The Haymaker on Palisades Gold Radio

In The Ring - July 22nd, 2022

Well, Haymaker Subscribers, we assured you there was more interview content on the horizon, we just didn’t think it would be such a fast turnaround.

This week, I was fortunate enough to join Tom Bodrovics of Palisades Gold Radio for a far-reaching conversation on problems with modern capitalism, the distinction between deflation and disinflation, contradictory/destructive energy policies, PPP, my gratitude to Senator Manchin, and deglobalization. Also, I share some thoughts on the politicization of the Federal Reserve (including an LBJ anecdote that might surprise you), Social Security, and the relationship between demographics and economic productivity in the U.S. and EU. And per the program’s title, we do spend some time on the topics of gold, gold mining, and mine development (touching on copper, as well).

(Note: PGR’s video editor provides a running tracker to help you navigate time-stamped sections you’re particularly interested in hearing the Haymaker expound upon.)

Tom is a top-notch host. He adroitly drove the conversation in several directions, ensuring we covered a lot of topics that our shared audiences find important. It was an honor to add my name to PGR’s long list of notable guests, many of whom I am fortunate enough to call my friends; I am now happy to also consider Tom a friend and can’t wait to appear on his show in the future. 

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To learn more about Evergreen Gavekal, where the Haymaker himself serves as Co-CIO, click below.

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Before we send you over to the golden “palisades” for another Haymaker interview, there are some pressing items from recent posts we’d like to touch on. One relates to an asset class that has been anything but glittering of late, at least for U.S.-based investors.

A number of Haymaker subscribers have asked about the weakness in precious metals and especially the miners. They, and anyone else with an interest in this area, should check out that section. Palisades Gold Radio has a keen interest in the yellow metal, as indicated by its name, an affinity I share. Consequently, Tom and I spend some time on what J.P. Morgan, the man, once called “the only money”.  (In his view, everything else was “credit”.)   

While gold has been rising against a number of currencies, the turbocharged U.S. dollar has been slamming it for U.S.-based holders, as it has nearly all “risk assets”.  Gold miners have been hit even harder.  There is no question they are in a downtrend for now. This is despite the pummeling of all things crypto which one might have thought would cause money to flow into precious metals. Alas, there is little sign of that occurring.

However, if the fed funds futures market is right, the Fed will be cutting rates early in 2023. That’s a view I share, even though I think it will be hiking repeatedly throughout most of this year.  Yet, please be aware the market agrees with me and is also pricing in a fed funds rate of roughly 3½% by year’s end.  Therefore, gold and the miners thereof are likely discounting this rate level already.  

It also remains my outlook that the Fed’s “double-tightening” – aggressive rate hikes combined with the gradual sell-down of its nearly $9 trillion balance sheet – is highly likely to trigger a recession. In fact, it seems intent on producing one in the interest of throttling inflation. Once it succeeds, the Fed will have little choice but to do a 180°, validating the fed funds futures’ positioning. In fact, two of my favorite big-picture strategists, Luke Gromen and Kevin Muir, believe Mr. Powell will pivot to an easing mode as soon as next month.  However, for now, my anticipation continues to be on further tightening until either the economy crashes or inflation cools rapidly, or both.

Even before that, when there is a perception of “peak tightening”, gold (and miners) should rally significantly. This is a group that endures painful corrections followed by jaw-dropping rebounds. That was the case even before most of the planet’s leading central banks decided that incontinent monetary policies would be their go-to strategy.  Although they are trying to move away from those for now, the need to finance soon–to-be-erupting deficits is likely to force them back into their familiar money-fabrication MO before long.  

Now, let’s get to the interview, but please be sure to check out the upcoming Making Hay Monday.  Even though I’m just mentally formulating the outline at this point, I am extremely excited about the subject matter.  Hopefully, I won’t disappoint on that build-up!

(Be sure to “Like” and comment here after watching the interview. We always appreciate it.)

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