Kevin Wadsworth and Patrick Karim from NorthStarBadCharts.com discussed the concept of a capital rotation event, a significant shift in capital movement between stock markets and precious metals, particularly gold. This event is characterized by a cyclical pattern where capital moves from risk-on assets like stocks to risk-off assets like precious metals during economic downturns. They emphasized the importance of using a “weight of evidence” approach, considering multiple charts and indicators rather than relying on a single piece of data. They highlighted that gold’s recent outperformance against various metrics, including the US dollar and money supply, suggests a significant capital rotation event may be underway.
The discussion delved into historical examples, such as the 1970s and early 2000s, where stock markets experienced major downturns while precious metals surged. They compared current market conditions to these historical periods, noting similarities in the behavior of gold and silver versus the stock market. Patrick Karim presented a detailed chart analysis, showing how the Dow Jones Industrial Average has historically underperformed silver, indicating potential future movements. The hosts also addressed the role of Bitcoin in this context, noting that it has not correlated with gold and silver as expected.
They advised listeners to be cautious about holding Bitcoin during a capital rotation event, as it may not provide the same safe-haven benefits as precious metals. Instead, they suggested focusing on precious metals and associated miners, which are currently outperforming. Kevin Wadsworth and Patrick Karim provided practical advice for investors, emphasizing the importance of identifying downside support levels and understanding one’s investment strategy—whether as a trader, investor, or stacker. They also discussed the potential for corrections in gold and silver, suggesting that these corrections could present new entry points for investors. The conversation concluded with a reminder that opportunities in the market are cyclical, and patience is key to successful investing.
Timestamps:
00:00:00 – Introduction
00:00:19 – Capital Rotation Overview
00:01:11 – Gold Outperforming Stocks
00:03:03 – Weight of Evidence Approach
00:05:23 – Historical Rotation Events
00:06:11 – S&P Versus Silver Analysis
00:11:57 – Trading Versus Investing
00:13:59 – Bitcoin Gold Correlation
00:19:14 – Asset Rotation Strategies
00:22:29 – Eliminating Investment Bias
00:45:43 – Gold Silver Ratio Signals
00:48:11 – Short Term Correction Outlook
01:08:30 – Concluding Thoughts
Patrick Karim is a proprietary capital manager and chart trader since 2006. Patrick’s background in commerce, psychology, and an ongoing career in systems engineering has allowed him to evaluate trading scenarios systematically.
His psychology background helps him understand the human factor: overcoming stress, which is mostly responsible for maintaining a successful career.
Guest Links:
X: https://x.com/badcharts1
Website: https://NorthStarBadCharts.com
YouTube: https://youtube.com/c/NorthstarCharts
Kevin Wadsworth is a seasoned chart trader with over 15 years of experience and a strong following on social media. With a background in meteorology spanning over 30 years, he has worked in various professional roles, including military and civilian weather forecasting. Currently serving as a Civil Contingency Advisor, Kevin provides advanced warning and guidance for life-threatening weather events and collaborates with emergency response teams.
His interest in the financial world was sparked by a colleague in the early 2000s, and he became particularly fascinated after the 2008 financial crash. Drawing parallels between weather forecasting and predicting market movements, Kevin emphasizes the importance of gathering evidence from various sources, much like assessing multiple weather models. His approach focuses on presenting clear, unbiased charts based on the weight of evidence, rather than personal bias.
Kevin’s expertise lies in distilling complex information into actionable insights, whether it’s forecasting weather patterns or market trends.
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