2008 'Violent Pullback' Returns: Gold To Nosedive, Nothing Is Safe | Chris Vermeulen
Summary
Market Outlook: Chris Vermeulen predicts a sharp, violent pullback in the markets similar to 2007-2008, followed by a strong rebound.
Precious Metals: Gold and silver have experienced significant drops, with gold tumbling 6% in a single day, raising concerns about whether the historic rally is overdone.
Investment Strategy: Vermeulen emphasizes the importance of following price action and momentum rather than trying to predict tops and bottoms in the market.
Market Sentiment: The current market behavior in precious metals is described as a "crowded trade," with signs of herd mentality and FOMO (Fear of Missing Out) among investors.
Stock Market Analysis: The stock market shows signs of weakness, with big money moving away from equities, suggesting potential instability and a possible downturn.
Cash Position: Vermeulen advises holding cash as a strategic position to protect capital during uncertain market conditions, despite the desire for immediate returns.
Real Estate Outlook: He suggests caution in the real estate market, predicting potential declines and emphasizing the importance of waiting for favorable conditions before investing.
Transcript
I think it's going to be more like 2007208 where it's going to be just a sharp violent pullback. I think it's going to rebound with a vengeance in a shorter period of time. I think we're walking through a landmine and I think we're very close to the markets going for a nose dive. Have Have they talked? Is the bull rally and metals finally over? We'll find out. Christopher Mullen joins us today. He is a chief market strategist at the technicalers.com. Chris, welcome back to the show. Let's just jump straight into it. Gold tumbles 6% today on the 21st of October. Biggest single day drop since 2013. Plunge comes amid warnings that historic bullion rally is overdone. Uh this just came out of the left field. Chris, it was going up parabolically and then it wasn't like, oh, people were talking about Yes, people have been talking about gold being overhyped for a couple weeks now, but the drop came very suddenly. I'll let you show your charts, but I'll show mine first. This is gold and silver as well. Um it started we had this bit of a double double top that uh first uh came last week and then it rebounded and uh briefly touched almost $4,400. Not quite before plunging now to $4,100. Silver exact same pattern except even more dramatic of a sell-off. Now it's well below $50. Um, I mean, it's still very high at 48, uh, compared to where it was just a few months ago. So, um, nobody's complaining if you bought several months ago. However, people are asking if this is the beginning of what happened in 2011, which was a peak in the pre precious metals, didn't stay that high for very long, and then a massive correction by the order of 40 50% all the way back down and stayed there for years. I'll let you analyze the charts. I'll take you I'll let you take over. >> Sure. All right. Yeah. Well, if we if we take a look at the charts, there's a lot to unpack, I think, in in the precious metals space. And I mean, I've been I've been somebody been talking about precious metals over the past week and a half, really saying like, hey, it's starting to go parabolic. The signs are here. And the big question is, as you just mentioned, David, you're like, out of nowhere, the top was put in or we had this big reversal. Uh, and that's the problem when things get a little overheated. We start to go parabolic. And again, the the monthly chart of gold, silver, miners, I mean, if you zoom back in time and you go look at, you know, the previous ways that gold has moved, usually this doesn't end well, right? It's it's just a typical scenario. You could give this to a fifth grader and be like, what happens? What should happen next after this, right? Uh so that's like the the super basic high level. But when we zoom in, you and I spoke a few weeks ago, we showed the the intraday charts and silver was uh poking up and trying to break to some new all-time highs and we we were seeing in gold and silver some big intraday bouts of selling. So somebody was unloading contracts slowly getting out and the market to me in the precious metal space. I've been sharing this quite a bit saying, you know, it's it's a crowded trade. And a lot of people are saying, well, Chris, it's not crowded. The retail traders are barely even in. When I say a crowded trade, which I believe gold is based on many different things, just the price action is signature of a herd mentality. The volume is is a signature of everybody's piling in chasing pricing. Uh but when I say it's a crowded trade, David, I mean not the whole world's piling in. just the people who are open-minded who are willing to potentially buy gold, silver, or miners or the other metals um are all piling into it. And so it's not it's it's most people don't hold gold. There's a very small group of people that actually hold gold in their portfolio, but the people open-minded enough to do it are all piling in and now they feel like they're missing it. And we saw this like over the past week, you could you could cut the air with a knife the FOMO that was in this space for people who aren't in it. And so there's some pretty interesting charts when when we look at the daily chart here. Uh gold is starting to have some big back and forth swings. I don't think this is the top yet. I actually think this is just one of the hiccups along the way of it potentially rocketing higher. And one of the best scenarios is if we go back to 2007, which is the chart on the left, we have the S&P 500 candlestick chart. The yellow line is gold. And on the right hand chart is is where we are today right now with the same two things. Now you and I touched on this uh in our last talk, David. But what's really interesting of where we're where we're at now is the stock market just had a bout of selling uh a week and a half ago. And so now it's it's showing a little bit of weakness. Gold has had a big first pullback right here, which we can see on this yellow chart in the top right. If we go to 2007, it started to have a little bit of weakness, the stock market, and gold started to pull back. Now take a look at this when I when I show you the other asset classes. So the chart underneath is GDX, gold miners, and then we have silver and then we have platinum and then we have platium. Look what happens like just near this end where we see gold miners shoot higher. Everybody starts piling into silver, platinum and platium. It becomes a bit of a crowded play. And if we were to just kind of fast forward this, you'll notice gold at the top continues to rocket higher. It continues to move up. It moves up for a It doesn't look like much on this chart because it's condensed, but it still has another big push to the upside. Miners struggle to to move higher, but we see silver, platinum, and platium still go parabolic. They actually take off and pick up speed. Now, you know, if we were to just kind of backtrack to kind of where we are, where we were in 2007, and look at where we are right now, notice we've got miners, we got silver, platinum, platium, all coming to life. This is the first hiccup, the first quick knee-jerk reaction where people who are chasing pricing and buying, you know, over the last week or so are emotional because they bought in emotionally. They have FOMO. So, it doesn't take much of a pullback like today to really spook everyone out and create this first move. But, I do believe we're going to see, I think, the metal space continue to rocket higher. This is nothing but a bull market trying to buck people out of gold. And I think it's going to want to go higher here. But there's no doubt we're on like the last major push I think in metals and then the question is is it like 2011 like what you mentioned do we go dormant for another 10 years after that and does it cut its pricing like do most things fall 30 to 50 or 60%. I don't know. Um that's why I just follow price when things top I get out and you don't have to really worry about how long it's underwater because we don't hold it. But this scenario of where we are is like the perfect storm brewing of the crowded play. Everyone's moving into all the precious metals, silver and miners as well. And that tells us that it's, you know, a little frothy and it's going to be a wild ride um going forward. Wild ride going forward. How do you make the assessment that this is the beginning of going back to my earlier point, a 2011 style crash? I think that is the number one question on investors mind. Is this just a temporary pullback or is this ultimately the end? How do we go about con making that conclusion? Maybe you could just pull up a chart of 2011 and compare that to what's going on right now. Looks awfully similar to the top of 2011, doesn't it? >> Now, are you talking about in gold miners or or the stock market itself or are you talking >> gold? Let's talk about gold. But gold miners as well. I mean gold peaked around gold miners peaked around that time and I think gold miners started falling before gold if I'm not mistaken. Uh but the metal's complex overall. Let's take gold as a proxy. Yes. >> Right. So I've mentioned this many times over the past year of you and I speaking together that eventually when I think we have like an economic reset and when gold finally does peak it's probably going to fall pull back 30 34 35% somewhere in there. And it you know that that's kind of if we go back and look at the 2011 peak the market pulled back about you know 45% in 2008 during that financial crisis it pulled back about 34% or so. I do believe eventually using just Fibonacci retracement based on the size of this run there is potential for gold to pull back to the sweet spot. And the sweet spot is between a 38% pullback all the way to a 61. And so we could see this pull back 20, you know, 27% all the way down to 45%. That is typical. That is how the universe works based on Fibonacci theory and also historically we've seen prices in gold. So when this does come to an end, wherever the top is, we still need to find the wait for the top to be kind of nailed down for gold. It could be much higher still. Then we can calculate, okay, where is it? Where should it settle out? And obviously, you don't want to be holding it as it goes down into these levels. There's there's going to be a time where you might want to actually like lock in profits, lock in gains on gold because it could go dormant for 6 8 12 months and lose 20 to 40% or it could go dormant for a decade, right? And that's that's one that's the most expensive thing us as investors or humans have is time. So, who cares if you don't own your favorite asset for a little bit if it's putting in a top? Just buy it back later at a cheaper price. um or potentially even pay a bit higher price later but after it's stabilized and it's ready for another leg higher. So that's the way I look at gold and and I believe we could go into a very big correction. Now you're you mentioned David is it going to be like 2011? I mean that was a really long dead period. I think it's going to be more like 2007208 where it's going to be just a sharp violent pullback and then it's going to recover because I think there's a lot going on right now that's going to spur gold for another big leg higher. So I don't think it's going to be like the 2011 in terms of time. It didn't take, you know, 10 years to come back. I think I think it's going to rebound with a vengeance in a shorter period of time. >> Gold and silver have reached historic highs amidst this crazy bull rally. More investors are turning to hard assets to protect their savings. But what if instead of just holding your gold as a savings vehicle, you could actually earn income from it, pay it in gold. So now it's not just in savings, it's also an income vehicle. That's what today's sponsor, Monetary Metals, helps you do. They're changing the way people think about investing in precious metals completely. Rather than letting your gold sit idally or paying fees to store it, now you can get paid to own it. Right now, through their marketplace, you can earn up to 4% yield on gold paid monthly in gold. Your savings grow in ounces, not dollars, and stack on top of any price appreciation. Thousands of investors are already earning real yield and physical gold and silver through monetary medals. It's time to see how it works for you. Go to monetary-metals.com/lin link down below or scan the QR code here to learn more >> rebound after the violent pullback. You mean? >> All right. After we see like a 30% or so pullback, I think it's going to rebound and stabilize and I think it's going to go something like this. Like I think we're going to see another big leg to the upside. Uh so like for example, if we were to use Fibonacci extension right now, we can say, okay, based on this low, based on the high, this is just the current high of gold. It may be higher later, but if we come down and settle into this 50% retracement, this tells us where the next upside target for gold is. And this is going to be really exciting because, you know, when gold comes down into this area, uh, it's going to rally up to 4,800 and then about to 6,500. So, there's quite a bit of potential still to the upside. I don't think it's going to quite get to this level on this run. I think we're going to stall out probably 48, maybe 5,000 maybe. I'm not sure. But um we'll be able to calculate where gold should run. But right now, gold has blown past all of its Fibonacci targets to the upside. So it is in no man's land. It's just bubble phase. And this is, you know, you nailed it right at the beginning. Like how do we know when it's going to? It just came out of nowhere. Well, that's what happens in a bubble. It just bursts out of nowhere and you don't know when. And so that's why traders are on edge. That's why we're seeing heavy selling. Miners are down over 10% 11% today. um silver and gold both down really big. It's because people are worried it's going to be the burst, but I think this might actually just be kind kind of the first pullback before we have another uh push higher going forward. >> I have a couple of follow-up questions. The first is you mentioned the top. Nobody knows what the top is. You even mentioned yourself on my show many times that you don't pick tops and bottoms. It's not really something you do. It's not even possible to do on a consistent basis. You just follow momentum. So right now currently as we're speaking the momentum is on the downside. Somebody who is a trader or even just a casual investor might look at today's price action. If you want to just pull up a price chart of silver intraday and help me illustrate the point here, Chris, you might look at a chart like this and say, "Whoa, okay, now I'm starting to worry. Even if I bought weeks ago, it looks like profit selling's taking place. Maybe I should be taking profits now myself while this is happening." We call that panic selling. How do you talk somebody through that process? Should they be selling right now into this panic, if you want to call it that? >> Yeah. Well, it really depends on the type of trader you are. You're you're saying momentum and generally when you when you're talking about as a momentum trader, you're usually looking at, you know, maybe maybe a 30 minute chart, something that can carry a pattern over several days. There's no doubt the trend is down on an intraday chart going back the past uh you know few u few trading sessions. In the grand scheme of things if you are a swing trader technically it is still holding up. The moving averages are all still sloping up. Price is pulling back to the 20-day moving average which is this pink line which is a natural pullback level. Um I I wouldn't you know I wouldn't be panicking out here at this point. I mean, I think most of the damage has just been wiped out. If you sell right here, you're probably going to be exiting at a point where it's about to bounce and and want to go higher. Um, but yes, there's no doubt people who have been piling into silver over the past month, they're right back down to kind of where they are, where they entered. And now it has a pretty scaryl looking chart pattern that if it does continue, it's going to be back down into the 30s in like three more days, right? So, it it carries a lot of fear. Definitely silver moves at the speed of light. I mean, it takes the elevator straight down. Uh, but it's a very small market and that's why it moves really quickly. So, if you are a momentum trader, the trend is down if you're looking at short-term charts. But if you're looking at still as a long-term investor, this is just a pullback within the big picture of a of a bull market in gold. And I think it could stabilize here, maybe even trade sideways for a couple weeks, and then and then it maybe breaks and runs higher to the upside. So, I wouldn't be panicking out as an investor just yet. I'm looking to sell my physical gold holdings. Um, but I'm not I'm not trying to pick a top at this point. I still have to let a top form and then when it looks like it's, you know, potentially breaking down, then I will exit. But right now, if we look at silver and we were to just kind of draw what typically happens after this kind of volatility where volume ramps up, it becomes a crowded trade. Usually, you get a sharp pullback and then it then it muscles its way higher. And what'll happen is it can it can really have some of the biggest percentage moves right near the end of a trend. It could come up and have a couple more of these and eventually uh there's this pattern I always look for that silver could make here is three surges to a high. And this pattern is a very very violent topping pattern. Meaning this would be one surge to a high then it pulls back. We have another surge to a another high and then has a very sharp pullback and then it does a third one. And usually after that, that's when things actually break and then it goes into a much bigger, you know, unwinding event. So that's one thing to look for in silver and gold and miners um going forward. But right now, um a big down day here to support is is not something to like throw everything out the window and and bail on yet. I mean, I do think we're close to a top, but it's technically not in place yet in my opinion. >> And one thing that struck out to me is that the stock market didn't fall to the same order. In fact, it was flat today. And so over the past couple of months to almost a year now, year to date, the stock market and gold have been pretty much moving consistently upward together with some deviations here and there. I'm not saying gold is now perfectly correlated with the stock market as a pattern. I'm just saying that's what happened this year. Uh but if we're if today was a down day for everything, you can just write that off as okay, maybe there was a new shift in trade policy or Federal Reserve policy or whatever the case may be. But it's just precious metals. Bitcoin is up a point um and a half, so you know, 1.3%. Um so let's take a look at the stock market now. Um and then towards the end of the interview, we'll get uh Chris's projections for all assets that we'll talk about. We'll get his key level projections. So stay tuned to the end. Don't forget to subscribe uh to my channel and follow Chris at his channel down below as well to get daily updates from both Chris and myself. Chris, let's talk about the stock market. Is a stock market topping right now? It definitely has signs of weakness. Now, there's there's a few things that if you were to strip away just the price action and you go and you see what different assets are doing, where money is flowing among different assets, I like to peel the markets back and look at it from this is from the NASDAQ sentiment chart. So, this chart is colorcoded with my own formula that tells us is big money moving into equities. Are they are they willing to take risk or are they moving away? And this chart here is giving us an very interesting warning. So earlier this year, just before the tariffs, we had a great big long stretch of the stock market pushing up and hitting all-time highs, yet insider big money was flowing away from equities. It was almost like they knew something big and bad was coming. We saw money, even though the market was moving higher and it retail investors were very bullish. Big money was rotating out. If you look at where we are right now, we've just had this really long stretch right here of big money rotating and getting away from the equities market. Uh, gold's gone parabolic because maybe this is maybe this is the last, you know, the last high we see in the stock market for a very long time if we go into a financial reset. So, this is a huge warning and the stock market right now is just kind of flirting with, you know, a few days ago or a week and a half ago, everyone was piling into small caps, micro caps, everybody was a genius. Everybody's got all-time highs on their accounts. And now the stock market is is testing near all-time highs like the NASDAQ, but it's very weak. And we just need to be aware that this drop that we saw, you know, over here, obviously, it was a news-driven move, but a lot of damage was actually done on the chart. And this analysis, this internal analysis that tells us something bad is coming. Usually, we start to see these things, news starts to hit. And so, that's kind of where we're at now is I think we're walking through a landmine, and I think we're very close to the markets going for a nose dive. Have they topped from a long-term investor standpoint? No. Uh we moved to cash a few days ago just right over here on a on an open. We moved to cash because this market is unstable. At any point here it could break down and crash. So we want to protect ourselves because it's just it's not a a healthy trend right now. >> Uh so right now we're sitting in cash just kind of protecting oursel. If the market does get some strength to it, then we might get long again and continue to ride this up because it's like an endless meltup in the stock market. Uh but if it rolls over, you know, you don't want to be holding stocks because I think it'll be fairly precipitous. And the way gold is moving and and metals and miners and stuff is telling us something bad is brewing in the world, in the economy, and it's just a matter of time before it sheds its ugly face on the stock market charts and then hits the news. And um and then it'll be a different game, right? Like people are worried over small pullbacks. I mean, they need to be worried about a much bigger pullback because when it does happen, most people don't want to exit a trade until it gets too big to exit the too big of a loss. And that's the worst part is you get down 20 30%. And then, you know, an investor will be like, well, I can't get out now. I just have to ride it out. And then they waste six or seven years, which is very expensive uh in terms of time and returns. you can do you can do a lot of stuff in six or seven years if you put your money somewhere else. So that's kind of my take on the stock market. >> Well Chris, we don't talk about capital rotation um a lot. Let's talk about that. Now suppose you're an investor generally speaking or a trader and you're you're you're locking in gains whether it be gold or silver or mining stocks or Bitcoin, whatever the what whatever it is and you're thinking, "Okay, I want to take profits. I want to put my money to work in another asset, not just leave it in cash." Now, gold is a perfect example. I'm sure a lot of people are doing that with gold and silver right now as we're speaking. >> How do you make that decision to A, there's a two-part component here. A, I need to lock in profits now, and B, I want to pick something else to put those profits in, not just stow it in cash, right? So, evaluate A, which I think we have already, and then number two, evaluate B. How do you go about picking another asset to park your gains in? >> Yeah. And so the key is you need you need a strategy generally to lock in profits. You need to have a rules in place so you scale out and you're pulling and locking in profits as the market moves up. We did a recent play in gold. We got long gold. We caught a quick 15% move. We scaled out as it moved higher and we're back into cash. And now gold's, you know, having a sharp pullback. And what what you need to do is you do need to sell positions to lock in gains. when you when you we never know something for sure in the stock market, but when all the signs are there, when things go parabolic, everybody who's interested in that asset class is piling in and they all believe it's just starting, that's usually a red flag, a warning sign that you should be starting to lock in some profits and mentally prepare yourself that this ride may come to an end soon and it might not be favorable for months or potentially years again. So you don't want to give back all those gains. And a good chart for this, David, is like you look at people who got into like GDX and we look at the the monthly chart here. This is like the experience that a lot of people have gone through is they got into precious metals back in 2010, 11, 12, and then they just went through, you know, 12 years of of not very big returns. and then in two green bars or you could say three bars which is only three months the whole rally happens and they think it's just getting started. The reality is looking at the charts it's actually just about to end. Um and so that's where they they get stuck in this scenario. Well I held it for 15 years there's no way a three-month rally is just the beginning. But based on chart analysis, that three months rally was more or less is the move and it doesn't have a whole lot of upside left. And you should rotate away from stuff like this when it goes parabolic. You know, you look at um silver's done the same thing. Um if you look at the the parabolic moves, if you look at gold or silver miners, I mean, these don't end well, right? So to answer your question, David, where do you ro how do you know when to rotate your money? Well, you know, when the charts look like this, you've made good money, be happy to lock it in. Slowly scale out. Who knows where the top is? We're playing a no man's land, so nobody can nail it. It's just be happy with what you lock in and how you manage the second half of your trade. If you try to let it go higher or if you, you know, get out now. Um, where do you go after this? That's a good question. I don't think stocks are safe. I don't think precious metals are safe. I don't think um real estate is safe yet. I think real estate's going to have a great opportunity, but I think we're far far from the real estate market um being a good opportunity where the numbers really work and where an investor can go and look at the properties and have like, you know, pick of the litter, right? They can be like that is a perfect rental property, multif family, whatever. You right now homes are still overpriced. The numbers don't really work and when things get bad, eventually rents will come down. And so even if the numbers barely work right now, they're not going to work two years from now when everybody's willing to just rent their house for a loss because they just need it rented to to subsidize some of their mortgage payments, right? So there isn't a great spot. I think the play could be the US dollar. I think the dollar could actually strengthen in a time of global weakness. I think inverse ETFs are a great way to do it. That's what we've done in the last bare markets. We we buy an inverse hold or sorry to hold or to trade inverse ETFs. >> They are not to hold. They are to trade. So they'll be a trade that could last, you know, a couple weeks or or a month or two. You get in, you catch a drop, and then you move out. They they have to be actively traded because they're they carry a lot of risk in different ways. >> Um so yeah, there's not a there's not a whole lot of safety. I think um dollar, you know, cash just it doesn't matter what inflation is. earning cash and earning 4% four and a half percent a year may not outperform inflation, but I'll tell you it sure is a lot better than losing 20 or 50% of of your of your wealth just because you're worried about inflation is a bit higher than the interest rate. So, it's about preservation and protect your capital, save your lifestyle, um, and wait for a new opportunity because if you only get into great opportunities that have a lot of upside, who cares if you got a year of dormant of not much action, u, you know, when you do put your money to work, it's got a high probability of of working and it's got a high probability of big returns. So, you have to be patient. You have to let the moves come to you in the markets and in any industry, in anything. you you can't force stuff and that's what traders unfortunately especially swing traders and day traders they're like they're forcing themselves to find trades and that's a great way to lose money. You have to let the trades unfold like open like a flower and then jump in and then you take advantage of it when it's per a per nearperfect setup. So that's I think how you have to attack the markets and life and and business and all of that is you can't just buy because you're you need something new to go into. Sometimes there really isn't much to go into. It >> it really does beg an interesting philosophical question. Now, hey, cuz usually when you take profits on a a risk asset like a Bitcoin or a crypto or a tech stock or or a midcap stock and you want to park your cash in something defensive, you go to gold, you go to treasuries, but now gold is the riskoff play. Where do you go for safety besides cash now in a time like this? >> Yeah, you go to cash. Like cash is king. Sometimes cash is the best trade. People don't see it as a position. This is this is the I think the biggest misconception. People see cash as wasting your money. It's not a trade. You're not doing anything. Cash is a position. You are doing something. You're protecting your capital and you're still, you know, scratching out a little bit of return on the interest. Cash is a amazing position to be in. And there will be a point here when the markets do reset and everything falls apart. There's going to be millions of traders around the world going, "Wow, imagine if I just moved to cash. How happy I'd be." But that won't happen until everybody's lost their shirts till there's a reset and they're like, you know, I I I felt the market correction was coming, but you know, I I held on to everything. So that I mean, I deal with thousands of traders all the time. This is the same scenario comes over and over again. Just realize cash is a position. It's doing many jobs. It's creating stability with your financials. It's creating some income and it's protecting your lifestyle. I mean, what else could you ask for? Especially when everything around you is falling apart. >> I want yield. I want I want I want returns. I want steady income. I cash isn't going to give me all that, Chris. It's boring. That's what I hear. >> Totally. That's fine. I can't help people with that mindset because chasing returns all the time when there isn't a good time to really chase it is going to get you in trouble. Now, the only way to do that is through an inverse ETF. Take advantage of things collapsing. And I do that. I do that. Um, it's a different game, but that's that's not for the average investor, right? That's >> Well, let's suppose you you have a fund or a company or whatever. And you have investors and they're asking you, why do you have, you know, all this cash that you're not putting into work? >> Yeah. >> Right now, I don't know if Warren Buffett gets this. I don't think anybody in the world challenges him, but he's sitting on a lot of cash. records amount of cash for >> for uh for his company Bergkshire Hathaway. But if you're not Bergkshire Hathway, which you know most people aren't, you might still get investors asking you to put your cash to work. How do you go about responding to that question, especially at a time like this? >> 100%. His his team gets it all the time. You guys are wasting our time. Get us into more positions. You got tons of cash. People naturally think you should be in the markets to make money. My response is um well I mean I I don't know really how to angle it but like more or less it's it's always not it's not about chasing the return. People who chase returns all the time and demand the money be working for them in a way that they're expecting like big returns. I I my strategy doesn't cater to that. I can't help people with that mindset, right? I'm I'm focusing on people who who have logic and have reasoning to be like, okay, I want to be in something when it's moving up and I want to maintain my wealth when things reset and then reinvest my money into an asset class when it's starting a new new cycle to the upside. But if you're looking to catch every blip and and dip on the charts and you your cash you think you always have to be in trades, you know, I that's I just can't help you because that's that's playing with fire, right? It's not always safe to be in the markets and and to be diversified into all kinds of stuff. It can carry >> How much cash are you in right now? >> Well, we we move to 100% cash with our strategy. So, we're sitting just kind of fat, dumb, and happy right now, just waiting for the next the next trade to get into. >> How low do either stocks, Bitcoin, or gold need to move before you go in, Chris? >> Um, >> and this is getting to the last part of our conversation. I promised uh >> viewers that you give levels. So here we go. Key levels to the downside before you get back in >> for for which asset here. >> Let's go through all of them. Let's go through gold first, stocks, and then Bitcoin in that order. >> Okay. So gold gold for me will require I'm just going to zoom out and get rid of this chart here. So gold's going to need a pretty big reset. Like it needs it needs something like this. We had this beautiful run up and this giant consolidation and it was screaming when we said, "Okay, we'll we'll play this breakout as a bonus trade where, you know, if you should have already physical metals, if you're into metals, we played this beautiful move to the upside." What we're going to need for gold is for it to do the same thing again. It needs to it's had this run up. It needs to consolidate and build a pause. It needs the some type of breaker pause here. And then when it starts to break and run higher, we can jump back in for another trade. Now, gold may actually pull back more significantly. Maybe it needs to pull back, you know, very significantly down into the whole 34%. Maybe if it has topped, it's got to it's got to finish the downtrend. So, what gold needs to do is either build a base, a new platform to break out of, which could take um a few weeks, and then we could we could get long on a breakout to the upside, or it needs to finish correcting and have a huge reset, which means the stock market and the economy are probably going to go through a rebalancing event where everything drops in pricing. So, there's a lot to be done when it comes to gold. I look at gold. I I don't use gold as making a lot of money. I don't use it as a main driver. I use the equities, bond markets, um, and the US dollar to using ETFs to trade. That's how I generate growth with overall growth in my whole portfolio. Gold is a sliver. It is for most people's portfolios, unless you're obviously heavy into the metal space, and you're probably almost all into metals and miners, but um, gold has to give me a perfect setup, so I just wait for another one. It's not about how much it pulls back. It's letting the charts paint a picture. Paint a formula or a pattern that is telling us, okay, the odds are if it breaks to the upside, it's going to go a lot higher. And if that's the case, then we'll get long. So, uh, you know, everybody always wants specific prices, and that's what you're you're going to keep asking me. It's like, what price? What price? I'm like, I don't really know. It's more like what have the charts drawn, and are they giving us a bullish picture? And then from there, we can calculate the pricing. What's your sentiment on Bitcoin? Similar question. I don't have to ask you for a specific level, but um if you're not in Bitcoin right now, which you're not because you're 100% cash, what does it need to do for you to let let's put it this way. What does Bitcoin need to do to convince you to get in on Bitcoin? >> Yeah, Bitcoin really needs to trade sideways in a in a more stable range. I'm not a fan of the Bitcoin chart because it's got this broadening formation. And it has higher highs and it has lower lows, which means volatility, every move is getting larger and larger. And so, you know, it it breaks to to an all-time high and then you might get long and then it and then it knocks you out and then it breaks a low and goes even lower and then you get short and then it reverses and gets you off guard and it makes a higher high and then you get long again and then it goes down and makes a lower low. Like this type of chart pattern is noisy. I don't like it at all because it it's incre it's increasing in volatility. It's getting more dangerous as the pattern unfolds. So, it needs to do a lot before I'll ever like Bitcoin again here. It's going to need to like build, you know, some type of bull flag pattern and have a nice controlled move to the upper end and build another pattern and then maybe after this, if it starts to break out, it could be a clean breakout. But right now, I can't really, you know, it needs a lot of time going sideways. It needs some stable pricing and right now it's just showing signs of money piling in and then money pouring out and that's not the type of price action that is that bodess well for a high probability trade. >> Finally, stocks similar question. >> Yeah, if we look at the stock market, I I think the stock market could turn around here very quickly. The stock market isn't quite as volatile. Um we're I think we're going to see over the next potentially over the next week or so, the market may stabilize and want to break higher. Uh, so it it's not far away from us potentially getting long again, but we do need to see some more broad market strength in the market. So I I can't give you a price, but I think in the next few trading sessions, we're going to know whether uh the market is actually starting another uptrend and this was just a piece of news and a bout of selling that shook things up. It's trying to buck everybody out of the market and then it wants to go higher or it's going to quickly here reverse back down and actually go into a bigger reset. Uh so again, right now we're just on the sidelines and we have to let the charts tell us in the money flows of of what we should do. So I mean it doesn't give you an answer other than we need to let it prove itself. Once the chart says, hey, this is actually an uptrend again. It meets our qualifications, then we can get long and the market might want to continue to run higher. >> Chris, I want to end on real estate. You mentioned real estate is not something you would park your cash in right now. I'm curious why rates are falling across the board, Canada and the US. >> Well, I I mean I follow a lot of economic data for in the in the real estate space and the charts look horrendous. Everything is telling me that we're still going to have some type of weakness in the overall economy, which is if we have that, it's not good for real estate. And it doesn't matter if mortgage rates drop that much. I I don't think uh usually falling rates help boost home pricing because if it's a cheaper mortgage rate, you can buy a more expensive house. Um but I if when you couple that with a weakening economy, which I believe we're slowly inching our way to, it doesn't matter. People can't afford the house anyway. And even if it's cheaper, they you know, a lower mortgage rate, they're like, "That's still too much." And then the other problem is is when we do go into recession, the banks tighten right up. So people who qualified for a mortgage, you know, a month before things turned sour, now they don't qualify because the banks put these. So you can't sell homes as much, they don't sell as fast because most people don't get approved. And so home buyers have to keep lowering their price so they can sell the house that they really want to get off their hands. And it creates this this feeding frenzy of um, you know, of supply. They just start dumping a lot of supply. And I I like real estate. I think there's some really interesting ways to play real estate. I mean, if we go back and look at um the monthly chart, you know, a lot of people, you know, don't want to get into real estate because of all the legal things that go with it and and toilets and running water, tenants, all that stuff. >> Yeah. >> But I I do think there's going to be a great opportunity just like in 2008. I think eventually, you know, REITs sell off. So, this is IYR. So if you say you don't want to buy a home or multif family or self- storage, you just go on your brokerage, you buy an ETF that owns those. They pay these purple lines across the bottom are dividends. They pay really nice dividends. Now you can see in 2008 the the REITs got hammered. They fell like 75%. Which is amazing because they they dropped sharply. you can buy them and the dividend yields back then I mean I I bought ETF ETF that was paying 16% dividend after the 2008 crash and so these yields will be massive because the share price has come down but the yields are still the same the div dividend distributions and so the nice thing about these is you can buy you know $10,000 $100,000 a million dollar whatever you want of these ETFs when they're oversold and they pay a high yield and take advantage of it and earn you know beautiful returns for many many years to come. I I do think we're going to see the real estate market and and the the REITs themselves as well fall dramatically again. I think it's going to be an amazing opportunity and I think you can make a lot of money with REITs um real estate side of things even even more so than real estate sometimes because you you get a share that's oversold. It's it's way undervalued and it it can bounce back and double in value in a very short period of time, a year or two. uh and and you know, you don't generally get that in the housing market. So, the REITs are a great way to play it. I do think we're going to see real estate fall. Rates are going to get hit very hard. Uh but it's not the time yet. I really don't The numbers don't work. If the numbers don't work, you shouldn't be dabbling in in real estate. The numbers have to be like, you know, really really um supportive of you buying it and give you a lot of wiggle room in case you have major problems or expenses in those. So, that's my take. If you if you have to buy a home cuz you have to live in it, that's a different story. But let's say I'm already sitting on a home um and I'm thinking maybe should I either buy a second property now or sell my home either for an upgrade or a downgrade in size. Um I'm getting the sense that you probably would stay put on the current home for now. >> Yeah, you nailed it. I mean, buying a home right now is not the end of the world if you're living in it. Homes are great investments long term. So, if it's your homestead, I mean, buy what makes you happy. Buy what has all the features you want and just realize it's a long-term investment. But if you're buying a second property or third property, I mean, you shouldn't I don't think you should be touching it yet. You got to wait for I think the bottom's about to drop and we're going to see a nice drop in pricing and it's going to open up the doors. So, if you're patient, the right cycles will come into play and you can accumulate at the right times. >> Excellent. All right. We'll put the link down below so you can follow Chris. He has a YouTube channel and a website. What uh just tell us what we can expect to learn from you when we go visit your work, Chris. >> Sure. Yeah. Well, pretty much every morning I do a morning report. I cover what happened in the markets overnight, pre-market, uh what to expect today from intraday charts all the way to the long-term monthly charts. I really just keep everybody with their their finger on the pulse of the market. You know, what to expect. Is there going to be gaps and and panic selling or FOMO? And generally I can kind of put a thumb on on how most investors are feeling and kind of I guide them through the day each kind of day by day so they don't get caught up in emotions. And then I share my trades. I manage my own portfolio. That's that's all I do. And I share my exact portfolio and trades and allocation with subscribers. So we all we all navigate these markets together. And I have the best intent because it's all based on my portfolio, the exact trades that I do. >> Excellent. Thank you very much, Chris. Great update today. Very timely update. We'll speak again soon. Don't forget to like and subscribe to this channel and subscribe to Chris's channel. Again, links down below. See you next time, Chris. >> Thanks, David. >> Thank you for watching. Don't forget to like and subscribe.
2008 'Violent Pullback' Returns: Gold To Nosedive, Nothing Is Safe | Chris Vermeulen
Summary
Transcript
I think it's going to be more like 2007208 where it's going to be just a sharp violent pullback. I think it's going to rebound with a vengeance in a shorter period of time. I think we're walking through a landmine and I think we're very close to the markets going for a nose dive. Have Have they talked? Is the bull rally and metals finally over? We'll find out. Christopher Mullen joins us today. He is a chief market strategist at the technicalers.com. Chris, welcome back to the show. Let's just jump straight into it. Gold tumbles 6% today on the 21st of October. Biggest single day drop since 2013. Plunge comes amid warnings that historic bullion rally is overdone. Uh this just came out of the left field. Chris, it was going up parabolically and then it wasn't like, oh, people were talking about Yes, people have been talking about gold being overhyped for a couple weeks now, but the drop came very suddenly. I'll let you show your charts, but I'll show mine first. This is gold and silver as well. Um it started we had this bit of a double double top that uh first uh came last week and then it rebounded and uh briefly touched almost $4,400. Not quite before plunging now to $4,100. Silver exact same pattern except even more dramatic of a sell-off. Now it's well below $50. Um, I mean, it's still very high at 48, uh, compared to where it was just a few months ago. So, um, nobody's complaining if you bought several months ago. However, people are asking if this is the beginning of what happened in 2011, which was a peak in the pre precious metals, didn't stay that high for very long, and then a massive correction by the order of 40 50% all the way back down and stayed there for years. I'll let you analyze the charts. I'll take you I'll let you take over. >> Sure. All right. Yeah. Well, if we if we take a look at the charts, there's a lot to unpack, I think, in in the precious metals space. And I mean, I've been I've been somebody been talking about precious metals over the past week and a half, really saying like, hey, it's starting to go parabolic. The signs are here. And the big question is, as you just mentioned, David, you're like, out of nowhere, the top was put in or we had this big reversal. Uh, and that's the problem when things get a little overheated. We start to go parabolic. And again, the the monthly chart of gold, silver, miners, I mean, if you zoom back in time and you go look at, you know, the previous ways that gold has moved, usually this doesn't end well, right? It's it's just a typical scenario. You could give this to a fifth grader and be like, what happens? What should happen next after this, right? Uh so that's like the the super basic high level. But when we zoom in, you and I spoke a few weeks ago, we showed the the intraday charts and silver was uh poking up and trying to break to some new all-time highs and we we were seeing in gold and silver some big intraday bouts of selling. So somebody was unloading contracts slowly getting out and the market to me in the precious metal space. I've been sharing this quite a bit saying, you know, it's it's a crowded trade. And a lot of people are saying, well, Chris, it's not crowded. The retail traders are barely even in. When I say a crowded trade, which I believe gold is based on many different things, just the price action is signature of a herd mentality. The volume is is a signature of everybody's piling in chasing pricing. Uh but when I say it's a crowded trade, David, I mean not the whole world's piling in. just the people who are open-minded who are willing to potentially buy gold, silver, or miners or the other metals um are all piling into it. And so it's not it's it's most people don't hold gold. There's a very small group of people that actually hold gold in their portfolio, but the people open-minded enough to do it are all piling in and now they feel like they're missing it. And we saw this like over the past week, you could you could cut the air with a knife the FOMO that was in this space for people who aren't in it. And so there's some pretty interesting charts when when we look at the daily chart here. Uh gold is starting to have some big back and forth swings. I don't think this is the top yet. I actually think this is just one of the hiccups along the way of it potentially rocketing higher. And one of the best scenarios is if we go back to 2007, which is the chart on the left, we have the S&P 500 candlestick chart. The yellow line is gold. And on the right hand chart is is where we are today right now with the same two things. Now you and I touched on this uh in our last talk, David. But what's really interesting of where we're where we're at now is the stock market just had a bout of selling uh a week and a half ago. And so now it's it's showing a little bit of weakness. Gold has had a big first pullback right here, which we can see on this yellow chart in the top right. If we go to 2007, it started to have a little bit of weakness, the stock market, and gold started to pull back. Now take a look at this when I when I show you the other asset classes. So the chart underneath is GDX, gold miners, and then we have silver and then we have platinum and then we have platium. Look what happens like just near this end where we see gold miners shoot higher. Everybody starts piling into silver, platinum and platium. It becomes a bit of a crowded play. And if we were to just kind of fast forward this, you'll notice gold at the top continues to rocket higher. It continues to move up. It moves up for a It doesn't look like much on this chart because it's condensed, but it still has another big push to the upside. Miners struggle to to move higher, but we see silver, platinum, and platium still go parabolic. They actually take off and pick up speed. Now, you know, if we were to just kind of backtrack to kind of where we are, where we were in 2007, and look at where we are right now, notice we've got miners, we got silver, platinum, platium, all coming to life. This is the first hiccup, the first quick knee-jerk reaction where people who are chasing pricing and buying, you know, over the last week or so are emotional because they bought in emotionally. They have FOMO. So, it doesn't take much of a pullback like today to really spook everyone out and create this first move. But, I do believe we're going to see, I think, the metal space continue to rocket higher. This is nothing but a bull market trying to buck people out of gold. And I think it's going to want to go higher here. But there's no doubt we're on like the last major push I think in metals and then the question is is it like 2011 like what you mentioned do we go dormant for another 10 years after that and does it cut its pricing like do most things fall 30 to 50 or 60%. I don't know. Um that's why I just follow price when things top I get out and you don't have to really worry about how long it's underwater because we don't hold it. But this scenario of where we are is like the perfect storm brewing of the crowded play. Everyone's moving into all the precious metals, silver and miners as well. And that tells us that it's, you know, a little frothy and it's going to be a wild ride um going forward. Wild ride going forward. How do you make the assessment that this is the beginning of going back to my earlier point, a 2011 style crash? I think that is the number one question on investors mind. Is this just a temporary pullback or is this ultimately the end? How do we go about con making that conclusion? Maybe you could just pull up a chart of 2011 and compare that to what's going on right now. Looks awfully similar to the top of 2011, doesn't it? >> Now, are you talking about in gold miners or or the stock market itself or are you talking >> gold? Let's talk about gold. But gold miners as well. I mean gold peaked around gold miners peaked around that time and I think gold miners started falling before gold if I'm not mistaken. Uh but the metal's complex overall. Let's take gold as a proxy. Yes. >> Right. So I've mentioned this many times over the past year of you and I speaking together that eventually when I think we have like an economic reset and when gold finally does peak it's probably going to fall pull back 30 34 35% somewhere in there. And it you know that that's kind of if we go back and look at the 2011 peak the market pulled back about you know 45% in 2008 during that financial crisis it pulled back about 34% or so. I do believe eventually using just Fibonacci retracement based on the size of this run there is potential for gold to pull back to the sweet spot. And the sweet spot is between a 38% pullback all the way to a 61. And so we could see this pull back 20, you know, 27% all the way down to 45%. That is typical. That is how the universe works based on Fibonacci theory and also historically we've seen prices in gold. So when this does come to an end, wherever the top is, we still need to find the wait for the top to be kind of nailed down for gold. It could be much higher still. Then we can calculate, okay, where is it? Where should it settle out? And obviously, you don't want to be holding it as it goes down into these levels. There's there's going to be a time where you might want to actually like lock in profits, lock in gains on gold because it could go dormant for 6 8 12 months and lose 20 to 40% or it could go dormant for a decade, right? And that's that's one that's the most expensive thing us as investors or humans have is time. So, who cares if you don't own your favorite asset for a little bit if it's putting in a top? Just buy it back later at a cheaper price. um or potentially even pay a bit higher price later but after it's stabilized and it's ready for another leg higher. So that's the way I look at gold and and I believe we could go into a very big correction. Now you're you mentioned David is it going to be like 2011? I mean that was a really long dead period. I think it's going to be more like 2007208 where it's going to be just a sharp violent pullback and then it's going to recover because I think there's a lot going on right now that's going to spur gold for another big leg higher. So I don't think it's going to be like the 2011 in terms of time. It didn't take, you know, 10 years to come back. I think I think it's going to rebound with a vengeance in a shorter period of time. >> Gold and silver have reached historic highs amidst this crazy bull rally. More investors are turning to hard assets to protect their savings. But what if instead of just holding your gold as a savings vehicle, you could actually earn income from it, pay it in gold. So now it's not just in savings, it's also an income vehicle. That's what today's sponsor, Monetary Metals, helps you do. They're changing the way people think about investing in precious metals completely. Rather than letting your gold sit idally or paying fees to store it, now you can get paid to own it. Right now, through their marketplace, you can earn up to 4% yield on gold paid monthly in gold. Your savings grow in ounces, not dollars, and stack on top of any price appreciation. Thousands of investors are already earning real yield and physical gold and silver through monetary medals. It's time to see how it works for you. Go to monetary-metals.com/lin link down below or scan the QR code here to learn more >> rebound after the violent pullback. You mean? >> All right. After we see like a 30% or so pullback, I think it's going to rebound and stabilize and I think it's going to go something like this. Like I think we're going to see another big leg to the upside. Uh so like for example, if we were to use Fibonacci extension right now, we can say, okay, based on this low, based on the high, this is just the current high of gold. It may be higher later, but if we come down and settle into this 50% retracement, this tells us where the next upside target for gold is. And this is going to be really exciting because, you know, when gold comes down into this area, uh, it's going to rally up to 4,800 and then about to 6,500. So, there's quite a bit of potential still to the upside. I don't think it's going to quite get to this level on this run. I think we're going to stall out probably 48, maybe 5,000 maybe. I'm not sure. But um we'll be able to calculate where gold should run. But right now, gold has blown past all of its Fibonacci targets to the upside. So it is in no man's land. It's just bubble phase. And this is, you know, you nailed it right at the beginning. Like how do we know when it's going to? It just came out of nowhere. Well, that's what happens in a bubble. It just bursts out of nowhere and you don't know when. And so that's why traders are on edge. That's why we're seeing heavy selling. Miners are down over 10% 11% today. um silver and gold both down really big. It's because people are worried it's going to be the burst, but I think this might actually just be kind kind of the first pullback before we have another uh push higher going forward. >> I have a couple of follow-up questions. The first is you mentioned the top. Nobody knows what the top is. You even mentioned yourself on my show many times that you don't pick tops and bottoms. It's not really something you do. It's not even possible to do on a consistent basis. You just follow momentum. So right now currently as we're speaking the momentum is on the downside. Somebody who is a trader or even just a casual investor might look at today's price action. If you want to just pull up a price chart of silver intraday and help me illustrate the point here, Chris, you might look at a chart like this and say, "Whoa, okay, now I'm starting to worry. Even if I bought weeks ago, it looks like profit selling's taking place. Maybe I should be taking profits now myself while this is happening." We call that panic selling. How do you talk somebody through that process? Should they be selling right now into this panic, if you want to call it that? >> Yeah. Well, it really depends on the type of trader you are. You're you're saying momentum and generally when you when you're talking about as a momentum trader, you're usually looking at, you know, maybe maybe a 30 minute chart, something that can carry a pattern over several days. There's no doubt the trend is down on an intraday chart going back the past uh you know few u few trading sessions. In the grand scheme of things if you are a swing trader technically it is still holding up. The moving averages are all still sloping up. Price is pulling back to the 20-day moving average which is this pink line which is a natural pullback level. Um I I wouldn't you know I wouldn't be panicking out here at this point. I mean, I think most of the damage has just been wiped out. If you sell right here, you're probably going to be exiting at a point where it's about to bounce and and want to go higher. Um, but yes, there's no doubt people who have been piling into silver over the past month, they're right back down to kind of where they are, where they entered. And now it has a pretty scaryl looking chart pattern that if it does continue, it's going to be back down into the 30s in like three more days, right? So, it it carries a lot of fear. Definitely silver moves at the speed of light. I mean, it takes the elevator straight down. Uh, but it's a very small market and that's why it moves really quickly. So, if you are a momentum trader, the trend is down if you're looking at short-term charts. But if you're looking at still as a long-term investor, this is just a pullback within the big picture of a of a bull market in gold. And I think it could stabilize here, maybe even trade sideways for a couple weeks, and then and then it maybe breaks and runs higher to the upside. So, I wouldn't be panicking out as an investor just yet. I'm looking to sell my physical gold holdings. Um, but I'm not I'm not trying to pick a top at this point. I still have to let a top form and then when it looks like it's, you know, potentially breaking down, then I will exit. But right now, if we look at silver and we were to just kind of draw what typically happens after this kind of volatility where volume ramps up, it becomes a crowded trade. Usually, you get a sharp pullback and then it then it muscles its way higher. And what'll happen is it can it can really have some of the biggest percentage moves right near the end of a trend. It could come up and have a couple more of these and eventually uh there's this pattern I always look for that silver could make here is three surges to a high. And this pattern is a very very violent topping pattern. Meaning this would be one surge to a high then it pulls back. We have another surge to a another high and then has a very sharp pullback and then it does a third one. And usually after that, that's when things actually break and then it goes into a much bigger, you know, unwinding event. So that's one thing to look for in silver and gold and miners um going forward. But right now, um a big down day here to support is is not something to like throw everything out the window and and bail on yet. I mean, I do think we're close to a top, but it's technically not in place yet in my opinion. >> And one thing that struck out to me is that the stock market didn't fall to the same order. In fact, it was flat today. And so over the past couple of months to almost a year now, year to date, the stock market and gold have been pretty much moving consistently upward together with some deviations here and there. I'm not saying gold is now perfectly correlated with the stock market as a pattern. I'm just saying that's what happened this year. Uh but if we're if today was a down day for everything, you can just write that off as okay, maybe there was a new shift in trade policy or Federal Reserve policy or whatever the case may be. But it's just precious metals. Bitcoin is up a point um and a half, so you know, 1.3%. Um so let's take a look at the stock market now. Um and then towards the end of the interview, we'll get uh Chris's projections for all assets that we'll talk about. We'll get his key level projections. So stay tuned to the end. Don't forget to subscribe uh to my channel and follow Chris at his channel down below as well to get daily updates from both Chris and myself. Chris, let's talk about the stock market. Is a stock market topping right now? It definitely has signs of weakness. Now, there's there's a few things that if you were to strip away just the price action and you go and you see what different assets are doing, where money is flowing among different assets, I like to peel the markets back and look at it from this is from the NASDAQ sentiment chart. So, this chart is colorcoded with my own formula that tells us is big money moving into equities. Are they are they willing to take risk or are they moving away? And this chart here is giving us an very interesting warning. So earlier this year, just before the tariffs, we had a great big long stretch of the stock market pushing up and hitting all-time highs, yet insider big money was flowing away from equities. It was almost like they knew something big and bad was coming. We saw money, even though the market was moving higher and it retail investors were very bullish. Big money was rotating out. If you look at where we are right now, we've just had this really long stretch right here of big money rotating and getting away from the equities market. Uh, gold's gone parabolic because maybe this is maybe this is the last, you know, the last high we see in the stock market for a very long time if we go into a financial reset. So, this is a huge warning and the stock market right now is just kind of flirting with, you know, a few days ago or a week and a half ago, everyone was piling into small caps, micro caps, everybody was a genius. Everybody's got all-time highs on their accounts. And now the stock market is is testing near all-time highs like the NASDAQ, but it's very weak. And we just need to be aware that this drop that we saw, you know, over here, obviously, it was a news-driven move, but a lot of damage was actually done on the chart. And this analysis, this internal analysis that tells us something bad is coming. Usually, we start to see these things, news starts to hit. And so, that's kind of where we're at now is I think we're walking through a landmine, and I think we're very close to the markets going for a nose dive. Have they topped from a long-term investor standpoint? No. Uh we moved to cash a few days ago just right over here on a on an open. We moved to cash because this market is unstable. At any point here it could break down and crash. So we want to protect ourselves because it's just it's not a a healthy trend right now. >> Uh so right now we're sitting in cash just kind of protecting oursel. If the market does get some strength to it, then we might get long again and continue to ride this up because it's like an endless meltup in the stock market. Uh but if it rolls over, you know, you don't want to be holding stocks because I think it'll be fairly precipitous. And the way gold is moving and and metals and miners and stuff is telling us something bad is brewing in the world, in the economy, and it's just a matter of time before it sheds its ugly face on the stock market charts and then hits the news. And um and then it'll be a different game, right? Like people are worried over small pullbacks. I mean, they need to be worried about a much bigger pullback because when it does happen, most people don't want to exit a trade until it gets too big to exit the too big of a loss. And that's the worst part is you get down 20 30%. And then, you know, an investor will be like, well, I can't get out now. I just have to ride it out. And then they waste six or seven years, which is very expensive uh in terms of time and returns. you can do you can do a lot of stuff in six or seven years if you put your money somewhere else. So that's kind of my take on the stock market. >> Well Chris, we don't talk about capital rotation um a lot. Let's talk about that. Now suppose you're an investor generally speaking or a trader and you're you're you're locking in gains whether it be gold or silver or mining stocks or Bitcoin, whatever the what whatever it is and you're thinking, "Okay, I want to take profits. I want to put my money to work in another asset, not just leave it in cash." Now, gold is a perfect example. I'm sure a lot of people are doing that with gold and silver right now as we're speaking. >> How do you make that decision to A, there's a two-part component here. A, I need to lock in profits now, and B, I want to pick something else to put those profits in, not just stow it in cash, right? So, evaluate A, which I think we have already, and then number two, evaluate B. How do you go about picking another asset to park your gains in? >> Yeah. And so the key is you need you need a strategy generally to lock in profits. You need to have a rules in place so you scale out and you're pulling and locking in profits as the market moves up. We did a recent play in gold. We got long gold. We caught a quick 15% move. We scaled out as it moved higher and we're back into cash. And now gold's, you know, having a sharp pullback. And what what you need to do is you do need to sell positions to lock in gains. when you when you we never know something for sure in the stock market, but when all the signs are there, when things go parabolic, everybody who's interested in that asset class is piling in and they all believe it's just starting, that's usually a red flag, a warning sign that you should be starting to lock in some profits and mentally prepare yourself that this ride may come to an end soon and it might not be favorable for months or potentially years again. So you don't want to give back all those gains. And a good chart for this, David, is like you look at people who got into like GDX and we look at the the monthly chart here. This is like the experience that a lot of people have gone through is they got into precious metals back in 2010, 11, 12, and then they just went through, you know, 12 years of of not very big returns. and then in two green bars or you could say three bars which is only three months the whole rally happens and they think it's just getting started. The reality is looking at the charts it's actually just about to end. Um and so that's where they they get stuck in this scenario. Well I held it for 15 years there's no way a three-month rally is just the beginning. But based on chart analysis, that three months rally was more or less is the move and it doesn't have a whole lot of upside left. And you should rotate away from stuff like this when it goes parabolic. You know, you look at um silver's done the same thing. Um if you look at the the parabolic moves, if you look at gold or silver miners, I mean, these don't end well, right? So to answer your question, David, where do you ro how do you know when to rotate your money? Well, you know, when the charts look like this, you've made good money, be happy to lock it in. Slowly scale out. Who knows where the top is? We're playing a no man's land, so nobody can nail it. It's just be happy with what you lock in and how you manage the second half of your trade. If you try to let it go higher or if you, you know, get out now. Um, where do you go after this? That's a good question. I don't think stocks are safe. I don't think precious metals are safe. I don't think um real estate is safe yet. I think real estate's going to have a great opportunity, but I think we're far far from the real estate market um being a good opportunity where the numbers really work and where an investor can go and look at the properties and have like, you know, pick of the litter, right? They can be like that is a perfect rental property, multif family, whatever. You right now homes are still overpriced. The numbers don't really work and when things get bad, eventually rents will come down. And so even if the numbers barely work right now, they're not going to work two years from now when everybody's willing to just rent their house for a loss because they just need it rented to to subsidize some of their mortgage payments, right? So there isn't a great spot. I think the play could be the US dollar. I think the dollar could actually strengthen in a time of global weakness. I think inverse ETFs are a great way to do it. That's what we've done in the last bare markets. We we buy an inverse hold or sorry to hold or to trade inverse ETFs. >> They are not to hold. They are to trade. So they'll be a trade that could last, you know, a couple weeks or or a month or two. You get in, you catch a drop, and then you move out. They they have to be actively traded because they're they carry a lot of risk in different ways. >> Um so yeah, there's not a there's not a whole lot of safety. I think um dollar, you know, cash just it doesn't matter what inflation is. earning cash and earning 4% four and a half percent a year may not outperform inflation, but I'll tell you it sure is a lot better than losing 20 or 50% of of your of your wealth just because you're worried about inflation is a bit higher than the interest rate. So, it's about preservation and protect your capital, save your lifestyle, um, and wait for a new opportunity because if you only get into great opportunities that have a lot of upside, who cares if you got a year of dormant of not much action, u, you know, when you do put your money to work, it's got a high probability of of working and it's got a high probability of big returns. So, you have to be patient. You have to let the moves come to you in the markets and in any industry, in anything. you you can't force stuff and that's what traders unfortunately especially swing traders and day traders they're like they're forcing themselves to find trades and that's a great way to lose money. You have to let the trades unfold like open like a flower and then jump in and then you take advantage of it when it's per a per nearperfect setup. So that's I think how you have to attack the markets and life and and business and all of that is you can't just buy because you're you need something new to go into. Sometimes there really isn't much to go into. It >> it really does beg an interesting philosophical question. Now, hey, cuz usually when you take profits on a a risk asset like a Bitcoin or a crypto or a tech stock or or a midcap stock and you want to park your cash in something defensive, you go to gold, you go to treasuries, but now gold is the riskoff play. Where do you go for safety besides cash now in a time like this? >> Yeah, you go to cash. Like cash is king. Sometimes cash is the best trade. People don't see it as a position. This is this is the I think the biggest misconception. People see cash as wasting your money. It's not a trade. You're not doing anything. Cash is a position. You are doing something. You're protecting your capital and you're still, you know, scratching out a little bit of return on the interest. Cash is a amazing position to be in. And there will be a point here when the markets do reset and everything falls apart. There's going to be millions of traders around the world going, "Wow, imagine if I just moved to cash. How happy I'd be." But that won't happen until everybody's lost their shirts till there's a reset and they're like, you know, I I I felt the market correction was coming, but you know, I I held on to everything. So that I mean, I deal with thousands of traders all the time. This is the same scenario comes over and over again. Just realize cash is a position. It's doing many jobs. It's creating stability with your financials. It's creating some income and it's protecting your lifestyle. I mean, what else could you ask for? Especially when everything around you is falling apart. >> I want yield. I want I want I want returns. I want steady income. I cash isn't going to give me all that, Chris. It's boring. That's what I hear. >> Totally. That's fine. I can't help people with that mindset because chasing returns all the time when there isn't a good time to really chase it is going to get you in trouble. Now, the only way to do that is through an inverse ETF. Take advantage of things collapsing. And I do that. I do that. Um, it's a different game, but that's that's not for the average investor, right? That's >> Well, let's suppose you you have a fund or a company or whatever. And you have investors and they're asking you, why do you have, you know, all this cash that you're not putting into work? >> Yeah. >> Right now, I don't know if Warren Buffett gets this. I don't think anybody in the world challenges him, but he's sitting on a lot of cash. records amount of cash for >> for uh for his company Bergkshire Hathaway. But if you're not Bergkshire Hathway, which you know most people aren't, you might still get investors asking you to put your cash to work. How do you go about responding to that question, especially at a time like this? >> 100%. His his team gets it all the time. You guys are wasting our time. Get us into more positions. You got tons of cash. People naturally think you should be in the markets to make money. My response is um well I mean I I don't know really how to angle it but like more or less it's it's always not it's not about chasing the return. People who chase returns all the time and demand the money be working for them in a way that they're expecting like big returns. I I my strategy doesn't cater to that. I can't help people with that mindset, right? I'm I'm focusing on people who who have logic and have reasoning to be like, okay, I want to be in something when it's moving up and I want to maintain my wealth when things reset and then reinvest my money into an asset class when it's starting a new new cycle to the upside. But if you're looking to catch every blip and and dip on the charts and you your cash you think you always have to be in trades, you know, I that's I just can't help you because that's that's playing with fire, right? It's not always safe to be in the markets and and to be diversified into all kinds of stuff. It can carry >> How much cash are you in right now? >> Well, we we move to 100% cash with our strategy. So, we're sitting just kind of fat, dumb, and happy right now, just waiting for the next the next trade to get into. >> How low do either stocks, Bitcoin, or gold need to move before you go in, Chris? >> Um, >> and this is getting to the last part of our conversation. I promised uh >> viewers that you give levels. So here we go. Key levels to the downside before you get back in >> for for which asset here. >> Let's go through all of them. Let's go through gold first, stocks, and then Bitcoin in that order. >> Okay. So gold gold for me will require I'm just going to zoom out and get rid of this chart here. So gold's going to need a pretty big reset. Like it needs it needs something like this. We had this beautiful run up and this giant consolidation and it was screaming when we said, "Okay, we'll we'll play this breakout as a bonus trade where, you know, if you should have already physical metals, if you're into metals, we played this beautiful move to the upside." What we're going to need for gold is for it to do the same thing again. It needs to it's had this run up. It needs to consolidate and build a pause. It needs the some type of breaker pause here. And then when it starts to break and run higher, we can jump back in for another trade. Now, gold may actually pull back more significantly. Maybe it needs to pull back, you know, very significantly down into the whole 34%. Maybe if it has topped, it's got to it's got to finish the downtrend. So, what gold needs to do is either build a base, a new platform to break out of, which could take um a few weeks, and then we could we could get long on a breakout to the upside, or it needs to finish correcting and have a huge reset, which means the stock market and the economy are probably going to go through a rebalancing event where everything drops in pricing. So, there's a lot to be done when it comes to gold. I look at gold. I I don't use gold as making a lot of money. I don't use it as a main driver. I use the equities, bond markets, um, and the US dollar to using ETFs to trade. That's how I generate growth with overall growth in my whole portfolio. Gold is a sliver. It is for most people's portfolios, unless you're obviously heavy into the metal space, and you're probably almost all into metals and miners, but um, gold has to give me a perfect setup, so I just wait for another one. It's not about how much it pulls back. It's letting the charts paint a picture. Paint a formula or a pattern that is telling us, okay, the odds are if it breaks to the upside, it's going to go a lot higher. And if that's the case, then we'll get long. So, uh, you know, everybody always wants specific prices, and that's what you're you're going to keep asking me. It's like, what price? What price? I'm like, I don't really know. It's more like what have the charts drawn, and are they giving us a bullish picture? And then from there, we can calculate the pricing. What's your sentiment on Bitcoin? Similar question. I don't have to ask you for a specific level, but um if you're not in Bitcoin right now, which you're not because you're 100% cash, what does it need to do for you to let let's put it this way. What does Bitcoin need to do to convince you to get in on Bitcoin? >> Yeah, Bitcoin really needs to trade sideways in a in a more stable range. I'm not a fan of the Bitcoin chart because it's got this broadening formation. And it has higher highs and it has lower lows, which means volatility, every move is getting larger and larger. And so, you know, it it breaks to to an all-time high and then you might get long and then it and then it knocks you out and then it breaks a low and goes even lower and then you get short and then it reverses and gets you off guard and it makes a higher high and then you get long again and then it goes down and makes a lower low. Like this type of chart pattern is noisy. I don't like it at all because it it's incre it's increasing in volatility. It's getting more dangerous as the pattern unfolds. So, it needs to do a lot before I'll ever like Bitcoin again here. It's going to need to like build, you know, some type of bull flag pattern and have a nice controlled move to the upper end and build another pattern and then maybe after this, if it starts to break out, it could be a clean breakout. But right now, I can't really, you know, it needs a lot of time going sideways. It needs some stable pricing and right now it's just showing signs of money piling in and then money pouring out and that's not the type of price action that is that bodess well for a high probability trade. >> Finally, stocks similar question. >> Yeah, if we look at the stock market, I I think the stock market could turn around here very quickly. The stock market isn't quite as volatile. Um we're I think we're going to see over the next potentially over the next week or so, the market may stabilize and want to break higher. Uh, so it it's not far away from us potentially getting long again, but we do need to see some more broad market strength in the market. So I I can't give you a price, but I think in the next few trading sessions, we're going to know whether uh the market is actually starting another uptrend and this was just a piece of news and a bout of selling that shook things up. It's trying to buck everybody out of the market and then it wants to go higher or it's going to quickly here reverse back down and actually go into a bigger reset. Uh so again, right now we're just on the sidelines and we have to let the charts tell us in the money flows of of what we should do. So I mean it doesn't give you an answer other than we need to let it prove itself. Once the chart says, hey, this is actually an uptrend again. It meets our qualifications, then we can get long and the market might want to continue to run higher. >> Chris, I want to end on real estate. You mentioned real estate is not something you would park your cash in right now. I'm curious why rates are falling across the board, Canada and the US. >> Well, I I mean I follow a lot of economic data for in the in the real estate space and the charts look horrendous. Everything is telling me that we're still going to have some type of weakness in the overall economy, which is if we have that, it's not good for real estate. And it doesn't matter if mortgage rates drop that much. I I don't think uh usually falling rates help boost home pricing because if it's a cheaper mortgage rate, you can buy a more expensive house. Um but I if when you couple that with a weakening economy, which I believe we're slowly inching our way to, it doesn't matter. People can't afford the house anyway. And even if it's cheaper, they you know, a lower mortgage rate, they're like, "That's still too much." And then the other problem is is when we do go into recession, the banks tighten right up. So people who qualified for a mortgage, you know, a month before things turned sour, now they don't qualify because the banks put these. So you can't sell homes as much, they don't sell as fast because most people don't get approved. And so home buyers have to keep lowering their price so they can sell the house that they really want to get off their hands. And it creates this this feeding frenzy of um, you know, of supply. They just start dumping a lot of supply. And I I like real estate. I think there's some really interesting ways to play real estate. I mean, if we go back and look at um the monthly chart, you know, a lot of people, you know, don't want to get into real estate because of all the legal things that go with it and and toilets and running water, tenants, all that stuff. >> Yeah. >> But I I do think there's going to be a great opportunity just like in 2008. I think eventually, you know, REITs sell off. So, this is IYR. So if you say you don't want to buy a home or multif family or self- storage, you just go on your brokerage, you buy an ETF that owns those. They pay these purple lines across the bottom are dividends. They pay really nice dividends. Now you can see in 2008 the the REITs got hammered. They fell like 75%. Which is amazing because they they dropped sharply. you can buy them and the dividend yields back then I mean I I bought ETF ETF that was paying 16% dividend after the 2008 crash and so these yields will be massive because the share price has come down but the yields are still the same the div dividend distributions and so the nice thing about these is you can buy you know $10,000 $100,000 a million dollar whatever you want of these ETFs when they're oversold and they pay a high yield and take advantage of it and earn you know beautiful returns for many many years to come. I I do think we're going to see the real estate market and and the the REITs themselves as well fall dramatically again. I think it's going to be an amazing opportunity and I think you can make a lot of money with REITs um real estate side of things even even more so than real estate sometimes because you you get a share that's oversold. It's it's way undervalued and it it can bounce back and double in value in a very short period of time, a year or two. uh and and you know, you don't generally get that in the housing market. So, the REITs are a great way to play it. I do think we're going to see real estate fall. Rates are going to get hit very hard. Uh but it's not the time yet. I really don't The numbers don't work. If the numbers don't work, you shouldn't be dabbling in in real estate. The numbers have to be like, you know, really really um supportive of you buying it and give you a lot of wiggle room in case you have major problems or expenses in those. So, that's my take. If you if you have to buy a home cuz you have to live in it, that's a different story. But let's say I'm already sitting on a home um and I'm thinking maybe should I either buy a second property now or sell my home either for an upgrade or a downgrade in size. Um I'm getting the sense that you probably would stay put on the current home for now. >> Yeah, you nailed it. I mean, buying a home right now is not the end of the world if you're living in it. Homes are great investments long term. So, if it's your homestead, I mean, buy what makes you happy. Buy what has all the features you want and just realize it's a long-term investment. But if you're buying a second property or third property, I mean, you shouldn't I don't think you should be touching it yet. You got to wait for I think the bottom's about to drop and we're going to see a nice drop in pricing and it's going to open up the doors. So, if you're patient, the right cycles will come into play and you can accumulate at the right times. >> Excellent. All right. We'll put the link down below so you can follow Chris. He has a YouTube channel and a website. What uh just tell us what we can expect to learn from you when we go visit your work, Chris. >> Sure. Yeah. Well, pretty much every morning I do a morning report. I cover what happened in the markets overnight, pre-market, uh what to expect today from intraday charts all the way to the long-term monthly charts. I really just keep everybody with their their finger on the pulse of the market. You know, what to expect. Is there going to be gaps and and panic selling or FOMO? And generally I can kind of put a thumb on on how most investors are feeling and kind of I guide them through the day each kind of day by day so they don't get caught up in emotions. And then I share my trades. I manage my own portfolio. That's that's all I do. And I share my exact portfolio and trades and allocation with subscribers. So we all we all navigate these markets together. And I have the best intent because it's all based on my portfolio, the exact trades that I do. >> Excellent. Thank you very much, Chris. Great update today. Very timely update. We'll speak again soon. Don't forget to like and subscribe to this channel and subscribe to Chris's channel. Again, links down below. See you next time, Chris. >> Thanks, David. >> Thank you for watching. Don't forget to like and subscribe.