, you know, target this year. HSBC is now at 7,000. You know, Bank of America is up at 7,000. Um, you know, there's a lot of different people here. Um, Jeffrey Gunlock is at 7500. So, a lot of different people are calling now for gold to have this huge run, you know, in 2026. Does that concern you at all?
>> Uh, not yet. I mean, it will um I I'm surprised because I haven't really followed where everybody's raised their targets to, but I didn't realize so many were above my target, but um you know, no, I'm not concerned at all yet. I think that that time is coming.
>> Yeah. Um and and the other thing with you know un unlike the stock market which I think is putting in a generational top meaning it could that the highs of this market once we get there um I think will stand for decades you know not one decade maybe two maybe more um whereas the the medals you know postbust I have much much higher targets so the only reason I'm probably more conservative than some of those people now is my concern that we're heading for a global bust. Um, if I were straight lining this thing, you know, I'm looking for 20,000 gold in early next decade. I'm looking for I had been saying 500 silver and thinking that's a reach. I'm now thinking, you know, if we get to anywhere near 200 this cycle, uh, there are people saying it'll go higher than that this cycle. Um, 500 seems way conservative. So um but but anyway, you know, my early early 2030s call is much higher than these numbers, but I see a bust in between. So
>> yeah, let's get into that. You know, and some of those gold um forecast may be, you know, they're from the the bank, but it may be just, you know, one commodity analyst. It may not be it's not maybe their base case, just maybe, you know, one one or two guys. But um nevertheless, um yeah, let's talk about the bust. Um, obviously we're moving towards this parabolic move that you see coming with the markets. The bust is going to look like what and how long will it take to recover?
>> Yeah, I I define a bust as something that's uh deeper and bigger than a recession, not as drawn out as a great as a depression like the Great Depression. Um, and it's accompanied by what really makes it a bust is it's accompanied by a financial crisis of major proportions. So 20089 was very close to a bust. As I say, I think they brought it back from the cliff just in time um back when GE was, you know, the course pick paper market was freezing up in in late 2008 and they were talking about, you know, GE might fail because they have to access paper so you know have to access those markets so often. Um, they the government acted fast enough, the Fed acted fast enough and they pulled us back from the cliff. Because of 20089, there's going to be reluctance this time around to act. They're going to say, "Oh, we don't want to go back there again." You know, you've heard all the criticism about QE and you know, uh QE to infinity, etc. And Powell's been on record many times to say we're not going to repeat that mistake. Um I think pretty much Wall Wall Street says that was a mistake. So So when the time is um similar, they're going to be reluctant or they're going to be doing it in baby or baby steps and taking longer to get there. Um so as a result, I think we can go over the cliff this time. And all that means is I think um we could see more bank failures and more, you know, financial um dislocation than we saw then. As bad as that was, um, they will inevitably have to react. It's just a question of timing. If they react soon enough, they can avoid a bust. If they don't act soon enough, they go over the cliff and then have to pull him back.
>> How does this coming appointment change anything? Does it change anything for you? Do you think he'll he will wait longer than a Jerome Powell, for example?
>> Yeah, it's interesting. I I thought Kevin Marshall was the best pick. I was, you know, I wanted him. He kind of flies in the face of what I'm talking about in terms of what they should do, right? Because he's he's one that says we got to reduce the balance sheet. And you know, and he's right. I mean, you know, when we look at the craziness of what happened post or during the pandemic and post pandemic, you know, you're you're you got up to 9 trillion on the balance sheet. I remind people that in October of 2008 before the crisis or on the verge of the crisis the balance sheet was 875 billion and that was that was as high as it had been in the life of the Fed from 1913 on. So we went from 875 to 9 trillion over the you know course of the next less than 20 years. Um, and so he's, you know, anybody would say, "Yeah, that makes no sense." And I'm a monetrist, so I, you know, I'm not preaching for more money. Um, however, it's kind of where where are we in the big picture? And in the big picture, there's going to be the only thing that's going to save us is money. Cuz when things start falling apart, it's not physical that saves you cuz that can't move fast enough. It's the only thing that can really save you is, you know, pumping liquidity into the system. And this is going to be global. So I, you know, I focus on the Fed, but it's really every central bank. Um, so Wars being who he is, um, and all his statements, yeah, he's he's somebody that's probably going to be slower to react. If anything, I I I basically would say that almost whether it was Powell, whether it was Wars, whether it was one of the others, it's almost this is bigger than any of them. It's it's really they're just they don't want to fight the last they're fighting the last war, which was 20089. And so they're they're going to be slow to make that same mistake. And yet that's what they're going to have to do. So it it really isn't, you know, worse versus the others. Um, but if anything, he's going to be slower because he's kind of feels like that's the wrong thing to do anyway. Um, but in terms of it's interesting because you heard all the narrative after he was appointed that, you know, Trump Trump uh is getting somebody that's going to do what Powell did and he's not going to be happy and why did he, you know, Worsh must have fooled him or what. If you if you listen to War's interviews after he is appointed, he does have some of what Trump has been saying, which is, you know, we're we're doing this Phillips curve thing. You know, we if jobs if the economy is strong, we got to hike rates or we can't cut rates. And, you know, if you have productivity gains or if you are in an environment where because of other past policies, inflation's coming down, you can have growth without it causing inflation. So, you know, really I can't fault Paul. I've been very I've defended him many times against all the criticism is if you look, he brought inflation down from 9%. And we didn't crack up the economy. So, um, you know, how can you say he did it wrong? However, looking forward, I think they are restrict way too restrictive right now. Um, you times are going to start unraveling and they're going to as as the Fed always does have to catch up. So, um, you know, but up till now, you know, I haven't agreed with Trump in terms of criticism. And frankly, I've always said the bond market determines rates, not the Fed. So, you know,
>> why don't you you got a lot of other things on your plate. Focus there because really, it's not POW that's the problem.
>> Yeah.
>> But from a bigger picture standpoint, I do think rates are restrictive and are too high. And so, you know, he's right about that. Lorsh basically agrees with that, you know. So,
>> yeah.
>> So, I think I think that Wall Street and the media got it all wrong. I think, you know, in their typical anti-Trump um slant,
>> you know, bias, they they can't help themselves, but have to be faulting whatever he does. So,
>> time time will tell. I'm sure they've had a lot of uh closed door meetings, and I'm sure they're on the same page. But when he was appointed, it did make me think of, you know, your thesis in that, you know, he does have this hawkish era to him that he will wait um longer and that's exactly what you forecast. Um, let's talk about bonds and interest rates. Um, you know, bonds is one area, you know, you you'd spoken previously like you thought, you know, by now we'd maybe be at 2 and a half or sub three. We're still above four on the 10-year. When do you see that cracking? like you just spoke to it a little bit, but can you just elaborate?
>> Sure. Um, yeah, I I mean obviously this whole cycle has played out longer than I thought and so people say your timing is way off and that's I I just keep stepping back and saying, you know, I'm forecasting a cycle. This is not a trading call. It's not meant to be. I give you ideas of what I think the timing is going to be, but it's really my forecast is really the cycle will be whatever it is. And so the fact that the cycle is extended means the you know the interest rates have been held up uh longer. But I do think um you know this run the back up to 430 and that the reversal since then I think is the beginning of the rollover. Once we get through 4% you'll know you've pretty much completed the it's it's basically a two plus year um top that rates have been building here. you know, got up to five, the tenure got up to 5% back in late 23, I think, and it's been ever since then in this trading range um between basically high threes or 4% and, you know, mid fours or somewhere in there. So, so I I think we're about to exit that. Uh about means could be a matter of weeks uh or even days, but probably weeks. Um, and that once we get going um I see us moving down sub 3% during you know between now and summer and then uh and then if we truly are going to see a global bust sometime later this year um then you'll move from 3% down to zero pretty quickly I think meaning over you know six or nine months um because
>> in a world of rising deficits currency dilution and market volatility many US investors are choosing to divert diversify their retirement accounts with assets like physical gold, silver, and even crypto. This video is sponsored by iTrust Capital, which offers a platform for Americans to hold physical gold and silver, as well as crypto directly inside a tax advantaged IRA. Designed around transparent pricing with clear premiums over spot and no hidden storage fees, iTrust Capital offers something that still isn't standard in the precious metals IRA space. If you're a US investor looking to learn more about owning gold, silver, or crypto inside an IRA, use the link in this video description. US residents may be eligible for $100 funding bonus when opening and funding an account with iTrust Capital. Now, let's get back to the pod
>> because once you get into that bus, you know, again, people have to understand you'll have you'll have the beginnings of a recession before you have a bus. you know, you're going to see the economy slowing and then going into recession and the bus comes after that as you know, as accidents happen, as things start happening financially. But um once you get into the bus se uh component, you know, you're not only going to have people running to the treasuries for safety, you know, for it's one of the few things that's not going to be going down, you're also going to have the Fed, as reluctant as they are, having to uh pump QE and and they'll start out with, you know, yeah, we're reluctant to do this, but we're going to do a trillion because we have to, you know, get liquidity into the system and and ultimately I think we're going to get to 20 trillion. So for how long is it going to take them to get from a trillion to 20? Um, you know, probably six or eight months or more but that last that last
>> just to clarify David that's new QE that's new liquidity. It's not going to take the balance sheet from 6 and a half or wherever it is to 20 trillion 30 trillion. And again, it's that's totally my guess of what it's going to take to turn the thing around.
>> Um, and we don't even know that we're gonna have a bus. I mean, I I've called a bus for for so long. And people think I called it for the next six months or so. I said my my timing on the bus has always been we have to complete the bull market in the stock market before you'll see a bust. So, and I've never been bearish on the stock market. So it's it's always pushed out because of the market's pushed out. But if it does happen later this year, um, yeah, I think it'll, you know, they'll start gradually, but ultimately um, you know, once once you start seeing free falling financial fail failures across the globe, it's going to be every central bank is going to be saying whatever it takes.
>> They'll start out with pieces. So you'll, you know, and then find out that's not nearly enough. It's not stopping anything. They'll go to a bigger chunk thinking that's more than we ever thought we'd have to do. Not stopping and then finally it's just whatever it takes.
>> Yeah. Yeah. They just throw in the towel and say it was interesting. Um, in Japan they just had another election and uh the prime minister there got even more control and she is um, you know, very friendly with Trump but she's also gone on the record that they're going to print print how if they need to. So you know, Japan will be right there if the crisis hits obviously as well printing. Um, obviously this is going to create a tsunami of inflation postbust. What does that look like? I mean, you've spoken during the bust the only place to hide is is the dollar and treasuries. Is that still correct?
>> Yes.
>> Okay. And the dollar the dollar it will be people have to understand because I'm still looking for an $82 DXY down to 82 here between now and you know sometime in the bus because I I think it'll still go down early in the bust or early in the recession anyway
>> and then from there once the bus really becomes apparent and is really causing concern around the world
>> I think the dollar gets that flight to safety trade it always gets and it'll get it up to maybe 120 or higher and from there it goes down. Um, so so during that period as long as you you know as long as you don't think it's straight from here yeah that the dollar will be one of the things that I think holds up during the bust.
>> Do you I mean we're 96 I think we just crept above 97 this morning on the DXY. That's not too far to go to 82. Um, do you keep some exposure there because you don't obviously know exactly when the bust is going to begin or are you until you see it kind of get get a lot lower, you're not interested?
>> Yeah. I mean, I don't give financial advice and I don't talk about what I do because it' be taken as financial advice. So, but what I will say is, um, you're probably the first one that I've ever heard tell me that 82 is not very far away. Um, 82 is a big drop, you know, to go from we were at 115, you know, we got down to the mid 90s and then rallied back over 100. So this this move is really from 100 down. If you go down to 82, that's that's a very big move, but I I think we probably run down to the 90 or thereabouts. There's a lot of um support down there and bounce from there and then go down to 82. So it's going to take time. It's not going to fall that quickly. Um, and uh, but but I I would say um, you know, I'm I'm still out there with that 82. I don't think there's anybody even close to that forecast. So I think for most people they think 90 is possible but not 82.
>> I got into the business in the mid-2000s.
>> So I remember, you know, the dollar crashing down into the low 70s in in 2010 2011 right when gold had its previous peak. So I know it can go there. And I mean, if you look at 96 high, 97 to to 82, that's less than 115 to to where we are now. Right.
>> Right. Right. Exactly.
>> So, and I mean, some people are calling for a lot lower on the DXY.
>> Well, I do think, you know, there probably the Austrians, you know, the the Austrians who think this is the the big ones, you know, that we crash here, right?
>> You know, they probably have that view. I I do think the dollar could be under 50 early in the 2030s. You know, as I say, the difference between myself and a Peter Schiff or any of the Austrian crowd
>> is that the Fed because I'm calling for deflationary bust. In deflation, you have a printing press and they can they will do whatever they have to do. They may not talk that way now. They may not at all and they don't at all realize that it's coming. But once they're in the midst of it, that printing press will keep it will kick the can down the road one more time. It's going to be a, you know, a big um it's like um there's going to be a, you know, bust that isn't going to be comfortable while we're in it. But because they have a printing press, they'll pull us out of that and we'll have one more cycle. So the difference between myself and the Austrians is that I think we see a collapse of the system in the mid-30s. They think the collapse of the system or the reset is now, you know,
>> it's happening now. So, so I can see why they think the dollar would go a lot lower now
>> because of I believe we can save it one more time because of the printing press. Um, you know, my case is that the dollar
>> probably starts heading south after the bust and um could get down to 50 early in the 2030s. Um, so I agree ultimately it's gone down but not not
>> Yeah.
>> in one month. And the DXY in some ways is almost a little bit meaningless because it's it's measured against a basket of other fiat currencies which we've spoken about before, right? Talk about the equity market. So the the bus could last between I think you've said 6 months and 18 months somewhere in there.
>> I think the bust itself which is the economic um part of the forecast. Um, like I said, it's a down a very bad down economy accompanied by a financial crisis. That's the bust. I I'd say 12 to 18 months. Um, that doesn't mean it'll have lingering effects because I think there's a lot coming out the other side that will still be, you know, the consumer is going to get hammered. So
>> I think the the next cycle looks very different. Um, but 12 to 18 months, I think the stock market, you know, the bare market might last 9 months or 12 months, you know, depending on how long the bust is. But um, you know, you'll have in in a bare market, it's not going to be straight from the top to the bottom. You'll have bare market rallies. Part of that probably driven by the Fed stepping in and saying, you know, we're going to print several trillion dollars here and everybody gets excited thinking that marks the bottom. So you might be down 50% at that time and then rally back halfway. Uh, and then they realize that's not nearly enough and it goes back down. or more problems show up and it goes back down and you're down now you're down, you know, 75 80% and then so you'll have at least two legs down maybe even three. Um, so that plays out over time because you you know, those those bare market rallies might last two months each. So if you had two of them, you know, it stretches it out four or five months and then, you know, the downs are two or three months. So
>> Mhm.
>> And then when it begins when the when the, you know, balance sheet reaches 30 trillion or the Fed is deployed enough liquidity to save the system and everything starts ripping again inflation is going what are what are some of your inflation targets and look like
>> I think coming out of the bust because you're coming if I'm right, I think you're going to have deflation. I mean, we're at essentially depending on which index you listen to. If you listen to true inflation, you know, we're at 1% inflation or whatever. So, but we're, let's say we're two and a half and we're in recovery or we're we're still in a positive economy. If you go into a negative economy, you're going to be below zero. I think pretty pretty definitely and maybe three or four% below zero. So, so if you're coming out of a deflation uh deflationary environment, that first year out, you're probably a very low single digits. Second year out, you may be moving into high single digits. Third year out, you may be into double digits and then you really start roaring from there. Um, so you know, by the end of the decade, uh, or early next decade, you could be at, you know, 12, 13, 14% on the way to 25%. I think I think the, you know, in 1981 or two and I was, you know, an institutional investor then
>> um, we had 20% inflation so this time around I think we could see 25 um before you know rolls over
>> uh and that's probably, you know, 2032 or three somewhere out there. But
>> um, if you imagine what that the implications of that are, that means interest rates which track inflation will likely be, you know, in in 1981, you know, the the 30-year and the 10-year got up to 15%. In this cycle, I think you could see it up closer to 20%. And how how in the heck do you finance debt that can't be financed at 5%? Where's the money going to come from? service that debt at 15 or 20%.
>> So you think things will be so bad that the politicians and the central bankers will actually have the conviction or the follow through to put people through that kind of pain.
>> Well, frankly, it's not enough. I don't think that at all. I think they don't they won't be in control. The markets will be in control.
>> Right? So, in other words, the rates are going there. The Fed the Fed could print all the money they want and what they're going to be doing is pouring gasoline on a on a forest fire. And so, you know, if they if they ever tried what Japan's talking about doing here, um, now if they ever tried that with a with let's say inflation's moving towards double digits and they say we can't we can't finance our debt, you know, we need to lower rates and they cut rates. and to cut rates. They're printing money. You're going to get to that 25% a lot faster or go higher than that. So, they they lose the printing press, I think, before the end of this decade. Probably probably 2028 or nine.
>> They lose the printing press. Once they lose the printing press, you have to live within your means and we won't have the means to live, right? They won't have enough money to service debt. Never mind service the militaries uh paid welfare programs, you know, Medicare Medicaid um, it's it's going to be that's why I say the system collapses and again, I'm speaking of the US, but this is global. This is in my opinion, this is, you know, the end of the super cycle that I define as the long cycle between two depressions, the 1930s and what I think will be the mid 2030s. So 100-year um cycle. And it basically is the end of a Ponzi scheme. You know, we've we've ramped it up every cycle more. It's just, you know, it's a sine wave type thing where it just gets, you know, bigger and bigger each time. The excesses get greater. The response to bring the excess excesses down get greater and you get to a point where it just gets out of control and you no longer really our politicians will have zero control over this.
In a world of rising deficits, currency dilution, and market volatility, many US investors are choosing to diversify their retirement accounts with assets like physical gold, silver, and even crypto. This video is sponsored by iTrust Capital, which offers a platform for Americans to hold physical gold and silver, as well as crypto directly inside a tax advantaged IRA. Designed around transparent pricing with clear premiums over spot and no hidden storage fees, iTrust Capital offers something that still isn't standard in the precious metals IRA space. If you're a US investor looking to learn more about owning gold, silver, or crypto inside an IRA, use the link in this video description. US residents may be eligible for $100 funding bonus when opening and funding an account with iTrust Capital. Now, let's get back to the pod.
Let's articulate the moment the Fed loses control of the printing press because that's that's a huge uh fundamental component to your thesis playing out. When will that happen? How will that happen?
Like I said, I would guess and I'm just guessing, but you know, if if rates are up, if inflation's up in the high single digits, um, any rational person at that point that knows economics, which means any, you know, hopefully people on on the Federal Reserve Board, um, and economic adviserss to the president, um, you know, whoever the president is in '28, let's say, if if if interest rates if if inflation is up in the high so single digits even um, they should recognize that printing more money into an inflationary environment. I mean, they they obviously recognize it now, they're going to recognize even more then they're going to have to resist the temptation to say we got to print our way out of this because that's only going to in accelerate the inflation and then then you're really out of control. So I think I think it's probably latter part of '28 if I were guessing. I could be off by two years but um, that that we're going to be at that point where you really say we can't we can't print. And the difficulty is we won't have the ability to pay all to service all that debt because don't forget we're you whatever the debt is today, you're if I'm talking about 20 trillion in QE, that QE is going to be accompanied by a lot of new fiscal spending, you know, the new debt, so that that, you know, if if we're talking about 38 or n trillion now and just US debt, US government debt, um, that could, you know, 50 or 55 or 60 um by then and, you know, post bust because of what we did during the bust.
>> Yeah.
>> You know, I keep talking about the 330 trillion global debt that's out there. It's a number that at least is is considered pretty accurate. Um, that could be 500 trillion by the time we get to the end of the decade and and most of it because of the bust, you know, in reaction to the bust. So, and and they're all going to be facing the same inflationary pressures, the same interest rate um picture. So, you I don't see how this the system survives that. And people go, "Well, how about, you know, all the things with crypto and, you know, or with gold or all these plans." I go, "My only response to that, cuz I my brain can't fathom how you, you know, how I can't put that together and figure out how it does it." Um, my only response is I think the macro just overwhelms all of that. You know, that's a
>> Yeah.
>> spit in the wind compared to what the problem's going to be. I think
>> Yeah. Yeah. When I hear I mean, global debt is well above 300 trillion. Um, and there's, you know, many, many reports citing that. But you can get to these numbers for gold and silver very easily when you think about just how much liquidity, how much debt has been been piled up. I mean, even today, we're having a hard time paying our interest on the debt, you know, which is well above a trillion dollars a year at the current rates.
>> Now, I mean, how much longer can they keep rates elevated? Like, you you forecast them coming down here pretty pretty soon. Um, but again, that's the front end of the curve, right? Um, the back end,
>> actually, I I think I I disagree with the narrative that's out there, the popular. I I think all rates I I do believe that in the bust we'll be looking at a half% or lower on the 30-year. In the bust we'll be looking at a 0% 10-year. In the bus we'll be looking at negative short rates. So, so uh and I think that's you know, the beginning of that bull market in in bonds or you know, bare market in rates I think is about to begin. So, it's going to, you know, it's going to happen gradually here in the next 6 months, but then accelerate as the bust becomes the story. Um, so I I don't agree with those that think, you know, we're going to have long rates going up here. I think they're coming down to there's going to be there's going to be a shortage of yield. That's the story we'll hear um 6 months from now or eight months from now is, you know, we have a shortage of yield. You know,
>> what are we going to do? You think about and people go, "Well, who's going to buy a 30-year bond at a half percent?" Well, if you're in deflation and there's there's nothing else out there, you're going to say, "At least I'm earning something." You know, and you're not going to be saying, "Well, yeah, but inflation's coming." You're going to be worried about deflation getting worse.
>> It's hard for people to just even consider.
>> It's a different world. It's a very different world than what we're in right now.
>> Yeah. [sighs] I got to feel good, man. We got to we got to turn this around. So, how do we survive the bust? Okay, so metals, everything's going to get hit in the bust. You know, how low do some of these metals go? You know, gold, silver, copper, how low do they go? And then what's the trajectory after the bus?
>> I get a lot of questions about what's your target in the bus for silver and gold. And I go, well, we got to see where they go first. You know, I have a target out there of 180 for silver and 6,800 for gold, but uh I'm not sure. so sure that they aren't going to be raised again, you know. Um, so I have to, you know, we have to really get there to be able to put something on the other side. But what I'd say in general is I think you probably are looking at maybe 30 or 40% hit to gold from wherever it goes here in the, you know, pre-bust and and maybe, you know, 60, 70 and more% or more in silver because silver's silver is very economically sensitive and and certainly a much, you know, less liquid thing once you you once turns the other way. you know, there's a lot of speculation in these numbers right now. I realize long-term there's a shortage of of silver and so that's, you know, that's the long-term bull story is part of that. But, but in a bust when demand's falling through the floor because of a bad economy around the world, uh, silver, silver's going to be more volatile than gold. So, it could fall well more than 50%. Um, but let's say it gets to 200, that means it comes back to maybe um 70, you know, maybe it goes back to 50, I don't know, but I can't put a number on because I don't even know where the end game is on the upside yet. Um,
>> that's fair.
>> So, but then coming out the other side, um, you're absolutely right. I think um every cycle and I you know having done this through many cycles uh I can say this unequivocally is that um every cycle has new leadership. So you know the um this cycle's been mostly technology and maybe healthcare earlier on um and, you know, growth stocks for sure. Um, the next cycle is going to be very much because of the whole story about inflation but also the story about re-industrialization, you know, re reshoring um, all the, you know, building out of the grid and what the AI's uh requiring in terms of power, the next story is going to be huge rebuild of the infrastructure, uh, um, a lot of industrial expansion. And what's when you're when you're building new plant equipment, well, what do you need? You need commodities. So, it's going to be a huge commodity super cycle. And so, those are the areas of leadership will be and we're seeing some of that obviously late the cycle. So, it's easier to understand today than maybe three or four years ago when everything was consumer and tech.
>> Um, but um, it's going to be uh industrial stocks and commodity stocks that I think will be the leadership. And when I say commodity, uh, and I've been a bear on oil and energy for the last few years, but when when I say commodities, energy, but we'll be right at the top of that list because I think oil could get down to 30 in the bust and go to 500 in the next cycle. So, if you go from 30 to 500, you can imagine what that does for oil stocks and for oil service stocks. And you know, there's going to be there's not going to be enough.
energy out there to satisfy what I think is going to go on. What what you're doing is you're we've spent decade after decade, uh, for you know, really since the late 80s, probably or mid-80s, uh, rationing, rationalizing down our capacity, um, in commodities.
So, you know, less mines were developed, less, uh, steel mills were built. You know, China's probably the exception. They expelled Arthur at that time, but the rest of the world really, um, you know, it was we're going to, we're going to, we have to make money. We can't make money with this excess capacity out here. We're going to shut down capacity. We're not going to build new greenfield, uh, mills or, um, plants. Um, and, you know, we'll satisfy just-in-time inventory, etc.
Then all of a sudden, you you goose up the economy through this, you know, 20 trillion in in dollars coming out of the US or what maybe in agri is 50 trillion coming out of the world, I don't know, but you loose up the demand because demand will follow with a lag. It's not going to happen six months after you do it, but within a year or two years, demand's roaring hot, and it takes you a decade or more to build a new plant or to, yeah, develop a new mine.
You can't, you you've ramped up demand, but you can't match that by ramping up supply. It takes too long. There's a long lag to that. So that means you're going to have massive demand and a limited supply. And the only thing it can give in that environment is price. And that's why you can get, you know, gold going from, you know, 5,000 to 25,000 or whatever it's going to be. Probably more than that. Um, and silver going from, you know, $50 to, you know, maybe $1,000 or something. So, and and copper going from, I think, copper in the bust because it's so economically sensitive, could be, you know, $1 or $2. Now, I'm calling for $8 copper pre-bust. That's my current target. So, it could fall to $2 or $3 or less. Uh, post-bust. I don't even didn't put a number on it, but maybe it's $20 or $25. I mean, we're gonna see obviously when I talk those numbers, those are that's inflation, right?
We're going to see commodities go through the roof. Oil, you know, oil obviously is a big part of our economy. Uh, if you get $500 oil, you can see why you might have 25% inflation. No kidding.
But there is a demand component. Like in my mind, yeah, you either need incredible inflation or an economic boom to sustain $500 oil. Is it going to be 50/50? Like, is the boom going to be starting to come, or is it going to be like 80, 90% driven by inflation? Those those types of prices.
Now, the the demand is what drives the price. So the demand comes from all that printing. Okay. Um, and, you know, the obviously there's there's a money component to a monetary component to it, and then there's the underlying story, which is reshoring and the need for, you know, data centers and the need for power, etc. All that that requires, you know, commodities, energy, it requires steel, it requires all the metals, etc. So, so it's it's the money that stimulates, but it's also the, you know, what we're doing as an economy. So, it's funny how it fits hand in glove that we're at this point in the super cycle where we are in need of reshoring because of what happened recently in terms of supply chains, etc., and because we spent three decades raping the US of its industrial capacity. So, we're now just reversing that course.
Um, and which, yeah, when you print that much money, that's going to speed up the process of how we reshore, I think. Um, because they wouldn't have the resources if it weren't for all that money coming in, too. So, so they kind of go hand in glove and between the two, it basically, um, you know, ramps up your demand and then that in turn translates into inflation through, um, price increases, etc.
Yeah. So, you know, does the US rise from the ashes after this, you know, collapse which you've described, right? We get 25% interest rates with that level of debt and the system basically just collapses at some point in the mid-30s, early early 30s. Um, you know, what does that look like? You know, does how does the US come out the other side of this?
Yeah, I I think the other side is a long story. I mean, I again, we're used to having recessions that last a year or two. Um, in the bad ones, it's two years or two and a half years. It seems forever. Um, this is something where this is Great Depression on steroids. I think. I don't know what comes out the other side. Is it a great reset where we can start all over and do it better, or is the world blowing up in this? You know, because obviously there's geopolitical risk, too. Um, what I will say from a, you know, from a, um, not not the big picture of all countries and what's going on, but just kind of it does seem to me that if you have a situation where you might have as much as 50% unemployment, um, and of course, you got other factors like AI, etc. Um, but let's say we have 50% unemployment because of the economy and whatever else going on.
Um, you're not going to have a government that can fund welfare. You're not going to have a government that can fund your Social Security is either going to be totally gone or a small fraction of it is available. Medicare, same thing. Medicaid probably is not there. You know, they don't have the money and and and they're not able to sell debt because who's going to buy your debt if you can't even service what you have, right? You're going to have defaulted on debt long before that. So, um, so basically we've we've played this game for probably 50 years at least, um, where we've we've because of the ability to borrow money both individually and government-wise, we've pretended that our standard of living continued to grow or held its own when it really wouldn't have been the case if we didn't expand government to the extent we've done it, right? Um, so, so we look like we're a lucrative society and that, you know, everybody has two or three TVs and a car and, you know, we we say even the people that are on the bottom end of this are living better than anywhere else in the world. Um, but if it weren't for the printing press and the and the bonds, you know, or the debt, this this would have it would have been clear that our center limit was dropping decades ago.
So, but so it's all going to come all at once in a in a much more stark fashion when things collapse. So, it's kind of a catch-up for 50 years of mismanagement, basically.
Yeah. Sounds like revolution, David. Well, certainly that's I I would I people go, "What do you do with that scenario? What what do you tell people to do?" And I go, "The only thing I can tell you is that you've got basically a decade at most, probably, um, to get your financial house in order. Um, and if you can get your financial house in order, the better you do with that, the more control you'll have over the bad times." And then when things really get bad, it's, you know, I I don't want to talk about having guns and all that, but the basics really could be anarchy.
Yeah. Access to clean water.
I mean, we we see it in other parts of the world. We just never saw it here. And, you know, it's I think you really have to know your history and recognize that.
Yeah. Yeah. We've we've lived this great experiment here for, you know, hundreds of years, but it's, you know, it's maybe coming to an end.
Yeah. Yeah. Well, we'll see. Um, but yeah, I mean, the structural deficits every year gets worse and, uh, you never know what these financial wizards can come up with. You know, a lot of people thought the bust would have come five years ago, 10 years ago. So they do seem to have this ability to kick it down the road, but, uh, I I share in your consensus that it is a Ponzi scheme and ultimately, you know, confidence will be lost. Um, so,
yeah, that's why I that's why I do say that I I really do believe we can kick it down the road one more time because we can print money. The problem is when you lose the printing press is when you have hyperinflation. You know, they just don't have an answer for that. You know, if if you need if you need, um, to grow things, if you need that money to grow, expand the economy, and and doing that increases the inflation, you you basically, you know, you're a rat on a wheel trying to, you know, the faster you go, the worse the harder it is to catch up, right? So, you know, the real analogy is gasoline in a forest fire. It's basically you're you're pumping gas out of a hose, uh, and it provides you money right now, but in I mean, we've seen the we mark, you know, the wheel.
Yeah, I was going to reference that. I mean, yeah, and I mean, Germany came out the other side of that, and there's some great books on that, um, Dying of Money is one, The Economics of Inflation. You know, obviously being the world reserve currency, there's a big difference there. But is it possible, you know, to just through this inflation go through this period of a year, two years that's, you know, horrific where a lot of people will get wiped out, but the debt will also get wiped out, and we come out the other side like the way the way Germany did. I mean, it it took them some time, but they came out strong.
For sure. This is a forecast or, you know, or my best guess of what is coming because of the, you know, the combination of factors that lead to that hyperinflation.
Yeah. Uh, the the problem we have is just the massive debt in the system, not just here, but around the world. Again, I am not worried, certainly not for the US, and probably not for most of the world in the bust of a sovereign crisis. You know, the debt crisis we have in the bust is a private debt crisis, a debt liquidation crisis, as you know, what we saw in 2008. You know, as banks fail, as companies fail, as people go bankrupt, you're going to have, you know, uh, an involuntary debt liquidation cycle. But I'm not worried that Treasury bonds are at risk or Treasury bills are at risk. And I'm probably not worried that Canadian bonds are at risk, you know, government bonds or because they all have the printing press. Um, if we didn't have printing press, it'd be a different story, maybe. But.
Um, so this time around is not a sovereign debt crisis. Next time around is a sovereign debt crisis, which is a much bigger part of the debt, um, equation, right? We have massive sovereign debt.
Mhm. If, uh, they can't service their debt because of inflation, if they can't come up with enough to service fully service it, it you all of a sudden you start getting into a default cycle, right? Where and so that that's what really comes now.
You know, I've heard, you know, people say, well, you can just forgive debt. The problem is people on the other side of it, right? I mean, if you forgive them, what do you do to the guy that depended on that debt, you know, had income coming off that debt? They, you know, you're gonna have somebody's gonna get hurt very badly, and and I'm not talking small numbers of very badly. So,
so it it there's they're not an easy easy solution. Could I be wrong? And somehow we don't get the hype, you know, we don't get inflation going nearly as high, or they come up, you know, they're able to use gold to pay down debt, or, you know, somehow it it softens the whole scenario a lot. Uh, and we just keep going on with this. But I I remind you that we've if you go back to let's say 1940 coming out of the Great Depression, and each cycle we had, you know, yes, we had inflation back then, but inflation was maybe 5% and they had to ratchet down because they were getting overheated, and, you know, they didn't have to go too far, and so it came down, and we didn't have a real deep cycle. Then next time was a little worse, and the next time a little worse. What we've seen again, it's like that sine wave. It's each cycle, the exit have gotten so much bigger. How many more times can we do that? You know, the the swings are just getting too big to manage, and that's where I think we're at. Do you have any final, uh, last words? I know your core framework is all about, you know, psychology and sentiment. Is there, you know, an indicator that you want to sort of leave our audience with, um, to just just keep an eye on as we move forward here and get closer to what you see?
Yeah, I'm, I mean, I really, I my feet are in two places. One is macro. Like I said, I've done it for a long time. I feel very comfortable with my ability to forecast macro. Um, and then the sentiment is the other piece. And and I used, you know, I use technical analysis stuff, too, to help me. But but, um, I would say I'm, I don't have any particular indicator I'm watching. It's really once you, and my my sense is that once you see institutions all in, you know, retail stayed very bullish even last April, they remarkably didn't get caught in that. The institutions did, but they didn't. Um, once you see, and the institutions now are getting on board and starting to realize they were skeptical from, you know, from October '22 all the way up till very recently, they kept saying, you, they had one foot out the door and saying, "This thing's going to roll over. This thing's going to roll over. It's just going a little farther and it's going to roll over." They're now beginning to realize, "Hey, this is a bull market has more legs." In fact, they're going to start passing me and saying, "Oh, this can go for in fact, you're hearing it from me or Denny and folks, you know, this thing could run for three or four years." And I'm saying, "This year is the end of it, probably." Um, so as you see that, as you see the institutions becoming the cheerleaders for a bull market and telling you you're wrong to be bearish here, that's the switch over that will begin to tell you you're getting closer. And, you know, and as you see the market steepen because I think this leg, which I believe I wasn't expecting it, but when we saw last April, that that created a new leg. So, I thought we were going to go straight to the top, but because of that 20% sell-off in the S&P or 19, whatever it was.
Um, that created another leg. We had one, you know, coming out of '22, we had another leg in October '23, and I think we may have had another one in 20 October '24. And then April was another leg. I think we are now in, we're despite consolidating now, we're still in that same leg that I think will steepen, so it'll be steeper than the leg into April.
Um, once you see that go vertical, you'll know timewise you're getting very close. It, you know, I may find that my numbers aren't high enough. I mean, when you go when you go vertical, well, silver's a good example.
Yeah. Why do you go vertical? Take your pick. What number is it? You know, is it is it one? Is it 110? Is it 122? Is it 180? Is it 250? You know, there's a guy out there, uh, Oliver, who is saying we could see three or $400 silver this summer. I mean, I, you know, he's he's a good guy and I'm not questioning him. I can't get there right now, but, you know, he could be right.
Yeah, he's a great guy. I had him on a few weeks ago. David, as always, um, such a pleasure having you on. Thank you for your time. Health and happiness. Best of luck.
Yeah. Thank you, Alex.