Transcription
Hello everybody and welcome into Commodity Culture, where we dive into commodities markets, sound money principles, and geopolitics, all with the goal of making you a better investor in the commodities sector. My name is Jesse Day, and on this episode, I'm thrilled to welcome David Hunter to the program. Chief macro strategist at Contrarian Macro Advisors, with over five decades of experience on Wall Street. David believes we are in the final parabolic phase in the stock market, which he anticipates will climb much higher in a rapid fashion before a devastating bust results in a massive stock market crash. In the aftermath, he sees gold rising to $20,000 and silver to $500 an ounce. He outlines the reasons behind his thesis and provides price targets on several other assets, both pre and post-bust. All of this and so much more ahead in my conversation with David Hunter.
David Hunter, it is great to have you back on Commodity Culture. The last time we spoke was June 1st, and boy, has a lot transpired since then when it comes to not only financial markets and the global economy but geopolitics and a whole lot of other things. I want to start with your 30,000-foot overview, and then we can hone in on some specific topics. So, what are you paying attention to most right now that you think should be on investors' radars?
Okay. Yeah, thanks for having me on, Jesse. Good to see you again. Um, I would say probably, obviously, it's the US stock market. Um, and and what I think we have entered, which is a parabolic final stage of what I've talked about as a 43-year secular bull market that started back in, you know, August of 1982. Um, what we're seeing here is a steepening of the rally as you move into the end. And I had talked about this several years ago that this is how it would likely end. I think we have reached that stage where it's, you know, it's it's a relentless rally. Doesn't mean you won't have sell-offs day-to-day, or that you couldn't see a 3 or 4% sell-off at some point, but mostly it's going to be upside and upside steep. Um, led by tech, but there's lots of other groups that are starting to participate, uh, as well. Um, I am putting out this, uh, this is being recorded on the 7th of October, but I'm putting out my my quarterly letter tomorrow where I make my my adjustments to targets, and I am raising targets, um, that are, you know, already extreme relative to anybody else on the street. I think, um, people are coming my way but still far below my targets, and yet I'm raising them again and raising them pretty significantly. For example, uh, because I assume this will come out after tomorrow, so I can say this, um, I think, um, my S&P target is being raised to 9500, had been at 8700. So that's a big, big number, um, and already was, as I said, way beyond anybody else. Um, my, uh, Russell 2000 number is being raised from 3,400 to 3,800. Uh, NASDAQ 32,000 from 30,000, and the Dow to 65,000 from 60,000. So, we're, we're, these are crazy numbers, and, and I do say that we're in a parabolic. So, it's, it could happen in a matter of a few months that you get to those targets. It doesn't have to. As I say, there's no, um, you know, the clock's not going to strike midnight on December 31st and the market has to be done by then. It could carry over into the first quarter next year. But whatever it is, it's fairly short-term because parabolics burn out. You know, you go, you go almost vertical. You cover an awful lot of ground in a short time. So whether it's 2, 3, 4 months, um, or a little longer than that, even, doesn't, doesn't matter to me, but we're, we're in that stage. Um, and it's obviously the thing that caused me to raise targets is because although the retail public has been bullish, and surprisingly was bullish last April when everybody was bailing out, they, they learned their lessons and said, we're going to, you know, we're getting opportunities to buy lower. I'm going to buy. So, the retail public's been pretty savvy about this and stayed right through that that period when everybody got nervous. The institutions who have fought this market from the October 2022 low all the way up and kept saying it's a bear market rally, and then when it went to new highs, they say, "Okay, it's not a bear market rally, but valuations are so high that the upside's limited." You know, there's, they've still been saying that right up till now, but you're beginning to see them finally say, you know, we got to get on board. This is a momentum train. And so, you're seeing targets getting raised on the street. You're seeing institutions having to get more aggressive and or, you know, allocate to more equities. Um, so because that's just beginning, uh, it tells me you're going to have a pretty big rush into the market from institutions here in the next, you know, this quarter. So, so that's basically why I say, you know, I've got to raise numbers because that's going to create a a pretty big run-up here.
The sponsor of today's episode is Arc Silver Gold Osmium. Owner Ian Everard is praised even by his competitors as one of the most honest and level-headed bullion dealers in the United States. They have some great prices. You can see some of them displayed right now on screen. Take advantage of these specials today by reaching out to Ian at 307-264-9441 or by email at ian@arcgs.com. Make sure to tell him, of course, that Commodity Culture sent you. And now back to the interview.
And what are the signs you'll be watching for to know that this parabolic melt-up is reaching its final end phase and we're headed for that large correction that I know you've spoken about on this show before? I mean, from an investor psychology perspective, is this just the moment of peak euphoria, is when the floor falls out underneath you, or what, what signs are you looking for, both in terms of market sentiment as well as any technical indicators?
Yeah. So from a standpoint of a top, yes, it's when when you get this all-in type of a mentality where people are now saying, well, the Fed's at our back. You know, we have a new easing cycle. Um, this is what I expect from the institutions. Um, and this could carry for, you know, a year or two or even more because easing cycles go on for a while. Um, when you start hearing that, when you start hearing that this is a bull market that has legs and can carry, that's the beginning of the end because, as I said, the the thing that's kept me so bullish has been that the institutions have been so cautious and so skeptical. When they lose that skepticism and they're on board and fully on board, uh, it doesn't mean you can precisely know that's the end, but it tells you you're in a very, uh, late inning point in the market. And anything from there is, you know, you just have to realize that you're going to go someday. And I don't know what that day is, but you're going to go someday from, you know, a spike up to a spike down, you know, where you're, you know, you're chasing it and then all of a sudden it comes to a stop and you're down 10%. Um, and I don't mean it has to do that in one day, but but it's going to reverse quickly from the top. It may, it may reverse quickly, go down a bit, you know, 10 or 15 or 20%. Bounce back up towards the highs, get back within five, five or 7% of the highs, and then go down. It's hard to know exactly how we'll we'll see it happen. There may be news that triggers some of it, uh, or there may not. Um, so, but the the key is to understand that we are in late innings here. Um, the problem is that you can cover what would normally take you three and four years to to, um, earn returns. You might get in 3 months. So getting out too early, like now, because you have lots of people saying, "Oh, I'm, I'm getting out because I can't time it." The problem is if you go up 30 or 40% from here, the likelihood is those that get out now are going to be forced back in. They're, they're, you know, psychology works in such a way that it's going to be a strong urge for them to say, "Yeah, but people are saying this could go on for a while, for a couple years. I, I got to get back in." And then you end up getting back in near the highs, uh, and it rolls over. So, so it is a tricky time because time-wise, this is time when you really should be starting to say, I can't be, you know, nobody calls this perfectly. I can't know when it's going to stop. I'm getting out. But just understand that because we're in a parabolic and because we're in what I think is a very historic market, um, you can cover years' worth of returns in the next few months and try to, you know, try not to get out too early.
I'd love to get your thoughts on gold at present, as at present, as we are just a few dollars away from $4,000 an ounce, at least when it comes to the spot market. I believe the futures market has already surpassed $4,000 at this point. Gold's been on an epic tear. What is this rise in the gold price telling you more broadly about the global economy, about the value of the dollar and other fiat currencies, and about financial markets?
Yeah. First of all, I, I raised my target to 4,000 from 3,400, I don't remember when it was, a year ago or whenever, but, um, and it's, you know, it's there, basically, as you say, um, in this letter, I am raising my target to 5,000. So I've had a lot of people have laid on on X, uh, a lot of my followers going, you know, it's at your target or it's almost at your target, what do you, you know, are you getting bearish or you, what's happening? I said, you got to wait for my letter because I, my subscribers get it first. But, um, so I've raised it, not by just a little bit, but to 5,000 because for the very same reason, uh, institutions hardly talk about gold. They're hardly invested in gold. Most institutions don't even have allocations to gold. So, we're still in that stage where you still have, and they will, um, jump on board. The institutions will finally, you're going, you're starting to hear noise about, uh, maybe we need to allocate 10 or 20% to gold, you know, maybe we need to, um, at least have an allocation to gold, whatever. So, it can be a very thin metal, and and the metals in general can be very thin when you have institutions all of a sudden getting on board. So, because that's just beginning, um, I felt I needed to have, you know, a pretty big upward adjustment to my target. So, 5,000, it's what I call my pre-bust target. So, it's, you know, it could happen early in the bust, but certainly most of it's before the bust. And then I think it'll get hit like, um, most assets in the global bust that follows. Um, so, is it, is it telling us, uh, something about the economy? Is it, is it warning us of trouble? I'm sure there's some of that in there because I do think we are moving towards that. But if you, if you kind of look at where the consensus is, the consensus of investors and of economists are see no, you know, they don't see anything on the in in the near-term horizon or even in the intermediate horizon that suggests anything like what I expect, which is a global bust. So, I don't really think, you know, some smart money may be doing that. I think it's mostly momentum. It's, it's also, I think, recognizing that the dollar is about to have another leg down. So, you know, we moved $14, we moved 14 figures down from 115, uh, back a few years ago to, or a couple years ago, to, um, you know, 96. We've consolidated that run down here in the last few months, and I think the next leg down takes us down 90 on DXY, maybe even my, my target ultimately is 82, uh, probably in the next 6 months. So, um, so the gold may be smelling out some of that weakness because clearly the Trump administration is is not a strong dollar, uh, doesn't have a strong dollar policy. I think they see it as a benefit to see a weaker dollar and help competitiveness in the US for our companies. Um, and, you know, at some point the dollar will reverse, but for the next 6 months, I think it's, you know, it's a weak dollar is a big part of the story. You know, you've got obviously a war in Ukraine that is not showing any signs of letting up. Um, we may see peace in Gaza. So that may, you know, maybe a story that causes a little bit of a counter move in in gold down and the dollar up. But, but, um, I think ultimately gold's story is really about the fact it's at all-time highs and a lot of investors missed it and are now starting to climb on board.
Do you have a target for silver as well? Because as gold seems to keep breaking out to new all-time highs, silver has actually risen more than gold on a percentage basis year to date. Um, and obviously within spitting distance of its previous all-time high, at least in nominal terms. If we adjust for inflation, we need somewhere around $200. And that's using official government inflation statistics. If we want to get back to previous all-time highs. What are your thoughts on the silver market? And and do you have a target for silver?
I do. Um, I, I was one of the big bulls on silver for the last few years and took a lot of, uh, heat for the fact that silver took a while to get going. Um, but silver, as you point out, is outperforming now. As typically when the precious metals are in a bull market, silver will outperform gold. Um, in this letter, I am raising my target. I was already pretty high on the street with a $75 target pre-bust. Um, I am raising that to a hundred. Um, and, uh, again, same thing. I think it's a thin metal that is just starting to get sponsorship, and, you know, retail's been there, a lot of, certainly the those that, uh, dabble in the metals have been there for many months, but the institutions really ignored silver and are just starting. So, uh, you know, I may even be low at 100, but I'll take 100 pre-bust. Uh, you know, post-bust, I have big targets for both gold and silver by early next decade. So, probably 2031 or two, you could see silver at $500 and gold at 20,000. Um, and yeah, that seemed more far-fetched when gold was down at 2500. Uh, but if, if it goes to 5,000 pre-bust, I mean, that's not a, a far-fetched number in an environment which I think the post-bust, uh, cycle will be, that is going to be very inflationary and, uh, very pro-commodity. So, um, you know, I think, I think 20,000 seems more reasonable every day.
Yeah, it absolutely does. Definitely doesn't seem out of the ordinary with how both gold and silver have been performing so far. Now, you also called the move in the GDX ETF from $22 to $75. Now, we're here at around $78. Would you be taking profits here? Do you think there's still room to run? Is it early days for the gold mining sector at this point?
Yeah, it's interesting because, uh, you know, again, I kind of had to wait for my letter because I always try to change my targets, uh, give them to subscribers, and then I'll put it out on social media. But, but, um, you know, when it pushed beyond 75, people are going, you know, you're missing it or whatever. I said, no, just wait. Um, there was, particularly on GDXJ, a target right around here. GDXJ has run up to, which is the junior gold miners, has run up to 102 or three, um, and right around there was a, a pretty significant, um, intermediate top. There's a higher high above this, uh, quite a bit above this 102, 3 area. But, but it looked like if it wanted to, if it was given a reason that you might get a 20 or 30% correction. They've had big runs. They're overbought. Um, so I was kind of saying, well, you know, I got to wait for my letter anyway. Let's see what happens. I'm more of the opinion now that, um, the miners are going to keep going here because I think the metals are are poised for a lot more. So I, I think they're not, you know, technically, you know, when you look at history and you look at the charts long-term, sometimes those those, uh, inflection points mean something, and sometimes they blow right through them. So, you know, still, still too early to know for sure, but I think the odds are that we just, we're not going to see much of a correction here. And I have raised my target on GDX, um, to 120. Um, I raised my target on GDXJ to 170, which is the all-time high. Um, and so you can see there's, you know, 50, 70% upside in those things. Um, silver, I, uh, the SIL, larger silver miners, um, was 75 and I've raised that. I can't remember what my number is now. Um, and my SIJ target, which had been 35 and for a long time looked like that was a reach. Um, I've raised that, even though we're, you know, we're down in the mid-20s, I've raised that to 60 because I think the smaller miners, you know, the more developmental miners, certainly, you know, the ones that explore and develop and aren't don't have real, uh, production facilities. Yeah. A lot of those, once silver gets going, they're going to probably fly. So, so I, I think there's a lot of room, particularly in the smaller miners, both gold and silver, for a big upside here.
I want to read something you wrote on X recently where you said, "The bust is not in any way determined by market levels. The stock market and the economy, though correlated in some ways, are two entirely different entities. I forecast what I expect markets to do, and I forecast what I expect the economy to do, independent of one another." Can you walk us through your thought process here, and where the economy and stock markets are correlated and where you see them acting as separate entities?
Yeah, they they tend to follow the same cycle. Obviously, the stock market's moving up when you're in a recovery cycle or when you're in a, you know, positive economic cycle, and when you have recessions and and worse, uh, the stock market will, you know, it hurts earnings, it hurts companies, and and so the stock market follows suit. Now, typically, the market leads the economy. So, I was by no means not, uh, trying to, uh, delink those. What I was really getting at is that people think that my stock forecast, if I change something there, it means I'm changing my economic forecast. And it doesn't work that precisely that that's the case because there are other, there are lots of factors that go into the shorter-term movement in the stock market. So, you know, raising my S&P number to 9500 is no, in no way putting off the global bust. It's not saying, okay, um, because I think we're in a blow-off, it's just that it's a bigger blow-off than, you know, I could anticipate a year ago or six months ago, even. Um, but yeah, I, I mean, people, uh, I find too often, particularly retail investors, um, act like a bust is is a stock market. You know, when I talk bust, I'm talking specifically about the economy and the financial system in general. Uh, when I talk about, uh, the linking of or the the related stock market, it's a bear market that goes along with that bust. Um, so, so it's really kind of just to get at those people who who think that if I, if my forecast in equities is changing, then I'm giving up my view on on what's coming in the economy, and I'm not at all.
Now, how much do you think passive inflows into ETFs are continuing this blow-off top longer than you said, even you anticipated six months ago? Because I believe now the number of publicly listed ETFs has surpassed the number of single company stocks, at least in the United States, which is a pretty interesting statistic. And of course, you know, the Jack Bogle method of just put everything into an index fund and that's all you have to do has taken hold over the past, you know, several decades, couple decades, I would say. And we're now at a point where success kind of begets success in the sense that these are market capitalization weighted indexes. So, the MAG7 keeps on getting perhaps bigger than it would otherwise. Does that play a major role in your view when it comes to the trajectory of the market at present?
Actually, I don't think so. I think it certainly plays some role, but I think we would see something similar to this even if that were not the, um, the landscape we have. Um, it's, it's really, in my opinion, it's more where we are in the super cycle in the grand scheme of things that, you know, you have, going back, you know, I call a super cycle the cycle, the long cycle between two depressions. So, the 1930s being the last depression, I think the mid-2030s is probably the next depression. So, you're in the last decade of a super cycle, and what has, what happens is you come out of the depression. Um, you, you have, you know, you've cleansed the system. Obviously, you're coming out of deflation, you're coming out of, um, a period when everything's flat on its back or, you know, things are down on the floor, and you have no excesses. So, the, you know, the first couple cycles out of that, you, you come out, you have nice growth. Um, when you start seeing inflation pick up to whatever it was back in the 40s and early 50s, you know, maybe 5% seems high. So, you ratchet it back down. Didn't take huge ratcheting down to do it. But each successive cycle, you end up with bigger excesses in various places, but inflation being one, but, you know, speculation being another, etc. And what happens is, as you move farther away from the previous depression, you get, um, bigger highs and bigger lows. In other words, it takes, you know, you, you end up going to more extremes. It's kind of a buggy whip type of a, um, cycle-to-cycle type, um, volatility. So, it takes bigger, you, you go to bigger excesses each successive cycle, or pretty much each successive cycle, and then you, um, take more, it takes more of, uh, ratcheting down, tightening down from the Fed to wind out those excesses, and because of that, they tend to go too far. Then you get, you know, more excesses on the downside that require bigger ups in terms of the stimulus, and and because of leads and lags, it, you know, they're always, you know, going too far in each direction. But as you get farther removed from the, um, depression, those cycles get more violent or get more extreme. And we're now in that, you know, ninth decade away from that. And, you know, we saw in 2008, 9 a very big extreme. And I think most people assumed that you, you don't see another extreme that quickly after that. But I think this being the next big cycle, we're actually going to see a bigger down, you know, because of the bigger excesses that are being cranked down and bigger errors that get made by the central bank because it's hard to figure out because of the leads and lags. So, I think it has more to do with that. And right now, I mean, let's just look at money. In, in, uh, 2008, as we were entering the great, uh, recession and the financial crisis, we had an $875 billion Fed balance sheet. We then went to almost 4 trillion, uh, in the next decade. Um, and then when we, when we had the pandemic, we took the balance sheet up to 9 trillion. So, we went from 875 trillion in 2008 to 9 trillion in 2021. Um, you know, what was that, 13 years? Um, um, and and so, um, now we brought it back down to somewhere between six and six and a half trillion, I think. Um, I expect because this bust is something nobody's anticipating and it's going to be big, I expect that you're probably going to see 20 trillion plus coming out of the Fed in terms of QE, in terms of a Fed balance sheet expansion. So, you know, to go from where we used to talk in billions to then trillions to now all of a sudden tens of trillions of new money, um, it's, you know, obviously that has an impact on markets and on, um, inflation, on everything. So, um, I think that's why we're seeing this, not so much the structure of the products. Um, certainly, you know, from a micro standpoint, I've said this many times. If you were smart enough to listen, if you understood what was going on back in the mid-80s, looking back, um, the, the financial industry recognized that the baby boomers were the rat going through the snake. You know, you had this this huge population boom that had impact on, um, our society back in the 60s because they were, you know, at that age where they were rebellious and and questioning instit. Then they went through their, um, uh, in the early 80s, accumulating homes and furniture and and those things, you know, as they got more established in their jobs and had, uh, discretionary income. And the financial industry recognized that they're going to start, uh, because their homes are bought for many of them, and they're, you know, they've accumulated assets, they're now going to be focused more on building their retirement incomes and retirement, uh, portfolios. And we need to do something. We can't, you know, we can't just have an industry of brokers that turn them and burn them. You know, the old way the brokers used to kind of dial for dollars and call people and say, "I have an idea. You might want to buy this stock. This is a good stock," or whatever. And then, you know, in the end, you weren't doing your customer any favors because you were picking stocks the wrong way or whatever. So, they, they went to a more professional process where, and and it was going to be a huge amount of money coming in. So, they were going to need to train a lot of people in a short while. And they went to an asset accumulation, uh, process, and they came up with the the mantra, it's time in the market, not timing the market. And just accumulate your assets, put it in an index fund, and let it ride. And if you were smart enough to listen to them in the mid-80s, instead of saying, "Well, I'm going to go with the pros, you know, they, they can manage my portfolios." S&P index funds outperformed most institutional investors, uh, from there till now. And so, for an awful lot of people, because it was really the right thing to do, they didn't know what they were doing with their money. So they listen to that. Um, for an awful lot of people, they've accumulated a lot of wealth as a result of being in those index funds and just letting, you know, the steady flow of of money go in there month-to-month, quarter-to-quarter. And, um, the problem is, and we, we had coinciding with that, um, four decades of disinflation. So, inflation peaked in the early 80s and it's come down ever since, you know, ratcheted down. It hasn't been a straight line, but that benefits portfolios, or benefits the stock market because you're capitalizing your earnings at ever lower interest rates, right? Because of the disinflation, PE multiples expand, in other words. So, you've had a period here from the mid-80s or, you know, early to mid-80s right on through to now that's been very much, um, in tune with that, that, um, mentality and that that idea. Now, we're coming to what I think is the end of, um, a 43-year bull market in stocks, the end of a 44-year bull market in bonds. Now, bonds have, they're going to go further because they're going to, you know, Treasuries at least, um, are going to go up in the bust. So, they have a, you know, they'll go a year beyond the stock market. But, but, um, you know, both are coming near the end. When you get to the next, um, recovery cycle coming out of the global bust, which is probably 2027, you're going to be in a whole different period of time, where because of all that money printed, not just by the Fed, but by all central banks, um, you, you could have 20, 20 plus trillion here and maybe a total of 50 or more trillion coming out of all the banks, central banks. Um, it's going to jumpstart a recovery cycle, but a recovery cycle that will quickly move into inflation within probably a year to 18 months after the bottom, um, because of all that money that's going out there chasing fewer goods. So, you, you could see inflation go, I call it a global deflationary bust. So, next year, by the end of the bust, you should see negative inflation. Um, you could go from negative inflation by early 2027 to 25% inflation by 2032 or three. Um, if you have that environment, that's going to favor commodities because we're also reshoring and and focusing on re-industrialization of the US. Uh, you could have reshore, I mean, um, um, commodities doing very well because they're going to, you know, as you build factories and equipment, it requires a lot of commodity, uh, input, and what you're going to have is from a macro st, from a monetary standpoint, you're, you're artificially gooseing demand much faster because of all that money printing. So, demand goes up through the roof, and supply takes a long time to build new greenfield, um, mines and, you know, energy fields, etc. So, the supply is constrained. Not to mention that we've spent, particularly in energy and in, and in the metals, um, we've spent three decades rationalizing down capacity, right? You know, green energy has been one way they've done it, but it's also been just the natural just-in-time inventories. You know, we're, we're going to be more careful to meet our quarterly budgets, etc. So, so you've really seen a shrinking of, and it's getting harder to find those commodities. So, you're seeing a shrinking of supply, and it's not going to be something you can ramp up quickly, and yet that that massive money coming in ramps up demand very quickly. So, you're going to have very high demand and limited supply, and that means much higher prices. Um, so that's what I think the next cycle looks like. It's very unlike this one, which was driven by lower interest rates, you know, going back through many years of this, uh, lower interest rates, technology growth stocks did very well because rates were coming down, multiples went up. Um, the next cycle is going to be quite the opposite, where what it'll favor commodities and and industrial stocks, and it will disfavor, um, not only growth stocks but index funds because you won't have that, you, instead of PE, um, expansion, you're going to have price earnings contraction because rates are going up. Interest rates could go from, I'm calling for a zero, um, percent tenure at the bottom of the bust by, by the early 2030s, the tenure could be approaching 20%. So, bond market is not going to be a place to be. Index funds are not going to be a very, um, pleasing place to be. Um, and so people are going to have to understand that each cycle has different leadership. Different assets are going to do well in what's coming. Um, and, you know, we're coming to the end of, you know, a great period for financial assets here, but it, it's not that there's no opportunities on the other side of this, but it's very different opportunities.
Excellent summary. I know you're seeing a commodity super cycle on the horizon following the bust. You mentioned targets for gold and silver, uh, at 20K and $500 by the early 2030s, I believe. What about some other commodities? We've covered this before on the show, but I think it's worth revisiting. Um, your price targets and thoughts on oil, uranium, maybe copper, or any other commodities that you think will perform especially well post-bust.
Sure. Um, short term, you know, I've been a bear on oil. One of the few out there that turned bearish when oil was up in the 120 and 30 area. But, um, I've been calling for 60 for a long time. It went to 55. I said from there, probably be in a trading range, you know, through the end of this cycle. So, 55 to 70 type trading range. Then I think it goes down to 30 in the bust. Um, from, from there, and it might even go below that, but let's say 30. From there, I believe oil by the early 2030s, not 2030, but the early 2030s, uh, could be $500 a barrel. And that's WTI. I mean, you know, going to be a few dollars apart with Brent. But, um, so that's a huge run. And the first question I always get is, you know, how are people going to afford their energy and stuff? I said, they're not. You know, it's not going to be an easy time for for people to live. They'll, there'll be substitutions. There'll be, you know, you, people are not going to be living in McMansions. They're going to have to find, you know, more efficient ways to live. So, it's going to cause a lot of adjustments. You know, they will take time to get there. But, but, yeah, energy, I think 5, or oil, 500. Natural gas, who knows? I mean, it could go down to a dollar, which isn't, uh, so surprising in the bust, and I think who knows what the number is on the upside. Going to be $50 or more. Um, and copper, I've got a $7 target now. You know, the tariff announcement kind of, it got, I had a $6 target. It started getting to six. I raised it seven, and soon thereafter Trump announced some tariffs on refined copper, and, you know, it felt like a rock. But I'm, I'm sticking to my $7 target just because I think this last three to six months is going to be crazy for everything. Um, in the bust, copper could fall down to as low as $1 or $2. And then I, you know, pick a number on the other side because with the kind of inflation we're going to have, the kind of, uh, emphasis on industrial America and building, um, you know, copper could go to 20, $30, who knows? Um, so, um, that one's, and again, pick, pick your, pick your commodity, whether it be steel, whether it be, you know, tin, whether it be nickel, everything's going to be going through the roof. I don't have numbers for any of those. Um, on the other side of the bust, but it won't, people need to realize it's not, you know, it's not that it comes out of the bust and in the first year it's there. It's going to, you're coming out of a depression, or not not a depression bust, but a deflation period. So, it's going to take a little while for that money to work through and and begin to heat things up. So, your first year or two, you're going to have probably low single-digit inflation the first year, mid-mid, then starting to rise above mid-inflation the second year out of the bust. By the third and fourth year, it ramps up into double digits. And then, you know, in your last couple years, it just goes straight up like the stock market is right now. So, so, uh, people need to realize this isn't a video game. It doesn't go from zero to 100 in, in, you know, 6 months. It's going to take time, but looking at the whole cycle of how it's going to play out, I think that's where we're headed.
I want to end by getting your views on the Japanese market at present because we're seeing a number of interesting developments. Bond yields are shooting up. I believe the 30-year has touched its highest level in history. Um, and this is all despite the best efforts of the Bank of Japan to keep rates low. The yen is falling, and the Nikkei was surging yesterday. I believe it's corrected slightly today, but nonetheless, a significant move. What are these events telling us about Japan and and the health of its economy in your view?
Yeah. So, there was an election in Japan, uh, over the weekend, and and the new prime minister, um, is a follower of Abe or Abenomics, I guess you call it. Um, and, um, so she's pro-growth. Um, she's talking about, um, limiting, um, you know, immigration. Um, people are enthused for the stock market over there because they hear the pro-growth policies. Obviously, the bond market got spooked by that because, um, you know, they're already starting to struggle with rates starting to break out a little bit and inflation starting to lift its head. And that's my take is that I, I've had for quite some time the belief that the the yen would rally versus the dollar to 0.0085. I, I do yen to the dollar, not the other way around. So, um, and it's down in the, uh, 0.67 or 8 area, I think. So, it's got a ways to run for that. And, and this election caused it to sell off. And I had people question me yesterday saying, "Are you changing your mind? Is, you know, what's going on with the yen?" I said, "No, I think this will, you know, take a few days to work its way through, you know, to kind of believe her policies are going to, you know, be in be these things." But I said, ultimately, I think it'll go revert back to where I think it was going to head. And so I think within a week or less, you'll begin starting to see the yen move back up a little bit. It'll start slowly, but I do think that 0.0085 is a, is a, a very viable target, and we could see that in the next six months. Um, interest rates. I, you know, my problem in Japan is that they have artificially held down rates for all this time, and they are a pretty closed economy, and they've been able to make it work for a lot longer than I would have ever thought they could. You know, um, zero interest rate policy, but we are seeing the signs that it's starting to fail, that or at least they're starting to get friction in the other direction. And I think it's only a matter of time. I'm, you know, I'm basically a monetarist. You can't keep printing money, which is basically what you're doing to hold rates down, without it ultimately causing a breakout in inflation and and ultimately a big breakout. You are you now have an economy over there and a and a bond market, a system that needs rates to stay in a very tight area, you know, between zero and one or one and a half, 2%. Once it starts breaking out above that and could break out, you know, pretty fast after it gets above that, um, you run into real problems because you really leverage your system in that way. So, I, I the way I've, uh, spoken about is to say, in the bust, Japan could be the wild card in terms of, you know, their system is just vulnerable because of how they've been able, you know, they've successfully worked it for 20 years, but there's a, at least I believe, you haven't, you haven't, um, the laws haven't been, um, destroyed. I mean, you know, the, the law of monetary economics still works, and ultimately it's pay me now or pay me later. And I think they're going to have a real pay me later point, um, where, you know, who knows what it does to the overall, uh, Japanese system, but I think they're going to be dealing with some big problems over there.
Well, David, this has been a fantastic conversation, as always. Tell us about Contrarian Macro Advisors and how people can sign up for that service.
Sure. Yeah, I, I put out a quarterly letter. As I said, my letter's going out on the 8th of October. Um, I, I just had somebody today say, uh, who had been a subscriber for a year, and he was complaining that I didn't do monthlies. And I said, I purposely do quarterlies. It's a macro letter. It's not a trading service. Um, and I don't feel I need to be justifying, you know, writing something when things don't change that fast in the macro world. Um, and there's plenty of lead time to see, you know, a bust coming or, you know, a bull market or to change things. So, quarterly to me fits what I do and have done for 50 years. Um, it, um, is really geared towards the US. So, I do talk about, you know, some of those other currencies and a little bit about global markets, but most of it is really geared to the US. Um, if people want to subscribe, it's by subscription. It comes with a cost. If people want to subscribe, um, they just have to direct message me on Twitter, and I'll provide them details. I'm on Twitter every day, or X, whatever you want to call it, um, replying to comments. I don't do a lot of originating of of posts. So, you have to make sure your settings are geared for replies, or you're going to not see a lot of my activity. Um, but I'm, you know, I'm a contrarian. I get lots of pushback on my views because they aren't necessarily consensus, but, um, you know, I came on here in 2013 with the idea I was retired from, you know, Wall Street. And my idea was, I'll use that form to teach retail, basically. Um, I think they get led by the nose in a lot of the consensus views that are out there, whether it be on CNBC or Bloomberg or elsewhere. Um, and, you know, just kind of an alternative voice. Uh, as some people have pointed out, you sound more consensus right now. Everybody's joining your your bullish view. Aren't you ready to change? I go, that's not how it works. Um, I'll be very contrary at the turning point, but for a while, the consensus is going to be right here, and, you know, I'll stick with that until I see signs I shouldn't.
Well, I will put a link in the description below to your X profile so people can reach out to you there via direct message if they would like to sign up for Contrarian Macro Advisors. David, as always, fantastic conversation and thank you so much for coming on the show.
Yeah, thanks, Jesse.
Thank you for joining us today. Our sponsor Arc Silver Gold Osmium has some fantastic prices. You can see them displayed on screen right now. To take advantage, reach out to owner Ian Everard today at 307-264-9441 or by email at ian@arcgs.com and make sure to tell him that Commodity Culture sent you. And pick up your Commodity Culture merch. Everything backed by a 100% quality guarantee. Represent the show in style using the link in the description below, and I'll see you guys in the next episode. Commodity Culture is a series on commodities and natural resources. If you would like to see more, be sure to subscribe and hit the bell notification so you're always up to date with the latest episodes.