David Skarica: The Greatest Scenario For Gold Stocks
Tom welcomes back David Skarica, Publisher and Founder of Stock Chart Of The Day. David Skarica the current rate-cutting cycle by the Federal Reserve, suggesting that political pressure might be the main driving force behind these cuts. He compared the current situation to previous cycles, noting that in 2008, the market was in a crash, while in 2019 and 1995, stocks were rallying before the rate cuts. Skarica also highlighted that the bubbles in 2008 indicated that previous rate cut cycles did not immediately work, but this time, the economy has held up relatively well. He expressed the belief that this rate cut cycle will be different and that predictions of a significant market downturn may not necessarily come true.
Skarica mentions that the Federal Reserve is looking to cut short-term interest rates in a controlled manner to avoid shocking the market. The expected cuts in March, May, and June are predicted to be less severe than those in 2008 or 2020, as the economy is not showing signs of requiring substantial intervention. Skarica emphasized that the Federal Reserve is taking a more strategic approach to interest rate adjustments to prevent abrupt changes that could disrupt the market.
The conversation then shifts to the performance of gold stocks during rate cut cycles. Skarica cited examples from 2005-2008 and 2018-2020, where gold stocks outperformed the market in the first 12-24 months of a rate cut cycle. However, as the bull market matures, investors tend to shift to more aggressive investments, leading to a slowing trend. Skarica theorized that a similar cycle may be observed again due to high levels of debt. He suggested that combining a bull market with rising gold prices and low oil prices could create an ideal scenario for gold stocks.
Skarica also touched on the importance of a long-term investment horizon, citing examples from the past. He pointed out the success of investors like Jim Dines and John Templeton, who made substantial profits by having a long-term perspective and buying stocks when they were undervalued. He encouraged investors to remain open-minded and look for opportunities while also being aware of potential risks.
In terms of specific recommendations, Skarica suggested investing in gold and, more specifically, gold stocks, which he believes are currently undervalued despite the high price of gold. He acknowledged the risks associated with these stocks but stated that the potential for rewards is significant.
Timestamp References:
0:00 – Introduction
0:51 – Pivots & Rate Cut Cycles
4:22 – Fed Cut Probabilities
6:34 – Pivots & Politics
10:32 – Treasury Yield Index
11:43 – HUI – Gold Bug Index
16:16 – Gold Long Term Chart
21:23 – Great Investor Trades
22:10 – Lessons & Patience
25:03 – Gold Space Sentiment
27:55 – Coming Debt Crisis
29:23 – Wrap Up
Talking Points From This Epsiode
- David Skarica believes the current rate-cutting cycle by the Federal Reserve is driven by political pressure and may differ from previous cycles.
- Gold stocks tend to outperform the market in the early stages of rate cuts, but the trend slows as the bull market matures.
- Skarica recommends looking for undervalued gold stocks and emphasizes the importance of a long-term investment approach.
Guest Links:
YouTube: https://youtube.com/@scotday
Twitter: https://twitter.com/DavidSkarica
Patreon: https://www.patreon.com/stockchartoftheday
David Skarica is the Founder and Editor of Stock Chart Of The Day. Skarica entered the financial markets at a very young age and became the youngest person on record to pass the Canadian Securities Course at the age of eighteen.
David is a regular speaker at trade and investment conferences in Canada and is a guest on the Business News Network (BNN), Canada’s flagship business broadcasting network. His work has appeared in publications such as the Bull and Bear Financial Report, Barron’s, Investor’s Digest of Canada, and Canadian MoneySaver. David’s recent book, Collapse, is available on Amazon.