It is more than a shift from growth to value style investing. The Great Rotation is a move out of overvalued long duration equities and fixed income securities and into undervalued commodities and basic resource stocks. pic.twitter.com/fvveNFQIWa
— Kevin C. Smith, CFA (@crescatkevin) March 1, 2021
Investors have implicitly understated hurdle rates and overestimated growth rates in their discounted cash flow models. The risk-free rate which the Fed has pegged at zero on the short end of the yield curve today and the discount rate in a DCF are two different things.
— Kevin C. Smith, CFA (@crescatkevin) March 1, 2021
Rising inflation expectations are the catalyst for the Great Rotation because they increase the required return and shrink the valuation multiples that investors are willing to pay for long duration financial assets. pic.twitter.com/0bKYmDzz6q
— Kevin C. Smith, CFA (@crescatkevin) March 1, 2021
But interest rate suppression through money printing to finance large fiscal and trade deficits is highly inflationary. In such an environment, investors will seek hard assets for protection.
Commodity prices are already breaking out to the upside after a long downtrend. pic.twitter.com/Lrp5kXsm8s
— Kevin C. Smith, CFA (@crescatkevin) March 1, 2021
In the short run, gold’s tight correlation with real rates indicates its price should be heading to new highs soon. pic.twitter.com/itXlDxzAJi
— Kevin C. Smith, CFA (@crescatkevin) March 1, 2021
Forget about the output gap, inflation today begins with the input gap, underinvestment in commodities at the same time fiscal and monetary authorities pull out their biggest bazookas yet to boost aggregate demand. pic.twitter.com/PnFBDlbye9
— Kevin C. Smith, CFA (@crescatkevin) March 1, 2021
The preconditions for gold stocks to go up significantly while large cap and tech stocks go down also look a lot like the tech bubble today. pic.twitter.com/R1ENzyYTXF
— Kevin C. Smith, CFA (@crescatkevin) March 1, 2021
In the pullback for gold since August 2020, Crescat’s activist precious metals strategies have delivered substantial absolute return.
Two of our holdings have been outperforming bitcoin…
— Kevin C. Smith, CFA (@crescatkevin) March 1, 2021
Eskay Mining $ESK.V has made a substantial high grade gold and silver discovery in the Golden Triangle of British Columbia. New BLEG anomalies indicate more exciting VMS targets on this large land package. pic.twitter.com/gIpkxplcvC
— Kevin C. Smith, CFA (@crescatkevin) March 1, 2021
It is rare that one gets the chance to buy a 61.8% Fibonacci retracement in the early stages of a major new bull market for gold. We believe this is the opportunity right now. pic.twitter.com/b4UpMhJ8w6
— Kevin C. Smith, CFA (@crescatkevin) March 1, 2021
We encourage you to check out our website for more research and information on our strategies. t.co/drTzaY54y1 pic.twitter.com/jH2sNPgnLj
— Kevin C. Smith, CFA (@crescatkevin) March 1, 2021