Mike McGlone: Gold’s Record Run Is Flashing a Market Warning
Summary
Gold: Gold massively outperformed risk assets and reached historically extreme premiums versus long-term moving averages, suggesting consolidation or a potential 20-30% correction risk.
Silver: Silver outpaced gold but is increasingly industrial; gold/silver ratio signals were highlighted with low equity volatility complicating the signal.
Copper: Copper strength was driven by supply disruptions rather than demand; risks skew lower if US equities weaken, with the gold-to-copper ratio at record highs flashing caution.
Crude Oil: A rare divergence with falling oil and surging gold was framed as a macro warning, implying vulnerability in broader risk assets if equity gains reverse.
US Equities: The US stock market was characterized as extremely overvalued versus GDP and the world, with elevated risk of a sharp drawdown and wealth-effect reversal.
US Treasuries: Bonds may benefit as volatility normalizes and risk assets reprice; Treasury prices showing early signs of turning higher as yields drift lower.
China: China’s deflationary signals (low yields) and its roles as top gold buyer and copper consumer were cited as key macro drivers alongside US tariffs.
Bitcoin/MSTR: Bitcoin and broader crypto underperformed versus equities despite higher volatility; MicroStrategy (MSTR) was flagged as a high-beta proxy rolling over, signaling risk fragility.
Transcript
It's a scary thing when virtually every risk asset on the planet underperforms gold. The last time we had a significant year like that was in 2008 when it really mattered. We all know what happened in 2008. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. [music] >> Greetings and welcome to our Wealthy on Show. My name is Trey Reich and we're here today with Mike Mcloone, senior commodity strategist at Bloomberg Intelligence. Uh, and for those lucky enough to be able to afford Bloomberg on an ongoing basis, we've gotten to know Mike's commentary as especially insightful and we thank him for taking the time to spend some time with us today. >> Well, thanks for having me, Trey. I'm looking forward to being on looking forward to our conversation. >> Terrific. So, uh, jumping right into things for those not familiar with your work, can you just give me a couple of brief sketches of your team and what you're trying to accomplish? >> Well, we have a decent commodity team here of energy, agriculture, and metals. Metals mostly based in London, energy all over the place, and agriculture mostly in the US, but global. But I'm the main commodity broad macro person. I spoke about the whole broad commodity market. Um, and Bloomberg has quite the team. And for me, bottom line, as you mentioned, the terminal, I have the advantage of sitting in front of this fire hose of wealth of of information and just trying to drink it every day. That's what we say here is trying to drink from a fire hose. >> Terrific. Well, for those uh again who aren't familiar with your work, I thought we would start with sort of a report card uh from 2025. So back on January 15th, uh your team published a report that was entitled seven metals and mining predictions for 2025. So again to establish your credentials uh loosely with our viewers, the first two were gold will outperform stocks and silver will outperform gold. Why were you confident of those and how did those two uh predictions work out? So that was my my um the Bloomberg Metals team in London published that. They piggybacked on my outlook on gold. Um and um that's really their research. My research was gold is going to outperform everything on a riskadjusted basis. It has um silver basically trades double the volatility of gold and it's on year to date it's up 60% and gold's up 50%. So riskadjusted silver should be up 100%. But of course it got to that new high and that's how it did. My my bias remained back of gold. Everything I saw was that the markets all markets were getting stretched. We had almost a perfect storm for gold. I think gold just absolutely loves our new president um and pushing back in the Fed and tariffs and kind of disrupting the world order. In addition, we have major geopolitical things keeping the gold market quite bid. I I the continuing war in Ukraine and obviously other other wars going on. But to me, it's also the bottom line I saw for gold is the US stock market just getting historically incredibly um expensive and it's actually historically incredibly more expensive now. And gold's been kind of the offset on that. So I think the thing is for gold it reached a pretty significant threshold around $4,000 an ounce. That was as far as looking at relative to virtually every moving average. I like to use 40, 50 or 60 month, 200 day, whatever one you want to use. It's basically the most stretched it has been since the late 1980s. And so I think it's reach reached a pretty good plateau. So for next year, I'm quite concerned with gold signaling. Certainly in a year with gold going up and crude going o oil going down and that disparity being the greatest in history. We only go back 100 years, but crude oil didn't really matter 100 years ago is quite scary from my standpoint from what I see what it might mean. Going back to the uh team predictions, uh three and four had to do with iron ore prices going lower and mined copper supply jumping 2%. Are those in your Bailey Wick or am I uh confronting you with your colleagues work? >> It's mostly I it's it's both. I I look at iron ore um let them dig into more. I've mostly focus on the macro most actively traded futures. Anything that's in the bloomer commod index or S&P GSI is kind of my focus. My background really is futures starting in the Chicago trading pits in the 80s. Um the thing about iron ore has been a great indication of the lack of economic demand pull out of China. It's been flat for a couple years now. Um and it's some of the other metals I don't dig in as deep. Um for instance, aluminum, but um copper I do and I just my my colleagues do mostly the supply demand analysis and outlooks. And it turns out what happened this year is copper's obviously had a major issue with um with curtailed of supply um production issues. Now that's boosted up. So it's basically up for the wrong reasons. But I look love to look at copper as a macro economic indicator. And looking forward I look at copper at about $56. Um watching the US price because this has really been the center of the universe because of US tariffs is at risk of going to four rather than sustaining and going back above six and going getting towards six and reaching alltime highs. So my outlook for copper is I'm quite discon quite concerned. But one thing that's happened recently, we just reached the highest gold to copper ratio in history and often times that um those peaks which looks like it's rolling over could be quite disconcerting. It can mean certain things sort of global economic issues. Also we had a pretty high gold versus everything um ratio reached earlier um this year and just this month in October most notably versus silver versus crude oil versus broad commodities. The only thing that gold's cheap against was the stock market. US stock market. >> Terrific. So you continue to jump forward to the present, which is your job. I'm still trying to sort of set this up a little bit. We'll abandon the other three. Cobalt, aluminum, and uh steel prices because I don't think that's really in your your baywick. Uh obviously your forecast for this year turned out to be pretty preient. So uh after rising 27% last year uh gold peaked on 1020 at 4381 up another 67% and on the silver side of the equation after rising 21.5% and 24 spot silver peaked at 5448 on 1017 up a stunning 89%. So after those moves in 2024 and given your enthusiasm for the sector, were you surprised uh by the degree of the outperformance? >> Oh, sure. Absolutely surprised, but nice to be on board that one. I get a lot wrong, but let's remember I I'm and again I think you appreciate point you pointed out is I my job is always look forward to have a view about where things are going. So I always try to dispel about a little bit where they went. But the key thing a lot of my longtime listeners and viewers and people who read me on the research is I had to get beat up by gold for about four years. When I first traded up to 2000 in 2020 and then when we had Russians invasion in Ukraine in 2022 I've been looking for it to go above 2000 for 20 21 22 and 23. So I had to be called an idiot for quite a while. Hey Mclo why isn't it going up? And finally it caught up. But it caught up at such a velocity, such an extreme. Now it's just, you know, that's the lessons of the entire business. When you can take profits and you get the right side of a trade, you're supposed to do that. And I, you know, I I don't give investment advice, but gold is very much to me at reaching $4,000 an ounce is so stretched historically. Yeah, I get all the fundamentals, but sometimes you have to shift over to them being a risk manager and risk manager, it's just so stretched versus all extremes. And I think the quote I heard was three to four standard deviations versus a 60-month moving average, which is 01 probability, which happens like very rarely that you have to be lightening up and not expect outperformance from these levels. So I look at gold is very similar to what I looked at Bitcoin last year. Bitcoin reached 100,000 and the whole crypto market. It's languished since um that was since December 6 and it's up only 15%. It's just trading like the stock market now. Gold, I think it's stuck for quite a while and it's waiting for its next big catalyst. I think the next big catalyst for gold might be some little deflation, a little bit of normalization in risk assets. And that's what I'm really concerned about there this year. When all risk assets, most notably the stock market and cryptos and copper and virtually everything underperforms the rock, something's wrong. And that's what that's what I'm concerned about looking forward is what it means. If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance at hardassetsalliance.com. That's hardassallalliance.com. So uh again bringing this along chronologically you mentioned the four years and that dovtales into an admission that I make which is I've been doing this for sort of 25 years and there are three I call them the big three fundamentals which folks who are uh exposed to the precious metal trade or slightly bearish or concerned about the Fed the big three fundamentals are US deficit anti-doll sentiment and declining Fed credibility. Now, as you mentioned, the four years that you were looking for these fundamentals, I've been look, you know, most folks have following the gold trade have been looking for these for 20 years. So, it's not that they're new. It's not that they're unprecedented. And again, this may not be specifically your area, but would you agree that these three fundamentals have hit inflection points uh clearly that are starting to matter on the global stage? >> Oh, sure. The thing is the the questions are the same the answers have changed. The 10 on a 10 one to 10 scale for everything that matters on everything right now is the US stock market. Unfortunately, it's it's wonderful. It's become the economy. It's 2.3 almost 2.4 times GDP. It's the highest in history. It's surpassed what it was in 1929. Surpassed Japanese stock market in 1989. And that's also versus it's also the highest ever in market cap versus the rest of the world. This is unprecedented um lofty valuation levels. So at some point you have to shift the narrative over to what matters now and that's what I've been doing for certain markings since I was staying bearish crude oil and the the the answers have changed and that's why I point out that's all that matters. So to get normal and continued appreciation in any risk assessably copper to have any type of base formation in crude oil um you need the stock market to keep going up and at some point it's going to go down. Question is when? We don't know when. I've been wrong on that for a while. So uh the bottom line is I think gold's telling us there's um lofty issues with all risk assets most notably US stock market and all the other things partly is like you mentioned yeah increasing US deficit despite expanding economy and um that's a problem and you know inflation above targets but then also what's really changed is Mr. Trump pushing back on the Fed every time he speaks gold loves him. I think that's that's what changed. But Marcus front run events and fundamentals, yes, are all bullish for gold, but the market's already priced in a lot of that by getting, you know, the best year since 1979. You go back a 100red years and still up 51% on the year as we speak on, you know, on October 28th. This is the fourth best year the last 100 years for gold. The only three preceding one are 1979, 1972, and 1973. Massive inflationary periods. What's happening this year is gold is doing something it's never done before. is at a parabach rally despite stock market um volatility at multi-year lows 90-day volatility now stock market's just very low it's like never happened um so what is it a is a is it warning us or is it faint and we shall see but that's part of the reason I think you know when you get this kind of excessive appreciation in the store value in a short period of time it's usually a sign of um it should stall at these levels for a while wealth so 4,000 or even from here a normal 30% correction is normal I mean that's what happened in on the way up in 2006 and 2008 this part of a decent bull market, but each time it corrected 30% from less overbought levels than we are now according to most moving averages. So, um that's the key thing to remember is in markets the answers change constantly is trying to keep up with those and that to me is why um we are very concerned. I'm actually somewhat scared by what gold's been doing this year. Now, it's been nice to be on top of that trade and I get a lot wrong and crude oil going down. Nice to be on top of that trade. But main thing I've been getting wrong trade and main thing is this excessive appreciation of US of wealth in US and um the lack of a decline in US Treasury bond yields which is potentially just getting started. >> Terrific. So uh last setup question before we get to some of your recent analysis about uh 60-month means etc. Um your work obviously has a fairly strong technical component. Um, gold obviously has a lot of fundamental uh analysis attached to it. How much has precious metal strength in this recent move been driven by technicals? Do you think gold has become a technical animal? >> Well, that's one thing I love about being accused of being technician is I'm both I'm everything. I'm what matters when it matters. And right now as I I and I wrote about this as soon as golden reached 4,000 I put on my when I was approaching my money manager hat. I did get my FRM in 2006 financial risk manager and I just point out fundamentals don't matter at some point when you get this stretch versus every historical mean in mankind I'm going back to major inflation of the 70s and 80s and that's when I switch over to the the tacticals I do love getting push back in those that's what a money manager is supposed to do I'm sorry risk manager and I just say sorry but this is not levels to me overright bullish gold now I was you know for last at least 10 years five six years gold is the the one to be in but Now it's just times to be um focus on things that give you indications you should be careful and the key thing is there's always a reason for movements and fundamentals always matter but there's time to be more technical more fundamental and this is where one thing I will point out is that there there's sometimes you get great signals either way and the gold signal we got until right about August where it it popped up to that high in um in April it stuck around um just around just 3,000 bumped up around 3500 for 5 months. That was like the perfect bull flag. Now, that one is a great signal. I love writing about it and they said, "Yeah, it's going to just pop up to 4,000." But now we got to 4,000. What do you do next? So, sometimes you get technical, sometimes you get funnels, but that's part of my job is identify what matters and also to be um above the curve and ahead of the curve and outside the consensus. When I just say consensus things, why bother to publish it? It's just as news. I need to be a strategist and look ahead and out and look beyond some of them. And that's the key thing I love about some of the fundamentals like supply and demand fundamentals for for copper are basically what you see in the price in the screen. What's the next what's going to be the next thing to make that move that market move. >> So uh this is a perfect segue in your recent work which I have read. You talk about spot gold's price premium to its 60-month mean uh which you mentioned hit 92% uh on October 17th. Why is the 60-month mean significant to you in your work? And how do current gold and silver price premiums stand versus prior cycle extremes? >> So, it's not just 60 month, it's 40, 50 month, 200 day, 200 week, 100 week. They're all somewhat subjective. They're all you got, you can test. I I bet to test them all and I just use the most relevant. But in commodities, typically fiveyear moving average is most standard and 60-month is the standard. So, I went to that one, but I published on all of them. I published a couple on 200 day just to to show I'm indiscriminate. I'm the money manager sitting here and saying, "Yeah, this is not a level to be overweight gold." And that's also then thing you you you learn to trade when you see the pileon trade happening into significant performance like this. It's usually a sign of what happens in bull markets usually make peaks on euphorian pylon. Now, that's clearly what's happened in cryptos and bitcoin. Now, bit gold's a little bit early for that, but you clearly saw the pylon and the stretched level. So I just pointed that's like I said I put on my risk management hat and said this is not where you want to be buying gold by the way here's what happens in the last 50 to 100 years well only 50 years because you know since we've been off to the gold standard when markets get distressted and I'm always looking for better indications the key thing is gold's been driving everything now we know the fundamentals central banks are buying but central banks also have somewhat elastic they were loading up between 2,000 and 3,000 but to overweight you know to load up to 4,000 might be a little bit we might wait a little bit um ETF buyer after four years of outflows have shift shifted significantly to inflows this year. Now they're curtailing a little bit but that was a major shift they identified last year that was going to happen. But all this has happened and this also we've seen how um controversial Mr. Trump is that was kind of somewhat predictable. We all most of us who read the books about him u realize it and then that's been wonderful certainly pushing back in the Fed. He didn't make any he wasn't shy about that but question is does it get any better? Um and we're in the middle of a shutdown. It's an epic set down that no one seems to be to care about. That's somewhat significant. So the the writing was on the wall for Bitcoin to make a high around 100,000 last year. Now it's higher, but it's the performance is really curtailed significantly particularly in the broad crypto market. But I need to compare the two because they ask your average 30ome. They don't care about gold. But the thing is for gold now, there's only four precious metals and gold's been driving them all up. Now, like in May, I think it was the gold platinum ratio that the price of platinum reached the lowest versus gold ever. Now, we only go back like 40 years and platinum caught up. Palladium a little bit, but platium's already had its run and silver's caught up. Silver's obviously a little more industrial, but they all, you know, are in the back of gold and gold's just too stretched at these levels. So, the question is what happens to next, which if it consolidates around 4,000, that would have been great. That's what Bitcoin's done. It can do a time correction. We'll see. But typically has 20 to 30 correction percent corrections from these kind of moves. And we'll see what happens with the rest of the markets, how they might drive it. >> So, where does the current uh premium above the 60-month mean stand versus prior cycle extreme? >> Still historic. >> Okay. Are we at >> I can pull my charts back. It's still historic. It's like 85% or so. And the the peak in 81 was about that. The peak in 2006 was that about 2008. And then 2011 was a little bit less. Well, 2011 is a significant because that's when it put its all-time high around 19,000 and then that lasts for 10 years. >> Things happen. >> You're saying even in the late '7s, it's never been more extreme than today. >> Not against the 60-month moving average. No. >> Mhm. >> Well, not until recently. It's pulled back a little bit, which was the point. I published that when it reached around just around 4,300 and that's come back a little bit. So, now that we have the uh correction, if you'll call it that, from the October peak, I think through this morning's lows uh on an intraday basis, we're down 495 bucks from the peak, which is about 11.3%. When you get a technical um event like what we've had, does that switch the balance from fundamentals to technicals over the short run? Well, it's it's still way too short because when um when you go back 50 years, I'm just going back just about 20 years to 2006 and seven and eight. >> Um gold's had, you know, there's periods from lesser overbought levels just we had recently it's it's it's stagnated for years. It's corrected 30%. Is it different this time? Maybe. We'll see what's going to drive it further. So, I just look at it. It doesn't, you know, again, yes, right now the fundamentals are are known knowns. I mean, you can, they're in New York Times, so you can read the cover and it's just how no known it is. And that's typically where you have to be very careful loading up on bull markets. Like I said, I took the pain for many years when I thought it was going to break out. It finally did. And now is not the time to to overweight longs in gold. >> Got it. Um so in essence well uh even [clears throat] though nothing's changed in the fundamental picture now we have these towering pivot points above us and that will I think color trading in these markets for months to come. Would you agree? >> Oh sure. So the question is what's it going to do forward? I mean hovering around 4,000 for a few months would be a great sign of just a bull market correction. Dropping 30% I think would being pretty significant buyers maybe down to 3500. It's just normal historically from such stretch levels. But now this is where I have to say, you know, sometimes you have to just you when you've made a decent amount of money, if you're a strategist, you you you give some back to the market, sit back and wait. One of the hardest things for traders, investors to do is not trade or not invest and just wait for opportunities. Particularly when you've been giving a gift like this is this this gold rally for those of us who've been bullish gold forever is complete gift. I mean, it's the best year in a 100. I don't expect to live a hundred years. It'd be wonderful. do, but I don't think I'll be trading that one. So, that's just how extreme. That's a key thing to mention, trade, though, is when I can say make statements like this that we've had the most extreme disparity between rising gold and flowing crude oil ever in a year the stock market's just me doesn't really care about these lows. That's kind of strange. I mean, is this going to mean something to me? I'm looking more at the macro. Is this going to mean something as we look back from the future? Is it telling us something? Is this warning? And I think it is. Um and that's where I look at the next key signals. So this is also happening with bond yields ticking lower. So when people are talking about inflation and debasing like that doesn't usually happen with bond yields ticking lower and then if you want to look at deflation look at China tenure note yield right now as we speak in the US is 398 and China is 189 81 that's deflationary forces in the world's second largest economy. So the macro is pretty significant. Who's the largest buyer gold on the planet? China central bank, largest demand pull user of copper, China. Um, and who's the the the target of a lot of this these tariffs in the US? China. >> Wealthian's putting the spotlight on silver with expert interviews, deep analysis, and a special in-depth report from our partners at SCP Resource Finance. To receive this report and other exclusive benefits, you can sign up to become an accredited investor with Wealthon at wealth.com/acredited or by finding the link in the description below. Speaking of silver, Wealthon will be on the ground in Toronto for the SCP Resource Finance Second Global Silver Conference. Legendary investor Eric Sprat headlines the event alongside 15 silver mining companies presenting their top projects. Find out more in the description below. >> So, uh, this is going to be a bit risky, but I'm going to go ahead and ask you anyway. >> Have you ever uh looked at the work of Michael Oliver? >> I've heard of him, not really. >> Right. So he does a lot of structural analysis and he was we SCP and wealthy on we just hosted a silver conference in Toronto this past Thursday and uh I was interested to be exposed to a lot of his work and Michael has some structural um uh ratios uh and spreads between gold and silver gold and gold equities and gold and the S&P 500 without going into all the details. If you look at these long-term structural spreads, we're bumping up against, and we certainly were at gold's high, uh, going through a very long-term resistance in the spread between silver and gold between gold equities and gold and gold and the S&P. Now that's a lot of introduction to ask you the question even though we I think everyone agrees that gold's due to cool off a bit here. Uh is do does your work suggest that if we poke above recent highs that there could be actually an acceleration in the move of silver versus gold and gold versus >> for that to happen. I love watching that gold silver ratio. It was great and I was great and it's been giving me some good signals this year. when it popped above 105 when volatility in the stock market spiked with um in April with the tariffs um that was a good signal it was a bit expensive the highest closing price in gold silver ratio in the history of mankind I think has been 90 or right around there um so we're already above right now we're at 84 and then it dropped down just below 80 recently I put out a buy signal not so much a buy signal say this is good support you're supposed to buy and here's a key thing that's different volatility is extremely low in the stock market it still is extremely low yet it's popped up from that 78 8 low 80 and it's heading back higher. So that gold silver ratio is a great indicator goes back hundreds of years but the world's completely changed and what's changed is silver is less and less of a precious metal every day. It's just much more industrial solar panels obviously and gold is being hoarded by central banks more so than any other metal. It's people don't really hoard silver anymore and central banks. Um so that ratio is awesome. I think was a great indicator and recently I just put out you know if you're going to buy the dip I I meant not the stock market look at gold silver partly because it dropped below 80 and volatility in stock market's really low now gold silver's bounced volatility in the stock markets still very low and the stock market's at record highs so so far I've been wrong about the stock market part but also I do love looking this um S&P 500 in terms of ounces of gold it is um the key level is about 1.57 right now it's 1.74 that's dipped below that a few times comes here and keeps bouncing up. But the first time it tested that ratio is in 1929. That's when it closed. Now that's monthly data. Um, and every time it breaks down below it, it's been hovering on that level for a few years now. Actually, since 2014. So, I think it's about time it's going to break down below it. Um, but the key thing now is much more the stock market driving because gold's had its move. It's way parabolic. It's way expensive. Historically, you're not supposed to buy this stretch versus most most moving averages. You can use 60-month as example. So now it's about the stock market can keep going up. And to me that's the next key thing just now here's what I love watching is some of the ratios are so significant. The things I'm seeing happening now is I'm so worried with the S&P 500 total return right now is 18% the year. If it just were give back five to 8% of that. I just see crude oil ready to drop hard. I see copper had major risk of dropping which is around five now backing down going towards four. And then I look at bond yields. They're ticking down despite the stock market going up. Yeah. Okay. the Fed's going to ease. But in this complete consensus that you got to buy the dip, stock market goes up, can't fight the Fed. Yeah, good luck with that because it's the everybody says the same thing. You got to watch some the lessons of Benjamin Israeli. What we generally anticipate does not occur. So be very careful. So that's why I'm watching that very closely and very concerned. And the key thing I'm watching for all leading indicators are cryptos. Um Bloomberg Galaxy crypto index is up what 8% in the year with the S&P 500 up 18%. That's horrible performance for something that trades three to four times ably. Cryp Bitcoin's up basically a little bit more in S&P 500, yet it trades two to three times of volatility. Very bad performance. So the indication for risk assets to potentially give up more of their performance versus gold will come from the risk assets now, not gold. To me, that's what I'm watching closely. And um we're going to the Fed's going to ease this this week. Obviously, this is not going to be played until next week. And the stock market has to go up. And that's what I'm looking at as alternatives now potentially are more in treasuries rather than before it was cryptos. They were great leaders. They got too expensive with Bitcoin 100,000. Then gold was a great outperformer this year. One of the best ever and that got too expensive. So what's left? That's why I'm looking at the risks of normal deflation from the inflation which is a lesson history which is happening in China right now. So, you mentioned a little while ago that you were worried, but you speak so quickly and I'm trying to follow everything. Slow down. >> I'm not sure exactly what you were worried about. So, are you worried about the stock market going down or in your world is that a positive thing? >> Oh, no. It's well um in in my world, well, it depends how you put it. So, that's why I should I will slow down. The the point is it's a scary thing when virtually every risk asset on the planet underperforms gold. The last time we had a significant year like that was in 2008 when it really mattered. We all know what happened in 2008. So the signals aren't very bad for risk assets. Maybe finally we'll get another decline. Oh my gosh, the market's not prepared for that. We've only had two in the broad stock market S&P 500 since 2008. Um so the market's completely given up on that. it's forgotten. Um, and maybe gold's warning us. I find it just quite um, frightening what gold might be telling us, what the next big trade is. And I laid it out for you. The last big trade was Bitcoin and cryptos. No, they got too expensive. And gold has been a great trade. It's got too expensive. And I think it's telling us the next big trade might be normal deflation from inflation. So here's what happens in history. 1929 US, 1989 in Japan, 199 in the US, 2008 in the US are all periods that are kicked into deflation only because they markets went up too much and so deflation follows inflation. The book the price of time by Edward Chancellor points out these these cycles always happen. I point out it's happening in China now. So how long can the US avoid normal deflation from inflation? And that's what I worry about when I can make a statement that gold's had the best year this year since to 1979. Something is potentially wrong. Now, we're going to look back from this future and say it just didn't mean anything. That's what I'm worried about. And that's why I'm concerned. Maybe there's a time you're supposed to just say, "Yeah, maybe it's time to lighten up on all risk assets and just stick with treasuries." And that's for me what gold's potentially telling us. That's my my interpretation of what's happening this year. And with crude oil going down, gold going up >> with uh would a 35% correction in the S&P in your mind be healthy for the financial system? >> Well, that's the key thing. Everybody keeps saying, "Oh, it's a healthy correction." We've had two 50% draw downs in the S&P 500 since 2000. Why not another one? And because when I say it, people look at me like I had three heads, like there's no way. I said the same thing in Bitcoin. Bitcoin in 2018, I said could drop a zero. I was only 70% right. It peaked around 10,000 after I said it and dropped to 3,000. Now I say the same thing. They look at like I am like I'm an idiot. That's why I have to point out I have to be an a a strategist and not be biased by any positions which I don't have. I don't can't trade and not without compliance and any you know and that's buy side or sell side. And that's why it's so important to point out these things. So I think we're this setup right now where we just can't stop going up is a setup for a disaster at some point. and gold is telling us that not so much it has to be disaster but we're way overdue for a normal >> reversion correction. And the key thing is a lot of us have been wrong about that for a while, particularly recessions, but now we're at the point the number one force for any type of recession is just a little pullback, a little bit of a reverse wealth effect. Um because we've had the greatest wealth effect in any time in history. It's all focused on US stock market. US housing markets part of it [snorts] up 57% since 2000. Stock market up 100% since 2000. Um running 2.3 times GDP. If that just drops 20%. That's 40% of GDP. That's the most in since the 1920s and 30s. So you see the problem there. That's why it's so important. It has to stay elevated. And I think that's what gold's warning us about. And now I'm wor worried about the next big trade is potentially deflation. I don't know what the trigger is going to be, but um when you get risk assets this expensive, even gold this expensive, and the market completely addicted to Fed's got to ease to keep it going, the fiscal the monetary stimulus has to keep keep to keep it going. This is why I point out where I just listened to a a um a book gentleman who is 30. It's okay to be 30. I'm double that age to point out, oh, you got to be in it for the long haul. you got to just create wealth by buy everything, keep buying and that's the kind of things that come out in their peaks and people just haven't learned the lesson of um 1929 US 1989 Japan. So I uh I was going to ask you about uranium and copper and rarers. Do those play uh any sort of roles in what you're looking at? >> Well, certainly copper less so rare earths um because you have to be um it's most through equities. I have colleagues who f cover those. I cover more the underlying commodities. Um uranium less so because it's not really traded active futures. I follow people like Eric Countet in macro voices and I believe him that uranium is going to continue to go up because of supply deficit. I don't really but I'm not so involved with that. But copper, absolutely copper is in my wheelhouse and it's it's been unique trade this year. Um and I I prefer to watch the US space copper, the European copper has just made a new all-time high which is great, but it's based on it's not because that usual demand pull force that you know copper and Dr. Copper can show the economic um global economic expansion is because of pretty significant supply constraints this year, production disruptions um and those are more than double normal. The questions typically those are not they're more temporary rather than the more enduring thing like demand pull. The key thing to watch for copper is overlay with bond yields. US price right now at 517 as we speak. Um bond yields are going down. Iron is going down. Overlay with bond yields in China. They're going down. Overlay it with um crude oil. Typically these are companions with copper and they're all going down. So what is going to keep copper up next year? That's what I look at as a wild card. And I view copper as a similar bucket as Bitcoin. Consensus is bullish. All the trends are up. It should continue to go higher. Everybody tells me the same thing. So that means a risk goes down in there. It's very highly correlated to the US stock market. So I just wrote that recently. Copper industrial metals and cryptos and Bitcoin will be fine as long as the US stock market keeps going up. That's my point is we are the most dependent in history for beta for the tide of beta to keep going up. And there's a lot of signals that tell us that the risks are it's going to go down. And one of the key signals is gold this year. >> So in your more recent report, I believe a few days ago, uh you raised a couple questions for the end of this year and next year. You've covered a lot of it, but metals beating stocks may be a trend. Did gold peak versus copper in October? Gold price headwinds, buried volatility? Uh record setting gold could signal a lose-lose. So we've sort of talked about the first four. Talk about the lose-lose. Yeah, that's the key thing. I've been writing about that for a couple six months. I had to rehash that because the signal from gold is this what kind of what happened in 2008. It warned us some of us who that was one of my best trading years ever when I traded. Um just because I [clears throat] saw volatility the year before got so low it just mean reverted. Um but um that was one signal. But the key thing from gold is if when it gets this stretch is telling you something's wrong. So that's a potential lose. Maybe we get that normal correction in stock market. God help us if we go down 20% and stay down 20 for a while. That's going to happen. It's just a question of when and that's severe deflation because it's the highest ever in terms of market cap to GDP. And it's also typically when those kind of things happen, if it happens any kind of velocity, gold's so stretched, the first thing that happens in any type of um you know market rug pull, you sell whatever you sell what you can and gold's one of those. It certainly happened 2008. Remember, gold had a great year in 2007. It was up 30%. Got up to a,000 in 2008 and things turned over. It dropped 30% down to from a,000 back to 700 and then back up again. Um, but it just cuz you got to sell what you got and then you sell what you got and what you want to. And that's why I have to tip over the tip of the iceberg is cryptos and bitcoin to watch what's happening there. And the tip of the tip of the iceberg is micro strategy. Micro strategy. Well, not just strategy. Um, run by Michael Sailor. I know him. I've interviewed him. We've been in touch for a while. Has rolled over. It was leading everything on the way up. It reached a pretty good peak last year and now that stock is down um on the year it's down. It's only it's unchanged with Bitcoin up about 25%. So, it's way underperforming. It's rolled over 200 day moving average has rolled over and I over I like to overlay that is you're just looking for indications. It's starting to hang downward. I mean that's the high beta stock tilting downward and it also is there's so much more fundamental involved we can talk about later but at the same time you look at the benchmark measure of US treasury bond prices in US that's the US one bond future I started in that trading pit in 1980 and it's starting to tick back up that's my point just the little reversion in that is barely started this is nothing so far we get just say a 5% draw down in the S&P 500 that stays down for a couple days a little pick up in 90-day volatility that just in in it's right now 10% right now but just a couple days ago reached the lowest since 200 just a little bit of reversion and the Dow tumble and that's what I'm seeing from you know crude oil going down and gold going up and I'm just looking for all the indications >> um but to me that's the tip of the iceberg of where things are heading and there's few times I get on a show like this and I think there's times when you have this is just a very scary market and there's times you're supposed to be prudent and say um don't tempt the market gods and this is what happens. Human nature always does they always get too bullish and and euphoric at the peaks and this to me is much more of a peak um later stages of a bull market. You certainly in the cryptos it's happening little bit in gold and maybe we're reaching that maximum pain versus potential gain in things like the treasury bonds which have been hated for a couple years now. >> So uh this has been fascinating. Thanks for your time and I'll close with a series of questions. Uh sort of the lightning round between now and the end of the year. Higher or lower? Bonds. >> Bond prices I think are potentially going to go higher with a pick up in stock market volatility. >> Stocks >> lower. >> Gold >> uned. >> Silver >> uned. >> Copper >> lower with stock market. Michael, thanks for your time. We'll check back with you in a few months. >> Thank you, Trey. I appreciate being on. >> Appreciate it. Thank you very much. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Thank you all for watching. We'll see you again next time. [music]
Mike McGlone: Gold’s Record Run Is Flashing a Market Warning
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It's a scary thing when virtually every risk asset on the planet underperforms gold. The last time we had a significant year like that was in 2008 when it really mattered. We all know what happened in 2008. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. [music] >> Greetings and welcome to our Wealthy on Show. My name is Trey Reich and we're here today with Mike Mcloone, senior commodity strategist at Bloomberg Intelligence. Uh, and for those lucky enough to be able to afford Bloomberg on an ongoing basis, we've gotten to know Mike's commentary as especially insightful and we thank him for taking the time to spend some time with us today. >> Well, thanks for having me, Trey. I'm looking forward to being on looking forward to our conversation. >> Terrific. So, uh, jumping right into things for those not familiar with your work, can you just give me a couple of brief sketches of your team and what you're trying to accomplish? >> Well, we have a decent commodity team here of energy, agriculture, and metals. Metals mostly based in London, energy all over the place, and agriculture mostly in the US, but global. But I'm the main commodity broad macro person. I spoke about the whole broad commodity market. Um, and Bloomberg has quite the team. And for me, bottom line, as you mentioned, the terminal, I have the advantage of sitting in front of this fire hose of wealth of of information and just trying to drink it every day. That's what we say here is trying to drink from a fire hose. >> Terrific. Well, for those uh again who aren't familiar with your work, I thought we would start with sort of a report card uh from 2025. So back on January 15th, uh your team published a report that was entitled seven metals and mining predictions for 2025. So again to establish your credentials uh loosely with our viewers, the first two were gold will outperform stocks and silver will outperform gold. Why were you confident of those and how did those two uh predictions work out? So that was my my um the Bloomberg Metals team in London published that. They piggybacked on my outlook on gold. Um and um that's really their research. My research was gold is going to outperform everything on a riskadjusted basis. It has um silver basically trades double the volatility of gold and it's on year to date it's up 60% and gold's up 50%. So riskadjusted silver should be up 100%. But of course it got to that new high and that's how it did. My my bias remained back of gold. Everything I saw was that the markets all markets were getting stretched. We had almost a perfect storm for gold. I think gold just absolutely loves our new president um and pushing back in the Fed and tariffs and kind of disrupting the world order. In addition, we have major geopolitical things keeping the gold market quite bid. I I the continuing war in Ukraine and obviously other other wars going on. But to me, it's also the bottom line I saw for gold is the US stock market just getting historically incredibly um expensive and it's actually historically incredibly more expensive now. And gold's been kind of the offset on that. So I think the thing is for gold it reached a pretty significant threshold around $4,000 an ounce. That was as far as looking at relative to virtually every moving average. I like to use 40, 50 or 60 month, 200 day, whatever one you want to use. It's basically the most stretched it has been since the late 1980s. And so I think it's reach reached a pretty good plateau. So for next year, I'm quite concerned with gold signaling. Certainly in a year with gold going up and crude going o oil going down and that disparity being the greatest in history. We only go back 100 years, but crude oil didn't really matter 100 years ago is quite scary from my standpoint from what I see what it might mean. Going back to the uh team predictions, uh three and four had to do with iron ore prices going lower and mined copper supply jumping 2%. Are those in your Bailey Wick or am I uh confronting you with your colleagues work? >> It's mostly I it's it's both. I I look at iron ore um let them dig into more. I've mostly focus on the macro most actively traded futures. Anything that's in the bloomer commod index or S&P GSI is kind of my focus. My background really is futures starting in the Chicago trading pits in the 80s. Um the thing about iron ore has been a great indication of the lack of economic demand pull out of China. It's been flat for a couple years now. Um and it's some of the other metals I don't dig in as deep. Um for instance, aluminum, but um copper I do and I just my my colleagues do mostly the supply demand analysis and outlooks. And it turns out what happened this year is copper's obviously had a major issue with um with curtailed of supply um production issues. Now that's boosted up. So it's basically up for the wrong reasons. But I look love to look at copper as a macro economic indicator. And looking forward I look at copper at about $56. Um watching the US price because this has really been the center of the universe because of US tariffs is at risk of going to four rather than sustaining and going back above six and going getting towards six and reaching alltime highs. So my outlook for copper is I'm quite discon quite concerned. But one thing that's happened recently, we just reached the highest gold to copper ratio in history and often times that um those peaks which looks like it's rolling over could be quite disconcerting. It can mean certain things sort of global economic issues. Also we had a pretty high gold versus everything um ratio reached earlier um this year and just this month in October most notably versus silver versus crude oil versus broad commodities. The only thing that gold's cheap against was the stock market. US stock market. >> Terrific. So you continue to jump forward to the present, which is your job. I'm still trying to sort of set this up a little bit. We'll abandon the other three. Cobalt, aluminum, and uh steel prices because I don't think that's really in your your baywick. Uh obviously your forecast for this year turned out to be pretty preient. So uh after rising 27% last year uh gold peaked on 1020 at 4381 up another 67% and on the silver side of the equation after rising 21.5% and 24 spot silver peaked at 5448 on 1017 up a stunning 89%. So after those moves in 2024 and given your enthusiasm for the sector, were you surprised uh by the degree of the outperformance? >> Oh, sure. Absolutely surprised, but nice to be on board that one. I get a lot wrong, but let's remember I I'm and again I think you appreciate point you pointed out is I my job is always look forward to have a view about where things are going. So I always try to dispel about a little bit where they went. But the key thing a lot of my longtime listeners and viewers and people who read me on the research is I had to get beat up by gold for about four years. When I first traded up to 2000 in 2020 and then when we had Russians invasion in Ukraine in 2022 I've been looking for it to go above 2000 for 20 21 22 and 23. So I had to be called an idiot for quite a while. Hey Mclo why isn't it going up? And finally it caught up. But it caught up at such a velocity, such an extreme. Now it's just, you know, that's the lessons of the entire business. When you can take profits and you get the right side of a trade, you're supposed to do that. And I, you know, I I don't give investment advice, but gold is very much to me at reaching $4,000 an ounce is so stretched historically. Yeah, I get all the fundamentals, but sometimes you have to shift over to them being a risk manager and risk manager, it's just so stretched versus all extremes. And I think the quote I heard was three to four standard deviations versus a 60-month moving average, which is 01 probability, which happens like very rarely that you have to be lightening up and not expect outperformance from these levels. So I look at gold is very similar to what I looked at Bitcoin last year. Bitcoin reached 100,000 and the whole crypto market. It's languished since um that was since December 6 and it's up only 15%. It's just trading like the stock market now. Gold, I think it's stuck for quite a while and it's waiting for its next big catalyst. I think the next big catalyst for gold might be some little deflation, a little bit of normalization in risk assets. And that's what I'm really concerned about there this year. When all risk assets, most notably the stock market and cryptos and copper and virtually everything underperforms the rock, something's wrong. And that's what that's what I'm concerned about looking forward is what it means. If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance at hardassetsalliance.com. That's hardassallalliance.com. So uh again bringing this along chronologically you mentioned the four years and that dovtales into an admission that I make which is I've been doing this for sort of 25 years and there are three I call them the big three fundamentals which folks who are uh exposed to the precious metal trade or slightly bearish or concerned about the Fed the big three fundamentals are US deficit anti-doll sentiment and declining Fed credibility. Now, as you mentioned, the four years that you were looking for these fundamentals, I've been look, you know, most folks have following the gold trade have been looking for these for 20 years. So, it's not that they're new. It's not that they're unprecedented. And again, this may not be specifically your area, but would you agree that these three fundamentals have hit inflection points uh clearly that are starting to matter on the global stage? >> Oh, sure. The thing is the the questions are the same the answers have changed. The 10 on a 10 one to 10 scale for everything that matters on everything right now is the US stock market. Unfortunately, it's it's wonderful. It's become the economy. It's 2.3 almost 2.4 times GDP. It's the highest in history. It's surpassed what it was in 1929. Surpassed Japanese stock market in 1989. And that's also versus it's also the highest ever in market cap versus the rest of the world. This is unprecedented um lofty valuation levels. So at some point you have to shift the narrative over to what matters now and that's what I've been doing for certain markings since I was staying bearish crude oil and the the the answers have changed and that's why I point out that's all that matters. So to get normal and continued appreciation in any risk assessably copper to have any type of base formation in crude oil um you need the stock market to keep going up and at some point it's going to go down. Question is when? We don't know when. I've been wrong on that for a while. So uh the bottom line is I think gold's telling us there's um lofty issues with all risk assets most notably US stock market and all the other things partly is like you mentioned yeah increasing US deficit despite expanding economy and um that's a problem and you know inflation above targets but then also what's really changed is Mr. Trump pushing back on the Fed every time he speaks gold loves him. I think that's that's what changed. But Marcus front run events and fundamentals, yes, are all bullish for gold, but the market's already priced in a lot of that by getting, you know, the best year since 1979. You go back a 100red years and still up 51% on the year as we speak on, you know, on October 28th. This is the fourth best year the last 100 years for gold. The only three preceding one are 1979, 1972, and 1973. Massive inflationary periods. What's happening this year is gold is doing something it's never done before. is at a parabach rally despite stock market um volatility at multi-year lows 90-day volatility now stock market's just very low it's like never happened um so what is it a is a is it warning us or is it faint and we shall see but that's part of the reason I think you know when you get this kind of excessive appreciation in the store value in a short period of time it's usually a sign of um it should stall at these levels for a while wealth so 4,000 or even from here a normal 30% correction is normal I mean that's what happened in on the way up in 2006 and 2008 this part of a decent bull market, but each time it corrected 30% from less overbought levels than we are now according to most moving averages. So, um that's the key thing to remember is in markets the answers change constantly is trying to keep up with those and that to me is why um we are very concerned. I'm actually somewhat scared by what gold's been doing this year. Now, it's been nice to be on top of that trade and I get a lot wrong and crude oil going down. Nice to be on top of that trade. But main thing I've been getting wrong trade and main thing is this excessive appreciation of US of wealth in US and um the lack of a decline in US Treasury bond yields which is potentially just getting started. >> Terrific. So uh last setup question before we get to some of your recent analysis about uh 60-month means etc. Um your work obviously has a fairly strong technical component. Um, gold obviously has a lot of fundamental uh analysis attached to it. How much has precious metal strength in this recent move been driven by technicals? Do you think gold has become a technical animal? >> Well, that's one thing I love about being accused of being technician is I'm both I'm everything. I'm what matters when it matters. And right now as I I and I wrote about this as soon as golden reached 4,000 I put on my when I was approaching my money manager hat. I did get my FRM in 2006 financial risk manager and I just point out fundamentals don't matter at some point when you get this stretch versus every historical mean in mankind I'm going back to major inflation of the 70s and 80s and that's when I switch over to the the tacticals I do love getting push back in those that's what a money manager is supposed to do I'm sorry risk manager and I just say sorry but this is not levels to me overright bullish gold now I was you know for last at least 10 years five six years gold is the the one to be in but Now it's just times to be um focus on things that give you indications you should be careful and the key thing is there's always a reason for movements and fundamentals always matter but there's time to be more technical more fundamental and this is where one thing I will point out is that there there's sometimes you get great signals either way and the gold signal we got until right about August where it it popped up to that high in um in April it stuck around um just around just 3,000 bumped up around 3500 for 5 months. That was like the perfect bull flag. Now, that one is a great signal. I love writing about it and they said, "Yeah, it's going to just pop up to 4,000." But now we got to 4,000. What do you do next? So, sometimes you get technical, sometimes you get funnels, but that's part of my job is identify what matters and also to be um above the curve and ahead of the curve and outside the consensus. When I just say consensus things, why bother to publish it? It's just as news. I need to be a strategist and look ahead and out and look beyond some of them. And that's the key thing I love about some of the fundamentals like supply and demand fundamentals for for copper are basically what you see in the price in the screen. What's the next what's going to be the next thing to make that move that market move. >> So uh this is a perfect segue in your recent work which I have read. You talk about spot gold's price premium to its 60-month mean uh which you mentioned hit 92% uh on October 17th. Why is the 60-month mean significant to you in your work? And how do current gold and silver price premiums stand versus prior cycle extremes? >> So, it's not just 60 month, it's 40, 50 month, 200 day, 200 week, 100 week. They're all somewhat subjective. They're all you got, you can test. I I bet to test them all and I just use the most relevant. But in commodities, typically fiveyear moving average is most standard and 60-month is the standard. So, I went to that one, but I published on all of them. I published a couple on 200 day just to to show I'm indiscriminate. I'm the money manager sitting here and saying, "Yeah, this is not a level to be overweight gold." And that's also then thing you you you learn to trade when you see the pileon trade happening into significant performance like this. It's usually a sign of what happens in bull markets usually make peaks on euphorian pylon. Now, that's clearly what's happened in cryptos and bitcoin. Now, bit gold's a little bit early for that, but you clearly saw the pylon and the stretched level. So I just pointed that's like I said I put on my risk management hat and said this is not where you want to be buying gold by the way here's what happens in the last 50 to 100 years well only 50 years because you know since we've been off to the gold standard when markets get distressted and I'm always looking for better indications the key thing is gold's been driving everything now we know the fundamentals central banks are buying but central banks also have somewhat elastic they were loading up between 2,000 and 3,000 but to overweight you know to load up to 4,000 might be a little bit we might wait a little bit um ETF buyer after four years of outflows have shift shifted significantly to inflows this year. Now they're curtailing a little bit but that was a major shift they identified last year that was going to happen. But all this has happened and this also we've seen how um controversial Mr. Trump is that was kind of somewhat predictable. We all most of us who read the books about him u realize it and then that's been wonderful certainly pushing back in the Fed. He didn't make any he wasn't shy about that but question is does it get any better? Um and we're in the middle of a shutdown. It's an epic set down that no one seems to be to care about. That's somewhat significant. So the the writing was on the wall for Bitcoin to make a high around 100,000 last year. Now it's higher, but it's the performance is really curtailed significantly particularly in the broad crypto market. But I need to compare the two because they ask your average 30ome. They don't care about gold. But the thing is for gold now, there's only four precious metals and gold's been driving them all up. Now, like in May, I think it was the gold platinum ratio that the price of platinum reached the lowest versus gold ever. Now, we only go back like 40 years and platinum caught up. Palladium a little bit, but platium's already had its run and silver's caught up. Silver's obviously a little more industrial, but they all, you know, are in the back of gold and gold's just too stretched at these levels. So, the question is what happens to next, which if it consolidates around 4,000, that would have been great. That's what Bitcoin's done. It can do a time correction. We'll see. But typically has 20 to 30 correction percent corrections from these kind of moves. And we'll see what happens with the rest of the markets, how they might drive it. >> So, where does the current uh premium above the 60-month mean stand versus prior cycle extreme? >> Still historic. >> Okay. Are we at >> I can pull my charts back. It's still historic. It's like 85% or so. And the the peak in 81 was about that. The peak in 2006 was that about 2008. And then 2011 was a little bit less. Well, 2011 is a significant because that's when it put its all-time high around 19,000 and then that lasts for 10 years. >> Things happen. >> You're saying even in the late '7s, it's never been more extreme than today. >> Not against the 60-month moving average. No. >> Mhm. >> Well, not until recently. It's pulled back a little bit, which was the point. I published that when it reached around just around 4,300 and that's come back a little bit. So, now that we have the uh correction, if you'll call it that, from the October peak, I think through this morning's lows uh on an intraday basis, we're down 495 bucks from the peak, which is about 11.3%. When you get a technical um event like what we've had, does that switch the balance from fundamentals to technicals over the short run? Well, it's it's still way too short because when um when you go back 50 years, I'm just going back just about 20 years to 2006 and seven and eight. >> Um gold's had, you know, there's periods from lesser overbought levels just we had recently it's it's it's stagnated for years. It's corrected 30%. Is it different this time? Maybe. We'll see what's going to drive it further. So, I just look at it. It doesn't, you know, again, yes, right now the fundamentals are are known knowns. I mean, you can, they're in New York Times, so you can read the cover and it's just how no known it is. And that's typically where you have to be very careful loading up on bull markets. Like I said, I took the pain for many years when I thought it was going to break out. It finally did. And now is not the time to to overweight longs in gold. >> Got it. Um so in essence well uh even [clears throat] though nothing's changed in the fundamental picture now we have these towering pivot points above us and that will I think color trading in these markets for months to come. Would you agree? >> Oh sure. So the question is what's it going to do forward? I mean hovering around 4,000 for a few months would be a great sign of just a bull market correction. Dropping 30% I think would being pretty significant buyers maybe down to 3500. It's just normal historically from such stretch levels. But now this is where I have to say, you know, sometimes you have to just you when you've made a decent amount of money, if you're a strategist, you you you give some back to the market, sit back and wait. One of the hardest things for traders, investors to do is not trade or not invest and just wait for opportunities. Particularly when you've been giving a gift like this is this this gold rally for those of us who've been bullish gold forever is complete gift. I mean, it's the best year in a 100. I don't expect to live a hundred years. It'd be wonderful. do, but I don't think I'll be trading that one. So, that's just how extreme. That's a key thing to mention, trade, though, is when I can say make statements like this that we've had the most extreme disparity between rising gold and flowing crude oil ever in a year the stock market's just me doesn't really care about these lows. That's kind of strange. I mean, is this going to mean something to me? I'm looking more at the macro. Is this going to mean something as we look back from the future? Is it telling us something? Is this warning? And I think it is. Um and that's where I look at the next key signals. So this is also happening with bond yields ticking lower. So when people are talking about inflation and debasing like that doesn't usually happen with bond yields ticking lower and then if you want to look at deflation look at China tenure note yield right now as we speak in the US is 398 and China is 189 81 that's deflationary forces in the world's second largest economy. So the macro is pretty significant. Who's the largest buyer gold on the planet? China central bank, largest demand pull user of copper, China. Um, and who's the the the target of a lot of this these tariffs in the US? China. >> Wealthian's putting the spotlight on silver with expert interviews, deep analysis, and a special in-depth report from our partners at SCP Resource Finance. To receive this report and other exclusive benefits, you can sign up to become an accredited investor with Wealthon at wealth.com/acredited or by finding the link in the description below. Speaking of silver, Wealthon will be on the ground in Toronto for the SCP Resource Finance Second Global Silver Conference. Legendary investor Eric Sprat headlines the event alongside 15 silver mining companies presenting their top projects. Find out more in the description below. >> So, uh, this is going to be a bit risky, but I'm going to go ahead and ask you anyway. >> Have you ever uh looked at the work of Michael Oliver? >> I've heard of him, not really. >> Right. So he does a lot of structural analysis and he was we SCP and wealthy on we just hosted a silver conference in Toronto this past Thursday and uh I was interested to be exposed to a lot of his work and Michael has some structural um uh ratios uh and spreads between gold and silver gold and gold equities and gold and the S&P 500 without going into all the details. If you look at these long-term structural spreads, we're bumping up against, and we certainly were at gold's high, uh, going through a very long-term resistance in the spread between silver and gold between gold equities and gold and gold and the S&P. Now that's a lot of introduction to ask you the question even though we I think everyone agrees that gold's due to cool off a bit here. Uh is do does your work suggest that if we poke above recent highs that there could be actually an acceleration in the move of silver versus gold and gold versus >> for that to happen. I love watching that gold silver ratio. It was great and I was great and it's been giving me some good signals this year. when it popped above 105 when volatility in the stock market spiked with um in April with the tariffs um that was a good signal it was a bit expensive the highest closing price in gold silver ratio in the history of mankind I think has been 90 or right around there um so we're already above right now we're at 84 and then it dropped down just below 80 recently I put out a buy signal not so much a buy signal say this is good support you're supposed to buy and here's a key thing that's different volatility is extremely low in the stock market it still is extremely low yet it's popped up from that 78 8 low 80 and it's heading back higher. So that gold silver ratio is a great indicator goes back hundreds of years but the world's completely changed and what's changed is silver is less and less of a precious metal every day. It's just much more industrial solar panels obviously and gold is being hoarded by central banks more so than any other metal. It's people don't really hoard silver anymore and central banks. Um so that ratio is awesome. I think was a great indicator and recently I just put out you know if you're going to buy the dip I I meant not the stock market look at gold silver partly because it dropped below 80 and volatility in stock market's really low now gold silver's bounced volatility in the stock markets still very low and the stock market's at record highs so so far I've been wrong about the stock market part but also I do love looking this um S&P 500 in terms of ounces of gold it is um the key level is about 1.57 right now it's 1.74 that's dipped below that a few times comes here and keeps bouncing up. But the first time it tested that ratio is in 1929. That's when it closed. Now that's monthly data. Um, and every time it breaks down below it, it's been hovering on that level for a few years now. Actually, since 2014. So, I think it's about time it's going to break down below it. Um, but the key thing now is much more the stock market driving because gold's had its move. It's way parabolic. It's way expensive. Historically, you're not supposed to buy this stretch versus most most moving averages. You can use 60-month as example. So now it's about the stock market can keep going up. And to me that's the next key thing just now here's what I love watching is some of the ratios are so significant. The things I'm seeing happening now is I'm so worried with the S&P 500 total return right now is 18% the year. If it just were give back five to 8% of that. I just see crude oil ready to drop hard. I see copper had major risk of dropping which is around five now backing down going towards four. And then I look at bond yields. They're ticking down despite the stock market going up. Yeah. Okay. the Fed's going to ease. But in this complete consensus that you got to buy the dip, stock market goes up, can't fight the Fed. Yeah, good luck with that because it's the everybody says the same thing. You got to watch some the lessons of Benjamin Israeli. What we generally anticipate does not occur. So be very careful. So that's why I'm watching that very closely and very concerned. And the key thing I'm watching for all leading indicators are cryptos. Um Bloomberg Galaxy crypto index is up what 8% in the year with the S&P 500 up 18%. That's horrible performance for something that trades three to four times ably. Cryp Bitcoin's up basically a little bit more in S&P 500, yet it trades two to three times of volatility. Very bad performance. So the indication for risk assets to potentially give up more of their performance versus gold will come from the risk assets now, not gold. To me, that's what I'm watching closely. And um we're going to the Fed's going to ease this this week. Obviously, this is not going to be played until next week. And the stock market has to go up. And that's what I'm looking at as alternatives now potentially are more in treasuries rather than before it was cryptos. They were great leaders. They got too expensive with Bitcoin 100,000. Then gold was a great outperformer this year. One of the best ever and that got too expensive. So what's left? That's why I'm looking at the risks of normal deflation from the inflation which is a lesson history which is happening in China right now. So, you mentioned a little while ago that you were worried, but you speak so quickly and I'm trying to follow everything. Slow down. >> I'm not sure exactly what you were worried about. So, are you worried about the stock market going down or in your world is that a positive thing? >> Oh, no. It's well um in in my world, well, it depends how you put it. So, that's why I should I will slow down. The the point is it's a scary thing when virtually every risk asset on the planet underperforms gold. The last time we had a significant year like that was in 2008 when it really mattered. We all know what happened in 2008. So the signals aren't very bad for risk assets. Maybe finally we'll get another decline. Oh my gosh, the market's not prepared for that. We've only had two in the broad stock market S&P 500 since 2008. Um so the market's completely given up on that. it's forgotten. Um, and maybe gold's warning us. I find it just quite um, frightening what gold might be telling us, what the next big trade is. And I laid it out for you. The last big trade was Bitcoin and cryptos. No, they got too expensive. And gold has been a great trade. It's got too expensive. And I think it's telling us the next big trade might be normal deflation from inflation. So here's what happens in history. 1929 US, 1989 in Japan, 199 in the US, 2008 in the US are all periods that are kicked into deflation only because they markets went up too much and so deflation follows inflation. The book the price of time by Edward Chancellor points out these these cycles always happen. I point out it's happening in China now. So how long can the US avoid normal deflation from inflation? And that's what I worry about when I can make a statement that gold's had the best year this year since to 1979. Something is potentially wrong. Now, we're going to look back from this future and say it just didn't mean anything. That's what I'm worried about. And that's why I'm concerned. Maybe there's a time you're supposed to just say, "Yeah, maybe it's time to lighten up on all risk assets and just stick with treasuries." And that's for me what gold's potentially telling us. That's my my interpretation of what's happening this year. And with crude oil going down, gold going up >> with uh would a 35% correction in the S&P in your mind be healthy for the financial system? >> Well, that's the key thing. Everybody keeps saying, "Oh, it's a healthy correction." We've had two 50% draw downs in the S&P 500 since 2000. Why not another one? And because when I say it, people look at me like I had three heads, like there's no way. I said the same thing in Bitcoin. Bitcoin in 2018, I said could drop a zero. I was only 70% right. It peaked around 10,000 after I said it and dropped to 3,000. Now I say the same thing. They look at like I am like I'm an idiot. That's why I have to point out I have to be an a a strategist and not be biased by any positions which I don't have. I don't can't trade and not without compliance and any you know and that's buy side or sell side. And that's why it's so important to point out these things. So I think we're this setup right now where we just can't stop going up is a setup for a disaster at some point. and gold is telling us that not so much it has to be disaster but we're way overdue for a normal >> reversion correction. And the key thing is a lot of us have been wrong about that for a while, particularly recessions, but now we're at the point the number one force for any type of recession is just a little pullback, a little bit of a reverse wealth effect. Um because we've had the greatest wealth effect in any time in history. It's all focused on US stock market. US housing markets part of it [snorts] up 57% since 2000. Stock market up 100% since 2000. Um running 2.3 times GDP. If that just drops 20%. That's 40% of GDP. That's the most in since the 1920s and 30s. So you see the problem there. That's why it's so important. It has to stay elevated. And I think that's what gold's warning us about. And now I'm wor worried about the next big trade is potentially deflation. I don't know what the trigger is going to be, but um when you get risk assets this expensive, even gold this expensive, and the market completely addicted to Fed's got to ease to keep it going, the fiscal the monetary stimulus has to keep keep to keep it going. This is why I point out where I just listened to a a um a book gentleman who is 30. It's okay to be 30. I'm double that age to point out, oh, you got to be in it for the long haul. you got to just create wealth by buy everything, keep buying and that's the kind of things that come out in their peaks and people just haven't learned the lesson of um 1929 US 1989 Japan. So I uh I was going to ask you about uranium and copper and rarers. Do those play uh any sort of roles in what you're looking at? >> Well, certainly copper less so rare earths um because you have to be um it's most through equities. I have colleagues who f cover those. I cover more the underlying commodities. Um uranium less so because it's not really traded active futures. I follow people like Eric Countet in macro voices and I believe him that uranium is going to continue to go up because of supply deficit. I don't really but I'm not so involved with that. But copper, absolutely copper is in my wheelhouse and it's it's been unique trade this year. Um and I I prefer to watch the US space copper, the European copper has just made a new all-time high which is great, but it's based on it's not because that usual demand pull force that you know copper and Dr. Copper can show the economic um global economic expansion is because of pretty significant supply constraints this year, production disruptions um and those are more than double normal. The questions typically those are not they're more temporary rather than the more enduring thing like demand pull. The key thing to watch for copper is overlay with bond yields. US price right now at 517 as we speak. Um bond yields are going down. Iron is going down. Overlay with bond yields in China. They're going down. Overlay it with um crude oil. Typically these are companions with copper and they're all going down. So what is going to keep copper up next year? That's what I look at as a wild card. And I view copper as a similar bucket as Bitcoin. Consensus is bullish. All the trends are up. It should continue to go higher. Everybody tells me the same thing. So that means a risk goes down in there. It's very highly correlated to the US stock market. So I just wrote that recently. Copper industrial metals and cryptos and Bitcoin will be fine as long as the US stock market keeps going up. That's my point is we are the most dependent in history for beta for the tide of beta to keep going up. And there's a lot of signals that tell us that the risks are it's going to go down. And one of the key signals is gold this year. >> So in your more recent report, I believe a few days ago, uh you raised a couple questions for the end of this year and next year. You've covered a lot of it, but metals beating stocks may be a trend. Did gold peak versus copper in October? Gold price headwinds, buried volatility? Uh record setting gold could signal a lose-lose. So we've sort of talked about the first four. Talk about the lose-lose. Yeah, that's the key thing. I've been writing about that for a couple six months. I had to rehash that because the signal from gold is this what kind of what happened in 2008. It warned us some of us who that was one of my best trading years ever when I traded. Um just because I [clears throat] saw volatility the year before got so low it just mean reverted. Um but um that was one signal. But the key thing from gold is if when it gets this stretch is telling you something's wrong. So that's a potential lose. Maybe we get that normal correction in stock market. God help us if we go down 20% and stay down 20 for a while. That's going to happen. It's just a question of when and that's severe deflation because it's the highest ever in terms of market cap to GDP. And it's also typically when those kind of things happen, if it happens any kind of velocity, gold's so stretched, the first thing that happens in any type of um you know market rug pull, you sell whatever you sell what you can and gold's one of those. It certainly happened 2008. Remember, gold had a great year in 2007. It was up 30%. Got up to a,000 in 2008 and things turned over. It dropped 30% down to from a,000 back to 700 and then back up again. Um, but it just cuz you got to sell what you got and then you sell what you got and what you want to. And that's why I have to tip over the tip of the iceberg is cryptos and bitcoin to watch what's happening there. And the tip of the tip of the iceberg is micro strategy. Micro strategy. Well, not just strategy. Um, run by Michael Sailor. I know him. I've interviewed him. We've been in touch for a while. Has rolled over. It was leading everything on the way up. It reached a pretty good peak last year and now that stock is down um on the year it's down. It's only it's unchanged with Bitcoin up about 25%. So, it's way underperforming. It's rolled over 200 day moving average has rolled over and I over I like to overlay that is you're just looking for indications. It's starting to hang downward. I mean that's the high beta stock tilting downward and it also is there's so much more fundamental involved we can talk about later but at the same time you look at the benchmark measure of US treasury bond prices in US that's the US one bond future I started in that trading pit in 1980 and it's starting to tick back up that's my point just the little reversion in that is barely started this is nothing so far we get just say a 5% draw down in the S&P 500 that stays down for a couple days a little pick up in 90-day volatility that just in in it's right now 10% right now but just a couple days ago reached the lowest since 200 just a little bit of reversion and the Dow tumble and that's what I'm seeing from you know crude oil going down and gold going up and I'm just looking for all the indications >> um but to me that's the tip of the iceberg of where things are heading and there's few times I get on a show like this and I think there's times when you have this is just a very scary market and there's times you're supposed to be prudent and say um don't tempt the market gods and this is what happens. Human nature always does they always get too bullish and and euphoric at the peaks and this to me is much more of a peak um later stages of a bull market. You certainly in the cryptos it's happening little bit in gold and maybe we're reaching that maximum pain versus potential gain in things like the treasury bonds which have been hated for a couple years now. >> So uh this has been fascinating. Thanks for your time and I'll close with a series of questions. Uh sort of the lightning round between now and the end of the year. Higher or lower? Bonds. >> Bond prices I think are potentially going to go higher with a pick up in stock market volatility. >> Stocks >> lower. >> Gold >> uned. >> Silver >> uned. >> Copper >> lower with stock market. Michael, thanks for your time. We'll check back with you in a few months. >> Thank you, Trey. I appreciate being on. >> Appreciate it. Thank you very much. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Thank you all for watching. We'll see you again next time. [music]