David Skarica: The Only Difference Between the Soviet Union and the USA is a printing press
This week we have author and investor David Skarica as our guest. David has been around the markets for a long time, and has seen many cycles come and go during his career. David’s newest book, Collapse, explains why the current stock market rally is not supported by fundamentals, and will subsequently fail. What David is bullish on, is precious metals and the junior miners, which he believes are deeply undervalued at this point, and will see great gains in the coming years.
Stating that the only difference between the Soviet Union and the US is a printing press, David starts out by making the comparison between USSR and the situation in the West today. Russia saw a 5-10 year depression to clear out the excesses of communism. David thinks government spending cuts, raising taxes and having standards of living decline for several years is needed to see a real economic recovery in the West.
We ask David about about what the indicators are, that makes him think a stock market correction is right around the corner. David emphasizes that historically, when markets haven’t corrected by 10% or more in 2-3 years, and basically has doubled during that period, the following correction is usually pretty nasty. Since QE started in 2012, the market has essentially gone straight up.
On the topic of bubbles, David thinks that if there is a crash in the market, the government will put more liquidity into the market, and he thinks the money will flow into the precious metals. The reason is that if investors get burned in previous asset classes which crashed, they will look for another asset class to invest in, and this time David thinks it’s going to be gold and precious metals.
When speaking on how investors can take advantage of a new bubble in precious metals, David prefers physical silver, because of the 65-1 gold/silver ratio, which makes silver quite cheap at the moment. David also prefers the “miners”, since the GDXJ index for junior gold miners has fallen 80% in price from it’s high, and the average 3-year return on that sector will be anywhere from 150 to 200%, and we’re only 30-40% off the low.
Finally, David speaks on what kind of junior miners he sees has the most upside potential. He says that the companies with good properties, that actually have ounces in the ground, and who just have to wait until a good market returns, that is where the biggest gains are going to come. Some stocks can go up 5,000 to 10,000%. As an example, David point to Avian Gold in Mali, which was totally beaten up after the financial crisis, and it went from $.06 cents to as high as $2 dollars. It was eventually taken out for about $.90 cents per share. David emphasizes: This is the time to buy.
David Skarica is the founder and Editor of Addicted to Profits, a popular newsletter known for its stellar performance in both up and down markets. Skarica entered the financial markets at a very young age and, at the age of eighteen, became the youngest person on record to pass the Canadian Securities Course. He 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. Skarica also writes Gold Stock Adviser, an investment newsletter for the conservative media outlet, Newsmax. David’s newest book, Collapse, is available on amazon.com.