Dave Pare: Gold Is Looking Strong

News & Current Events Public News & Current Events
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This week, PeakProsperity.com's own precious metals analyst, Dave Pare, sits down to the microphone.

Better known on the site as davefairtex, he joins Chris to discuss his current outlook for gold and silver, his approach to building market models, and how he balances fundamentals versus technical analysis in assembling his macro views.

Dave has been a daily contributor to the site for years -- not just with his precious metals commentary, but also with thoughtfully constructed comments on a host of topics. His opinions are pointed, and occasionally controversial. But his ability to always challenge readers to think make him widely respected, even by those who don't agree with him.

In this podcast, we get the chance to learn much about the man behind the keyboard. It's well worth the listen:

I'm a software engineer. I went to UC-San Diego and then went into industry and did lots of different things. I was an individual contributor, an architect, a tech manager and then I found Peak Prosperity, and that sort of sidetracked my whole life. 

In my training as a trader, you can’t be over-focused on whatever your idea is of where things should be going, or where you think they should be, or what the value should be. Prices really do have to dictate what your reaction is. Prices in some sense are your reality.
 
That isn’t to say they reflect the reality of the real world; but they are your arena. If you ignore prices, you lose money. And, so from a standpoint of trading, prices are it. Prices determine whether or not you fail or succeed, whether or not your trade was good or bad. And, so in that sense, prices are everything.

But from the standpoint of are we going to use these prices as predictors of our future -- are we going to find more oil? are we going to do more of this or more of that? -- well, prices are largely irrelevant. You’re playing at forecasting: what's the world going to look like in 20 years? That’s out of my paygrade. What I deal with are my daily prices. It’s really more a question of: OK, so am I going to succeed or fail based on what I see going on right now? 

Again, I have a daily market commentary, and so it's a daily timeframe. And, so that’s the other piece of this. I mean, when I sit here and I do commentary about gold and then I say: Well, the trend is this. If you step and look at the past 3-to-6-months , you can say, Well, gosh, with negative rates, gold looks pretty good. I really do think gold is quite strong right now, especially if you compare it to where we were last year.

Click the play button below to listen to Chris' interview with Dave Pare (55m:49s)

This is a companion discussion topic for the original entry at https://peakprosperity.com/dave-pare-gold-is-looking-strong/

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I will listen but wait for Jim H. to post!
 

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In psychoneurodevelopement!

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Great Interview…I really appreciate Dave's contributions on the PM market. A few take-aways for me.
Dave:  "Well, well, to me, most inflation comes from private debt creation"    Don't we have a new housing bubble that has reached the heights of 2007? And auto load problems again…These would seem to fit the criteria of private debt creation. ??

Dave:   I’m used to the corruption in the markets, because they’ve been this, they’ve been here since time—it’s like I’m expecting my pocket to be picked.   I agree…and where there is corruption I have no interest in lingering longer than necessary…Dave:   So, it’s about timeframes. So, if you want to compete, right, if you want to compete in their timeframes, you’re going to lose.…Therefore I agree with longer term defensive investments or better yet staying out of the market as much as possible.

That's my 2 cents…not worth a whole lot.

 

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I found the off topic content more interesting than the on topic, in this podcast.
Chris's comment about the decline in bug population really made a light go off for me.  I've noticed a dramatic decline in mosquitoes and black flies in both Central and Southern Wisconsin.  Up to about 15 years ago, you didn't go outside in rural or suburban areas of Wisconsin without at least considering using bug repellent.  Today, there are a few weeks a year, where bugs are a minor nuisance.  The rest of the year, they are barely noticeable.  I've been clearing a back lot on my new property in Central Wisconsin quite a bit this year and have found one tick on my clothes.

I have thought several times over the last several years that something has changed, but never really considered the cause or ramifications.

A few years back, I read that insects have been largely unaffected in all of the mass extinction events, except one.  It is possible that we are creating a potentially unprecedented mass extinction event.

 

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Chris/Adam -  what's your thoughts on Harry Dent view on Gold?
http://www.zerohedge.com/news/2016-03-23/“-greatest-crash-your-life-just-ahead…”-–-harry-dent-warns

 

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Les-
For me my light bulb in this conversation was something I knew intellectually, but didn't really get until I was there in real time talking with Chris.

For the vast majority of people, information simply doesn't move people.  Emotional experience moves people.

When I think back to my peak oil aha moment, I remember the emotion - not the particulars that got me.  "Can this be real?"  Shock, surprise, more than a hint of betrayal.  It was an emotional experience.

If we are to be persuasive, somehow we have to stir the emotions.  Back it with information so we aren't tricking anyone - but change only happens when it is accompanied by an emotional impact.

Applying this principle to the goals of this site, I am now clear that Americans will need to have an emotional experience to break them loose from the daily dose of hypnotism that modern society provides in all its forms.  A chart simply won't do it.

And that's why Chris wants his market crash.  Not because he wants people to be in financial distress - he wants them to have their emotional experience which will help break the hypnotism.

And for me personally, I need to consider that emotional system more, because its the key to everything.  Nothing happens without it.

Aha!

I'm not a salesman by nature.  They know this stuff instictively.  :slight_smile:

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What a fun podcast! It's funny how perceptions can change. In my mind, I pictured Dave as being a very tall person with a deep baritone voice - somewhat like John Wayne. ;-)
Two parts that struck a particularly strong note with me - the peak oil discussion and the lack of insects. I remember when I first learned about peak oil. I didn't believe it at first. I spent my time looking for alternate lines of thinking to discredit the peak oil discussion. There were a few out there, but they didn't hold water very well. At some point, I remember feeling a hollow feeling in my gut and a cold sweat overtook me. That's when it felt real … and I had to change my line of thinking.

The missing insects issue is more of a symptom of our modern mindset. Our farming has become a financial commodity mining venture. Instead of coal, gold, or iron, farming mines food and fiber. The systems are set up to maximize profits - large geometric fields planted to a single growing commodity. Anything that makes the bottom line fatter is considered good. Since there are insects that consume some of the crop and spoil the appearance of much more, insects are considered bad. It may be only a few types that are causing the problems, but it costs too much to develop weapons specifically addressed to combat those particular pests when a cheap, broad spectrum pesticide promotes the bottom line.

If it were only one farm in the area incorporating this strategy, the impact wouldn't be significant. When all the farmers adopt similar strategies, the impacts are far ranging. Until it hits the bottom line, they won't voluntarily change their practices. Look at the plight of honeybees over the last couple of decades. It isn't good, but farmers are able to mitigate the problems so there isn't an overwhelming need to adjust seemingly successful farming strategies.

We have a similar mindset with the medical profession. Instead of curing a problem, the focus changes to covering up the symptoms or maintaining minimal bodily functions with pharmaceuticals. Got diabetic symptoms - don't worry about changing your diet or exercising habits … just take this pill everyday. That's where the profit lies. It doesn't matter that this approach is marginally effective and very expensive. It supplies profits. As long as it is profitable and the entire system works, expect more of it.

Grover

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OOG-
I agree with your attitude about the market.  If it didn't fascinate me so, that's how I'd approach it.  I'm trying to use my engineering skills along with my market understanding to come up with an edge.  Its not an approach that most people can take.

And you have to go in knowing they are working your emotional system really hard - via industry-written "news" articles, and "experts" talking their book, banging the close at OPEX and other strategic moments, by going after your stops, and "earnings expectations" (vs y/y comparisons), and "non-GAAP earnings", and Cramer with his buzzers, insider information, analysts who are actually salesmen, the list just goes on and on.

As for private debt creation - the rate is what matters, and the debt creation rate is nowhere near what it was during 2000-2008.  See the chart below: it was 7-12% back in the heyday, and its about 2-4% right now.  That's a huge difference.  This is both public and private debt - but private debt vastly outweighs the public debt.  (Fed debt: about 18 trillion, total credit: 64 trillion).

China has been doing all the heavy lifting when it comes to private debt creation.  I just don't have the timeseries to show you.

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The missing insect phenomenon is a really big deal to me.
Right now I am on an island in ME, and my wife and I have been coming here for 30 years.  This year we note that the first walk up the mid island trail has always required the use of a 'spider stick' to clear out the many orb webs from one's path.

Not this year.  No spider webs…you have to hunt to find a few small ones here and there, tucked high in the trees.

No insects = no spiders.  

Just as bad, no cormorants out on the water to speak of, and only a few gulls.  A tiny fraction of the wheeling clouds of raucous gulls I remember from a few decades back.

The mussels are all gone.  The few shells on the beach, once a bare foot hazard that was hard to avoid they were so numerous…for the first time we thought of gathering them, bagging them, and putting them away for future generations to marvel at because they may never come back.

It's as if the Rapture happened, only it wasn't the humans that got lifted away.

The fish and the insects and spiders and birds are missing.  I'm still here.

Now to find out that other people are having the same experience in different climes and regions is unsettling to me, to say the least.  In a local area you could make the case for over application of pesticides, but once we've got northern forests and coastal Maine and central Massachusetts and the entire drive up to NY from MA also wiped out…what the heck could that mean?

My wife Becca has the sense that mother nature is retracting her life, just reeling it in to wait for better times.  I have a sense of dread I never thought I'd get from the loss of insects…I always took them for granted.  

Again, as the base of a very complex system, insects cannot be lost without severe perturbations and consequences.  

I'd love to gather other people's insect impressions and anecdotes…

And then I'm going to hunt down some scientists who study these things quantitatively.

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Many of us like to point the finger at pesticides as a prime contributor to decreased insect populations, but we forget that the almost ubiquitous use of herbicides to control weeds in croplands, headlands and ditches throughout NA, limits the number of flowering species that provide pollen and nectar sources for many varieties of flying insects. The more species you eliminate, the more interactions between species are reduced as well. Diversity is essential for a healthy eco-system and herbicides add to the burden. But try and sell that to the farmer that lives next door or the boys at Monsanto or Syngenta or BASF. Access to open water is also being reduced which, again, leads to habitat destruction and places for insects to live. (However, the mosquitoes seem to be doing okay in my backyard).

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I started bagging shells a few years ago.I display them in large glass vases.I consider them natures jewelry.Large unbroken pieces of coral are now selling for hundreds of dollars because they are so rare.Very little washes up on the beach…It just makes me sad…I believe your wife is correct…

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Chris, I'm up in new york state's adirondack region. There is no shortage of bugs here. In fact, this year has been so hot and humid they are amplified. I'm being driven indoors by noon. I've been farming up here for a long time and I'll tell you that every year is a little different. Dry weather usually means fewer insect presence, hot wet weather brings them out. This has been one of the worst years for bugs here for us.

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Thanks to Chris and Dave both for a good podcast conversation.  I've just finished listening to it and a thought struck me with regards to the talk of trying to understand how to reach people when just information alone isn't enough.  I'm betting John Michael Greer might have something valuable to say on that subject if he were wearing his druid hat rather than his peak oil hat.  I'm not really familiar with his work as a druid, but from the bits and pieces he has dropped into his writing on the Archdruid Report blogs over the years I believe that a good deal of the druid "magic" is about finding ways to consciously reprogram what might otherwise be unconscious responses of our mind.  It might be worth contacting him to see if he'd have something to say on it for a future podcast.

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  • Wild honeybees in the hollow pine behind the chicken coop: about average traffic on warm sunny mornings.
  • Mosquitoes and blackflies - below average this year - dry weather combined with high temperatures make for fewer breeding pools?
  • Crickets - seem to be far quieter than average in terms of crickets this summer.
  • Cicadas - impressive noise today at a nearby natural area - so lots of them?
  • Fireflies - seem to be as many as ever.  They love meadows and thickets.  My relatively less "well kept" yard with lots of fruit trees and meadowy areas have far more than my neighbors yards.
  • Katydids - they're just coming out.  So far, it seems about average for early season.
  • Butterflies - seem to be fewer Swallowtails, still no Monarchs and generally fewer butterflies.
  • Moths - haven't noticed - I'll keep an eye out for them.
  • Beetles - no Japanese beetles on the raspberries this year, but it might be early for them?
  • Dragon flies - they're out there, but fewer than I remember - but I think that's because they peak in August and September.
  • I'm going to keep a close eye on the variety and # of pollinators on the mountain mint as it ramps up it's bloom.  It usually attracts many insects including many kinds of bees, wasps, beetles, butterflies and various predatory species including spiders.
I've been thinking about the windshield thing Chris.  From my perspective, insect populations might be significantly down in farm country, but even there, not 90%. Elsewhere, they are down less, other than specific species like the monarch butterfly.  If you're seeing a widespread decline in bugs on the windshield, could it be because the car you're driving is much more aerodynamic than the one your' parents drove when you were a kid?  The smaller bugs especially would tend to slip past the car in the laminar flow that the engineers try so hard to facilitate around all but the rear of the vehicle.  This results in a car with a low drag coefficient and higher gas mileage.  I'm guessing that with the older cars with more decorative shapes, gutters and window trim that sticks out, larger gaps between the hood and the fenders, more intricate a front grill areas and a generally boxier shape - the flow went turbulent even over the hood and windshield.

 

 

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Here in western NY we have fewer bugs this year that I attribute to the drought we're having. We had about an inch of rain today, the first time we've had that much in a day since last October. This is the driest year I remember in the 24 years I've lived here. Fewer deer flies, mosquitoes and Japanese beetles. Pollinators seem about normal. Swallowtails about normal. Very few monarchs but that's normal in the past few years. Lots of fireflies. We're hearing katydids in the past few days. Spiders are plentiful. Dragonflies about normal.  Caterpillars seem way down so far.
Insect populations vary year to year usually due to weather conditions.

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Interesting you should compare it to the rapture. Do you know what the word in the original greek means? It’s related to the word “rape”, and the best translation would be that the rapture is what is happening to the Syriac Christians, the kurds, the yezidi, and the others in Iraq.
So yes, that is really an appropriate comparison to what is happening to our wildlife.

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mosquitoes-I don't see/feel them in my suburb but no standing water here
butterflies-a few in the late spring

ladybugs-fewer

bees-none visible in the grass or honeysuckle or raspberry plants I have seen this year here but I don't get out often

dragonflies-a few

roaches-going strong

birds: more robins over the past few years and more cardinals as well; haven't seen a bluejay this year.

lots of hawks. lots. lowflyiing birds of prey  maybe its normal but more than I usually see. 

Not as many geese as in years past.

 

 

 

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When i was growing up my job was to mow the lawn and clear the car window. You see 30 years ago if you let your car sit for too long then birds went to the toilet on it. It was a weekly job, cleaning car windows. I got really excited a few months ago when there was bird droppings on my car because I couldn't remember it ever happening since I was a child.
My car is always parked outside, surrounded by 20 fruit trees by a river. I see birds all the time, crows eagles, parrots, sparrows, owls, falcons, kingfishers, kookaburras, galah's, cockatoos and minor birds, i often wonder how many birds must there have been to see crap over car windows, and where they have all gone.

 

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I had not been attuned to this issue before this thread.  A couple of recent articles on the topic:
A Growing Crisis:  Insects are Disappearing, and Fast.

Defaunation in the Anthropocene