Transcription
David Hunter, welcome back to the channel.
Hi Dave, great to see you.
Likewise. Likewise. I really always enjoy our conversations. I don't know where to start. Really, I don't know where to start. Um, markets are, you know, in my 25 plus years in markets, I've never seen anything like what we're going through at the moment. Uh, I don't know about you, but let me know.
Yeah, for sure. I mean, we're going to look back on this period, whether it be, you know, this year or the last three years or even the last six years, and just go, "Wow, how did we live through that and think it was normal?" Because it's not.
Absolutely. And I, as I say, I don't know where I don't know I don't know where to start. But um let's talk about uh your predictions anyway and then what we we'll start in that point and then we can kind of unravel them and you can tell us how you got to them. Um I'm going to actually start because it's the thing that most people watching this channel are interested in as precious metals. So I want to know where you think that gold and silver are going to be in the next 12 to 24 months.
Sure. Um, so I since the last time we talked and I'm not sure when I was, but I'm sure I've raised my uh metal targets a couple times since then. So I
I you know I had a longheld target to 75 on silver um that you know going back several years. In October I I raised that to 100. Um and then again um in January I raised it to 125. Uh we had that huge rally in January, early February that took us up to 122 I think
and after and I and I actually had a podcast that you know that week before before it rolled over it started a little bit and I said you know you could you could see this thing down it's been you know straight up in a parabolic you could see this thing back down to the 7075 area very quickly. Uh, but it's, you know, it's not, this isn't the top.
And, uh, when it did that, I raised my target to 180. So, that's where I'm at right now. Um,
and 180. And are you do you you putting a time frame on that?
Um, I think it'll probably be there. Well, certainly this year, and I think we could be there this summer, right? Um, so I I think as fast as that runup was from say 50 to 122, I think we'll see, you know, and obviously it sold off overnight down to whatever was 65.
So you could see a run from 65 to, you know, 180 and who knows, I may be conservative on that number. Um, but and and be there this summer. gold I did similar, you know, I was uh I've raised that a few times over the last couple years, but you I went from 3,000 to 3,400 to 4,000 to um I think um uh 5,000 to 5,500. I'm currently at 6,800. Raise that again in January. Excuse me.
Um, so
you're at 6,800.
Same time frame.
Same time frame. Um, and and I'm pretty confident in these numbers. You know, they're I'm not this isn't my normal style to be raising things as we see the momentum build. But, uh, and I did raise them on the sell off, not on the way up. But, but, um, it we are, you know, we're in unusual times and you just have to kind of live with that. And what is it? The momentum that you're looking at there or what is it that's making you uh recalibrate?
Yeah, two two things for me that got me comfortable going up to those kind of numbers so quickly. Um one, I've got a very bearish view on the dollar. So, I've been saying for quite some time that the dollar ultimately will get down to 82 83 down um probably get there in a couple steps. So we're we're obviously seeing a rally in dollar with with Iran, but I think we're very close to a roll over there. Go from 100 probably down to the 90 area. There's a lot of res support down there, pull around down there before it breaks and ultimately I think in this cycle gets down to 82 83.
Um and so if you're
what underpins that dollar bearishness? I mean is that is that kind of buying into the ddollarization? Is that uh an inflation? Is that losing control of the uh basically losing control of the currency through losing control of the national debt? Or is it a combination of all of the above?
Yeah, it's probably combination of all of them. And it's it's partly I think the interest rate differentials, you know, particularly in Japan versus US and of course DXY is mostly the yen and the euro. So I think rates are going up in Europe and in Japan. And I think our rates, as much as everybody's been bearish on on bonds, I think the bond market here in the US is about to go up a lot. So I think you could see you could see the um 10 year go from you know the current 225 down to I mean 425 down to 3% maybe below by Labor Day. Sure.
So
so when you when you say just for those that may not uh follow follow that when you say the bond market goes higher, so when bond markets go higher, yields go lower. So, what you're saying is you're looking for lower yields, which in turn also means higher um higher bond prices,
right? And if our yields are falling while Japan's having, you know, they're kind of in different sequence than we are. they were, you know, they followed that zero interest rate policy for so long
and are very leveraged to that and now inflation's breaking out there, rates are breaking out there. So they're in the opposite direction on rates at least, you know, in the next several months
and Europe seems to be because partly because of oil probably, but um seems to be in a mode where they're going to be hiking rates, not cutting rates. So, so I I think the that's probably the biggest thing. On top of that is obviously all the worries about, you know, the big debt here, um, all the money printing that went on over the last several years. Um, and I I just think ddollarization is a concern. So, it's all those things and maybe some some belief that, you know, Trump doesn't mind seeing the dollar down. Um, you know, every president has always um said, "Oh, we support a strong dollar." But I I sense in Trump's case, if it can help trade, if it can help our, you know, help America gain some um trade balance, um that he would wouldn't mind seeing the dollar down.
Yeah. Outwardly focused dollar policy has always been a you know, supporter of strong dollar policy. What you're saying is that uh you know to support manufacturing and to support trade um that a weaker dollar is is is beneficial also. So that there is you know it's it's don't uh don't don't look at what I say look at what happens you know it's a
Right. Right.
Yeah. And um so that actually supports the higher metal prices as well. Weaker dollar stronger metals you know.
Yeah. And and then the other thing I think momentum certainly is part of it. Um but the biggest other piece is I think institutions have been very slow to warm up to metals. You know for many many years they almost had no gold or silver representation in their portfolios. In the last 6 months they certainly are gaining more and gold certainly first but I think you know the moves in in the medals and the fact that they're sticking around uh is forcing them to say you know we can't be out of these. So what I keep reminding people is that whether it be in the metals themselves or in the miners, those are very when institutions decide to buy them, they're going to find out find out how small those markets are, how thin those markets are. And I think that's what you're going to see here is if this if this selloff, this correction we had that went down to 65 and we're now back up in the low 80s on silver and with gold we're over 5,000, you know, 5,100. If if um those start picking up heading back towards the highs,
that momentum is going to pull those institutions whose mindset has changed, they're starting to realize they have to.
They've been waiting around to see whether, you know, that we're going to get a better opportunity at lower prices.
If they start running away to the upside, I think the institutions are going to jump in there and push them push them up pretty rapidly. particularly, yeah, with everything else that's going on in the world, I mean, there's a scramble for physical metal uh and and if you can buy into um mines and mining supply, which and some of these guys are, you know, that that they've got a all-in sustaining cost in the you know, mid to low30s and some even lower than that. Uh so effectively you know as long as management is strong and they are producers that you're getting you know you're getting physical you're you're it's like a leverage play on uh on physical metal. You know, it's like buying silver at $35 an ounce. Uh and if that continues to go higher, you can see the institutions looking at that, seeing the value in that and the mall scrambling to get a piece of that. And there's only
And what's fascinating is Yeah. I mean, you've been around the metals a long time as have I.
What's fascinating is that, you know, you couldn't you can get an institution to look at a mining company for so long or if they did, they looked at Numont maybe, but but um you know, at Nikico, but but you know, as you say, the even even poor management can't screw this up that badly. you know,
got a they got a they got they've learned I you know you just look the merger you know the in in past times if we had seen this kind of move in metals you'd be seeing all kinds of um M&A activity and you're not what you're seeing is these companies have gotten some religion and said
we got to focus on our operations and I think that's a positive
yeah yeah 100% 100% um so We're looking at the metals there and you're saying higher metals that's supported by the uh you know the weaker dollar and the weaker dollar is caused by all the various different factors that we we talked about as well. Um in terms of what you think is going to go going to happen in the stock markets what are we what are we looking at for say the Dow the S&P NASDAQ? What's your predictions on those?
Yeah, let me let me just back up because I meant to talk about the miners and just because I did I did make some big changes there too. my my um current targets. I have to actually look at them myself because I have changed them enough times. But um you know my my GD I use the ETFs as kind of proxies for where the miners are going to go. Um I've raised my GDX target which was for a long time was 65 then 75 then 100. I now have 180 target on GDX
180 target. And just reference that's trading where at this moment in time.
Um where is GDX? I think it's down near 100, maybe up plus or minus 100. I haven't looked at lately.
Um GDXJ,
um I had a um I think 100 target for a long time. Raised that a year ago or before um to uh maybe 150. I'm now and have raised it since then. I'm now at 250 on GDXJ and I think that's down in the 120 130 area somewhere. So
the the junior the junior gold miners juniors.
So yeah, you're expecting that you're going to get a leveraged return on the junior gold miners.
Definitely. Yeah. As as we always see when you're in a bull market, the juniors tend to, you know, gain as particularly as you're getting these kind of price moves, it helps those smaller, you know, typically more developmental miners move up. So
would be would be very uneconomic uh or even lossmaking at lower metal prices and then you know once it pops up over their you know over a certain rate these become basically uh money printers nearly.
Yep. Precisely. And and my silver um sil which is larger cap silver miners um I'm now up to 90 on that. I had been at um 75 I guess. Um, that is that right? Oh, no. I'm sorry. I'm at 220 on So, SIL. Um, and so I've risen that from 75 to you 150 and now I'm at 220. Um, and still, I'm not sure where Sil is right now. Silj um which is the junior silver miners um you know had had for a long time a 35 target when when SIJ was selling in single digits and people said you're nuts you know it's never getting there and you know we're now uh it did get there got up over 40 and we're now right around there again. Um I've raised it a few times but I've raised it most recently to 90. Um, so
that's significant.
My 35.
Yeah, you've you've had to you've had to kind of weather a storm. You get an awful lot of uh flack or you have done over the last number of years.
Hey, I'm a contrarian. I've I've weathered flack in my institutional jobs, you know, trying to, you know, sometimes when you're contrarian and things are going for you, you look pretty smart. But boy, when you're early and you're contrary,
there are a lot of people that just think you're crazy. And and even more so in social media, you know, if you're on Twitter and and uh you're you're making a call that nobody else agrees with.
Yes.
It takes a while to get there. You know, I was called all kinds of names. Uh back
you were you got an you got an awful lot of flack for it over the years, you know, but you were consistent. You stuck with it. you kind of showed an awful lot of uh fortitude. Do you ever do you ever go back to some of those comments and go, "Told you so."
Um it's it's hard because um you know, you've moved on and to remember who said what, you know, at the time it's like, "Oh, I'll remember this one, but
you know, you got too much else going on to worry about that." And I I and I know where it's coming from, obviously. I I know I'm I'm probably the contrarian of all contrarians. So, yeah. So, it's hard for people who most people go with the crowd. They don't realize it, but they're, you know, they're influenced by the crowd. And when you got a guy saying the exact opposite. I mean, look right now, you know, the Iran war. I mean, I'm saying this is, you know, the US is US and Israel are doing very well and this is not a long drawn out situation and oil will go right back down. And you got people out there saying, "You're crazy. the oil's going to 200 or 250 and what makes you say that there's nothing out there. I'm looking and saying actually I don't understand where you guys come from. So
what's your what's your call on oil?
Um well my my um you know as you know in the in the invasion of Ukraine um I had a target um you know it went up to 130 and and between 20 and 130 I said this isn't going to last. We're going back below 100. when it got back below 100 and I think I said 85. When it got back below 100, I lowered my target and said we can get down into this mid60s and lowered it to 60 at one point. Obviously got down to 55. I think this is a similar situation where you get the spike on the war um and except this one I think is faster and I think you'll go right back into that um trading range between the you know mid high50s and the mid to high 60s and then in the bust I've been saying for a long time you know when we have a global bust which I think is mostly a next year story um at the bottom of the bust you could see oil at 30 or maybe even below
right So, so you got everybody worried about oil going up a lot.
And I sit here and go, I I think the the surprise here is going to be how fast it back it unwinds. You if we get the if the strength of war moves get straightened out in any way, you know, if they start seeing tankers go through there,
you're going to see there's a lot of air in oil.
That's that's where I was going to go next with this. I mean that was so much of it is uh hinging on that at this moment in time and we're sure everybody run
yeah everybody's all eyes on the Middle East the new cycle is is loaded with it and it's a real case of yeah I mean if that gets if that gets resolved if this war is shortlived and there's very little um kind of secondary issues yeah you could see you could see oil trades but I mean it was a good
I think one of one of the things that is hard for particularly the retail investor to grasp and why there's so much why why they tend to go with the news and they don't understand the discounting function of markets and they don't respect how a market is the sum total of all kinds of views.
Yeah.
And so it's a great efficient way to kind of capture all the views together and put it out in some sort of a you know, a number. Yeah. So, so everything that is currently known and everything that uh the sum total of everything that is expected is all discounted already in the price right now. So the 90 90 odd wherever we are 85 to $95 a barrel in oil that is the sum total of everybody's current expectations of what will what is going to happen.
Uh
and so so it's what happens at the margin beyond that that matters.
New information.
Yep.
New new events. New events. New you know a new turning in the war or in uh some geopolitical that's the thing that will move it next.
Yeah. So it so it really takes understanding that and it doesn't mean I I'm always going to be right. You know, there's going to be time particularly in war things can take a unforeseen turn or certainly go against my view. Um but generally I'm uh you know, I'm the markets are better indicator of what's coming or what you know what the truth is than are all the news um casters out there or you know you can go to all kinds of individual sources. I just trust the market as an aggregate of all of that
as a you know
a better indicator of what what we're looking at. H still looking for a blowoff top then in stocks.
Yeah, I'm very bullish here. I think we probably turn today um you know, we'll see. Um but you know, I see some things that came right down to trend lines um and um turned where they should have turned. So if if we can hold today, I'm pretty bullish that we're off to the races in, you know, next few weeks. Um, I have a target now, um, which was raised last October. It's the same target I've had since my fourth quarter letter in October of 9,500 on the S&P.
Wow.
Um, so that's, you know, from here probably almost 40% or is probably 40%. Um, NASDAQ a little more than that. I have a target of 32,000 on that. uh the Dow 65,000 and the Russell 3,800 which is basically from here probably um 50%. So you know you're you're looking at what I think could be um a final blowoff rally into the summer
um that gets us there. And that means you're going to go parabolic. you're not going to yield. You can't get those numbers without going very steep and straight up.
Yeah. Like it's like that. It's like the it's like the running silver all the way up to 121. Um it can be it can be fast and it can be violent. Unpack that a bit for me because uh that's the significant call. Let's take the you know the Dow's the Dow's at 47,000 at the moment and we're talking about you know 65,000 another 18,000 points from here. Are you suggesting, and that this ties in with your kind of earlier thesis, that this is effectively just another representation of the devaluation of the dollar versus you, given the fact that you think it's a short-term blowoff top, it's not really underpinned by market fundamentals. Would you agree with that?
Um, not entirely. It certainly mean when when you take the sum total of this whole market cycle and you look at it in hindsight certainly you're going to see it as euphoria drove us to unreasonable numbers. So from that standpoint, no. But from the standpoint of where we are at now and what's just going to justify that run, um I think you can rationally make the case um during that run and it will be you know the rationale will be based on fundamentals not just you know excitement.
Um so because earnings are still remarkably good. you know, there's a big part of the market, particularly the small caps, that are still reasonably valued. Um, and and you can make the case if you want to, you know, look at AI and want to look at tech that, you know, and and look at semis for semiconductors for example, it's driven by earnings. So, it's hard for me to say it's not fundamental. It's not sustainable, I don't think. I think and you know it'll be based on optimistic views of extrapolating out this year's numbers but so ultimately look back and say yeah they were just too optimistic but but the fundamentals I think will drive it and the other fundamental that I think is going to be a big part of that is you know rates dropping from four and a quarter to 3%. Um, you know, that's a that's not in anybody's current mindset, right?
I mean, most people are worried rates are going the other way.
Um, so as that starts happening, that that will be a big thing, I think, in particularly institutional institutional investor minds.
And you're talking you're talking shortand rates now. You're talking Fed fund rates dropping down to 3%.
No, I'm talking about the tenure
tenure tenure rates.
That's 125 basis point drop from here. Um we've had you know we've had a two two plus year um top in rates botment and bonds if you look at it and I think we're going to emerge from that and once you emerge from that I think you can have a pretty quick move to 3% maybe two and a half and again quick means the next six months maybe um and then if the global bust kicks in late this year it can take it down from there all the way down to zero in the 10 year. So, but but by then you've got another issue that will cause the market to be rolling over. Rates can go down for bad reasons. You know, while earnings are going down faster than rates
and and the market can go down pretty fast. So, so there's a point at which you cross over from being bullish because of rates and bearish because of rates. Um but um the other the other big part I'm a contrarian the probably the biggest part that has allowed us to have this unusual five or six year period is institutions every time we get a sell off this one's 5%.
You know so far anyway um every time we get a selloff sentiment
goes right back to the bare side. you know, they've got one foot out the door all the way from from the October 2022 bottom. I've said this many times. Institutions have skeptically, you know, they have to have money in in the market. So, they're there, but they're defensive and they're just constantly looking for the exit because they think this thing's unrealistic. You know, valuations are high, historically high. And so that skepticism, that wall of worry has allowed this market to sustain well beyond what anybody would have thought, including me. Um, and um, and I think we're there again. You know, the Iran war certainly helped it. But they just started to finally after three years, October, you know, October 2022 to say October 23, I mean October 25, those that three-year period, they finally began to come out of their shell and say, "Yeah, I guess we believe this bull market. There is reason to believe it can go farther." Rather than always having that cave caveat that it was it was going up, but it wasn't going to go up much more. um they finally when it hit 7,000 or you know 6,800 last fall um you know, after that 50% run or 40% run out of the April bottom last year um they finally started losing some of that skepticism becoming bullish and then the Iran war hit and they're right back into saying oh we may have topped and you know, there's all kinds of calls out there that this thing could be rolling over or if it's not rolling over the corrections, you know, 15% or whatever. So, so I think we have that wall of worry built right back up and it's, you know, as I say, that's the fuel for the next advance.
What's the thing that uh will make you pause for thought and lower your um projections?
Um, yeah, if I'm wrong on oil, that certainly is something I'll have to factor in. If I'm if if rates turn the other way, I think they're topping here. But if they turn the other way, I'll have to factor that in. Doesn't mean I'll turn totally bearish. It may just stretch out the cycle maybe. Or or if we start seeing, you know, we have we certainly have signs. You're not going to go from everything's great or everything's good to global bust without signs along the way. and we are starting to get some of those signs with private credit. I think private equity is an issue. Um, so if those things start growing more, uh, I keep getting that question because people know my global bus story. You know, are we seeing the bus now or are you going to have to turn now? And I go, it's not systemic yet. It's the beginning of it. You know, you don't go from zero to 100 all in one day. You know, it gets there gradually and then all at once. But so I think we still have an ability to kind of contain private credit or look like it's contained right now. So that allows that to be put on the sideline while you get this last run. But it could be within six months, it could be a whole different story. And if if I'm wrong and that starts speeding up sooner, you know, I'll have to take that into consideration. And as a contrarian macro uh strategist, what's the best bit of advice that you can offer to the average investor given everything that's going on at this moment in time?
Yeah, I I put it in context of where we're at and I go in normal times and I was a value manager before I was ever a strategist. So, you know, I I was always knowing I was early and um you know, sometimes things took longer, but you know, they ultimately worked out as long as you had patience.
I always tell people patience is a probably a key ingredient to successful investing. Um but secondly, in normal times, none of us are smart enough to pick a top and pick a bottom. And I I was usually early in early out. Um and so in normal times I would probably be saying you know if we're within three four six months of the top um start get doesn't mean get all defensive now but start getting defensive
and you know and everybody has to kind of pick their times based on their own risk tolerance etc but and how how smart they think they are in terms of timing but but in this particular situation because we're so late in a what I think is a 43 year circular bull market that has steepened all the way into this and will steepen all the way into the top. You you run the risk if you say, "Hey, 6 months getting within six months of 43 years of a a bull run. Um I'm not smarter than that. I'm getting out." You run the risk because of if I'm right about this next run, you run the risk of getting out now
seeing 40% in the market, 30, 40, 50% in the market and saying, I guess I was wrong to get out. And I keep telling people at the top, it's going to be compelling. you're going to have everybody telling you why this thing can have two more years to run or, you know, has, you know, we're in a whole new world or whatever. It's not going to be easy to sell at the top. But if you if you sell now, I can almost guarantee you that a majority of those people somewhere near the top are going to feel I missed too much. I can't stay out. You know, look at what happened to crypto. You
get back in again
and they get back in at the top. So, so it's not unlike some cycles, this one's not where you can just kind of say time-wise, we're not too far away. I'm I'm getting out. And again, everybody has to make that decision for themselves because there is a I believe there is a big bare market on the other side of this. So, I'm not I'm not giving advice that way, but I just people need to know themselves and know that for most people that crowd is going to influence them closer to the top and it's going to be hard enough if you stay in to get out near the top, but if you get out, it's going to be hard to stay out. So, so I think, you know, along the way, don't try to be a hero and pick it at the top. But I think I think there's enough room between now and then based on sentiment alone.
I just don't this is not the kind of sentiment you see at the top.
And um you know supposedly the the hedge funds are as short as they've ever been. I mean they're they're aggressively short here.
Um and may maybe people think that's the smart money. I don't I mean there's a lot of smart people there but they they don't have a great track record um on that. So, um, so anyway, um, yeah, I guess that's that's the biggest message here is this is going to be hard to play this last, you know, 3, six months. But um don't don't kind of knee-jerk and say, "Well, I'm nervous about because I've I've certainly had people on my feed that um you know, they hear the global bus story even two or three years ago and and bet on the global bust instead of also hearing the other part of the story. We're much farther along now, but still, you know, 40 or 50% returns between now and Labor Day or between now and July. That's um that's three and four years worth of returns typically. So So we're in very unusual times.
Yeah. And tell us this uh where can people find you online?
Sure. Um I'm on X every day. Um with all its problems, I'm still there. Um and I I mostly communicate via replies. So, if people are just looking for original posts, I don't do a lot of those because they end up in too many too many. I I do try to respond to people and if I do original posts, I get hundreds of things I have to respond to and I just can't keep up. So,
so anyway, um I'm on X every day and then I also um do have a quarterly letter that I um it's by subscription. So if people have any interest in that, uh I would provide them information if they just sent me a a private message, which is, you know, the new um X has the new chat feature. It used to be a direct message, now it's this chat. Uh so if you send a a request, I'll I'll send back um information on that.
Perfect. Listen, it's been fantastic talking to you. Uh again, we're really appreciate your bold calls. Um, and I really appreciate the tenacity by which you've stood by them all of these years and eventually been proven right and had to deal with a lot of trolls and a lot of flack. Uh,
some some people call it pigheadedness. My wife maybe, but
bravery. Bravery.
It comes it comes comes with 50 plus years of doing this. You know, I I'm I truly, you know, contrarian isn't just a knee-jerk contrarian. I really, you know, kind of understand sentiment pretty well, I think.
Indeed. It's a lonely position to be in.
That's when I'm happy when nobody agrees with me. I'm very happy.
David Hunter, thanks for joining us on the channel today.
Okay. Thanks, Dave.