Jaime Carrasco: Nobody is in the Precious Metals Sector Yet
Gold options expire this week, and they expire at much higher prices and Jaime says, “we may soon know who has a large short position.” Things are looking very bullish for gold, and it’s reflecting the underlying systemic risks in the financial system.
There is a paradigm shift coming with the eventual end of the currency reserve system. We are witnessing an ever-increasing 16 trillion in bonds at negative interest rates. This has never happened before in human history. Pension funds are required by law to buy these “assets,” and at some point, they will want to hedge into gold. The problems with the banking system will continue to worsen since we continue to ignore the issues of 2008.
The Dow-Gold ratio reveals the current lack of investor participation in the gold space, and all historical corrections have ended with that ratio at parity. The US remains the safe harbor for much of the world, and the stock market could continue to rise along with gold as investors flee to safety. Also, the Gold-Silver ratio is revealing the huge potential for silver.
When the time comes, it’s going to be very hard for investors to get a good position in the gold lifeboat. He recommends that investors take some money off the table now. Eventually, the market sentiment will reverse, and we will move to a distrustful, fearful market. This requires patience, and many investors will have a hard time changing their mindset. Investors need to assess the real risks to the system because the shadow banking system continues to grow.
Time Stamp References:
0:30 – Options contracts expiring higher.
2:10 – Ray Dalio’s recent comments on gold.
3:00 – Pension funds required by law to buy treasuries.
4:30 – Banking sector remains at risk.
5:30 – Dow-to-Gold Ratio and reversion to the mean.
6:00 – US dollar remains a safe harbor.
7:00 – Silver is a big opportunity.
8:15 – Expect more destruction in the bond market.
9:45 – Investors are too complacent.
10:30 – Gold lifeboat won’t be easy to enter.
13:00 – Favorite authors and books.
14:00 – Think outside the box.
Talking Points From This Week’s Episode
• Gold is the only asset that is no one else’s liability.
• We have not solved the problems of 2008.
• The shadow banking system has only grown worse.
• Silver has more upside than gold.
• The debt bubble will continue imploding.
Jaime Carrasco is portfolio manager at Canaccord Genuity Inc. in Toronto. From 2014-2018 he worked as Director of Wealth Management and Associate Portfolio Manager for ScotiaMcLeod. Before this, he worked for Macquarie Group, CIBC Wood Gundy, BMO Nesbitt Burns, Gordon Capital, and Merrill Lynch.
Jaime is a leading Canadian investment professional with 25 years of experience providing wealth management and investment counsel to affluent families, businesses, and institutions. He has garnered a reputation for questioning and challenging the status quo and exploring the most innovative investment strategies.
Jaime, whose mother tongue is Spanish, also speaks Italian and French and completed a BA in political science and economics at the University of Toronto in 1988. While a student, he worked for CS Yacht, a company that built luxury sailboats, thus spending his summers as a skipper for members of the Canadian establishment. Jaime credits this experience, and having survived sailing through Hurricane Bob in 1991, for learning lessons that have become a metaphor for his financial investment strategies;
“Like one’s financial wealth, sailing is not about controlling the wind, but rather about adjusting the sails.”