The US faces a foundational challenge:

The pursuit of leadership in AI, industrial regeneration, and domestic manufacturing depends not only on digital infrastructure and intellectual capital.

But it also depends on the physical availability of metals.

Thread 👇👇👇 Mining is the bedrock of innovation and industrial revival.

Without a reliable supply of critical metals, the foundations of technological and industrial progress remain structurally limited.

We’re building the house before laying the foundation.

Mining comes first.

Today, a new set of structural pressures has brought the US dollar to a critical juncture. 
 
Thread 👇👇👇 No major economy in the world today is pursuing such an aggressively expansionary fiscal policy while shouldering an unsustainable cost of debt service.

In our view, we stand on the cusp of a major transformation in the FX markets:
 
The likelihood of significant depreciation of the US dollar relative to other currencies over the next several years.
 
Allow us to elaborate.

👇👇👇 The Fed's current interest rate policy is entirely misaligned with the magnitude of the debt problem, putting the US economy in a precarious situation.
 
This issue is notably more severe compared to other developed countries.

We are currently experiencing a multitude of technical breakouts in the precious metals industry.

I can't recall a time when I've seen so many historical moves in this space.

Here are my 6 favorite chart setups.

1) Gold and silver miners to gold ratio 2) Junior miners to gold ratio also breaking out from a 14-year downward trend

The most critical question facing investors in the precious metals sector today:

If this truly marks the inception of a new secular bull cycle for gold, why are junior miners significantly lagging?

Thread 👇👇👇 In my opinion, the answer can be distilled into 2 primary points:

1) This is a common phenomenon, and the lag is your friend.

Initially, funds typically gravitate towards larger and more liquid companies, before investors begin seeking higher returns in riskier market segments

This chart is truly revealing.

The current macro environment across global equity markets presents a sharply divided investment setup for 2024 and the remainder of the decade.

It's time to buy low & sell high.

👇👇👇 While our concerns are fueled by the pervasive speculation in the US stock market, there also exists a parallel narrative where long-neglected economies present themselves with exceptional value and promising growth opportunities.

Live shots of the "new bull market"

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It is time to redefine traditional portfolios.

The valuation history of 60/40 portfolios unfolds through extended cycles, and we are now experiencing another critical juncture in this dynamic.

Thread 👇👇👇 Conventional investment strategies are poised to undergo a significant restructuring, placing a prominent emphasis on investments in hard assets.

Monetary and fiscal authorities are currently running unsustainably divergent policies.

The simultaneous rise in the cost of debt by central banks and their deliberate reduction of balance sheet assets is entirely incongruous with the growth in government debt.

Thread 👇👇👇 Following the COVID era, we have entered a period of fiscal dominance among major developed economies.

Hence, the escalating debt burden is already near historical levels and compounding at an alarming pace.

The debt ceiling issues present a much greater risk than currently perceived.

Although prior concerns have proven to be mostly peripheral, today’s circumstances are quite unique.

To be clear:

The main problem relates to the potential consequences after an agreement.

👇👇👇 During periods that require a debt ceiling extension, the Treasury cash balance for daily operations tends to be at extremely low levels, which is the case again today.

The change in stance by the Fed back in early 2019 was what got me interested in silver.

Today, if you ask me, here is where I believe the most asymmetric opportunity lies ahead.

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👇👇👇 While metal prices are likely headed much higher:

I would rather buy silver or gold in the ground for literal pennies on the dollar.

This is how the billionaires in this industry made their wealth.

Financial conditions are too loose for inflation but too tight for financial assets near record valuations.

If this is the beginning of another decade of higher-than-average cost of capital, equity markets are yet to reflect these changes in fundamental multiples.

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👇 Since 1900, there have been only 5 decades that the total return for stocks was negative, in fact, deeply negative.

3 of these periods happened during inflationary eras.

The other two occurred when equity valuations were at historical levels.

Today, we have both issues at once

We're at a key inflection point for the gold industry today.

Due to the overwhelming pressure to adopt the green revolution, there has been a declining interest from miners in deploying capital to gold-focused projects.

Perversely, this is very bullish for the industry.

👇👇👇 Some brief history first.

Since the end of the Bretton Woods system in 1971, there have been two major gold bull markets:

A raging one in the 1970s and another substantial one in the early 2000s.

The wheels are coming off the global economy.

Here is where I think the market is heading.

👇👇👇 The painful increase in cost of debt in combination with the relentless appreciation of the dollar and tightening of monetary conditions have exposed long-standing macro imbalances.

These forces are interconnected, self-reinforcing, and completely unsustainable over the long run

Today’s restrictive Fed policies in a rapidly deteriorating economy are the preconditions for a steep recession.

Time for a thread 👇👇👇 Contrary to the unprecedented monetary and fiscal support we had following the last economic downturn, we are currently experiencing a major withdrawal of liquidity at a time when corporate fundamentals are starting to contract.

The rise and fall of the consumer.

Household demand for goods and services is poised to fall off a cliff.

The US economy simply cannot handle the Fed’s continued monetary tightening.

This is the onset of a vicious stagflationary environment.

Here is a thread 👇👇👇 The unprecedented combination of excessive debt, speculative asset bubbles, and persistent inflation makes the current economic environment truly precarious.

A major contraction in consumer demand is imminent.

These factors will soon pressure the Fed into a policy dilemma.

For the first time in history, the US is experiencing a confluence of three macro extremes all at once:

▪️ The debt problem of the 1940s
▪️ The rising inflationary environment of the 1970s
▪️ The excessive financial asset valuations of the late 1990s

Thread 👇👇👇 Any one of these three economic states endangers the health of markets and the economy.

Together they are a highly explosive mix.

The disparities have evolved from an era of misguided monetary and fiscal policies.

Everyone wants to be a technologist these days.

While software is eating the world today, people cannot eat software.

Here is a thread 👇👇👇 Today we have a structural imbalance at the core of the supply chain.

There has been a major divergence between long-term capex of technology companies versus commodity producers.

This disconnection began in 2015, long before the Covid Recession.

The government has been flooding the market with issuances of longer maturity instruments at unprecedented levels.

The amount of outstanding marketable bonds and notes have increased by $626 billion in the last three months.

Thread 👇👇👇 There is a significant shift underway in the composition of debt maturities issued by the US government that could profoundly increase the supply of long duration Treasuries.

Where are we in the precious metals cycle?

There is no shortage of questions on why gold has significantly underperformed during such an ideal macro setting.

Here is thread 👇👇👇 Let’s start by looking at the usual fundamental trends of this industry as part of prior historical cycles.

Gold and silver stocks have never peaked at historically undervalued levels.

Miners are now trading at the cheapest fundamental multiples we have ever seen.

Global monetary debasement is setting the stage for a rude awakening.

Here is a thread.

👇👇👇 For the first time since the 1970s the sense of fiat currency erosion relative to financial assets and consumer prices due to misguided policies has penetrated the mindset of investors in a significant way.