David Brady, CEO and Co-Founder of Global Pro Traders, is welcomed back to discuss what capitulation will look like in this environment. He states that typically, a large increase in volume can be seen as the price is falling to a low, which can indicate that a low is in. Additionally, a gap down followed by a move upwards is another indication of capitulation. We haven’t seen a meltdown in employment and payroll numbers in the past year, however, the latest numbers came in just below expectations and then gold and silver saw a surge. Brady believes that we are near the bottom, as long as support holds and the risk-reward remains dramatically skewed to the upside.
Bank of America has a big short position on gold, while JP Morgan has a smaller position but is long. Everything else with the metals is looking promising. Brady suggests acting contrary to the markets, as emotions can be the death of wealth. It is important to maintain an analytical approach to markets.
Brady argues that the Fed should be more concerned with deflation, instead they are considering further rate hikes. The peak in PPI was 9.2% a year ago, which has now fallen well below 3%. He believes the PPI is a much cleaner statistic than the CPI. Brady believes that gold is sniffing out that rate hikes are already priced in and perhaps we will get one more price hike. He expects bank failures are almost certain in this environment.
Brady also suggests that Central Bank Digital Currencies (CBDCs) will be rolled out along with digital identification and universal basic income. He believes that this new money will be spent on existing goods and services, which will only create more problems and more inflation. In that environment, gold and silver prices will explode, while other asset bubbles burst.
He believes Canadian Banks may be vulnerable, with the exception of the large too big to fail, CIBC and RBC. The housing market has been spectacular, with the lowest affordability and highest debt to personal income, creating a potential disaster.
Brady suggests miners may be cheap soon relative to the metals, and if they are underperforming, it is a great buying opportunity. He also cautions that when everything is going to hell for government finances, they will do anything to keep the ship afloat, including potentially nationalizing mines and other industries.
He believes that the West’s implementation of CBDC systems will fail because they will still be fiat based. The BRICS version however is likely to be tied in some fashion to commodities.
Brady’s advice is to focus on miners in North America and wait for confirmation of the lows. He stresses not to get caught in the weeds, as the reward potential is high, and the train is leaving the station soon.
Time Stamp References:
0:00 – Introduction
0:35 – Sentiment & Capitulation
7:16 – Banks & COT Positioning
8:09 – Emotion and Wealth
14:53 – Exiting at the Top
17:15 – Fed & Deflation
20:38 – Feds Path Forward?
30:03 – Banks in Canada
32:52 – Mortgage Terms & Collapse
35:56 – Miners Underperformance
42:15 – Nationalization Risks
44:05 – BRICS Meeting Thoughts
51:58 – Concluding Thoughts
54:40 – Wrap Up
Talking Points From This Episode
Guest Links:
Twitter: https://twitter.com/globalprotrader
Sprott Money: https://www.sprottmoney.com/writers
Silver Chartist: https://silverchartist.com
Fund Website: https://4779Capital.com
David Brady has managed money for banks and businesses for 25 years. Mr. Brady is a CFA charter holder and holds a bachelor’s degree in Business Studies and Financial Markets from Dublin City University. He started as a foreign currency trader in USD/DEM and managed multi-billion dollar bond and foreign exchange portfolios for multinationals such as eBay and Salesforce.
He has always been interested in financial markets, winning investment competitions at the age of 15. Scoring the highest grade for his graduate thesis, “Is the ERM (Exchange Rate Mechanism) Fatally Flawed,” in 1993, and won foreign currency spot, forward, and bond trading competitions at 23. Suffice to say that financial markets have been his passion for much of his life.
David is a native of Dublin, Ireland. He moved to the United States in 1998 and now lives in Ontario, Canada, since 2015, with his wife and four kids.