Tavi Costa: Gold and Silver Miners are Set Up to Push a Lot Higher
Tavi discusses the business cycle and where we are in it. The yield curve is reflecting a potential downturn, several economic indicators are showing signs of recession, and the amount of insider selling is concerning.
Gold is likely the true safe-haven asset in a likely downturn, and the setup for precious metals is looking incredible. Central banks globally are easing while debt levels continue to balloon, and it appears that we are on the brink of another currency war. It’s all fun and games until monetary policies start to come with a cost.
Silver is currently the cheap high-beta version of gold along with volatility at near all-time lows. There is tremendous potential for the silver price to rise significantly from here.
Early discovery stories bring the best opportunities, and today many projects are quite undervalued. Tavi’s team looks for projects in safe jurisdictions, and they are finding plenty of deep-value opportunities.
Bitcoin provides another outlet for protection from depreciating fiat currencies. It is limited in supply, much like the precious metals. He thinks a small position could be valuable as a hedge, particularly for those who live in countries with a history of currency crises.
He says, “It’s never easy to deal with short-term movements, but it’s important to keep evaluating your thesis.” They look for the large imbalances and macro trends while also examining the business cycle for momentum plays.
Information is abundant these days, and it can be hard to filter. Combining your knowledge with history can be a crucial part of the investment process.
Monetary dilution appears to be underway, and due to the risk of recession, it’s hard to make a bullish case for copper.
Time Stamp References:
0:50 – The business cycle and silver.
5:40 – Juniors and early discoveries.
7:40 – Bitcoin and hedges against market turmoil.
10:30 – Dealing with short term movement and your thesis.
12:30 – Evalulating data and finding what is important.
13:30 – Copper is hard to make a case for currently.
Talking Points From This Week’s Episode
• Our location in the business cycle.
• Reasons for holding gold in this environment.
• Silver and juniors are quite undervalued.
• Bitcoin is attractive at this level as a hedge.
Otavio (“Tavi”) Costa is Global Macro Analyst for Crescat Capital. He has been an analyst on Crescat’s investment team for more than five years, with a focus on global cross-asset research. “Tavi” built Crescat’s macro model that identifies the current stage of the US economic cycle through a combination of 16 factors. His research has been featured multiple times in financial publications such as Bloomberg, The Wall Street Journal. Tavi is a native of São Paulo, Brazil and is fluent in Portuguese, Spanish, and English. Before joining Crescat, he worked with the underwriting of financial products and in international business at Braservice, a large logistics company in Brazil. Tavi graduated cum laude from Lindenwood University in St. Louis with a BA degree in Business Administration with an emphasis in finance and a minor in Spanish. Tavi played NCAA Division 1 tennis for Liberty University.