Is silver finally ready to explode higher? Crescat Capital’s Tavi Costa joins Wealthion’s Trey Reik to share why he believes silver is entering a powerful new bull market, and why most investors still don’t see it coming. From surging industrial demand for solar and AI infrastructure, to a historic supply crunch and under-the-radar central bank buying, Tavi explains why silver may be the most undervalued macro asset on the planet.
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Tavi also shares:
- Why silver could enter a “discovery phase” that sends it to triple digits
- How Crescat gained 60–70% silver exposure through contrarian acquisitions
- The untold story of Bolivia’s San Cristobal mine Crescat deal
- Why silver’s monetary role hasn’t even kicked in yet
- The macro setup: inflation, stagflation, and the coming dollar breakdown
- What sectors to avoid (hint: the mega-cap “spenders”)
- Where he’s bullish beyond silver: copper, zinc, and energy
Whether you’re a silver bug or a macro investor, this is one of the most insightful commodity interviews of the year.
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Tavi Costa 0:00
As silver prices begin to rise, people are going to start, you know, obviously linking the history it has as as a monetary asset and and that’s when things get really crazy. It wouldn’t shock me at all if that means triple digits.
Trey Reik 0:20
Greetings and welcome to our wealthion show. My name is Trey Reich of Bristol Gold Group, and during the month of August, we’re going to be shining the spotlight on silver markets with expert interviews and market analysis and hopefully some actionable investment insights. You can learn more about silver markets by downloading our free report Silver Investing in the description in the link below, and kicking things off this morning, we’ve invited Tabby Costa of crestcott capital to join us today to help break down what’s really going on in the silver market. Tavi, welcome back to wealthion. Thanks
Tavi Costa 1:01
for having me looking
Trey Reik 1:01
forward to this. Cobra, this conversation. Excellent. So our producers have gotten us focused on silver for this month, and you’re one of our favorite experts on the metal. And back in May, as you recall, you mentioned that you felt silver was the most undervalued metal on the planet? A nice, humble way to put it, is that still your view?
Tavi Costa 1:28
Yeah, I you know, it’s obviously a catchy way of saying that something is extremely cheap, but, and it’s hard to measure what’s the cheapest thing on earth, but regarding large macro assets, I continue to think that silver must be one of the top cheapest things out there. Of course, you know, we’ve seen gold move substantially over the last few years. I think that has given us the green light to think about all right, we probably trigger a long term trend in precious metals, and all these other things that are linked to gold are yet to have major moves. We’ve started to see some of these things trickle down. So copper prices had a major move that we saw the royalty companies have a major move. Some of the senior producers have started to move as well, particularly the ones that have low production cost. And silver is now on the move as well. And I do think this is the beginning of a much bigger trend as well for the metal. If we looked at a loan since what is remarkable, and how you can measure these things is the outperformance of silver during times when gold is not really moving, gold has basically gone actually down two percentage points all the way back from April 21 of this year. And I’m not just picking that period specifically, but if you you know that was really the peak of gold recently, I don’t think that’s the A major peak, or anything along those lines. But since then, we’ve gone sideways, and silver prices have gone up about 17% so you know, clearly the market is starting to take more risk over time. And I don’t think this is a trend that is at its end. I think it’s at the early stages. The gold to silver ratios to 80. We’re seeing more needs for silver over solar panels and all sorts of other capacity that the matter is likely to be used for. And so I’m extremely bullish here, and I’m continuing to focus on finding assets that provide some level of leverage to silver itself. So yeah, extremely attractive and very compelling story behind the demand and supply mismatch of this metal.
Trey Reik 3:47
So drawing on what you were just talking about in term of Silver’s recent performance, I looked it up, and gold was up 27% in 2024 and we’re up about another 28% this year, and interest for a compound move of 63% and silver was up 21% in 24 but is now up 33% this year for a compound return of 62% so it’s been a textbook example of gold moving first and silver sort of catching up. Can you just give us your view on why the lag and what do you expect in terms of comparative performance in 2025 and beyond? Well,
Tavi Costa 4:36
I think the lag is absolutely normal and the lag is, is the way to explain this is that macro never happens all at once. You get these clues on a daily basis, sometimes on a weekly or monthly basis, and you either focus on those clues or you just focus on the volatility side of things and kind of miss the big picture. And. And you know the fact that silver has lagged over the last few years, a lot of people have lost interest on the metal, saying it never will change. It will never change. It will always be a lagger relative to gold prices. By the way, the same thing happened with the mining industry. I remember not too long ago, many people were saying that the mining industry was structurally broken. I was like, no, that’s just a lag. You know, gold prices go higher, and then silver and people start taking more risks. They look for things that have higher volatility. They start buying silver and other things, of course, if the metals, if the underlying metals, improve, you know, the margins of companies with energy prices in the floor are, you know, extremely attractive. And so everything is somewhat connected here. And I also find it interesting that these waves are all happening, you know, in a sequence. And the other thing that is happening that I think could be in line with this movement on silver and emerging markets as well. By the way, is, is what’s happening with the I think the most important chart in the world right now is the dollar. Is the d x y index. The d x y index is currently, you know, in a major support all the way back to 2011 once we break that support of which I am over the strong view that we will see a break of that, because it’s not even, oh, it is a market driven movement, but also a, almost like a policy that the that the government needs to run, because we cannot sustain not only these levels of rates, but also such an overvalued dollar. Once we break those, I think it’s going to bring even more attention to the riskier parts of the gold levered assets such as silver, and I think we’re very close to that. And to answer your question on performance and returns, like, I don’t have a crystal ball, either like like anybody else that comes here in your show, but I do think we could see, you know, and a caveat for compliance reasons. I really don’t know if this is going to be unfold or not, but I have a strong believer. Well, otherwise I wouldn’t be trying to deploy capital and spend my time in this industry, I do think we’re going to see new highs over the next even six months. And I think we’re going to get into a discovery phase over these next 12 months. And so a discovery phase means nobody knows where we’re going to land. And we’re going to know once we land, because it’s going to be a, you know, we’re probably going to consolidate at some point, which is kind of where gold did, you know, gold kind of had this triple top for a while. And I remember saying, triple tops never work, you know, we always break triple tops again. This is just a technical foundation of analysis that gave us even higher conviction, knowing that the fundamentals are the big drivers of all this same thing here. So you got a peak of 2011 peak of the 80s and late 70s. And now you know, and now you’re going to bump on that on that level again, and probably going to hit a discovery I’ll probably get a bump on that level, lose a little momentum, and then back again. And once we go from there, it’s going to be discovery phase. That’s what I call the 12 months or so. I could be wrong. It could happen in the next three months. I’ll be, you know, I’ll be happy with that too. And if it doesn’t, I’m a patient investor, and, you know, I think that building wealth is is is really betting on your conviction of a major macro trend over time, and that’s certainly what I’m trying to accomplish here. So yeah, I do think, you know, a discovery phase is hard to measure where we could go, but it wouldn’t shock me at all if that means triple digits
Trey Reik 9:03
on the silver price. Yeah, excellent. Well, that’s a great ending to that answer. 100 bucks would be good. Um, bet. Just backing up a little for the benefit of our viewers. You know, silver fundamentals are obviously more complex than gold. There’s an industrial component and a monetary component in a jewelry component, if you will. Do you see those drivers? In other words, is silver breaking out because those three uses for silver are in alignment? Or how do you see the industrial versus the monetary demand for silver at this stage and evolving over the next year?
Tavi Costa 9:49
I think what’s driving is the link with gold, and we’re yet to see the monetary aspect take place. Here we’re seeing the industrial side of it by. At a clear upper trend from particularly So solar panels. It is, you know, the solar capacity in China, for instance, has surged by 60% over last year. And 60% of increase, you know, is essentially a huge part of the demand this year. It’s double digits from one country. And so if you start doing the math, you know, and there’s certainly a push towards solar panels, particularly coming from folks like musk and others, and if we do see that occurring, then no you can start extrapolating what that could look like. I also think that, you know, we’re in the midst of probably a one of the biggest construction booms we’ll see in history. This big, beautiful Bill does anything but really stimulate construction in a large way, of allowing companies to, you know, expense on basically year one, all their their cap, taxes. And it is really interesting how that may drive a real infrastructure boom, of which other times in history we’ve seen this back in the early 2000s driven mostly by China, this time now driven by, we can easily say the g7 economies. Who knows if it’s not g20 and if that’s the case, then you know this could be a very drastic change on demand for metals in general, and I’ll be shocked if silver doesn’t participate on that. Now, on the monetary front, you know, as silver prices begin to rise, people are going to start, you know, obviously linking the history it has as as a monetary asset, and that’s when things get really crazy. We haven’t. We’re so far from that yet. You know, rarely people talk about silver as a monetary metal, and rather, more about its, you know, industrial properties. And that would change, in my opinion, as we get into the middle to later stages of all this, eventually, I think we’re going to get there. And that’s that, to me, is where the big move will come from. And I could even be driven by central banks purchasing the metal. You know, we own the fourth largest silver mine in the world, which is a private company, and we see purchases from Asia and other places to a degree that we’ve never seen, and so who knows if who is behind those purchases as well? I think those are all interesting questions. But, yeah, it’s extremely, you know, interesting. What’s happening with silver right now, and the fact that we’re just not seeing any major discoveries over the last few years, you know, I mean name one that is substantial enough to change the supply curve, and is simply we have not seen one. And so it is really important to see that the demand is surging. Supply is fairly limited, and you know, that’s usually the recipe for a real long term bull market. As
Trey Reik 13:30
part of our silver focus this month, we’re bringing you top tier research in a free silver investment report, which you can obtain a free copy of by clicking on the link in the description below. And if you’re looking for a simple, secure way to invest in physical gold and silver, check out hard asset Alliance at hard assets alliance.com speaking of silver, wealthion will be on the ground at the SDP resource finance, global silver conference this October in Toronto, where Eric Sprott will deliver the keynote address. It’s going to be a major event for silver investors. Stay tuned for more details in the weeks ahead. You brought up a lot there. First of all, on your capex deduction, I want to make sure viewers know what you’re referring to. Is that in the big, beautiful Bill, you can deduct 100% of the capital expenditure in the first year. Is that correct?
Tavi Costa 14:31
Yeah, and we saw that in 2017 In fact, there’s somebody who did a research on construction companies and how they led the market during that period, and then they started to lag the market after, we start seeing the phasing out process of that. And a lot of people are saying, well, we’ve seen this in the past, and it’s not going to be the case. What’s happening here, however, is that we’re seeing the leveraging process of the largest balance sheets in the. World to build infrastructure for AI and other things. And I’m referring to the mag seven economies. And it’s almost like we’re going to build spenders and earners. Spenders are going to be the ones that are going to be driving this construction boom, and then the earners are going to be the ones that are going to be providing the service, the material, the energy. I call it the three pillars, which is energy, infrastructure and materials they’re going to be benefiting from that those spenders. And so I do think this is taking place now. And if you start thinking about their pre tax income and how much they have to, you know, really feel this construction boom from a data center standpoint, of which remains, last time I checked, was 0.3% of GDP is, is this is the amount of data center construction spending we’re seeing. In other words, we’re not seeing anything yet. It’s going to be insane. And so, yeah, I do think, yeah, it’s going to be a very different environment. Forget about, you know, think about onshoring as well. Onshoring is going to be significant, bringing back manufacturing and industrial capacity. No Jensen one from Nvidia, was talking, not too long ago, talking about how every factory is going to be accompanied by another factory, which is where you have your AI factory, followed by your product that is your product line factory. And so, you know, so now you got to have 2x factories, and it’s going to be, you know, it’s going to be pretty insane what we may see of construction spending over the next few years. And we’re so 7% of GDP, we may see double that amount very easily over the next few years.
Trey Reik 16:52
Interestingly, Bloomberg put out a report, I think, yesterday, BNEF, that’s the part of Bloomberg that focuses on commodity research, and they estimate that annual copper demand just for AI is going to be 400,000 tons per year over the next decade, and they project a 6 million ton deficit just from Ai construction. So obviously, while silver isn’t a huge part of an AI center, it brings to light the demand for commodities over the next decade.
Tavi Costa 17:30
Look. I mean, any person you talk to who is in the in the industry of or the sector of technology, will will will have, or majority of them will have a especially, especially especially in the building of infrastructure for technology, will understand that silver is also significant portion of all this, and is a very critical model and so, but copper is is also, you know, I’m not trying to pick winners here. I’m trying to own winners, basically. But, yeah, I want home gold. I want to own silver, and I want to own copper too. I think all of them are going to do extremely well. And, I mean, there’s so many ways to think about this, but this artificial intelligence trend is, is definitely, is definitely a race that is different from the internet and it’s different from the real world. You know, analogies that have been drawn in the past, because it’s it’s not just the technology itself. Is certainly a national security race across countries. And who wants to be the dominant player, country wise, quicker? And so there’s a need from every country to build up as quick as possible to get there. And so was the internet like that. No, was real worlds like that. No, you know, so AI does have that difference. It’s, it’s, uh, everybody wants to get there first and and it’s gonna, it’s just gonna, I think, feel a major construction boom in all sorts of economies that we haven’t seen in a very long time.
Trey Reik 19:14
And with this increased demand for silver from this construction, if we could back up a bit, can you give us a little picture of, you know, the supply, demand deficit in silver markets? And the most important way I like to approach this is, you know, silver is produced mainly as a byproduct of zinc and lead and copper and gold mining. And can you just talk a little bit about the challenges that that brings to increasing, you know, silver mining supply?
Tavi Costa 19:49
Yeah, well, first, I mean, a lot of times I think that would change over time. The reason why it’s secondary is because it’s so cheap as well relative to those other metals. And that. May change in the future as the price of silver starts to become more elevated, we’re seeing this in our own again, it’s a secondary metal for our own mine, and because we got zinc and lead and because of silver prices, is becoming the dominant driver of revenues now, and that’s happening not just with us. It’s happening with other minds that are facing the same beneficial movement on the Nano prices. But yeah, it’s, you know, I I don’t know many pure silver place that you can find. I think companies like hakla are a great example of, you know, in a great way to measure performance of silver miners. It’s very rare to see a company that has sort of sustained throughout cycles like, you know, especially the mining cycles are so severe on the upside and the downside that it’s rare to see a company has survived all these years, particularly in the silver space. I mean, let alone the gold space. But silver is, is, is extremely difficult. And so you look at the prices of hakla over, you know, all the way back to the 80s, we’re probably breaking out from a major downward trend. And as we see institutional awareness in this industry, eventually that should drive the bigger players to benefit from that. And so we’re seeing the beginning of that. I also found interesting that when you as an investor, you look at these companies, particularly the big ones, the implied volatility of the derivatives or call options in most of these companies are still very low relative to what we tend to see during breakouts like Hecla not the other day with reporting earnings was up 20% when you look at their implied volatility prior to that was, you know, much lower than that for the next few years, annualized in annualized ways. And so all I’m saying is, is, most of these plays are still available in the markets, in my opinion. But going back to your question on supply deficits and all this, yeah, I mean, it’s, it’s, there’s countries, if you think from a country standpoint, there are countries that are still producing large amounts Mexico and and and Peru relative to the rest of the world. But if, if you follow their production very closely, it’s been very, you know, small, I would say, incremental changes in production. And so it’s, you know, and it’s a function of the difficulty of finding new supply of the metal. And you can follow this in many databases, in regards to what’s been happening with the supply of silver. And I do think, I do think that that’s really what creates the setup for and it’s why I like silver more than a lot a lot of other metals. Is because, is because of that, of that supply constraint that we clearly have another side of copper, for instance, we don’t right. I mean, it’s got we have enough copper in the world. The problem is we don’t have enough copper above ground, which is also an issue and so and so that that’s the that’s the striking difference between the two. But again, when prices move higher, eventually that drives supply as well. It’s going to create the need for finding discoveries. And, you know, that’s what happened in the 70s. You know, first we had the moving prices. In 80s and 90s, we saw the major discoveries of precious metals all over the world, because prices were much higher. And he created a need and also an incentive for people to look for those discoveries. Oh, we’re going to get into that too. Excellent
Trey Reik 24:04
looking at ways to gain exposure for an individual investor. What are the options to gain? What are the best options to gain exposure to silver markets?
Tavi Costa 24:17
Well, there’s, you know, I think that will vary on, on, on the profile of risk of each investor. You know, if I would say that those that have a higher, lower tolerance for risk, I certainly silver coins and bars are probably the way to go. I am. I am not in that camp. I embrace volatility, and I embrace, you know, change, and also, you know leverage. You know, smart leverage, of course, to or at least the way I view leverage, is as intelligent relative to the. Metal price. And so how do I view this? Well, I am, I’m very focused on a few or some discovery names that I think are remarkably undervalue. And you know, we that we own through the funds. And I think there’s also a play for those looking for that too. The ETFs are not the greatest way to find perfect exposure to silver. But is, it is interesting that although they do, you know, a good job trying to find exposure to silver in some of those well known ETFs, like s, I L, S, I l, j, um, they are still just just starting to outperform silver prices, gold prices, gold miners. And I mean, I remember not too long ago when copper miners were doing very well, and then gold miners are not doing very well. And I kept asking that question, why do you think that is? And people will come up with some really stupid answers, just instead of focusing on the fact that the money is just trickling down, and it’s going to come down to that, and they’re just trying to justify what is unjustifiable. And it’s just the same thing here. Eventually, the big miners and the smaller Miners are going to get capital, in my opinion, and I don’t think this is a structural problem, and these ETFs, even not being the best products out there, are also going to benefit. I mentioned hackla and others, yeah. I mean, those companies are probably going to be the first ones to come in mind with institutions that are looking for a liquid play. So that’s one option as well. And something that people don’t think about as well is when you look at the prices of silver versus countries that have metals and mining being a large percentage of their GDP, you know, ie Mexico, ie especially Chile and Peru and others. Those, those economies are also likely to benefit tremendously. And when you start looking at the you know, think about this, right? I mean, the grand strategy of of investing is usually finding a low multiple with strong growth. Okay, well, you have a view on silver. Silver is likely to start moving of which is likely to boost growth. And then at the same time, you look at these countries, and most of their businesses are having very low multiple, you’re about to see growth and low multiple hit each other, and that’s when you see exponential change in prices of companies, usually. So yeah, I would definitely be focused on emerging markets as well as part of all this.
Trey Reik 27:54
And are you comfortable naming a couple of the silver plays, not necessarily as a recommendation, but for viewers to study to begin to learn silver markets,
Tavi Costa 28:06
I’ll mention a few. You know, very high grade discovery at court silver, Alaska silver, as well, is another one that has no I like, I like strong grades. And so that’s why that those come to mind silver. 47 is another one that also has very strong grades. And the fourth one would be Kuya silver. They have, you know, two assets, a producing asset in Peru, but also a remarkable asset in Ontario, that has probably what some of the best grades we’ve seen in in the last five years in terms of intercepts. So those things usually tend to attract capital more easily. But again, those are not rules and, and, and, and, you know, markets will, will will take its course. Take its course. Market will take its course, you know, despite of anything I say here. So yeah,
Trey Reik 29:07
and for individual investors, obviously, portfolio exposures to gold and silver are very personal and based on a long list, you know, of goals and investment parameters, risk tolerance, but just for fun and crest cats fund, what is your gold silver and what is your or gold exposure and your silver exposure, just to give people an idea of portfolio percentages so
Tavi Costa 29:37
the investors that came in prior to sync crystal ball, oh, I’m sorry, uh, yeah, prior to the sync crystal ball acquisition, and we’re being able to benefit from that, are probably at around 60 to 70% exposure to silver today in our portfolio. So we definitely try to find as much exposure to silver. As we can. Saint Cristobal to me, you know, and I didn’t nation, just because it’s probably not a vehicle that is openly available for folks, but certainly is still one of the best ways I found to, you know, have exposure to to silver. I think maybe I mentioned this before, but no, when we were negotiating this, silver prices were lingering around $15 an ounce. You know, we were all called crazy for trying to negotiate this thing in Bolivia. And, you know, and it’s, it’s been probably the best acquisition, leverage acquisition I’ve done, certainly in my career, and probably some of the best acquisitions we’ve seen in the industry. And so, yeah, it’s, you know, it’s always, it’s always a good time to be busy when there’s blood on the streets. And so I think that was the case back then, and we took advantage of that. And I’m sure there’s going to be more opportunities similar or like this in the future as well. I
Trey Reik 31:02
think Bolivia hesitation certainly dates back to apex silver, which was a painful experience for all of us. But can you give us just a few sentences on your same crystal ball asset in the history there?
Tavi Costa 31:18
Yeah, I look the reason why we liked it is the apex was not necessarily, necessarily an issue with government, but certainly an issue with hedging, and that the company was forced to hedge and end up in bankruptcy and end up Being in hands of Sumitomo and the smartly took over and made significant money through the returns of the cash flowing of the mine over the years, and decided to sell the mine later for other reasons, and that’s when we got involved. The risk we were taking was, in average the last five years was basically, you know, this company was making about a few 100 million dollars per year of annual free cash flow and and that was basically the acquisition was a few 100 million dollars as well. So our thought was that we were taking a risk. You know, by leveraging this through an acquisition that was mostly driven by debt, we thought that the risk of of that acquisition was a bit over a year of being successful at producing the asset, I’m sorry, at producing or generated for cash flow. And you know, even at those prices of $15 an ounce, the mine was very, very profitable. Of course, we had views the silver was going to be, you know, significantly higher than where it was trading at that time. So when things just started to change, we saw the leverage on the free cash flow front pay out. But you know what we liked about the mine is that the management it was made basically a managed lad buy out, and the management of the firm has been in place for many decades and has done an incredible job with a community, and know the asset like nobody else does. And you know, I do think that this and has endured many different political leadership cycles in the past, which is key. And so I totally understand that the jurisdiction may scare a lot of people, but I do think that you want to be worried about these things at a commodity bear market time, not a bull cycle. And I do think we’re in the early innings of a bull cycle in this in this space. And I think that the entire South America, not just Bolivia. You know, region looks incredibly attractive if that’s the case. And so that’s why we wanted to have a major exposure there. And once we bought the asset, it had, you know, call it about six years of mine life left, and I can’t speak much about that, but there’s definitely not six years of my life left in our view. And so there’s, there’s much more than that. Yes, okay, so that was the that was part of our view as well. And there’s a little more than that that I can’t disclose, but it’s that is incredibly positive. But, you know, you know buying an infrastructure with more or potential, and you know a major exploration potential asset that was nearby, that also alone made the whole acquisition worth, worthwhile, in our view.
Trey Reik 34:58
And are you aggressive? Late drilling this year.
Tavi Costa 35:04
Within doing what most majors have not been doing, our exploration budget is, I’ll challenge any company to show their exploration budget relative to ours. I think it’s, it’s drastically higher. I think exploration drives. You know, is it? It’s, it’s your growth driver in in a mining company. And I have a feeling, or not a feeling, I know statistically, that that strategy has lost its way in the mining industry for a long time now. And you know, of course, it has to do with the lack of capital and other things. But, you know, I do think playing offense is extremely important, and especially if you’re of the view that the more volume you have in the market that is likely to be in a bull cycle, the better you will be. And I’ve always been at the view of larger acquisitions, you know, go, go, go, and, and it seems to me that some of these other major companies are doing the opposite. Are trying to pay down debt and clean up their balance sheets. It’s like you should have done this 10 years ago, not now. This is the time to lever up and, and so we’ve been spending substantial amount of our capital on exploration and and it’s been paying off tremendously because we found more ore, and it changes the whole game of your company, because, especially if you already have the infrastructure in place, finding more ore just means, you know, NPV could grow substantially from those levels. And that’s, that’s key, that’s, that’s the main driver of your share price. Although we’re private, it’s been a big driver of our share price privately, the fact that we’ve focused on exploration,
Trey Reik 36:56
congratulations. Sounds like a home run.
Tavi Costa 37:00
Knock on wood
Trey Reik 37:02
not to spread you too thin, but with respect to other metals that you crestcat May be looking at. Have feelings about copper, uranium, rare earths. Do you have a few comments about some of these other sectors?
Tavi Costa 37:19
Yeah, without going too deep into major ones, but zinc is definitely a focus of ours. I love when I hear some experts talk about, you know, so badly about zinc, and I’m no that just calls my attention immediately, because I’ve done work in regards to the potential deficits we may face given the huge amount of demand that is likely to be driven by this construction boom, we may see most of the bearish views are backward looking, in my view, and I think he or she Who controls the zinc industry will have a very interesting next few years ahead. And so, Saint crystal ball, and, you know, our team has been trying to to be some of those leading players in that space. And so I think there’s, you know, I think this is yet to become a view for the market. I mean, people are just not paying attention to that at all. So yeah, zinc is definitely in my radar, especially because when you look at the zinc prices throughout the last century, we are in an upper channel formation, and we’re right at the lower band of that channel right now, and I don’t believe we’re gonna break through that and go a lot lower. I think asymmetry is key here, and I think we’re very close to a major bottom in zinc prices.
Trey Reik 38:58
Where is zinc and where has it been over the last several years,
Tavi Costa 39:03
where you mean for supply or prices, it’s probably around, you know, 3500 or so, you know, call it 35 under. So I think you can see, you know, double, triple. Who knows? From here. It’s sort of, you know that, but you got to think about now, a lot of people think about that was like, well, triple doesn’t sound very attractive in these markets where people make multiples and multiples of their money. But you got to think about the mining leverage here. And you know what I’ve been instructing companies we work with is, is to be very intelligently try to, you know, manage risk right now by not to get into a separate subject, but to really hedge your energy cost, because most metals relative to energy costs today are at near all time highs or. Very close to all time highs. And you know, if you think energy is going to be where it is for the next three years, I think you’re out of your mind. I think that is, this is a real inflationary regime, which I believe strongly we are in. You do want to be careful with the more money you make on mining hedge that exposure by, you know, by basically looking at energy. I mean, that’s, that’s a wonderful way. And a lot of people think about, oh, what if the market crashes and all these things. And I think that’s the wrong hedge to the mining industry. The right hedge is on the energy front, owning some energy alongside with your with your mining exposure in a portfolio, is probably the right mix to consider. That’s just my opinion,
Trey Reik 40:48
great input, and just sort of winding down, does crestcat have a predominant view of general stock and bond markets?
Tavi Costa 41:01
Well, this has been a part of the market that it’s been very challenging to have a view on, because valuations continue to expand, and the the the price to hedge a portfolio on the downside has never been cheaper. You know, you got volatility being suppressed. You have credit spreads being suppressed. At same time you have, we’re running a 7% deficit with the President saying that we need to cut rates to 1% literally, 1% you know, we’re four and a half. So, uh, let’s just say we do 100 basis points of that, you know, with 7% deficits, you know, it’s, it’s hard to have a strong view on things. And then on top of it, you have valuations already reflecting a lot of that by being, you know, by being at an extreme levels right now, very frothy. I think it’s important to have some hedges. I definitely do. I think sentiment is extremely bullish right now. And I think corporate bonds in particular look frothy. This the we can see spreads widening there substantially. And I actually think that what could cause the shock, it’s just I might be wrong on this, and that’s not where I make the, you know, real money on calls and things like that. I do think that real money is made on the long side, but I should say that there is a big chance that, because of the RE emergence of inflation on the data that we’re seeing, there’s a real chance that this 90, as we speak right now, 96% of probability of the Fed cutting rates in the next meeting. What if they don’t? What if they you can say, if they’re politicizing, I don’t care, but they’re. They can do it if they wanted to, and we’ve seen this in the past. This confrontation between the two is not nothing new, although a lot of people will try to paint it as new. It’s not new. It’s it’s unique, sure, but it’s not new, and it’s very likely that that could be the case now, once we get new, you know, new fat share in place and so forth, and that could change things. And I definitely have the view that the two year yield is going to collapse, but this could be what could mark a correction in the markets your near term that is not reflected in prices right now.
Trey Reik 43:40
So with respect to CPI in the low twos or mid twos or whatever we want, do you see that heading higher over the next year?
Tavi Costa 43:49
You know, CPI is a tough measurement, because now Trump is even changing people that calculate those things, and so who knows what CPI would be, but in a normal environment or not normal. I’m not saying that prior to Trump, these numbers were not cooked or anything along those lines, and who knows if they are not claiming that either, just on the want to be in trouble for that. But what I would say is that leading indicators of inflation, regardless of government data, are clearly pushing higher. You can see money supply at all time highs. We just paid, we just passed one of the largest bills in history. We have deficits at 7% we have, did I say money supply, making, reaching all time highs as well,
Trey Reik 44:34
20 trillion, right? We just went over 22 trillion,
Tavi Costa 44:38
correct. And so, you know, I I think we’re pushing on the street, and then you’ve have commodities leading the way. You know, look what’s happening with metals. And then now I think agricultural commodities will take the lead here as well, along with energy. And, you know, I do think there’s there. Is a high potential. And then you look at leading indicators to inflation data, like prices paid on ISM services index, you know, which leads the inflation data by about 12 months. It’s telling you that we’re going to see much higher core CPI, for instance. Again, I don’t know what’s going to happen with the data, but there is very strong indication that inflation is coming back, and it’s actually a lot of indication that we’re we’re actually facing more of a stagflationary environment, light stagflation, stagflation, not on a contraction of growth in real terms, but rather a, you know, but rather a deceleration of growth compared to prior years, alongside with inflation reemerging. That’s, I think that’s what we’re seeing right now.
Trey Reik 45:48
And wealthy on viewers are obviously excited about finding areas to make money, but everyone’s should also be focused on avoiding areas to lose money. What would be your advice on sector, sectors to avoid?
Tavi Costa 46:04
Um, I think you want to think about spenders and earners. And I think you want to avoid spenders. Um, name your, you know, mega caps and others. I mean, I don’t think you want to be focused on that. I think you want to be focused on the earners, regardless if it is your edges, on energy, infrastructure, materials and or emerging markets. I think that’s where you really want to be focused on right now and the other side of it. I think it’s noise and important, but also carries, you know, of course, they can continue to work, but you’re talking about risk relative to reward, and I think that that does not look very attractive right now. Excellent.
Trey Reik 46:51
Well, Tavi, thank you very much for this update. Thank you for taking the time to visit with us, and we look forward to getting an update on st Cristobal over the next six to 12 months.
Tavi Costa 47:02
All right, thanks for having me and looking forward to other interviews. Terrific.
Trey Reik 47:08
Thank you, Tavi, thank you for viewers who are interested in digging deeper into investing opportunities in silver markets, please remember to click on the link in the description below to obtain a free copy of wealthion Silver Investing report. And even more importantly, for those looking for a little guidance in these volatile times and markets, if you’re interested in a free portfolio review from one of wealthions partners, please visit wealthion.com/free you. With markets at all times, highs and another volatile year now’s a great time to stress test your strategy and be prepared for what comes next. Thank you for watching, and we’ll see you next time you.
