Video Haymaker
My recent interview with Adam Taggart of Thoughtful Money
“Like Liberty, gold never stays where it is undervalued.” - John S. Morrill
“Invest in scarcity.” -Tony Deden, as relayed to me by Grant Williams
Charts of the Week
Gold’s decisive breakout this week has attracted scant media coverage. Perhaps that’s because the yellow metal has been out-of-favor since 2020. Its steady, but deliberate, increase from the September 2022 trough — when the S&P 500 coincidentally also hit bottom — might be why it has stayed off the financial media’s radar. Since then, it is up 29%. While that trails the S&P’s 45% return over the same timeframe, it is nonetheless a respectable return, particularly for a lower risk asset. Reflecting its store of value nature, it is increasingly edging out U.S. Treasurys as the reserve asset of choice for foreign central banks. Despite its rising popularity, particularly in China and India that have a combined population of nearly 3 billion, the majority of U.S. investment advisors have less than 1% exposure to bullion. That may be poised to change in a significant way.
The long bull market has caused older investors, those who should be the most risk-averse, to be heavily exposed to the stock market. Although the trend is clearly up, it will be challenging for this percentage to rise much higher. Also, if you look closely at the below chart, you’ll notice an example of another excellent breakout signal back in 2005. There was a sharp reversal during the Great Recession/Global Financial Crisis, but the rising trend quickly reasserted itself. Much of that era was characterized by negligible competition from bonds due to the Fed’s long war against interest rates. Now, however, more mature investors can earn 6% type returns from bonds, as highlighted in numerous prior Haymaker publications. In other words, there are some compelling alternatives out there for investor capital. (Thank you, Jacob Rosenberg, for consistently being willing to let us run your excellent charts!)
Good morning, Readers and Subscribers!
It’s been a little over a week since my good friend Adam Taggart had me on his successful new program, Thoughtful Money. Adam always pushes me to bring my A+ game, which for me means coming to the table with loads of charts! Hopefully, I didn’t disappoint in that regard. This time around, my team and I (thank you to my Gavekal partners!) put together some data-dense slides on government capital needs, the viability of our oil wells, the 2024 inflation outlook, U.S. IPO history (the ‘90s are back), IT/Communication companies’ stock surge, and even the Hong Kong market, along with much more.
This interview isn’t just the slides but Adam grilling me on what they mean. I’m always happy to share my insights (and Gavekal data!) with Adam’s audience, and I’m doubly happy to re-share them here.
By the way, around the 24-minute mark, I admit my frustration with the gold mining stocks, and have more to say on their performance around 41:40. Fortunately, since then, they’ve come alive. In fact, the Junior Gold Miners that I upgraded recently are up 14% from when Adam and I chatted. That’s nice, but be careful about your entry price should you like this idea (and if you didn’t accumulate some already). Long-term, they have a tremendous amount of catching up to do, in my view, relative to the gold price.
Enjoy!
Dave “The Haymaker” Hay
Video: Thoughtful Money
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Is investing in India a good idea at this point?