Gold Absolutely Loves This, The Dollar Does NOT (Uncut) 02-23-2025
gold loves that dollar hates that the inverse correlation on a 30-day basis between the US dollar and gold is8 that’s not as good as it gets but pretty damn close so what that tells you is provided that the dollar is going down and bond yields have stopped going up you know it’s a new cycle highs or anything like that uh then Gold’s going to keep ripping and there’s a lot of that’s just the that would be the standard stock and flow dollar rates Etc view of gold um but the bigger picture I think like I said is monetizing uh the
US government us government’s balance sheet which has you know got loads of gold in it hello and welcome to sore financially a channel where we discuss the macro to understand the micro my name is Kai Hoffman I’m thejr mining guy over on X and of course your host of this Channel and I’m looking forward to welcoming First Time guest Keith McCulla he’s he’s the founder and CEO over at hedi risk management I’m really looking forward to this conversation with them always excited about first time guests never
know where the conversation goes with first time guests as well so uh I think we’re in for a doozy here I’ve got a few topics prepared of course one is a bit of an exploratory topic because I I listened to a podcast this morning and it’s about a new trend it’s called Rob Robotics and humanoids and if we if we could fit it in like I’ll ask Keith about it what he thinks about those future trending topics and what he sees as an opportunity or not so I’m curious what he thinks um before I switch over
to my guest hit that like And subscribe button it helps help us out tremendously and we appreciate it it’s a free way to support us and we thank you for it now Keith it is great to welcome you on sore financially thanks for making your making the time it’s uh great to be the first time guy here I appreciate it Kai yeah absolutely I love having first time guests on yeah like it mixes up the conversation always a bit nervous I say that because we I never know where the conversation could go we’re just getting
to know each other so um I’m sure we’ll have some fun you seem like a great guy and uh we’ll have a doozy here um it’s just like macro it’s nonlinear it can go wherever it goes exactly it’s like water it it always finds a way right um ke Keith first time guess I always like asking a bit of a a standard and basic question just to assess where where you’re at and where you’re mentally at to2 degree as well as is just like what what’s your assessment of the economy right now and the financial markets where are we at on the US
economy or Global or both uh both like we could start Global hone it down like we don’t have to go at to granular just just get a good assessment like are we in a recession perhaps yeah I think I think um a lot of people miss you know the rest of the world when they when they when they try to answer that question it’s if you subscribe to the view that the world is nonlinear it is a complete ecosystem that uh is constantly correlating and and and and and colliding with itself I mean there’s there’s a there’s a lot to do out there
I mean I think firstly the world coming out of a what was you know even though there wasn’t a reported recession in the USA there was a rolling recession in industrial production growth there was obviously a global uh recession one that found its way on a reported base to to your country like to Germany um etc etc Canada my country so you know coming out of that what we typically call that is either quad one uh which is the rate of change of of the economy accelerating on a real basis without inflation or quad 2
which is U both are accelerating at the same time so we’re we’re we’re of the view of the latter uh our current what we call our growth inflation policy model um which leads us to the quads economic quads there four of them uh two are bad quad four and quad 3 and quad one and two are the growth accelerating quads so we have both the US um coming into and out of the election uh in Quad what we call Quad 2 and we have Global quad 2 and the global quad 2 is quite powerful um because it’s really driving
we would say you we have a huge position in inflation uh as an asset allocation Express through which you know very well uh Commodities so Commodities as an asset class you know where the inflation cycle bottomed uh which in September in the USA uh in particular in the in September uh 2024 from that point the crb Commodities index which is 19 Commodities as You’ know uh is already up 20% so um being long inflation’s clearly been a great asset allocation you can express that in stocks you can express that in high yield bonds we can
go through anything you really want yeah no absolutely no appreciate that Keith um let’s talk inflation I think that’s that’s an important one um what are your inflation expectations we’re at we came from 2.4% in in September uh seem was seemingly the bottom uh we’re at 3% now trending higher obviously if we just follow the line up uh a you know question is what’s driving inflation right now and B where where do you see it headed well what’s driving inflation on a reported basis is generally the
base effects um and that’s how we model it but we also use real time a real-time commodity price sample basket that takes Real World prices as opposed to the that you get from governments or bureaucrats right so if you go back to September to your point at 2.4 % year-over-year CPI you know most Federal Reserve bureaucrats or linear econs as I affectionately call them on the old wall uh they thought inflation was headed towards their target right okay it’s going down towards 2.4% it’s got to go to two that’s our Target you know we
were put on this Earth to tell you know the economy and gravity what to do our s our our process are nowcast said no that was inflation’s about to re accelerate so to your point it’s already accelerated to 3.0% last month which is a monster re acceleration on on any level the bond market we think priced that in there’s a Nuance move here where we because we have a stochastically driven and mathematically oriented or driven um CPI nowcast and we update it for clients subscribers weekly and of course monthly
and we actually have it ticking down this month Kai which is the first tick down but it’s a oneand done so down for a month uh which by the way I think the fedal hookline Sinker try to go back to their narrative well look you know like because today they said they’re on hold uh until they see an improvement well our nowcast is for the first time McFly you’re going to get an improvement uh but then it’s not going to be a trending Improvement and we actually have inflation for the third quarter going
back up towards 3.3% so I don’t think that that’s the end of the world or anything like that again if if you had if you’ve had our view on inflation you don’t believe bureaucrats and government people on inflation you just own it no absolutely and it seems like you you you touched on the FED here the FED seems to be quite happy with where they’re at right now unemployment around 4% uh seems fairly low in historical context and like I’d say full employment is at 3% so we’re almost at full employment here uh it’s not far off and
as you said inflation around 3% uh you know some some commentators expect that the new inflation Target might be 3% in the future that might get changed Jerome Paul gets asked about that frequently in the press conference uh whether he’s going to touch that and he’s like no we haven’t discussed this at all um but it seems to be on the agenda if it’s talked about right um you know I’ve warned you I’ll ask you that before like hitting the record button Keith but we we have to talk about what what camp are you in should
we have higher uh fed fund rates or a lower fed funds rate uh well we we’re in the we were in the we’ve multiple times been in the view because really if you go back uh for a year and a half now you know the FED has whipped Wall Street around like four separate times we’re going to take you know five to 10 rate cuts and we took them all out then we put them all back in uh and now we’ve taken them all out again so I think that if you have a if you have a mathematically like I said in stochastically oriented Pro process to
measure map inflation you’ve done quite well just fading that every three months and I think um like I said this one is a one month uh thing but I do think that over time there’ll be much more nothingness in bals like we were the Hawks on inflation we’re the Hawks on Bon we were short duration we were short TLT we’re short anything that was related to rate sensitivity real estate stocks utility stocks consumer staple stocks I’m not short any of those things anymore um we’re currently looking for
nothingness like I have a sideways uh 10year yield risk range for example I’m I modeled the rist range is what I call them every single day we publish them uh through our through our through our process and and of course people use that as a tool or as a navigator and really it’s like a 20 basis point wide risk range from 443 on the tenure to 463 it’s the first time we’ve seen nothingness in bond yields in terms of the range somethingness would be Oh look The the tenear yields risk range if I went back to mid January was closer to
it was 50 basis points wide it was it was saying that 5% tenure was in play well not anymore it’s 463 on on the upside and there’s not much downside so that I think would be good I mean if you look at treasury bond volatility or the move index for example it it’s completely collapsed because finally I think the Bond Market said look you know the FED has totally got this wrong but they are at least acknowledging it that inflation has been going up you know since October and there’s nothing to do
with that there’s no more rate Cuts there I I don’t believe that they’re going to raise rates I mean it’s one thing for Scott B who knows what he’s doing um to say we don’t need rate cuts to get inflation down it’s entirely a different thing for you know Pal’s first move to be a rate hike like I I don’t buy I don’t buy that I I think there’s nothingness a lot of people try to make somethingness out of it sometimes we make something out of it uh but right now nothingness is the view Keith like under one of our videos
recently we’ve seen I’ve seen a comment uh in regard to our guest and he say like one of his first sentences well the economy is strong and and the comment was like ah I’m out of here he said the economy is strong wasting my 30 minutes here right um like what do you counter to that well I mean we we live in interesting times you my partner Neil how calls it the fourth turning it’s a generational thing uh and that’s what the election was all about and it wasn’t just here it was in Argentina obviously
there having similar type elections as you all know in in in in my own country in Canada and Europe um so you know I think we’re at that political moment in time where being completely polarized and biased uh politically is is is being Unearthed as untruthful right on both sides um in markets if you apply that political lens that what I call that kind of dogmatic baby boomer lens that both Fox um and MSNBC would subscribe to wrongly on both sides you know you’re going to be totally screwed in markets
if you take that kind of a view if you cannot handle the truth of rate of change data like let’s just use the the the the person’s example um and it’s like well you said the economy is strong I I can’t handle that or I don’t believe that or I don’t want to believe that well it doesn’t matter you know the it’s not about the economy being strong or weak it’s about the economy accelerating or decelerating in rate of change terms and on a trending basis so again most humans don’t think in rate of change
terms but markets do and that’s the point like I’m indifferent if markets are accelerating my view is it’s accelerating if it’s decelerating it’s decelerating it’s an apolitical mathematically you know driven view um and by the way for anybody who doesn’t have the you know the the humility and mental capacity to accept that fact um just it’s it’s just an empirical fact I mean when you go back when you go backwards in time as opposed to trying to look forward like markets are the rates of change of what the economy did
and when are empirical facts they’re not political opinions no absolutely like it’s you know we got to deal with the government data that we got like that’s where we have to take our assumptions from it I know we all know like most of the data doesn’t make any sense at all because we’re seeing it very differently right just just a Cas just what is it uh a case of eggs or whatever is called box of eggs what what’s it in the US it doesn’t matter like just the price is ridiculous okay um out here it’s like what what am I
paying I’m paying Five for 10 eggs out here that’s you know that’s that’s about five bucks roughly like if if the US dollar and the Euro own par but uh it’s up like we all know like we all feel it differently here um yeah so it’s it’s a difficult topic of debate because you know we deal with the numbers and neither you and I probably going from house to house asking 10,000 people every month how they’re feeling and how much money is left in the you know in their bank account at the end of each month right well on that one you the
good news Kai is that you we don’t have to just be on our own personal experience I mean if you deal with markets that way you know human beings by the way are always hallucinating along their own personal path I mean it doesn’t mean the rest of the world has to see it your way the the rate of change in egg prices I write about it all the time I tweet about it I’ve been tweeting about it for a year because the rate of change of egg prices are up 148% year over-year in the last month they’re up 22% so that’s why everyone’s talking
about a dozen of eggs being on average eight bucks but if you tweet that what’ll happen what I love about the market now is that you have a lot of participation by what we call retail investors that’s an insult by the way like if you’re retail if you’re like reduced to that you you have no macro awareness you have no self-directed nature with a process you know don’t let people call you retail learn a better way right like measure and map the rates of change of things like you would the weather or anything else in your life
and you know eggs is a great example of that it enrages people and and somebody will say well I’m in I’m in Montana and the average price is five bucks but like you just said you know over here it’s 11 bucks go to Bahamas one one week it was like 22 bucks I mean for a dozen of X and but but these things are empirical facts and my team’s job and my job in particular in synthesizing all these rates of change and the embedded data embedded they’re in is to just summarize it I mean it is what it is it’s not what
people think it is no ABS absolutely I agree like uh it’s interesting everybody feels it differently and of course everybody’s emotional as well right which is the worst way to be when you’re trying to save and make money in markets yeah it’s it’s very difficult to keep emotion out of it absolutely like I’m I’m in junior Mining and it’s all emotion here so there there’s no waying yeah tough tough one um Keith you touched on the bond market I think that’s a really interesting one uh because Simon hunt once phrased it and I
keep repeating it here on the program it’s the root of all evil there’s just so much money involved not just domestically but internationally so much Southern you know money flowing into you know us treasuries and and you touched on the yield um we have to talk about us needs to refinance a lot this year uh you know depending on what source you look at it’s either three trillion 7 trillion you pick a number it’s it’s massive um do you see liquidity crisis and what does the high interest rate tell you right now on the yields on the
on the bonds sorry I don’t like if the economy was slowing I would see you know potential stagflation type crisis or where liquidity would be a much larger problem when the econom is accelerating and Scott besset knows this very well you grow your way out of the problem and and if if the US can grow two and a half to 3% GDP which is where we have it growing for the next three quarters you know I don’t think that that’s on the table it’s not to say that you know bessent knows this very well he he’s
outright um criticizing the former treasury secretary and a completely biased political hack and Janet Yellen on on on on on what she did you know you got you got 9.3 trillion you know sitting there that he has to deal with now with very short-term you know duration on it and he’s gonna I don’t think that that’s an I don’t wish that task trying to risk manage that or or or bend that and shape that upon any man or woman this is this is an extremely difficult situation that the US is in at Peak debt Peak deficit levels um but
currently and I reserve the right to change this tomorrow morning so that you know our conversation could be different tomorrow morning uh or next week or next month for that matter if my signaling process were to um say the opposite of what I just said I’ll say the opposite I’ll say look you know this is on which we’ve said multiple times by the way uh and the risk an interest rate move to the upside which we’ve been saying for a long time is much higher than people think so um that was a much bigger
problem in 2022 when we made the call that the US economy was going to slow from its 2021 Peak uh from here the economy is accelerating like I said into quad 2 so it’s less less of an issue at least from a market signaling perspective no I appreciate that um Keith I’m not sure if you can see it and uh uh my my browser tab but it’s it’s a the the yield curve I’m showing the 10-year versus the 2-year treasury um like how important is it to you it seemed like it was turning and trying to go back down to zero U maybe even go
under it but it seems like it’s turning around I’m sure if our viewers can see it it used to be full screen here let me see if I can get it back here to full screen um there you go um you can see it’s like it’s been dipping it’s been dipping down towards zero again I’m curious like what do you make of that move and uh like should we be concerned about that or is that just a normal correction uh like this is first of all yes I mean it’s one of the primary inputs to our process it’s not just about what where is the trend signal and
where is the risk range on the two-ear the 10 year and the 30e but what is the split in particular on the 10 versus the TW that’s one of the top 30 you know if I were to you know risk weight my the factors in the model would be in the top 30 things which would include you know like the price of copper price of gold um again that’s how my process works but you know I think the Y curve is just trying to find its it its footing to go back to plus 50 maybe uh on tens minus twos which would be a new cycle High for
now it’s just consolidating I mean our view was look when inflation and growth come back in particular coming out of the election you’re going to see the Y curve Steep and which is exactly what it did it went all the way up to plus 41 on 10 minus twos so we’re currently at like plus 26 in this consolidating pattern it’s essentially the same answer Kai that I gave on on bonds like the the the standard deviation risk or the range of outcomes on where the yield curve can go where the 10 year yield can go where the
two-year y can go uh if you look at them all mutually exclusively it’s all all the same answer it’s a narrowing range which means that You’ Consolidated a lot of things that people didn’t expect which includes the return of both growth and inflation at the same time growth that’s where I want to go like where do you see growth coming from Keith like it’s it’s an interesting topic like it’s it’s it’s it’s difficult to assess like I have a hard time uh just throwing in the buzzword tariffs here as well like where is growth coming
from well it’s going to come from both U cical factors like things that are like steel for example um and it’s going to go against things like Auto uh but so those are you know cycal factors but so you get cyclical growth in pricing you know steel companies in America haven’t had pricing in Forever um you get pricing in like we we just bought added Platinum for example to the to the long side of our acid allocation model obviously gold signaling the same thing but on the real fun stuff like that’s
like you know when we start to go back to 2021 like it’s the back test in the model says that when you’re in Quad 2 you can almost believe in anything isn’t that an amazing thing it may or may not have to be true enter Elon Musk I mean think of all the things that he said just categorically didn’t happen I mean you know flying cars the burrowing company Etc it’s not to say he’s not brilliant I know a lot of brilliant people that are really terrible at running risk in markets uh it’s to say that when you’re in a certain economic
environment the market actually believes you therefore more people believe it so I’m big on trying to handicap and risk manage you know that behavioral curve alongside the economic growth curve and there what’s what’s actually happening now is that you know certain mag seven growth companies uh are giving or seeding share to certain um subcomponents of US economic growth uh two big ones that we’re we just recently have been investing in would be uh Robotics and uh space uh of all things so you know those are those are really
interesting things that people want to and are willing to believe or the market wouldn’t believe it and I’m willing to believe it until the market signal doesn’t believe it you you touched on B robotics you put the ball on the spot here and now just got to kick it in here um Keith uh I I want to talk about it I found I found that fascinating I was listening to a podcast this morning I think it was the iced coffee hour I was listening to and they had a guest on who talked about that he’s invested in in robotics and
humanoids and he thinks we should all pile into Tesla because nobody’s really investing into Tesla for example because of the robotics division they’re all invested because of the Cars full Cale driving and potentially some of the AI stuff they’re doing but not the robotics so I’m curious like what motivates you to buy Robotics and like how much research have you done into it I’m just curious like it’s a it’s a new storyline for me um curious what your thoughts are yeah I mean well think of how
that answer is right like oh the only way to play it’s Tesla like this is what a retail investor would say because they don’t see anything else right that is the definition of ignorance you know when you look so if you look inside of the Robotics and automation ETF that Mong Robo you would start with their two heaviest weights are Japanese companies I mean it’s like it’s not like so you have harmonic in there and Fook and then you have names like aenta you have names like hexagon which is also you know not
again not a us-listed company in the top 10 um and and that’s that’s the thing about markets these days the machine is very good I’m also long Quantum Computing which by the way my analyst doesn’t even believe I should be long but I’m making money being long because other people believe it so you know if you look like like retti Computing it trades like R GTI it trades like 100 million north of 100 million shares someday this is where the machine as I like to say or the flow has gone is towards things that are big topics that
aren’t just like oh you can’t get it anywhere else so you got to buy Elon stock I mean that’s like I said that’s categorical the opportunity is in doing a lot of work and and understanding that there are different places that like you said the water is Flowing because that’s the thing about water right you can’t tell it where to flow forever and and currently it’s flowing to these new places where there’s a lot there are a lot of different companies that are in these places yeah let me share my screen real
quick like I’m learning as we go here uh Keith I have to admit but uh ju ju just look at this like um I’m just sharing like figure AI is one of the big companies that the guest invested in but my point is like this could really transform how we do things how the economy is shaped um AI is one thing this is the next thing like uh Unlimited Supply of workers is one and and one thing the US needs and that’s why I’m like I’m quite keen on this topic because it really fits in what we’re discussing here on the channel is
productivity growth and uh yes the US has a ton of debt 130% but one way to get out of it or not be as uh uh restricted anymore is by just growing GDP and uh by growing productivity and that’s something that’s why I’m quite interested in what I’m seeing here um what are your thoughts on this does the US I even have a chance I know we’re hinging all our hopes on AI right now but uh like how can we combine this here well I I mean it’s hard to disagree with what the future could be because nobody really knows what it is the the funniest
thing is that most people that kind of are narrative based investors they need and want to believe something therefore they’ll believe it until they start losing money um so I I have no reason to argue with that’s what part of our future looks like the the question is when does it get priced in and what humans tend to want to do is they’ll see a video like that or they’ll see a theme like this and it’s like well it’s here today now this is going to take a very long time you know you got to get through the first part of Doge which is
cutting the people out and then you got to get to the next part which is the efficiency the do G most people forget the efficiency piece is going to be answered with productivity I mean Elon you know I I criticized him but of course I’ll compliment him um you know his delete delete delete you know mentality that’s what he calls his algorithm uh is entirely focused on doing things more efficiently and with better better tools which would include robotics so um I think you just have to understand at the single stock level
what you’re buying and we’re at the ETF level which I just went through Robo I can do the same thing with another big topic on UFO which is another ETF that we’ve been long that’s crushing it uh I don’t always crush it I get crushed just like most people um but you know these are big things with with new new and exciting companies that that have market cap well we sort of brushed AI to the site and jumped to the next big thing here but we we got to talk about AI cuz it is moving markets it has moved the
S&P 500 for the last two years pretty much exclusively um what are your thoughts I know like deep SE was a big disruption the question is is it still have people woken up um are we still taking it serious I’m curious what your thoughts are because remember on the David Lynch show you said your your analyst uh says this is a big disruption um I’m downgrading Nvidia yeah and and we’ve been you anytime you say anything negative on Nvidia oh you know all hell is going to break loose right I mean you’re you’re it’s like your religion’s
being attacked U but that’s because it was really the best way to be long AI for long time like to your point it’s it’s it it became the largest company in market cap or in human history in the most widely held momentum stock still is um for a reason because they grew at an unbelievable rate the rate of change of their revenue growth is unprecedented for a company that has that market cap right so now what as Paul Harvey would say what is the rest of the story and the rest of the story for Invidia is
that if if if the threat the credible threat not of of deep Seeker but of of of elon’s you know grock or whatever the hell the things come or the next five to 10 things are going to compete with that is that you’re going to have to pay less for the chips and that’s what the Market’s message is on Nvidia we don’t want to give you any more new all-time highs instead we’re going to buy Quantum Computing we’re going to buy robotics we’re going to buy space we’re going to buy companies that are actually
accelerating on a rate of change basis to new Revenue growth rate highs while you decelerate so my analyst that’s his view right because we model every company I Al also find it you know I don’t I wouldn’t say it’s laughable I find it quite appetizing that a lot of people have views on stocks and don’t have models like never mind accurate models I mean you can’t work at a world-class Edge Fone without having a model on a company with and have a position in the company it’s it’s not where the pros play the game but the
amateurs think they know everything right which is an opportunity for us to both coach amateurs to being pros and and Pros to being better pros and we think we simply to put it simply it’s the Deep Seeker was an event that is um an efficiency event a lower cost of Entry event it would therefore which makes you know their premium pricing and margins under attack while the rest of the world gets faster and better and AI so we’re not saying you know we’re actually saying the opposite we’re we think that what happened with deep seek
is a huge it pulls forward a lot of time and space because it’s it’s cheaper to get in the game and to apply AI like my business does and many businesses have uh and will continue to you know a cheaper and a faster rate No it’s like project Stargate was announced uh pretty much January 20th January 21st and uh you know 24 hours later uh deep seek was announced and uh you know pushed through the media um project starget for our viewers $500 billion project uh on on AI spent not all immediately I think the
first 100 billion were supposed to be invested immediately uh but deep seek shook that up a little bit like I don’t know if you if you know know the answer to that but like what what do you think is going to be shaping project star like what’s that going to look like moving forward with all the Deep seek impact you know that I have no idea I mean I I am not from the future I I mean I’m I’m I I my signals front run the future but I I actually think the the the more humility you have and the more times you
can say I don’t know uh the better you might get at this game I mean at least when I look back at all my dumb mistakes um it’s like I thought I knew more than I knew and in in the case of that question I have no idea no fair enough like it’s uh it’s it’s an interesting topic because there’s just so much being money being spent on like us INF let’s call it infrastructure and National Security projects yeah it’s crazy so that’s why I’m and the other side of these trades happen pretty quickly right
like so paler which every most of the retail Community owns and plenty of professionals own because it’s been the right thing to own um they like you get one headline that Trump’s going to cut defense spending and that’s a lack to their defense cont contracts stock was down yesterday I mean yesterday paler was down it’s not just that it was down Kai like 10% on the day it was down on 146 million shares of volume like people who haven’t played this game at any level never mind like for years like to
put that in context even pal ander’s 90day average volume is around 80 million shares trade 146 million shares right you’re seeing um like immediate short-term reactions and I think a lot of this is what’s really interesting about AI is you put it alongside the market structure like of the in particular the US Equity Market with zero days expiration options trading weekly options trading these things trade like wildfire for NVIDIA Apple Tesla you know this makes the gain like the market and the Machine go faster
while everything’s just happening faster fundamentally so it it certainly isn’t for the fan of harder for people not understanding when something’s overbought where they shouldn’t be buying it or chasing it or oversold rather where you could be buying some more of that and that’s what we try to teach people to do is that have that discipline so that you’re not chasing you know the up moves and you’re not selling palente tier on yesterday’s down move you would have sold some at the top end of its range you can buy some more
down 10 15% from there no absolutely my my audience is going to hate me for sharing something from CNN here in a second but just the fear and greed index you know something I I just I look at from time to time because I’m just trying to gauge where the market is and then I scroll down uh Market momentum seems shaky there’s fear what is interesting stock price strength extreme fear right so exactly sort of what you said like if there’s something bad happening people are willing to just dump it at any cost and get out of it
yeah yeah that’s exactly what your what you mentioned I think that summarizes it quite well our fear as human beings is a direct function of our experience you know the the collapse of all the fun stuff as I like to call it including fraud in crypto in 21 is front center right in between these two things your ears for most human beings that don’t know what they’re doing but they own them right think about that it’s like a casino and all of a sudden somebody pulls a fire alarm it’s like w you know
and that’s that is not what we do right like I mean but it’s what they do so we’ve had to change you know some of the durations that we’re using shorter make them shorter term to make the right shorter term decisions to fade that kind of behavior of the crowd to capitalize on it I I just you know the if you actually look at um the way that I Define market complacency or fear complacency or capitulation by bears you know very uh unique bullishness you’re you’re actually sitting right on it right now what I do is I look at 10day
realiz volatility of the S&P 500 it’s at the lowest level that we’ve seen going all the way back so you have an intense um institutional pressure what they fear is new all-time highs in the S&P 500 and underperforming right whereas the fear I think you’re talking about is the retail investor who just has no way to really fade their feelings no and that that’s exactly it um like ner nervousness like you you mentioned I’m just looking at the Vicks here um just trying to gauge like what what what is that telling us it seems
pretty calm still like not like in August last year uh or even towards the end of the year um in December I think it was uh when it jumped up closer to 30 um are are how how closer are you monitoring the vix like how much an indicator is it for you it’s top three out of those 30 that I gave you um so and we have a a partnership with a company called tier one alpha that everybody should follow uh for free on Twitter and and and and start to maybe try to wrap your arms around the machine the flow of the machine the flow of
options flow and how it really navigates the daily um you know es and flows of the s&p500 in particular and the heavy weights inside of it don’t forget that Nvidia is like 7% of the S&P and Apple’s close to to the same weight so really when the machine’s buying it’s buying apple and video when it’s selling you know vice versa um if you go back and the real thing that we’re on the lookout for is what we call Quad 4 now Quad 4 were the only company to make the quad four call because we invented Quad 4
right so it’s you again it’s when the rate of change of growth and inflation are decelerating at the same time so when that happened in August and the vix went to 40 guy it didn’t come out of nowhere the US economy started to slow and so did inflation towards those September cycle lows uh of 2.4% that we already talked about that started in July so volatility started to go up in July and then it went roof in August and then that was it because we came out of what we call Quad 4 inflation bottomed
and took off again so that’s why I’m always using the price Vol my signal is based on the relationship rate of change relationship of price volume and volatility when the volatility of volatility in particular with the vix is signaling that then we do that it’s currently been signaling and now we’re you know we made the sixth all-time high in the S&P 500 for 2025 already right so you know our view that the US every dip was to be bought here you know since you know we started getting more dips in
February that’s played out from here like I said the vix is almost like a ball underwater um and and who know I mean next week nvidia’s got to report reality and we think that we think that the Nvidia issues like I said are much more about their former successes than it is about deepseeker is definitely a negative for them but the real negative is how well they did in the past and and again most humans who aren’t Pros it this don’t even know what I’m talking about they like well isn’t it still good
yeah but it’s less good and that’s the point and that’s next Thursday so we’ll see I I’d say that the options Market currently is is quite complacent you can also like not to you know dig into the screws of it but Nvidia has an implied volatility discount of 26% versus 30-day realizable I said it quick because if people understand they understand it otherwise it’s like the guy who says he doesn’t like that you said the economy’s strong they’re like I can’t understand it but but it doesn’t mean that if I’m
drive if I’m flying you know a fighter jet that I don’t know what I’m doing when I said right I if you don’t and you want to ignore it that’s fine but what I’m saying is what that means is that there is an absolute Mania associated with Nvidia weekly calls and there’s not a big appetite for the puts right going into next Thursday they’ve been buying the very technical term out of the Nvidia weekly 140 calls which expire on Friday it’s also a huge options expiration day uh it’s monthly Outbacks on you know tomorrow but next week I
think it it should be a material event for the market if Nvidia proves me wrong then it’s going to be a material event to the other to the other side so um we’ll have to see about that Switching gears a little bit because we mentioned to go for 35 minutes without mentioning the new president of the White House um like I don’t think we mentioned his name yet um which has been interesting like uh we didn’t throw him in the in the FED discussion at all but I’m I’m curious like we we’re one month into his tenure
now um how do you factor it in like he’s like a sitting Black Swan in the White House like in the Oval Office like you you don’t know it’s like I wake up here every morning I check the news like okay what did he say last night that I missed while I was asleep um I’m I’m I’m curious like how do you factor that into your model like how does that fit in because that could just derail everything within like seconds yeah so a German and a Canadian guy get on a podcast and start to talk about President pump I mean it’s like you know
it it’s um it doesn’t really matter what I think of him like like no it’s like not as a person just more the impact on the economy right like it just markets like what you expect we would say for the things that we’re buying uh his new administration because it’s more about the administration it is about him he unlike last time when Trump got elected when he didn’t even realize he was going to get elected he had a bunch of goons in there I mean he had the mooch Anthony scare mooch a bunch of people just incompetent and are
political hacks you know this time he’s got Scott Besson who I know well uh who’s a serious Market practitioner who understands currencies Commodities Global rates of change um serious people like that when it comes to the market that have announced serious things okay so I think that and that are pro prom Market let’s just say on the private side like a company like mine you cut my taxes and deregulate I’m happy right it’s not a political thing it’s in in the back of my pocket thing if I go more
broadly and you start to think about like what really has happened here to the gold price I mean when Scott Besson said we’re looking to monetize the US government’s balance sheet I mean think about what that means I mean gold they the US government’s average price I believe in owning gold is $42 an ounce the the realized gain would be almost 7000% I mean they the the the monetizing the US government land uh I think it’s 640 million Acres of the US of of the USA’s land is owned by the US government
which is is 28% of us land I mean so there’s so many different things that a market practitioner if you will inv bests in who understands very well uh how to float a balloon even try certain things and see how the market ex reacts and then they could take them back I mean that’s what they call them they call them balloons so I I’m not I’m not a republican I’m not a Democrat I’m a Canadian I’m just saying that it on balance tariffs are bullish for steel stocks you know on balance tariffs are bearish for auto stocks on balance you
know cutting taxes and going PR growth and and potentially getting really creative with also the US government as you know best and Trump launch uh us Sovereign wealth fund that’s brand new you know taking the the Bitcoin that they basically grabbed from illicit behavior and putting it on to the U us balance sheet officially in a sovereign wealth fund I mean they can do that that Silk Road um Bitcoin inventory is sitting right there just as an Irish guy would say it’s sitting right there waiting for you you know like Irish
Canadian lots to do amazing Keith have one last question sort of like because we haven’t touched on it but uh I’m always curious like what influences models here um and geopolitics of course is a big one it’s it’s been a big topic this week on our Channel um how do you factor that and let’s assume maybe uh you know Trump and Putin meet tomorrow and uh they decide okay war in the Ukraine is over without even without even including the Ukraine in the discussion but let’s assume that happens like how do you factor any
geopolitics into your models all signal based so what we would say is that the reason why oil is the only commodity never mind only major commodity to not break out to the upside is because the rate of change of geopolitical risk so we try to call everything a factor exposure right China is a factor exposure geopolitical risk is a factor exposure inside a geopolitical risk Middle East is Factor exposure Russia’s bigger bigger Factor exposures but they’re in some cases mutually exclusive of each other in other in other cases
you can summarize them if you look at it like I model things like I said stochastically and also fractally so what you’re trying to find are in fractal math or similar sets things that in rate of change terms are changing uh on a trending basis and I think what the Market’s saying um you know is that that’s that geopolitical risk premium for oil in particular is going down because tensions are going down and they’re having the conversations well we’ll have to see what happens but um for now that’s why I’m not long
away no make makes sense too much uncertainty in general like I I have a hard time you know dissecting the whole like OPEC plus situation over Supply but then again we got uh you know Israel actually attacking the hoodies so it’s like what’s going on here so um to too too convoluted like I have a hard time tracking it I don’t understand like I thought when the war broke out in the Middle East that we’ll you know see $100 oil didn’t happen right I I think that Kai that’s a very that’s a very like um
that’s like a mature experienced uh Market practitioners you know view of a market right is that you it doesn’t make sense relative to what my intuitions or anything like that’s why I I gave up on my what’s in my own brain and automated it I mean why is so many people in fatuated with AI but they don’t automate their own decision-making process removing the emotion the biases I mean I’m there I mean it certainly helped me if I went with what’s in between my two years I’d be in a lot of trouble you
would not enjoy this conversation there’d be no value added certainly no Alpha no it’s uh yeah no it’s I got to go by that like and that’s why I’m staying away from it like that’s I stopped predicting gold prices as well cuz it is difficult of course I’m bullish gold but uh I think it was a few years ago and I was writing a stock newsletter back then and uh the US was like minutes away from hitting the debt seal and going bankrupt just because they couldn’t like it’s like six seven years ago something like that because
they couldn’t agree on raising the debt ceiling but gold was going down I like hm all right I I give up here that’s when I threw in the towle on gold price forecasting and just copi and pasted what other people said um but maybe on on that topic gold um I have to ask last question Keith for you um you you touched on it revaluation but I’m really more curious what what are your thoughts on gold price Direction uh higher lower neutral what are your thoughts what’s interesting is that now that you know
and it may just be for the next month like I said we’re going to have our first uh our nowcast is predicting or now casting a tick down first tick down since really since September in CPI gold loves that dollar hates that the inverse correlation on a 30-day basis between the US dollar and gold is 08 that’s not as good as it gets but pretty damn close so what that tells you is provided that the dollar is going down and bond yields have stopped going up you know to new cycle highs or anything like that uh
then Gold’s going to keep ripping and there’s a lot of that’s just the that would be the standard stock and flow dollar rates Etc view of gold um but the bigger picture I think like I said is monetizing the US government us government’s balance sheet which is you know got loads of gold in it 8,000 tons $750 trillion worth of it I looked it up the other day that’s why I know um no Keith what a wonderful conversation I tremendously appreciate you having on the program having you on the program we’ll need to do this again soon um you
you you published a book uh an ebook for everybody free to download and I do have to read the title because it is a longer one but Master of the market a hedge fund manager’s guide to process and profit give us the cliff notes like what can we expect yeah sure I we have um so I’ve basically developed this entire process over the course of uh over the course of 25 years which is kind of Aging me um but you know it’s fully loaded with every single mistake I’ve made I’ve timestamped every mistake over
I have 8,000 I think real time alerts going back 17 years out of the 25 um so The Good the Bad and the Ugly but all the learnings embedded they’re in are you the result of that is my process so we call it the full Investing cycle process it’s not about like buying things on valuation or buying Things based on narratives it’s understand understanding where the full Investing cycle is so think of a and we walk you through this visually in the book that’s why I kept the book short because I want it to be accessible to the people right
you know wall Street’s one thing if you don’t want to be taught because you’re paid to be you know taught a different way that’s going to take you to your grave on Wall Street um or take you to the promised land I mean there are plenty of people are successful to their own process obviously but with mine what I’m my goal is to teach people that what really matters in macro like you started our conversation with this and I I appreciate that this is how you think um it’s macro to micro if where are you on
the sign curve that’s all that matters where’s the cycle is it accelerating is it decelerating and if you can tell me the answer to that on GDP growth and inflation you’re going to be able to front run policy embeded they in you’re going to be able to front run asset allocations sectors you’d invest in sectors you get out of which is super important currencies Commodities stocks right so we go through that and um we we try to explain you know how to use the process as a practitioner’s guide uh you’re not going to find it obviously at
a business school I didn’t go to business school I went to the School of Hard Knox which is called live ammo in the market and I and I think the most important thing is that like I have my skin in the game right like I I’m dumb enough to to to show my long only like my family’s my family Office Long only account to the world every day like people have to pay for it but you know you get to see how I’m applying the process that you read and how consistent and disciplined it is and I think that’s the last thing you know like you said
Cliff Notes but I mean if you don’t have discipline and a repeatable process you don’t have anything you have bets you have feelings you have things that I just don’t have I mean I have probability weighted decisions which are different than bets you know so those you know this is this is all part of the the process as well and we also tell a couple U good stories about the good old wall folk like Maria bomo and Leon cooperman Jim Kramer uh over the years that we’ve had a couple couple of U I’d say little hocky fites
with you know fantastic uh h.com book um for your free download Keith thank you so much for coming it was a true pleasure having you on as I said we’ll have to do this again very very soon and everybody else thank you so much for tuning in to sore financially hope you found this informational educational just like like I have if you if you did please hit that like And subscribe button it helps us out tremendously and also leave a comment what do you think where where are things headed should the Fed R be
higher or lower and let us know why you think that like it’s okay to have an opinion on in either direction should we stimulate more should we be more restrictive put that down below we do want to hear from you thank you so much for tuning in we’ll be back with lots more thank you [Music]
