Transcription
Hey everyone, hopefully you're having a good day. My name's Andy. Channel's Finding Value. Today we're going to go through Twitter, see what people are sharing on social media. I'll interject my financial opinions as we go through it together. Generally related to three different topics: wealth building, commodities, and/or financial topics. So, let's dive right in, take a look, see what's going on today.
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Global markets investor says the US market has never been so expensive. The S&P 500 valuation at the highest level in history based on several indicators. Combined valuation metrics even exceeded the dotcom bubble and the 1920s before the Great Depression. Future long-term returns will likely be dismal. Well, let's go back and look. This is 1929. This one is the mid the late 1960s. Uh this was the 2000 and this here is today. I pulled up the S&P 500 chart. Uh here is 1929. Look at how bad the outperformance was to get back to 1929. It took 25 years. 25 years to get back to the valuation of the same price level from '29 to 1954. '29 to '54. If you go back and you look here, the 1960s, 1960s puts us in this area over here, we had the we went from 1967-'68 to 1982. So that's 14 years over a lost decade of underperformance. The other one was the year 2000. 2000 was another lost decade where we went all the way to 2013 before it broke out again in 2000. 2013. So that was 13 years. We have 13, 15, and 25. That's how bad that underperformance.
Now, there's something else that I want to uh put in here. the US 10-year yield. I'm going to put that underneath it. This was a declining interest rate environment which came into an increasing interest rate environment over time where we had a lot of choppiness. And this one, I'll just put it like this. Um, we were in a declining interest rate environment starting over here. all the way to where we are today, which is a lot more um conducive for financial assets to perform under. So if we look at this just to just to show you, we had the declining interest rate environment here uh which was kind of chopping sideways this entire area. We had massive underperformance. Massive underperformance with that large overvaluation here. What do you think's going to happen here? We've got everyone who's piled in from 1982 forced into financial assets in a declining interest rate environment. Even people who were looking at bonds couldn't get yield in bonds. So they all flew into and fled into financial assets like stock market. Everyone's jammed into the stock market. That caused a 100-year low in hard assets versus financial assets. We know everyone's over there because of the high valuations that. So why why would you want to go in this if every single time in history this time, this time, this time all resulted in lost decades? Every single one. This is what's coming. It's going to be a lost decade that's coming. Why fight the trend? the the the the faster you gain confidence in this cycle, the quicker you can start to position correctly in hard assets for what I think is coming.
More news coming down. It says if you invested $10,000 in the US stock market 10 years ago, you would have $39,177 today. The same investment made 50 years ago would be worth nearly 4 million. The magic of compounding in one chart. What is he doing wrong? 50 years ago. He's saying if you bought stocks up here and rode it for the entire declining interest rate environment, you would have made $4 million. What's the problem? Well, why don't you take buying the stock market down here because that's kind of where we're at, right? And seeing how it would perform. So, if you bought the stock market like in here, your average would have been $12. And then if you would have rode it to the top here, it would have been $108. So that's a 10-bagger over a 40-year period. A 10-bagger over a 40-year period.
Now let's go look at the same period with silver. Silver during that same time frame. If you had purchased silver and rode it all the way to about 1980 in an increasing interest rate environment, well, silver didn't do a 10-bagger. It did a 141-bagger, 142-bagger, sorry. 142 times your money versus 10x. Which one is better? Or another way that we can look at this, we can look at it like this. We can do XA divided by the S&P 500. We'll get it off log here. Uh so where that was is you would have purchased it in here and rode it all the way up and had an outperformance from here to there uh in this entire move. Now the S&P went up quite a bit here. We can look at that. Put up another pane there. Go log so you can see it. So we had choppiness in the beginning uh where we came on, you know, through this choppiness through there. But you can see when we pulled down that there was some good strong area for S&P and then the silver market absolutely destroyed it from the 1960s and onward. So when looking at these charts and looking at the cycle and looking at interest rates here, I would undoubtedly choose silver here because that's where the opportunity was right in here like last bull market. So silver was the opportunity, not the S&P 500. So although people are sharing information [clears throat and cough] on Twitter about how much the S&P went up, that was under a different market condition. I don't think it's going to do the same thing in the next 50 years. I think I think silver's going to outperform. I think gold's going to outperform and hard assets, commodities.
Is do you think by any happenstance that the central banks that have been buying for 10 years or so of gold, they know what's going on? They know that gold is bottoming against the S&P 500. It's got a big double bottom going on here. There's the double bottom. So, they're buying. They started buying all through this section, all through here. That's where all the gold, you know, well, they were selling it in here because it was the bottom of the market. They capitulated, [laughter] but a lot of central banks have been buying on the right-hand side here because they know this is going to this is going to come. That's what's going to happen. We're going to see an outperformance of gold versus the S&P 500. And it's going to be a big, big outperformance going all the way up would be my guess. This is on my radar in the year ahead. This is iShares Japan ETF versus the S&P 500. And this is going to be a bottom. Correct. Why is this going to bottom? Because the dollar is going to underperform a bunch of different other currencies. It's all part of the cycle. It is all part of the cycle. So, when people look at this, they look at the day-to-day movements and they have price dictating if they're bullish or bearish depending on if it's going up or down. This is a bottoming pattern and this is going to break and go higher where the Japanese stock market's going to outperform the S&P because of currency exchange rates. So if we were to look at uh let's do is it JAPUSD maybe or is it yen? I don't know which one it is for that. JPY JPY sorry JPYUSD. This is the Japanese yen versus the dollar. uh we can go out. It's been coming down and I think that this is going to turn its way and break on higher. It's a falling wedge that's broken out doing a retest and it's going to work its way on up. That's going to provide a tailwind [clears throat] behind Japanese assets. And that goes for all a whole bunch of different currencies. Brazilian real, Australian dollar, Canadian dollar, they're all going to outperform the United States dollar.
Chart of the day. The green slogan says the world is moving away from hydrocarbons into electrons. But then there's the question of how those electrons are produced in absolute terms rather than as a share. And he's just talking about how they're produced by global electricity generation is coming from fossil fuels and the growth of fossil fuels. Uh here's something that maybe people aren't taking into consideration. Do we have enough copper and silver to create this world that we want to create? Uh to transfer all of this energy through power lines? Can we all be driving electric vehicles with the copper deficits that are coming and the silver deficits? I don't think so. I think that's going to be a huge barrier for adoption for a lot of these things. So, if there's a barrier, well, what what are we going to use? We're going to use the same old stuff that we've always used. Gasoline, hybrid vehicles may be something that we would use in the future because we we just don't have the copper. We don't have the minerals to do it. Copper, silver, nickel, cobalt, lithium. I think we could probably do lithium with time. I think there's enough there. It's just silver and copper. I just look at this and and platinum and a lot of these other minerals and I'm like where where are we going to get all this big question mark? Now those are those are going to be barriers to entry. You're you're not going to be able to build as much as what people think. So, if it doesn't exist and you don't have that as an option, well, you're going to continue to drive or use fossil fuels because that's all that's available. And that's also going to impact mining, the mining industry, and everything else.
Spain is breaking out to the highest level since 2008. That's the cycle. It peaked in 2008. We went into a big consolidation. There's your consolidation. and we are breaking the consolidation to the upside. So emerging markets, currency exchange rates, the yen, it's all interconnected and the dollar is going to weaken against these currencies. It's happened all the time. That's what 2000 to 2008 was. It was a weakening of our dollar against these currencies. If you go back and look at the Japanese yen, go go to go find 2000 here, 2002. Here's '98. And then look where this went upwards up into 2011, 2012 for this particular one. Some of them peaked in '08 and then did a double top in '11-'12. Like the Australian dollar, this was a peak in '08 and then a double peak, we'll call it, in 2011. Uh the Canadian dollar did the same thing and we're about to break out and start ripping to the upside. Uh peak in 2008 and a double top there in 2011. Bull market was this currency [clears throat] exchange rate difference, not supply and demand characteristics that everyone is staring at. Money rotates and looks for other opportunities and that's where the money's coming from. It's being forced out of other asset classes. Exchange all your dollars for emerging market stocks. Correct? And he's looking at the US dollar futures versus emerging markets. He's looking at the correct things to look at. And as this goes down for the dollar, you're going to see emerging markets go in the opposite direction, up. So when the dollar drops, emerging markets go up. That's your currency exchange rate and money flows. And what you want to look at is you want to look at the big, big picture of all this. And this is emerging markets versus S&P. This is foreign currencies versus United States dollar currencies. That's why I'm showing that your cycle where the dollar strengthens. This is going to be where the dollar weakens. And this is your shoulder, inverted shoulder, head, shoulder bottoming pattern. And don't use short-term market pricing to determine anything. Look at these big picture cycles. [clears throat]
Central banks keep buying gold even at all-time highs. During the last gold bull market, central banks were net sellers. Now, with them turning net buyers, this bull market will strengthen even further. It's not it they're not driving necessarily the bull market. The bull market is through the interest rates and money flows and currency exchange rates. So, when when we look at this, central banks are reacting to the market condition. They're not driving the market condition. So that's that's what I'll say there. Uh in terms of see how we're breaking this downtrend. They're buying the bottom here because they know that interest rates are going up. Gold and silver outperformed during this environment here. They're preparing for much higher interest rates is what they're preparing for. And the unwillingness for countries to dump money back into bonds at the top of the bull market. It's the bottom of yields. So it's TLT. This is the the top of the bull market. And people are going to start selling because they have to move so much money. They're going to sell their bonds and go buy hard assets. That's the name of the game here. And it takes time. So when people say this, you know, people say, well, you know, it's because central banks are buying. They're the drivers. No, they're they're reacting to this. It's it's the end of the cycle.
Austria's 100-year bond just printed a fresh low, minus 76% from its March 2020 peak. That's not a chart. That's a crime scene. The duration monster is alive, well, and still eating portfolios. This matters because the bond bare market of the 2020s is not some academic footnote. It's the market screaming one message. Inflation risk isn't dead. It's just getting better at hiding. Long duration is basically a leverage bet that policymakers will behave. Cute. Michael Hartnett uh Michael Hartnett's read is even more revealing. Trump wants a boom without higher yields. That's a unicorn unless you get one of two things. A genuine productivity miracle, which is rare, or a material a materially weaker US dollar, far more policy realistic. If the ambition is growth up, yields down, the toolkit starts to look interventionist, yield curve control because markets can't be allowed to vote, gold revaluation because balance sheets need a magic trick, stable coins because plumbing matters when trust doesn't. Direct price interventions. Energy, pharma, utilities because optics is more important than economics. And here's the kicker. In that environment, real assets stop being a meme and start being a hedge. Artnet points to a weird signal. Silver reaching parity with oil for the first time since 1980. When that ratio moves, it's usually not because everything is normal. So yes, gentlemen prefer bonds until bonds behave like penny stocks. Duration still isn't a safe asset. It's a political asset. The politics is the most volatile input in the model.
So, this is a 100-year bond price at new lows. Why is it at new lows? Because the U because yields are breaking out. They're breaking that 45-year downtrend line and we're moving higher in yields. And when yields move higher, bond prices go down. And that cycle is what's driving central banks to go buy a whole bunch of gold. So if you know that this is coming, we're coming and going up. People sell bonds. That's how you get interest rates to do this. We're in that cycle. That's why central banks are buying gold. And that's why the 100-year bond 100-year bond price is at new year, you know, new price lows.
Platinum to gold ratio as inflation works its way through the system and as confidence in the economy becomes greater platinum starts to outperform gold. So that's when stocks start to underperform. So we're coming from a really low in uh part of the cycle. The cycle from 2008 which was the peak, it peaked [clears throat] came on down and went all the way down to where we were in 2025. Now we are starting to break the downtrend line to the upside. This is where stocks start to underperform right here, right now. And we're breaking that downtrend line. When platinum outperforms gold, stocks start to underperform. So could we get a slowdown in the stock market? Yes. Yes, we could. And that could happen right this second. Now, does that mean that we're going to see a big sell-off in our commodity stocks? Not necessarily. We have to wait and see. Because if people are really worried about inflation and the long end of the curve continues to go higher uh on the long end here and we start moving up which it looks like that that we could um we may not see the same reaction that the market has during the last 40 year, you know, 45 years where we were in a declining interest rate environment. Might be a little bit different. You know, um, in some of these big pullbacks, the [clears throat] 10-year went down during those recessions. I'm not exactly sure what happens here. Seems like the market is kind of lining something up a little bit different. Um, so one of the recessions here was this one. We had another one, uh, where was it? 2000. So, there's another one here. And then and this this is another one here. So that's these were all recessions pulling back here uh over the over the years. What I am wondering is even if we get a recession, does this go up on the longer end? I don't know. And that's something to watch. So, we could get the two and the 10-year yield curve to drop here. Like I've got that arrow there where we drop, but it drops because the short end of the curve falls perhaps lower, maybe. I don't know yet. And then the 10-year remains resilient, maybe even goes up. So, it's we haven't seen this dynamic since really anyone's been alive.
Update. Russia has accused the US of trying to use crypto to wipe out its $35 trillion of debt. Putin's advisor says Washington will shove debt into stable coins, devalue it, and reset the system. Sure sounds like something like that's going to happen. They sound pretty much on top of it. Platinum's about to become a crap show. Uh EU yields to pressure from automakers as it rethinks its 2035 combustion car ban. They say so they may reverse and not ban combustion car engines. You know why? Because we don't have the copper. We don't have the silver. We don't have all that. Then platinum is sitting there and it's going to go ballistic because they're going to have to reverse that that pressure. You know, it says EU yields to pressure from automakers. So, they're have to reverse that stance. 5 metric tons of physical silver has been completely sold out by this mainland China silver distributor. These are all physical silver buyers. They are not leveraged paper silver buyers. So over in I guess in China they're just buying up a bunch of physical. I love it. I love it. Maybe they know what's coming in in the cycle, perhaps.
Buffett just gave a serious warning. He said governments always destroy their own money and US policy scares him. Japan. So for Japan, it says now Berkshire is moving 348 billion into Japanese yen. Remember that Japanese yen, US dollar that I said was going to go up. Buffett sees the same thing I do. The man who never panics is preparing for a dollar fall. Do do you see all of this evidence and how it's compiling for a weaker dollar in relationship to other currencies which then promotes money rotation into emerging markets into oil, gold, silver, and other commodities, copper, and then you look forward [clears throat] and the supply deficits look absolutely ridiculous in some of these metals. It look it looks ridiculous.
Speaking of ridiculous deficits, copper could soar into the stratosphere, says Wall Street. Copper could hit stratospheric new highs as hoarding of the US of the metal in the US continues. Industry experts say the latest leg of the rally has been turbocharged by tariff concerns. The red metal is seen as a leading pulse check for economic health. If we have economic health, aka copper, and it's breaking higher, it's going up here. Let's uh let's get it out like this. So, it's going higher. It's breaking higher here with the upward arrow. Well, that doesn't scream recession, does it? But then everyone who's looking at the two and the 10-year yield curve, they're all screaming recession. What's going on here? How can you have such a disconnect between Dr. Copper and the two and the 10? Maybe they're in there buying the 2-year yields or something. I don't know. The 10-year yield looks like to me that it wants to go higher, not lower. If it goes higher, then copper is most likely right and something's going on with the 2-year yield. If it drops lower, maybe they're buying it. I don't know. Maybe they're doing something with it because they're releasing a lot of bonds on the short end of the curve. I I don't know. Being serious. I really don't know because copper is going up and it's probably going to launch higher. Not just go up, it will launch higher like silver. Silver's going up and you don't really see silver going up in a recession, per se. And this thing's flying. Gold is a leader generally, you know, runs before a lot of these commodities and that's been full-on sprint mode. It's not like you see platinum outperforming gold in a recessionary environment. So it it's some of the data at least on the yield curve on inverting doesn't really match what we're seeing in some of the commodities that we're seeing.
It says sell silver when the red line hits the blue line uh has been a good idea generally. Blue line's at $395 an ounce. He says I'm not making this crap up, by the way. Whenever the red line hits the blue line uh it's a good time to potentially sell. And that's all the way up at $395 an ounce. [laughter] We got a long way to go, baby. Uh platinum, it says the bull is on is on, ladies and gents. As we have broken out of this and are running higher. He's got a price projection of $2,600 for the first near-term target. Will surpass gold this cycle and go to $10,000 plus per ounce and I'm sure the ratio will uh be greater than than gold, perhaps. So maybe the price of platinum will be higher than gold. Mark. I I don't know. Maybe that's what we've seen at most cycle tops and it's usually about two, 2.3 times the price of gold. Platinum is. And right now we are I don't know, under half the price of gold. We have a long way to go. And that's all I've got for today, guys. So, we're going to end it there. Uh give me a thumb up for the content. Subscribe to the channel. Subscribe to the website if you like. Special is the coupon code. And that's all I've got. So, we'll catch you next time, guys. I see it.