David Skarica: Leverage and Cheap Money Have Set Gold and Silver to Soar
David discusses the economy and why many companies are mostly built on quicksand and debt. Excessive borrowing and inflated valuations have created additional risks. Companies have spent much of their earnings on stock buybacks which have made many companies vulnerable in a downturn. Everyone has borrowed and many are over-leveraged and now we see the hidden consequences of all that borrowing.
People become biased and invent stories to justify their future expectations. Real estate in many areas has a long way to fall in the coming months. The fracking industry will be hard hit since that business model is centered primarily around financing.
David discusses the different outlooks investors have toward the markets and why investors need to remain positive and look for opportunities. Money printing will continue and he sees short term deflation and then a period of stagflation or hyperinflation where governments will under-report numbers. In the deflationary phase, gold will do well but in the later inflationary period, silver will outperform.
Time Stamp References:
0:45 – Leverage and monetary manipulation
4:40 – Company stock buybacks instead of savings.
5:50 – Canada and debt burdens.
8:00 – Real estate bubbles in Canada.
12:00 – Oil and fracking.
13:30 – Inflation and lying statistics.
14:50 – Fundamentals for gold and silver.
17:30 – What happens after?
22:00 – Politics and US Elections.
Talking Points From This Week’s Episode
• Leverage in the system and risks.
• Being realistic in a world that has changed.
• Real estate recession and oil markets.
• Deflation could be followed by stagflation.
• Consumers will change their spending habits.
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.