Whale watching, bubbles, honeypots and making bank on juniors – John Rubino & Rick Mills

2025.07.20

Rick Mills, Editor/ Publisher, Ahead of the Herd:

John, about the Big Beautiful Bill, there’s so much talk about increasing the debt and the deficit and there’s talk about the tax cuts for people, especially the wealthy, and it’s all supposed to be paid for by sparking economic growth of more than 3%. That’s according to the White House and congressional Republicans.

But when you look at the United States what you’ve got right now is a contraction of the ISM for three months and it’s the sharpest decline since November 2024, the ISM manufacturing PMI fell to 48.5 in May.

The other problem I have is that more people in the US are not looking for work. The US labor force participation rate decreased to 62.3%, the employment population ratio which measures the proportion of the population that is employed was 59.7% the U-6 which includes marginally attached people to the labor force and those working part time for economic reasons, that decreased to 7.8%.

Samuel Tombs, chief US economist for Pantheon Microeconomics said, “tariff costs are strikingly visible in June’s CPI data.” He goes on to say, “excluding auto, prices for other non-food or energy goods rose at the fastest pace since June 2022,” you’ll remember that was back when the Fed was still in a battle to lower pandemic-era inflation.

So, food prices are up, rent is up air, travel’s down, oil’s starting to creep up, the housing market has way too much inventory and no buyers, economists and Fed officials have said now they expect inflation to gather pace this summer.

When you look at the definition of the word stagflation it’s pretty much what the US is walking towards.

John Rubino, Financial Author, Founder, Rubino.substack.com:

Well, Trump has never been an austerity guy, so he was always going to run big deficits, and so we’re getting there at least in the short run and almost certainly in the longer run, basically with boomer retirements government spending has to soar to cover Medicaid and Social Security as we all start drawing our benefits, so there was never any doubt that we were going to run big deficits going forward.

As for what the economy’s doing right now, with all the new policies being put into place, the tariffs on the one hand and all the various kinds of wars that are going on out there, and the attempt on Trump’s part to convince other countries and other companies to set up factories in the US. That makes it impossible I think to run macro numbers and for them to have any kind of continuity, because so many new things are happening, that I just don’t know what to make of the short-term numbers.

We absolutely are heading into an inflationary period because we’ve taken on so much debt, there’s no choice but to inflate away the currency to make that debt manageable, and that means we’ve kind of baked into the cake inflation going forward and there’s not much we can do about it.

If growth doesn’t recover, if we don’t get a really robust manufacturing sector out of all these new factories, then yeah, we’re back in 1970s stagflation. And it’s possible that we’re back there no matter what just because we’ve taken so much debt.

So, I think what’s coming is obviously going to be kind of messy in the short run, but it’s probably going to be chaotic in the long run and there’s no real way to avoid it.

As individuals we aren’t able to change the macro momentum that’s out there, so we should be looking at trying to manage our own finances and helping our friends and family understand what to do so that we’re resilient as all this stuff starts to happen, but I don’t think there’s any way out of the currency crisis that has been coming for a long time and maybe the geopolitical crises that flow from that and the political crises.

Because all this stuff is what you get when you borrow way too much money, and I don’t think there’s any doubt that we are heading towards that cliff at an accelerated rate.

RM: I do believe that, and we’ll get into tariffs in a bit, but I just want to bring up a point – there’s 400,000 empty manufacturing jobs. They’re not filled, even with legal immigrants or illegal immigrants; there’s 400,000 factory jobs in the US that Americans don’t want to work so there’s that.

The 3% growth is targeted: its economic growth projected on the US getting it’s manufacturing back, and a lot of new manufacturing, but there’s three problems with that.

First, it’s going to take years to just build the new plants and if you’re tariffing the imports of stuff you don’t make, then that tax is going to be passed through showing up in the inflation print, companies only have so much profit margins.

Second, you don’t have the people to run these plants anymore, the skills and experience have either retired or died because so much manufacturing from the US was shipped overseas years ago. You can build a plant but who are you going to get to run it? Your middle-level managers, your senior executives are long gone, and so are your workers.

So, third here’s the other problem, there was a study put out by the Federal Reserve Bank of Dallas, and they said that “unauthorized immigration is going to reduce GDP,” the removal of unauthorized immigrants is going to reduce US GDP growth by 0.8% this year. If Donald Trump’s administration can reach its goal of a million deports a year, then the drag on growth’s going to intensify.

You subtract 1.5 percentage points of GDP growth in 2027, and this is concerning because average US GDP growth for last decade per annum is only 2.5%. So, to me there’s absolutely no way, without these immigrants and what they contribute to the workforce, you’re just not going to get your growth.

Your economy can’t grow without immigrants, I just don’t see how the numbers that the Republicans are putting out are going to work.

JR: Well, no numbers really make any sense while we’re going through all these transitions, I think it’s impossible to take a model and use it to predict what’s happening with all this stuff that’s going on; Trump is a very mercurial, unpredictable guy and his policies reflect that.

The goals are good, more manufacturing in the US is an excellent goal, borders that are under control and an orderly immigration process is also a good goal, so we have to differentiate between legal and illegal immigration.

I think everybody wants some level of legal immigration, but the people who are happiest with mass deportations want to be able to set a number, we’re going to bring in like a million people this year and we’re going to know who we’re bringing in, so they’re not totally opposed to all immigration, they’re opposed to chaotic immigration, like under Biden they just left the borders open and we got between 7 and 10 million people according to the most recent stats coming across, most of them military-age men who we don’t know anything about and that’s the kind of thing that is basically cultural suicide if you do that for very long; look at Europe right now.

Europe as a culture is basically dying because they’ve had open borders and the chaos that flowed from that is completely changing Paris and London, they’re not anything like what they used to be, and we don’t want that.

So, to the extent that Trump is closing the borders and letting us rationalize, figure out who came in and how many of them should be allowed to stay etc., that’s a good thing but it’s very hard to do without causing chaos. So much of what Trump is doing is basically that story – a good goal, some good results but this layer of chaos over top of it that makes it very hard to understand and very hard to predict.

RM: The illegal immigrants do form a very large percentage of construction laborers in the US, so that’s another interesting twist on it.

JR: It’s not clear how much of the goals will be achieved, some of them are being achieved. There’s been a lot of notices of new factories that are going to be set up in the US, but like you said that takes years and the border is closed, and some deportations are happening, so there’s progress, but I wish it could be more orderly and not so chaotic.

RM: Let’s jump to Epstein. We all need, not just Americans, but all of us need to find out who was raping those underage girls, and who was financing Epstein?

There are hundreds of hours of sex tapes. There are two lawyers that facilitated all his deals, there is a tax consultant that was paid $100 million to do Epstein’s taxes.

Put Maxwell in with the general population, let’s see how long it takes her to start talking.

JR: Well, I have a theory about how it started and ended and everything if you’d like to hear it.

RM: Absolutely.

JR: Ok, Epstein was obviously a honeypot operation run by Mossad and the CIA. The goal was to lure rich, powerful men into compromising positions, and then using the video from the statutory rape that they were all committing as blackmail material, so they could control very powerful people and use them when the time came to change policy in their favor.

Trump came into office intending to release the Epstein files and just get it all out there, but as his guys were going through it you know looking at the actual videos, they realized that from a power politics standpoint that is solid gold that they’ve got.

They now have the ability to control thousands of rich, powerful men using these videos, so they changed their mind, and they decided to keep it and to use it. But to do that they have to look us in the eye and lie. They’ve got to lie to us until this thing blows over, until the news cycle shifts and something else attracts our attention. And it can’t be comfortable for them.

You know I understand what they’re doing from a strategic standpoint but from a moral standpoint obviously it’s very ambiguous, and from a technical standpoint how do you make this happen politically, how do you get through this? It’s not at all clear that that isn’t going to hurt Trump’s popularity to the point where it actually offsets the value of having all these guys out there being blackmailed and doing what you’re told.

So, I don’t know if it’s going to play out the way Trump is hoping that it does, but I think that’s the strategy obviously. There’s no other reason why they would go in just a space of like a month from “Oh yeah we’re going to release it all, all these videos everything,” to something that doesn’t even exist, it’s a hoax. They turned so completely that there is no other explanation for that in my opinion, that they just decided that this is too valuable to give up and they’re trying to run with it.

RM: The bottom line is that we’re never going to know who the pedophiles are.

JR: Oh yeah, I think finding out in the sense of naming all the names and releasing all the videos, I’d love to see it happen, I absolutely want it to happen, but if you’re in charge of the world that kind of chaos is terrifying to you. So, the powers that be I think just want to use it and don’t want to release it, and that’s what’ll happen. So, they’ll go on lying to us for as long as it takes.

Here’s the scary part of the story: If we don’t give up, if we stop watching and asking questions, these guys are liable to get frustrated and do some kind of false-flag attack, where they take down an airplane or something like that and blame it on Iran, or whatever and get us into another war in order to get us past the whole Epstein thing. So that would not be a surprise at all.

Europe is already blundering into World War III as a way of distracting their citizens from the mismanagement of their economies, and the US has done false flag attacks many times in the past, so it wouldn’t be surprising if that’s how this thing’s resolved.

We get distracted by something usually big happening out there and nobody’s paying attention to the Epstein thing anymore.

It’s another sign of how late-stage everything is now, we have screwed up the world on such a massive scale that the guys in charge in a lot of cases just don’t see any solution but to start a war. To get past the immediate effects of all the mismanagement, so yeah.

We’re at the end of the credit supercycle first of all, it began in 1971 or possibly 1913 depending on where you want to start it from. We began an experiment with fiat currencies that is blowing up in our faces right now, there’s just an awful lot going on now that the people in charge really do not want to get blamed for.

RM: I wrote an article called ‘A Decline of Empires’ in which I talked about a change of global hegemon and it’s definitely part of it all.

People don’t realize this, but we have masters, and they’re not the politicians, it’s the shadow group in behind them and people say, “Aw you’re a conspiracy theorist or you’re a way-out left wingnut or right wingnut” but that’s not it at all.

If you go back and you read and you truly try to understand what is actually happening, start with reading “The Great Taking,’ you start to understand it’s mass grab of every dollar, penny, assets, stocks, bonds that’s happening now, its deliberate and how they are doing it. And it’s going to continue to happen but there’s very little that me and you can do about it, what we have to do instead is just sit back and figure out what each of us is going to do, how to get through, how to prosper and thrive.

I’ve been buying gold and silver stocks since the start of the year and I’ve already got nice gains, a lot of private placements, I’m currently filling out subs for two more. I do believe that it’s gold and silver’s time, what are your thoughts on that John?

JR: To follow the theory that you just sketched out about how there are people in charge now and they’re bleeding us dry. I totally agree with that. I think that obviously unsound money is the mechanism that they’re using because with inflation the rich get richer, and so they’re basically draining wealth from the rest of society and they’re going to do that until they’ve stolen as much as they feel like they can get away with stealing and then they’re going to take us back to sound money to protect their stolen wealth, and that’s where gold and silver come in.

They’re very probably going to go back to a gold standard with gold at 10 to $20,000 an ounce, that’s basically how the numbers have to work to have enough gold to back the amount of currency that exists in the world right now, and so from the standpoint of a rich, shadowy aristocracy that rules the world, and is basically taking it stage by stage it makes complete sense that gold is the thing to own because that will probably be the mechanism for the next stage of what those guys are doing.

So, you want to basically follow the whales in your market. You see central banks right now buying gold really aggressively, they have been for the last four or five years and they haven’t been price-sensitive, they’re just buying, so obviously they have targets in terms of tons, not in terms of dollars per ounce.

We should be following their example because they have basically unlimited money to throw at this and they’re throwing it at gold so we should absolutely be on the side of these guys.

Like you said gold has been going up, the gold mining stocks have been doing really well and now silver is starting to pick up pace and catch up to gold and outperform it. We’re making some money in our mining stocks right now, but I think the real action is still to come, and this is just a spectacular setup.

If you’ve got really high-quality miners and very high-quality juniors in particular, there are some 10-baggers in our future here, the tricks to choose wisely from among all the possibilities out there.

RM: I’m a firm believer in is that historically your greatest leverage to a rising gold and silver price has been junior resource companies that trade on the Toronto Stock Exchange, the Venture. Most of the companies are in Vancouver, there’s thousands of them listed, but how do you pick a quality junior?

Well, there are ways, the first thing you do is you’ve got to pick it cheap enough, the market cap is low enough where you can imagine some price rise in it, and then of course you have to believe in the management and the project.

Orestone Mining ORS has two projects; the Captain copper gold porphyry project in British Columbia and it’s a very nice project but they’ve recently picked up one in Salta province in Argentina that’s called Francisca.

It’s gold with a silver kicker; it’s a good silver kicker but it’s not the main thing. This is a pure precious metals play, and it is surface oxide so the metallurgy, the processing is very well known and they’re working on it now.

I took part in a small financing, bought shares on the open market, and the reason I like this one is because it looks like it could have some very serious size to it, and the management of Orestone has put 10 or 12 of these oxide heap leach deposits into production, so I’m looking at this as a unicorn, which is basically a junior run by management that has built companies into cash flow, and I think this is a project they can do that with. I’m quite excited with this one.

The other one that I like is a pure silver play. Silver North SNAG offers exposure to one of the most prolific silver districts anywhere in the world – Keno Hill up in the Yukon. Their neighbor is Hecla Mining (HL), the largest silver producer in the United States, and Silver North has the Haldane project right next to the silver veins being mined at Keno Hill.

So, they’re planning a 2,500-meter drill program this year, they’ve raised $2.1 million, they’ve got another $500,000 that’s still open, so they’re going to be able to do it, and they’ve made astounding discoveries up there in the area close to Keno Hill.

These two, in gold and silver are representative of what Ahead of the Herd really likes about a junior resource company.

JR: You mentioned several things that are crucial I think, one is management, you know with these little stocks with great sounding stories so many of them fail that it’s very helpful to have management that’s been there and done that before – people who have proven that they’re capable of actually turning a hole in the ground into a working mine or at least a good acquisition candidate.

And then size is a big deal. I’ve heard Rick Rule say several times that small mines and big mines have the same growing pains and risks, but a big mine can give you a massive reward compared to the small mine so you’re better off betting on the biggest deposit that that you can find because when they succeed, they succeed massively.

Those are really good rules to live by. And then you mentioned the Yukon. I think the Yukon is going to be transformed in the next decade with all of the interesting projects that are going on up there. Snowline and Sitka are in the Yukon and they’re looking like really impressive properties right now. I think for Snowline it’s all over except for the buyout, but there’s going to be a lot of action up there.

I don’t know what that means for the Yukon itself but there’s going to be a lot of wealth flowing into it and maybe a lot of disruptions so we’ll see what happens but that is a hot spot for mining right now.

RM: You’ve got to like things like that because they become an area play, they build excitement and they bring it into the juniors and it’s good for everybody, not just those stocks but it’s good for the industry and people see the gains the stocks are making, they just want to be a part of it and it kind of feeds on itself and it’s an excellent thing.

What do you think would happen in the markets if Trump actually fires Jerome Powell, the chairman of the Federal Reserve?

JR: I think Trump will get what he wants from the Fed eventually one way or another because as a real estate guy our current president has all these quirks that you never see in any other president, and that’s his strength and it’s sometimes his weakness but as a real estate guy, low interest rates are just an obvious good thing from his point of view.

He spent an entire lifetime investing in real estate and benefiting from cheap money so he sees no reason why the US shouldn’t benefit from cheap money too, and he doesn’t understand why the Fed hasn’t already lowered interest rates to zero.

So, Powell, I’m not sure it’s legal for the president to fire the chairman of the Fed, that’ll have to be worked out in the courts if he tries it, but eventually he’s going to name people to the Fed that he wants that are going to be extremely easy money to govern it.

One way or another we’re going back into very low to possibly negative interest rates and even if Trump wasn’t in favor of things like that, we’re heading for an equity bear market and a recession and all that stuff because we’re wildly overdue, and that’ll force the Fed to ease aggressively no matter what.

Even if Jerome Powell is still at the Fed there will be an aggressively easy money guy leading it in two years just because the economy is going to force it on him. I think that’s something that’s just in our future, we have much lower interest rates coming, and the question will be, will the bond market allow it to happen?

In other words, will bonds fall when the economy weakens as stocks tank and the Fed starts cutting? Or will bonds rebel against this process and when gold and silver go up and bond prices go down and long-term interest rates go up and then the government has to step in with yield curve control.

Do they force down long-term bond rates by creating insane amounts of money and dumping it into the system? As with everywhere else in today’s world, monetary policy can be pretty chaotic going forward because we’ve baked that into the cake. So, it might be Trump in the short run, or it might be the economy in the longer run but interest rates have to fold, or all hell will break loose.

RM: If the bond vigilantes’ confidence fails in the Fed, I think they’d probably ask for a much-increased risk premium to hold Treasures, the 20-year and the 30-year both cracked 5% three times now this year. If not run away from US Treasuries.

Now of course on the other side, as you said, short-term rates, which the Fed can directly control and under a new Trump-appointed Fed leadership are heading lower, so the yield curve is going to steepen dramatically. If the Fed attempts to limit the surge in longer term debt yield, say by restarting quantitative easing, I think that would be met by even stronger selling by the bond vigilantes. Private and foreign investors would get in on it too.

And the dollar is going to be very negatively impacted. The US$’s reserve currency status absolutely relies on global trust in US institutions, you wouldn’t have that anymore if the Fed was politicized, right? Foreign holders of US dollars are going to seek to diversify into other currencies and gold. You’d have a selloff in US bonds that would be mirrored by a fall in the US dollar, and this would just fuel that trend that is already starting to emerge.

US equity markets would not be spared the shock either. If you look at the bubble in place right now in the markets, it’s caused by such small market breadth, it’s concentrated in such a very limited number of stocks, it’s a very fragile melt-up that we’re in now.

JR: Oh yeah, I think this is the most overvalued the US stock market has ever been. For instance, if you use the Buffet Indicator, which is the total market cap of all the equities in an economy versus the country’s GDP, stocks have never been this expensive relative to the size of the US economy, so yeah if history is any kind of guide we’ve got a massive stock crash coming, something like what happened in 2000 or 2008, just because of wild overvaluation right now.

About the bond market, it makes intuitive sense that you don’t want to own the bonds of a country, in other words you don’t want to lend money to a country whose debt is 120% of GDP and the interest costs on that debt is $1.5 trillion every year which has to be borrowed so the debt goes up. We’re in that kind of a debt spiral where lending money to the US government goes against every last bit of bond market history.

You never want to be owning long-term Treasury bonds in this kind of a situation. But there is one circumstance though where that might not be true, and that is if the world starts to devolve into chaos, and the rest of the world looks worse than the US. As bad as we are if you’re in China or Russia or Brazil or Europe, maybe you’d want to own US assets just because they are perceived to be less risky than what you’ve got going locally. So it could be that a lot of foreign capital comes into the US even though we were the cause of global financial chaos; I think that’s possible too.

So, I wouldn’t go out and short US Treasury bonds with money that I got from mortgaging my house or something like that, because there’s that one risk that foreign capital flows in here and changes everything, but I think just based on history there’s never been a time when countries were this badly run and their bonds turned out to be good investments, that’s never happened in human history so we’ll just have to see if past is still prologue.

RM: We can see retail investors buying bonds at 5%, thinking it’s a great return.

JR: If the dollar is losing value at a rate of eight to 10 or 15%, then a 5% Treasury yield is a loss of capital with time, and I hope people will be looking at that. I don’t want to own bonds, I see a lot of different scenarios playing out in the bond market and wouldn’t be comfortable picking any one of them, but they all seem feasible.

RM: It all points back to gold and silver.

JR: Yeah, absolutely, I think $10,000 gold is probably a point at which you might want to start lightening up and selling some of your stack and with silver that equates to $150 an ounce or $200 an oz, so we have a long way to go before the dynamics of the global financial system point towards a contraction and deflation and a drop in the value of gold and silver, that’s just so far out there in the future that way higher crises are easy to envision.

Especially in this world, we’ve already seen some manias happen, look at what happened with bitcoin ok and then with NVIDIA and the other artificial intelligence stocks just lately. They’ve had massive runs beyond anything that reasonable analysis would say is going to happen and it happened for them. So, if all this investable cash that’s sloshing around out there because of over-easy money starts flowing into gold and silver, which are tiny little markets compared to something like tech stocks, you could see runs in gold and silver and some of the miners that look a lot like what just happened with NVIDIA.

RM: I think they could become market darlings, if you look at the major miners just this year, their share price is soaring, they’ve made remarkable gains, their profit margins are through the roof and that money is going to come into the sector and start chasing returns.

JR: Yeah so, we just want to be in good-quality names, and we want to make sure we store our stacks wisely, keep them in safe places and some of it very accessible, some of it super-safe and just ride this out.

We have the investment thesis down, so it’s just a question of it playing out, which took way longer to happen than it was supposed to which made the last decade kind of depressing for gold bugs. But the upside is that it gave us a chance to get positioned, to figure out where exactly we want to be and a lot of the people who’ve been around all this time are basically just set up.

I don’t feel like I want to be buying anything else now because I feel like I’ve got the junior miners, the physical and everything lined up and that wasn’t true seven years ago. The slow pace of the credit crisis was in a way a good thing because now we’re basically set up and we can ride this thing.

RM: I think we’re having a bit of a reset here in the way people think that maybe commodities and gold and silver are the last safe haven standing, it seems like the dominoes are all lined up, there they are and most are still standing.

I look at the tariffs, when you tariff imports into the US that you don’t mine, grow or manufacture, rare earths and rare earth magnets for example prices will rise but selection and variety decline, and some products become ridiculously hard to source, basically they’re unobtanium, and of course starting a trade war also makes your exports less desirable.

The US just added more tariffs on graphite from China and the effective rate is now 160%. The weird thing is that you do it when you’re 100% reliant on graphite from China, there’s just no escaping the extra cost when you tariff a product you don’t have, manufacture or refine and make things out of it. I look at it and I think ok well what’s a way to play US tariffs?

Graphite One GPH. Graphite’s essential to the functioning of any modern economy, you don’t have a military without it, it’s as critical as rare earths if not more critical in the supply chain for your military and there’s a 100% US dependence on China.

That’s going to change because Graphite One has the largest, highest-grade graphite mine in the US, it’s in Alaska just outside of Nome, and they just published a feasibility study, three-quarters paid for by the Department of Defence in the US. Readers should look at recent MP Materials news, they have the federal government coming in as a partner.

Graphite One’s graphite mine in the US is big enough to supply all US graphite needs for generations, and they’ve got a lot to spare, to stockpile, or sell to allies right? As first mover they’re entering a market that just isn’t going to be supplied externally, the US doesn’t supply its own graphite, they don’t refine it, they get it from China.

Graphite One is a first mover into this market, they’re way ahead of the game having a feasibility study and plans to build a graphite product manufacturing plant and there’s a financing pathway to do that.

This is a stock that I’ve been a part of, watched it being built. I’ve bought in the market, I’ve bought private placements, I still own shares and I’m quite high on the future of this one.

JR: I just pulled that up while you were talking, they had a hell of a pop in just the last week because the government cited them for expedited permitting, right? So that means they’ve got the government on their side and get to speed up the production in their mine, ok good story.

RM: They just got on the FAST-41 permitting dashboard, the only project in Alaska that’s on it and there’s only five to begin with. They’ve already received HPIP [High-Priority Infrastructure Project] designation for fast-tracking permitting, they’ve got two loans from the Department of Defence, they’ve got a $350 million letter of intent to finance their anode and graphite product manufacturing facility in the Battery Valley of Ohio, of course JD Vance was their senator, now he’s the countries vice president.

They’ve got very strong political support in Alaska, Governor Dunleavy talks about it all the time, Senator Lisa Murkowski talks about it all the time, she’s been a very big push on this, the other congressman, the other senators, it’s got a lot of support and rightly so. Graphite One can solve the graphite security of supply for the US.

JR: Rick, what is an entry point strategy for this? If you don’t want to buy it on this spike, would it make sense to put in a lower bid and wait for good news on the trade war front to make it correct a little bit?

RM: At this point I think G1 has been de-risked to the point where even the most risk adverse investor can look at it. The company’s got a brilliant future – if you can solve a critical metal supply issue, give the US graphite security of supply and lessen China’s hold on the US by any means, I think that’s a good deal.

JR: Yeah, I like this one.

RM: Ray Dalio put out a CNBC video in which he alluded to cycles that could lead to bubble troubles and busts. The Economic Long Wave Research Group went quite a bit further, they did a comprehensive analysis of 56 major financial bubbles, and it revealed a devastating pattern that suggested the worst is yet to come.

There’s an 85.63% rule and this rule, believe it or not, is the average loss that investors experience when bubbles burst. This 85.63% rule has been proved time and again for 400 years. Its one of the most consistent patterns in financial history. Now all that’s old news, but what is new is that bubbles are forming more and more frequently.

Historically you’d have a bubble every seven to 10 years. Now bubbles happen multiple times per year creating what the Long Wave Research Group’s author calls the Great Bubble Parade: you had a 3D printing bubble, you had a cannabis stock bubble, you had a clean energy/ solar bubble, you have the SPAC bubble, meme stocks, AI, real estate and now we’re in a market bubble, bitcoin’s in a bubble I believe, so we’ve always got to remember the average bubble loss is 85.63%.

People better be paying attention because if you look at what Economic Long Wave has done and then you look at what I wrote about the end of empire with the change of hegemons, you look at what’s happening geopolitically and then you line all that up with Nikolai Kondratiev’s Long Wave Theory, which predicted economic cycles lasting 40 to 60 years the conclusion is that we’re in the centralized fourth wave that began around 1950 and we’re now approaching the winter phase which is a period of economic contraction and deflation and structural reform John.

JR: Oh yeah absolutely, we’re just staring with this. I have a series that I publish on Substack called ‘The bubble versus the Long Wave’ because all these Long Wave theories say that we should be in winter right now. They should have burst, and we should be at the bottom of the cycle, but we’re not and why aren’t we? And I think the reason that we’ve been able to stretch this credit supercycle out longer than it reasonably should have has been possible because all the countries in the world have unlimited printing presses.

We’re all running fiat currencies which allow for a lot more currency creation than ever in human history and that has allowed us to blow up all these sequential and concurrent bubbles. Bubbles used to be like one thing, one sector would get overheated, and it would burst. Now onto the 90% drop in price thing that actually does happen but it’s almost inconceivable during a bubble that your favorite stocks or whatever can drop by 90%, but they do.

In 2000, when the dot-com bubble burst they had a thing called the 90% club which is stocks that have gone down by 90% from their peaks in the last year and a lot of big names were on that list, I think Amazon was a member of the 90% club, they were riding high and then they just plunged even though they were a good company.

And then in 2007-08 the banks and the home builders who were just absolute darlings of the market in 2005 they went down by 90% in a lot of cases too, so there’s no reason to think that you won’t see that again and a lot of things that seem bullet-proof today will be down by 90% or thereabouts in the next few years.

I think that there’s a big short thesis in here right, if we can figure out which of the bubble stocks out there now are going are be in the 90% club two years hence we can make life-changing money by betting against those stocks and that’s something I think is worth pursuing, there’s so many targets out there that you only have to get a couple, buy long-dated put options on a couple of them and you make 30 times your money.

RM: You’re looking at the S&P 500 hitting records almost every day and it’s almost all because of a very narrowband of stocks, there’s a way to play that?

JR: The simplest way to play it is with long dated put options on the NASDAQ, because that encompasses all those tech stocks.

RM: Excellent.

JR: I think the NASDAQ is definitely a candidate for going down by 80% when the big bubble, when the everything bubble bursts, and I think we’re not that far from that point. So it could be that you and I will talk two years from now and the NASDAQ will have been the big short that we’d wished we’d mortgaged our house and bet against. 

RM: There are opportunities everywhere even in bear territory or what you think is catastrophic conditions, there’s always a way to make money if your willing to take on risk. We are pretty much wrapped up here John is there anything that you want to specifically comment on or talk about before we wrap it up?

JR: One last thing I would say to readers out there is even if you feel tempted to trust the government, don’t. Whatever they tell you to buy or to do you just start looking at the opposite because we’re in a world where the expert class has failed epically, but they’re still there and they’re telling us things that are just manifestly untrue, and if we don’t want to be the ones who really suffer from what’s coming we want to do the opposite of what we’re told by the establishment.

RM: We’ll end with news from the Economist, the world is winning the war on cancer. It’s not so much against any particular disease, it’s more of an overall advancement and they go on to write “the progress is plain from the data and there’s every reason to think it will continue. Cancer is related to age, if you strip out longer lifespans it becomes clear that in the rich world, the early 1990s were an inflection point. Since then, the age-adjusted death rate has been falling, slowly but steadily year after year. In developed countries the rate is now about a third lower than in the ‘90s.” Now this is across all developed countries and that is incredible.

JR: Well, here’s hoping that medical science continues to progress because we have a long way to go before we get to the point where all these chronic and old-age diseases aren’t an issue. And as somebody who’s heading into that category, I would love to see stuff like cancer solved before I have to get chemo or something like that.

And AI’s playing a role here apparently, they are turning AI towards drug development and getting some good results in a hurry, so if it speeds up drug development that takes us to a good place, I think.

RM: Yeah, I believe that using AI is going to cause the biggest advancements in medical science we’ve ever seen and if you follow the sector at all you see that there’s constantly news coming out.

Thank you, John. I enjoyed our talk.

JR: As I did Rick, thanks.

Richard (Rick) Mills
aheadoftheherd.com

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Richard owns shares of Silver North Resource (TSX.V:SNAG), Graphite One (TSX.V:GPH) and Orestone Mining (TSX.V:ORS).

SNAG, ORS and GPH are paid advertisers on his site aheadoftheherd.com

This article is issued on behalf of SNAG, GPH and ORS.

John does not own any of the stocks mentioned in this article and none are advertisers on his site. Rubino.substack.com