Competent Man Podcast

Adrian Day, CEO of Adrian Day Asset Management and Manager of EuroPacific Gold Fund, shared his insights on the mining industry and gold market during a podcast with host Tom Bodrovics. Day attended the Prospectors & Developers Association of Canada (PDAC) conference, noting an initial positive sentiment among investors, particularly junior companies, although this declined as gold did not respond as expected to geopolitical events like the bombing in Iran. Day explained that gold tends to move ahead of such events but then drops in the immediate aftermath due to various factors, including the strength of the U.S. dollar and interest rates. Day expressed a bullish outlook on gold for the next six to twelve months, citing persistent inflation, fiscal deficits, and central bank policies as driving factors. He also highlighted the significant buying of gold by central banks and Tether, a stablecoin organization, which is price-agnostic and buys gold to back its stablecoin. Day noted that individual investors in the U.S. are largely absent from the gold market, and institutional capital has not yet significantly driven the market. Day discussed the U.S. stock market's complacency and the role of 401(k) plans in maintaining a steady flow of money into the market. He also touched on the disconnect between global and regional gold and oil prices, attributing this to liquidity crunches and regional supply issues. Regarding the broader commodity market, Day sees value in other commodities like copper, oil, and agricultural products, which have lagged behind gold and silver. He also noted that foreign markets are likely to outperform the U.S. market in the coming years, with good valuations in the UK, Hong Kong, and Brazil. Day predicted a stagnationary environment for commodities, with gold and oil potentially being top performers. He also discussed the Fed's likely response to current economic conditions, expecting rate cuts but not as dramatic as some anticipate, and a continuation of quantitative easing. Looking ahead, Day believes the gold market will remain strong and that the U.S. will lose its dominant reserve currency status within the next decade, transitioning into a bipolar world with different spheres of influence. He also mentioned the potential for a final farewell tour by the Rolling Stones in ten years, with even more expensive tickets.

During a podcast with Tom Bodrovics, Lawrence Lepard, Founder and Managing Partner of Equity Management Associates, discussed the complex economic and geopolitical landscape, focusing on the impact of the recent war and its potential consequences. Lepard highlighted several key indicators to monitor, including the U.S. 10-year yield, gold, Bitcoin, and the price of oil, which he believes are crucial for understanding market dynamics. Lepard expressed surprise that financial markets have held up relatively well despite significant risks, suggesting potential market manipulation by the federal government to maintain stability. He predicted that the war could lead to a recession and a rollover in the stock market, although he believes the market might be artificially supported. He also discussed the potential for increased inflation due to higher energy costs and supply chain disruptions, particularly from the Strait of Hormuz, which could impact various commodities and goods. Lepard emphasized the importance of holding assets like gold, silver, and Bitcoin, which he views as safe havens in an environment of potential currency debasement. He argued that the current monetary system is unsustainable and that a return to a sound money standard is necessary to prevent further economic and social issues. Lepard also touched on the private credit bubble, comparing it to the housing crisis of 2008, and warned that the unwinding of this bubble could have significant repercussions for the financial system. Throughout the discussion, Lepard stressed the need for investors to stay informed and adaptable, as the economic environment is likely to remain volatile. He predicted that the next leg of the gold and silver bull market is imminent, with silver potentially offering more asymmetric upside due to its industrial uses and lower stock levels. Lepard also highlighted the potential of Bitcoin, particularly in geopolitically unstable regions, as a portable and secure store of value.

In a podcast hosted by Tom Bodrovics, Lyn Alden, the founder of Lyn Alden Investment Strategy, discusses the economic implications of recent geopolitical events, particularly the Iran war, and its impact on the U.S. economy and financial markets. Alden emphasizes that fiscal dominance and sovereign debt crises often coincide with periods of war, complicating the investment landscape. She maintains that her base case scenario for the Federal Reserve's balance sheet growth remains a "gradual print," where the Fed will end quantitative tightening and transition to a gradually rising balance sheet in line with normal GDP or bank deposit growth. Alden highlights that the war in Iran, while expensive, is not a game-changer for the U.S. economy in the short term. However, it adds variance and uncertainty to the gradual print scenario, pulling forward the risk of a more significant print if the conflict escalates. She notes that the Fed's primary concerns are disruptions in the interbank lending market and the Treasury market, both of which have shown minor stress but remain stable. The discussion also touches on the impact of higher energy prices on the economy and the housing market. Alden believes that a prolonged energy price spike could affect housing affordability and market sentiment but does not expect a housing market collapse in the near term. She also discusses the role of liquidity in financial markets and how assets like Bitcoin and gold can serve as proxies for global liquidity. Alden concludes by advising investors to expect elevated shocks and headlines due to the current geopolitical and economic environment. She recommends diversification, owning high-quality scarce assets, and embedding assumptions of chaos into investment models. She also mentions the potential for a multi-polar world with neutral reserve assets, like gold and Bitcoin, playing a more significant role in the global financial system.

Bob Coleman, Founder and President of Idaho Armored Vault, discusses the evolution of the gold and silver industry with Tom Bodrovics. Over the past five to six years, the industry has shifted from a focus on mining and monetary metals to a more casino-like atmosphere, driven by high-frequency trading and hedge funds. This shift has led to increased volatility and the dominance of paper markets over physical metals. Coleman highlights the role of ETFs like SLV and GLD, which are used for investment, hedging, and speculation, and how options and futures markets influence price movements. He notes that the physical metal remains the bedrock of the industry, but the price action is often driven by derivative strategies rather than physical demand. Coleman also discusses the impact of high-frequency trading and algorithmic strategies on price movements, citing examples from October 2023 and January 2024. He explains how the dislocation of metal between exchanges and the tightening of borrowing rates can create volatility and affect the ability of market makers to create shares. Coleman raises concerns about the reliability of exchanges like the CME and LME, citing outages and the cancellation of trades, which can create uncertainty and reputational risk. He also discusses the role of margins in stabilizing or destabilizing markets and the potential for illiquidity to drive prices higher. Coleman advises investors to understand the fundamentals of the market, the market structure, and the risks associated with storing metals. He cautions against relying too heavily on AI and encourages critical thinking and diversification of knowledge sources. Coleman also touches on the potential impact of longer-dated calls on gold and the importance of understanding the strategies behind such trades. He concludes by emphasizing the need for due diligence and a healthy dose of skepticism in navigating the complex and volatile precious metals market.

Edward Dowd, founding partner of Phinance Technologies and co-host of the Signal Vs. Noise Podcast, discusses several significant economic themes with Tom Bodrovics, including a potential housing crisis in the US, the bursting of the AI bubble, and China's real estate and demographic challenges. Dowd highlights that a sustained oil price above $80 due to conflict with Iran could exacerbate the current economic situation, leading to deflationary pressures as consumers are already strained. The impending housing crisis, termed a "white swan" event, is driven by factors such as the post-COVID housing boom, increased property taxes, and rising interest rates. Dowd notes that the market is frozen due to unrealistic price expectations and affordability issues, with new home pending sales at an all-time low. This crisis could significantly impact the consumer economy, as housing constitutes about 20% of it. Dowd also addresses the AI bubble, suggesting that cracks are already appearing as credit markets question the growth rates and revenues of AI startups. He predicts that the AI bubble could burst this year, with credit markets playing a crucial role in this process. The discussion also touches on the differences between private credit and public credit cycles. Private credit, which has grown significantly post-2008, is more opaque and could lead to higher bid-ask spreads as the cycle unwinds. Dowd warns that this could create feedback loops, tightening credit and potentially freezing the market. Regarding the stock market, Dowd believes it has been stagnant since October 2022 and predicts a 30-50% drawdown. He advises having cash on hand to take advantage of opportunities during this deflationary scare. Dowd also discusses the potential for a new monetary system, suggesting that gold and silver will play a significant role and could reach much higher prices by 2030. Dowd sees the US dollar as a strong currency in the next 6-12 months and expects bonds to perform well due to declining growth expectations and deflationary pressures. He also highlights the potential contagion effects from China's real estate and demographic crisis, which could impact its trading partners and, consequently, the global economy. Dowd concludes by sharing his daily routine of monitoring yields, the dollar, and equity markets to gauge the economic landscape. He emphasizes the importance of understanding cycles and demographics in predicting economic trends.

Craig Tindale, a private investor and writer of the CTindale Substack, joined host Tom Bodrovics for an in-depth discussion on geopolitical dynamics, economic shifts, and the implications of artificial intelligence (AI). The conversation began with an analysis of the geopolitical situation in Iran, particularly focusing on the strategic importance of the Strait of Hormuz. Tindale emphasized that the strait is a critical choke point for global energy and trade, comparing it to the jugular vein of global commerce. He noted that while oil prices spiked during recent conflicts, the market's initial lack of reaction to the 12-day war signaled a belief that oil shipping through the strait would not be significantly disrupted. Tindale delved into the concept of "titanium bolts"—small but crucial components that, if missing, can halt entire systems. He applied this analogy to the Strait of Hormuz, suggesting that even if oil flow is maintained, the disruption of other critical supplies could have profound economic consequences. He highlighted the interdependence of global economies, using China as an example, noting that while China has significant oil reserves, it imports vast amounts of other essential goods, making it vulnerable to disruptions. The discussion then shifted to the role of AI in the global economy. Tindale argued that while AI is often portrayed as a job-killing technology, its impact is more nuanced. He pointed out that many jobs, particularly in white-collar sectors, have already been automated or outsourced. Tindale suggested that AI could fill gaps left by an aging workforce, particularly in sectors like aged care, where demand is expected to rise significantly. He also criticized the current marketing and implementation of AI, suggesting that companies are not effectively communicating the benefits and capabilities of the technology. Tindale and Bodrovics also explored the idea of decoupling between the U.S. and China, suggesting that while there is a political push for decoupling, the economic interdependence is too deep to be easily severed. They discussed the potential for a new geopolitical balance, where the U.S. and China might find a way to cooperate despite their differences. The conversation concluded with a reflection on the evolution of technology and society. Tindale emphasized the importance of understanding the physical and metabolic systems that underpin the economy, suggesting that the future will involve a rebalancing of global trade and a focus on sustainability and resilience. He advised listeners not to over-rely on predictions and to maintain a balanced perspective on the future.