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Mark Magarian: This is an Inflation the Fed can’t Solve

Mark Magarian returns to the show to discuss the markets and the fundamental outlook for gold. Timing is key in these markets.

Mark discusses the importance of managing risk and considering the fundamentals of assets. Volatility isn’t necessarily the concern, but more importantly is their cash flow. Resource companies with diversification across metals and jurisdictions are important considerations.

There have been a number of surprises over the past couple of years. Including the policies of governments and how some of them have persisted. We’re dealing with the aftermath of the money printing, and we see the problems in logistics and supply. The Fed’s fight on inflation is also very interesting, but inevitably the markets can’t deal with high rates for very long.

Many who invested in crypto markets may not have been interested in hard metals. Most larger players in the space aren’t interested in metals either. They see crypto as a spin-off of tech related sectors. Crypto really is new tech.

Silver can be a better speculative indicator than gold. Gold is increasingly looking quite attractive. A good indicator for gold is when the yield curve moves out of inversion. This indicates the Fed is choking, and gold usually has large moves to the upside. We’re currently deeply inverted. Gold is quite hated and therefore, as a contrarian, there are some interesting opportunities.

We will see $2000 gold again probably over the next 12 months and likely upwards of $2300 inside 18 months. He discusses ways of keeping gains during the next bull market. This sector is wild and discipline is key, avoid leverage. Watch for gaps up in the gold price and excessive media attention to the sector. Those are indications that it’s time to take profits.

The biggest risks in mining are mismanagement and share dilution. Find companies with good balance sheets and growth profiles.

He has high conviction that uranium will move to $100 in the next five years. However, how it gets there is an open question in this market.

Lastly, Mark discusses why oil isn’t going away anytime soon and the journey to all electrics will take some time. The United States is being more cautious on energy and natural gas. However, we are still draining the strategic reserves for political purposes. Europe wants all the natural gas we can send, and the Saudis are cutting production slightly. A rise in energy prices this winter seems very likely, but may be somewhat short-lived.

Time Stamp References:
0:00 – Introduction
0:40 – Lessons & Timing
4:27 – Managing Risk
6:35 – Surprises & Opportunity
9:36 – Crypto & Silver
16:48 – Gold Fundamentals
19:08 – Kinross Announcement
20:53 – Forecasts for Gold
21:57 – Exiting and Profits
25:53 – Nuclear & Uranium
31:06 – Oil & Electric Future
38:17 – Europe Civil Unrest?
39:50 – Wrap Up

Talking Points from this Episode

  • Mitigating risk in these markets and considerations with miners.
  • Why silver and gold plays are looking increasingly attractive.
  • Predictions for gold prices over the next two years.
  • Outlook for energy and risks of civil unrest this winter in Europe.

Guest Links:

Mark Magarian is Senior Portfolio Manager at Pine Valley Investments LLC. Previously, he was a Vice President and Portfolio Manager for Wells Fargo Advisors. He has been in the business for over twenty years. The first half of his career was spent working with hedge funds, and John Paulson was one of his biggest clients. Career Highlights include working for Deutsche Bank in London as a Vice President and being part of the investment team at Gruss & Co.

Since moving to the United States twelve years ago, he became a portfolio manager and has focused on a hard asset strategy that has, at its core, a focus on precious metals.

He is a value investor at heart, but one with a macro perspective for our position in the market cycle. Specialties include managing a tactical growth portfolio and creating customized solutions.

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