You may or may not know that I consider Bob Hoye an influence of mine. Many years ago his views, especially about the proper fundamentals for the gold mining industry, rang so obvious to me in the face of the legions of gold bug orthodoxy (you know, the Wrong Way Corrigans always focused on inflation as a good fundamental for gold mining?). Herds of them… wrong, a lot.
Hoye’s contrary view was right. I knew it because when stopping to think out the details it made sense, and the promoters did not. So I expanded upon it and made it my own (with a big hat tip) and came up with the Macrocosm of proper fundamentals.
Now, I have also seen Bob carry a hardened view forward for painfully long periods before it would prove out, and in some cases it would not prove out. Still, when the man states a case – and I am able to access it publicly – I consider it.
As of August 29th his view on the long bond is in line with my own (I’ve increased my battered short against it) and his view on the gold sector is that it’s a long-term bull market subject to an imminent correction. I agree with the 2nd part, but am not necessarily on board (yet) with the 1st part. Since our targets for HUI are still significantly higher I don’t feel a need to label this a major bull market. We’ll cross that bridge (and key resistance zone) when we come to it, pending the macro.
Now, where Bob and I differ informs the reason I am not yet calling a long-term bull market for gold mining. He is firmly on the deflationary script, the usual Gold/Silver ratio rising theme, with a target around 120. I am open to a balls out inflation coming from this deflation scare. Bob says yields will not rise under pains of inflation, but by difficulties in servicing debt. I think they can rise due to both situations in a classic bond market rebellion (though it’s been decades, and counting…).
You can access Bob’s Pivotal Events excerpt by clicking the graphic above. I think you should.
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