Tavi Costa shared his thoughts on the macro trends shaping today's markets, and why Crescat Capital sees opportunity in exploration companies.
Tavi Costa: Gold, Silver, Copper Aren't Going Away — Strategies for Juniorsyoutu.be
With concerns about inflation running high, where should investors focus?
Speaking to the Investing News Network, Tavi Costa, partner and portfolio manager at Crescat Capital, said his firm is taking a long view on inflationary assets and is short expensive financial assets such as mega-cap stocks.
"The obvious plays are usually not going to work," he explained. "The obvious plays are software, technology, crypto — all those things are the things that are actually down significantly this year. And I think there's further go in those issues."
In his view, commodities are a segment of the market that should work for a variety of reasons. According to Costa, those include deglobalization, labor market trends, infrastructure development work and many other factors.
He explained that producers and developers appeal to a wider variety of investors because they are easier to evaluate, while understanding exploration-stage companies requires some knowledge of geology.
"Because of that, and because of the lack of folks that can really navigate this space, there's a ton of inefficiencies here," Costa said. "So we think this is the time to be allocating capital here, knowing that most of the majors are also going to be facing a supply cliff; they've been depleting their reserves and not really replenishing those reserves over time. So they're going to actually at some point have to be purchasing — either purchasing or actually doing their own exploration."
He emphasized the importance of being early to macro trends like the one he sees building in commodities.
"Nobody is really focused on silver, (but) silver is not going away, gold is not going away, copper is not going away. It's all going to be with us for many, many years and decades and centuries," Costa said. "I think value and macro investors need to be taking the approach of buying things that are cheap, that have the likelihood of doing very well."
Watch the interview above for more from Costa on macro trends and the junior resource space. You can also click here to read our recap of the New Orleans Investment Conference and here for our full event playlist on YouTube.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.