Simon Hunt: Market Valuations have Diverged Considerably from Reality
Tom welcomes back Simon Hunt to discuss the generational risks in the global economy. There are growing bubbles everywhere, along with enormous amounts of speculation, overvalued markets, and geopolitical tensions which all appear to be worsening. In addition, we have central bankers running wild. Debt can’t continue to grow faster than the economy. Navigating these risks is difficult. You can either run with the crowd or take preventative actions. Interestingly, two countries China and Russia have chosen to take prudent action for their economies. They are preparing for the monetary collapse outside of their countries. They understand that this will end badly.
Simon discusses consumer sentiment and how it is signaling higher prices and high inflation. We’re seeing inflation running hotter than income. We’re going to see a slow down in global business activity soon. The Fed will certainly respond with more money regardless of its severity.
We’re going to see a complete run on the metals because they will be hedging into harder assets and equities. Somewhere around 2025, the US dollar index will be halved to under fifty. We will have a strong inflationary period into 2024 and that’s when we start seeing a collapse similar to 1929-1932. Once we come out of this period we should see a long period of good stable growth.
The geopolitical risk appears to be increasing in Eastern Ukraine due largely to western interest and arms sales. This is likely a red-line for Russia and at some point, there will be a response that could mean war in Ukraine. China is less likely to take Taiwan over militarily but there are red lines that could be also be crossed by the West.
China and Russia both hold very significant gold reserves higher than what they are reporting.
Lastly, Simon gives us his outlook on where copper prices could head and how they may be manipulated. Prices could correct if there are any surprise economic shocks or the economy weakens. However, there has been significant pent-up demand for some products which will maintain or increase demand next year.
Time Stamp References:
0:00 – Introduction
0:42 – Generational Risks
4:10 – Inflation
5:30 – Recession or Slowdown?
6:58 – Fed & Gold/Silver
10:54 – Geopolitical Tension
16:55 – China & Outlook
24:26 – Global Dependence
26:23 – China Digital Currency
28:27 – Dollar Consequences
31:09 – Copper Price Thoughts
40:58 – Inflation & Copper
42:40 – Mine Supply Risks
45:55 – Wrap Up
Talking Points From This Episode
- Generational risks and the countries that are preparing for economic collapse.
- Consumer sentiment is signaling continued inflation along with risks of a recession.
- Geopolitics and Western interference in Ukraine and Taiwan.
- Copper market thoughts and what could drive the market from here.
Simon Hunt began his career in 1956 in Central Africa as a PA to the Chairman of Rhodesian Selection Trust, one of the two large copper companies in what was then Northern Rhodesia, now Zambia.
In 1961 he came back to London and joined Anglo American Corporation of South Africa as a PA to one of the Board Directors, followed by being part of a small sales and marketing team for copper. From there, he helped start up a new copper development organization, CIDEC, financed by copper producers, which he then joined, focusing on conducting end-use studies of copper in Europe.
He then went into the City to gain financial experience and founded Brook Hunt in 1975. He was instrumental in setting up the company’s cost studies and end-use analyses. He appeared as material witness and consultant in two ITC anti-dumping cases in 1978 and 1984, winning both at the commission level.
He has spent 2-4 months every year in China since 1993 and until a few years ago would be visiting some 80 wire and cable and brass mill factories across the country every year. He now restricts these factory visits to a smaller number, all of which he has known for many years. He also spends many weeks each year traveling around Asia.
The focus of the company’s services is on the global economy, including the changing geopolitical and financial structures, China’s economy and its copper sector, and then the global copper industry as each part is interconnected.
Simon is the author of the “Frontline China Report Service,” which is marketed by the TIS Group. The Service provides regular reports on China’s economy, politics, and financial outlook.
Simon established this company in January 1996.