‘The Data is a Lie’: Analyst Who Called 3 Crashes Reveals What's Really Happening
Summary
Market Outlook: Gold has reached a new all-time high, signaling a flight to safety amid economic uncertainty, while silver is also surging, reflecting investor nervousness.
Economic Indicators: The US industrial economy is in contraction, raising questions about the S&P 500's near-record highs despite negative economic signals.
Algorithmic Trading: High-frequency trading and algorithmic strategies dominate the market, accounting for over 80% of daily volume, creating volatility and manipulation risks.
Valuation Concerns: Current market valuations are at historic highs, with many stocks having unsustainable price-to-earnings ratios, making the market vulnerable to downturns.
Leverage Risks: Margin debt has surpassed a trillion dollars, posing a significant risk in the event of a market downturn, potentially leading to widespread margin calls.
Geopolitical Tensions: Global geopolitical dynamics, including alliances between China, India, and Russia, could impact US economic stability and market conditions.
Precious Metals Strategy: In the face of potential market crises, gold and silver are recommended as safe havens due to their historical stability and resistance to inflationary pressures.
Crypto Skepticism: Bitcoin and other cryptocurrencies are viewed as speculative with no intrinsic value, contrasting with the enduring value of gold.
Transcript
[Music] Hey everyone, welcome back. I'm Jeremy Saffron. Well, gold has just stormed to a new all-time high, breaking above $3,500 an ounce on the spot chart. Quite crazy to see. I think almost 3526 at the moment. Now, silver also on a tear, surging past the $40, almost at 41. And this is the kind of classic flight to safety you see when investors are getting nervous again. And there's good reason for it. This morning, we got the latest ISM manufacturing report, which confirmed the US industrial economy has now been in contraction for six straight months. That brings us to the central puzzle for every serious investor right now. How can the S&P 500 trade near a record high when a key pillar of the real economy is flashing red and hard assets are soaring? Now, to get these answers, you have to talk to somebody who's navigated these exact conditions before. Our guest today is Bert Domen. And for 49 years, he's been the editor of the highly respected Wellington letter, guiding investors through booms, busts, and everything in between. Now, track record of contrarian calls is extensive, including warnings issued to his clients ahead of the 1987 crash, the dot bust in 2000 and the 2008 financial crisis. Now, we invited him back today because his latest analysis is one of the most serious he's published in years, connecting the dots between market speculation, geopolitics, and the economy. Bert, it's great to see you again and to have you with us today. Thanks for this. It's always great to be with you, Jeremy. You're the best. I appreciate that. I mean, we were talking just off camera. There's always lots to kind of get into it. We saw these new ISM data, but let let's get straight into it. I mean, you see the same numbers as me over here, and a few weeks ago, you predicted what you called the day of the top. Uh what do you believe the market is fundamentally mispricing right now? Yeah. Several weeks ago, we wrote, "What will the day of the top look like?" And how will you know it's the it's the top or probable top? And so the uh the important thing is what what the game is. The markets are a game nowadays. They're controlled by the algo traders and the HFT. So that's all it is. They go against the majority. When the majority is long, they go short. When everybody's short, they go long. So that's what the game is. Forget about all the fundamentals and all that stuff. These are the ripples. The big thing is what will the big players do? Do you know that elbow traders right now they make up over 80% of the daily volume in the stock market? You know, how do you think? I mean, I know people that try to trade day trade the markets. I said, "How do you think you can really out trade with your laptop the computers of the algos which can enter 90,000 trades, not shares, trades per second?" Okay, I got to ask you, I mean, you know, we're talking about those algos and the algorithm. AI is just getting more and more crazy as we know. I mean, how has that fundamentally changed the market structure that you've analyzed for almost 50 years, Bird? I mean, do these algos make the short squeezes and bull traps that you've described much more dangerous for the average investor? Exactly. We never used to have these big multiple situations where stocks are down 20 and 30% at the opening. This doesn't happen. There's no one in his right mind that would buy a stock that's opening 30 30% down, you know. So this is um uh all manipulation and manipulation is supposed to be against the law but here it is. So when we describe what the day of the top will look like said it's going to be like this. You're gonna have a big down gap opening as we have seen in individual stocks up to that time, but this time it's going to be the major indices. Big down gaps and that locks all the bulls in with losses. People will not sell anything they hold at a loss, which is a big mistake when you're trading the markets. The markets, the first loss is the best loss. That's an old saying we've had for the last 50 years. And so when uh when markets open up down this big, everybody sits there and waits for a bounce so they can get out even. And getting out even is the most expensive exercise you can do. You know, you want to take your loss when it's small. You don't want it to get bigger. And forget about the get out even because they want to lock you in. And that's what the big down gaps that we had today for example uh uh do they just lock people in with big losses and then the these people they write it all the way down. You have to remember that all the shares that are outstanding they have to have an owner on the way into a bare market. When the market is down 50% or some indices are down 80% as they have been in other bare markets. Somebody has to own those shares. Wall Street doesn't want to own those shares all the way down. So you are the elected back holder. Yeah. So you're creating liquidity for what you're saying. These sellers, these algos as well. Yes. Yeah. Exactly. The ALOS I mean for them it's it's lunch money. You know they are in the market maybe for a few hours perhaps maybe a day depending on uh who it is and so on. They're in it for a short term. You know, they don't care about fundamentals and all that stuff. That doesn't matter. That's why it's always I have to smile when on TV they say, "Well, the market is down today because investors were worried about this and this." Yeah, that's that's not true. Well, we got to talk a little bit too because your letter stated that this recent rally in small caps was a massive short squeeze, not real buying as we just kind of talked about. And I mean, if that buying wasn't genuine, let's talk about the market breadth here. I mean, we know a handful of large tech stocks have driven the gains. Your letter notes about half the stocks in the Russell 2000 have no earnings at all. I mean, how vulnerable is the entire market when a few stocks are holding it up? Very vulnerable. This, you know, the valuation measures, they're not timing vehicles, but they tell you how vulnerable the market is. And the market right now is at all-time record highs going back aboutund 100 years. We've never seen such uh speculation uh as we have now. And those tops, they're always in place for a short time and then the market goes south. So this is where we are right now. And these record values I I cannot see how people can buy stocks that have a PE ratios or P sales price to sales ratio of 200 to one like a Palanteer. Then you've got snowflake and all some of these other stocks price earnings ratio of 500. Do people even know what it means when you buy a stock at a PE ratio 500? If all the profits of the company would go to you if you bought the company, all the profits would take you 500 years just to get your own money back. No profit. What about leverage? I mean, I was reading your your your note and the New York Stock Exchange margin debt has surpassed a trillion dollars. I mean, from your perspective, why does that level of leverage mean? What is it? What what does it mean for the stability if we see a sharp downturn? It it is the the most critical part of what's going to happen in the next big downturn, which I think may have started today. And u you know, I remember the 1987 crash. It was on September 4th. So that was about 5 weeks ahead of the crash. We um we managed money at that time and u so we got into 77% cash at that time and um because we could tell our technicals we use advanced technical analysis told us that the big money was exiting the market and that's what you want to go for. The big money does not want to stay on the way down. So then we had the crash you know and um so it was very timely the we said that was portfolio u insurance was the the strategy that was being pushed at that time. So this company in Los Angeles went around to institutions you never have to sell a stock if you think the market is going to go down you just uh sell short the index futures. They called that portfolio insurance. said, "This is a ridiculous because the floor traders are always on the other sides of these trades. They're the guys on the floor." And he said, "If they see all these orders coming in to sell short the indices, they're going to go to the sidelines and have a cup of coffee and watch the fund." Is this what you're seeing today? I mean, we talked about it briefly. You you think we we saw the top maybe today? I mean, the bulls would argue that as a percentage of total market cap, today's debt margin isn't as dangerous as in past cycles. But I mean what do you what are we seeing? How do you respond? Well, let me finish the other thought was a margin debt. We had a a few weeks later we had a meeting uh was a vice president of big Wall Street firm Persing. They came and he said, "Oh yeah, I'm going all over the country and so on." And I said, "Why do you have to travel so much?" He said, "Well, I'm foreclosing on houses." And I said, "I didn't know you were in real estate." He said, "We're not. These are for closing of people who can't meet their margin calls. How many margin call um people or margin players which you know you have to have $5,000 in your account and you can qualify to buy on margin. How many people do you think know that they can lose their house? Mhm. I I don't think there there very many people that know that they can lose their house, you know. So that's what's going to happen in in this downturn. People have been buying these zero day options. They start trading in the morning and they expire on the same day. Over the majority of call options are now the zero day options. This is ridiculous. Most of the people are in the double and triple leverage ETFs. They're they're all going to get margin calls they cannot meet, you know. So, we're going to see a fiasco of margin calls going out that people cannot meet and they will lose everything. Yeah, that's wild to hear. I mean, when you start thinking about these short uh shorting cycles, we've seen it before. I mean, how widespread do you believe that this specific risk is for the average American investor today? Well, right now the margin call is at an all-time record high, the the the margin buying. Okay. So, this could be the worst that we've seen since 1929. You know, I hate to be gloomed there. I I never believed all the people that were talking about bloom and gloom, but this time I take a look at how stretched out everyone is and how nobody cares about earnings anymore. They they've got the meme stocks, etc. I said, "This is insane that people are are buying at these valuation levels." You know, nobody cares about valuations. I mean, what do you think buying a stock is? You know, I mean, a lot of I've heard people say, "Oh, that all doesn't matter. If it's going up, buy it." Yeah. Well, that's not the best reason to buy a stock. Yeah. Yeah. Well said. I got to ask you about some of the data, too, Bert. I mean, the big jobs report is coming out this Friday, and your letter suggests that a weak report is coming and that it could prick the bubble. What are you seeing in the underlying labor data that gives you that conviction? I mean, if that's the case, maybe we're not at the top of the market today. Maybe it's then we have been in a recession for the last two years is being hidden by largely by the jobs numbers. We have written how phony the jobs numbers are in in January 2023. So that's 2 and 1/2 years ago now. Uh there was a jobs report for January and just said 514,000 new jobs have been created in January. I said that's impossible. January is always down because seasonal workers they leave, you know. And so we looked on the BLS website, their own website. this we call it the BLS stands for Bureau of Lying Statistics and uh so and they showed two and a half million job losses not 514,000 gains so they the the the published number that was on TV was over $3 million wrong can you believe that people believe it so luckily here Mr. Trump and his people they they called the BLS on to task on this and they fired the head of the BLS which was really a very high time but this is this this is labor statistics Jeremy I'm talking also about GDP statistic all these economic statistics out of Washington they are untrustworthy you cannot trust them they're as bad as those numbers that come out of China and we have never believed the numbers out of China as bad as the numbers out of China. I'm going to remember that because you know if they have been basically putting out these numbers and we've been reporting here at Kiko for for almost years now about the numbers changing whether it's the BLS and some other financial data. But if they do put out some Goldilocks report, you know, not too hot, not too cold, wouldn't that be the perfect catalyst for the next leg up in stocks? Kind of like what you're saying has been happening all year. The next leg up in stocks. Yeah. You go from record valuation levels to even higher record valuation levels. It could happen. You know, pigs can fly. I've heard I've never seen one fly, but maybe pigs can fly. I don't know. I got to ask you about the divergence, too. It was another fun fact in your report. You were early to point out that divergence between Bitcoin and the NASDAQ. And for years, they've moved together. But why is Bitcoin's recent weakness such a critical leading indicator for you, Bird? I mean, I think it's about 110 today. Yeah, I think the cryptos, you know, I've said that from the beginning, and of course, I know they've had good gains and so on. They've also had 80% declines and so on. So, the corrections in cryptos are pretty bad. But when it comes right down to it, a cryptocurrency or Bitcoin is a figment of the imagination. There is no intrinsic value. The intrinsic value is zero. You give them good spendable money that anyone will take and they give you a key with a number. That's it. Okay. So, somebody ends up with something valuable that you had and they give you a number, a digital number. And what is the value of that number? Can you buy a beer for it? Can you buy a loaf of bread? Can you go to a Safeway supermarket and buy groceries with it? No. What do you What can you do with it? Or you could or you can use it for smuggling drugs. Well, I don't have any urge or need to smuggle drugs. I got to ask you. I mean, you know, a lot of people will be writing me when they see this and they're going to say, "Hey, you got to call them out on this." I mean, the market cap has surpassed a trillion dollars on the Bitcoin, making it larger than any or many, I should say, of the world's largest banks and companies. But how do you reconcile something having that much real world value with the idea that it's not real? Yeah. Bernie Maidov had the biggest uh profits alleged option trading very profitable record profits and so on until they found out he made no trades. They were phony entries. Okay. So scams will go to record highs from time to times. I consider all the cryptos a big scam. Well, we uh we know that you prefer gold to Bitcoin right now and you've been stacking that for a long time. I want to talk a little bit about your process. I mean, after 49 years, what are the first things you look at every morning that you get just to get your bearings to the market when you wake up in Hawaii? Well, the most important parts of the market for me is first of all the um the bonds. I want to see if bonds are up or down. I want to see what the dollar is doing. Then what the precious metals are doing and then I go to the major indices, you know. So that that's basically the process. And u uh we look very much at uh volume. A lot of people use that use technical analysis, they only look at RSI or MACD or moving averages and so on. But they missed the critical component and that is a volume. You want to know what volume is. Volume times price gives you the amount of money. So if you don't have uh the volume, you don't know how much money is being traded or going in or going out. So we measure supply versus demand versus using an indicator. We call it the do money flow. It's an indicator we develop do money flow and it tells us if money is going out or going in. And what we've seen over the last six weeks, we have seen well the indices have been going up like the NASDAQ and so on. the um the money flow has been uh declining. So money had been flowing out even as the indices went up. So that tells you the big money is saying bye-bye. Have fun guys, you know. So that's what what we call a bearish divergence. Bearish divergence. And you always want to use indicators that the masses don't use. People have no idea money flow. Oh yeah, you find how do you calculate and so on. No, it's too complicated. People are basically lazy, you know. But when it comes to your life's earnings, you should not be lazy. You should be willing to work at it, you know. I mean, even at my young age, I'm still working 12 hours a day. You know, I don't consider it work because I enjoy it. It's a challenge. Every day is a challenge. I was going to ask you, I mean, is there been a major call maybe that you kind of got wrong and and then you taught yourself about the potential blind spot in your analysis? Uh, no. You know, with the manipulation today, it's easy to be wrong. We for 48 years, we basically called most markets within a a day or two. Okay? And that is using advanced technical analysis. It's become tougher since 2007. In 2007, they made it possible for the highfrequency trading and the algo traders to sell short without waiting for an uptick. We had the uptick rule in place since 1933 was Joe Kennedy who was a big manipulator in the 1929 crash. He and his guys crashed the market in 1929 and then they made him head of the SEC and he said well if we would have had an optic rule in place we could not have manipulated the market downward. That means that if you put an order into sell short the the order before that had to be on an uptick higher price even if it's only at 18. And uh so that optic rule was in place in 1933 and in 2007 they did away with it quietly and and we we we read it. We said, "Oh, something is up. There's going to be a crash next year and they want to make a big uh big money out of that." And of course, we have the crash in 2008, you know. So this was all manipulated. People have no idea. They think the SEC is there to protect them. No, the SEC is there to protect their friends, you know. So, a lot of money is being made with these manipulations and uh so uh the up move uh in early April in the stock market. Um we said that it's going to be a bare market rally, but we'll probably have a couple of the indices making new highs by a small amount. uh but we don't want to play this. This is too dangerous because it doesn't necessarily have to happen that uh they will go as far as few indices making new highs. So we sat that one out. Yes, we could have made a lot of money in that rally but we had gold and silver and they made a lot of money for us. And then you ask about gold before you know in uh 1980 gold had hit $800 an ounce. Okay. So we were along for the whole ride from 197 onward. 77 is when I started my business and uh so uh we're along for the ride but then we got a sell signal on our indicators. We said okay time to sell, take profits. It's it's been fun. And then we we did a cycle study on gold going back 400 years. So that was about 200 years in the US and 200 years we had to go to the data from Britain. And um so uh we said okay this is going to be a 20-year bare market in gold. People thought that was crazy because they were still waiting for $3,000 gold at that time. But it happened. When was the bottom of that bare market? Year 2000. exactly 20 years uh after 1980. And it was amazing to us even because usually cycles they they're move a little bit to the left or to the right. You know they're off by a few years and so on. But um the bottom was in the year 2000 and um you know people want to know what what the second part of the uh cycle study said is how far the next up move would be. So far it's correct. Okay. So, we said in 1980 how high this market would rise. The the current bull market, it's a secular bull market. You always have to differentiate between a cyclical bull and bare market and a secular secular is very long-term. Yeah. And bring it home for investors too. I mean, and gold is obviously trading at all-time highs, but you warn of a liquidity crisis where everything gets sold. I mean, how does an investor kind of reconcile those two powerful forces? Yes, that's a very good point. See, in in the first part of a bare market when the markets just tumble, you know, and um everybody has to scramble because they're getting margin calls. So, they sell what they can sell and gold and silver of course does have bids and then they will sell that too. And in the first phase of a decline like that, gold and silver will be declined because it's being used as a source of cash to meet margin calls. But then uh comes the second phase and that is when all that urgent selling is out of the way and that is when you really want to buy gold and silver uh that second phase because then everybody goes to um safety and gold and silver is considered the only safe thing because the central banks then will step on the accelerator manufacture as much money as they can as they did in year 2020 2020 21 and um that means that your money is worth less. The purchasing power of your money declines and the only safety uh for that is gold silver they will go up. So gold and silver you know gold has been an island of saving for thousands of years. It's not going to change. Yeah. Yeah. Yeah. And I mean to your point, India, it was just a new report this morning saying India just cut 14.5 billion dollars of US treasuries in a year while adding those 40 tons of gold and China has been trimming its holdings too. Is is that proof that the even bigger reserve holders are starting to lose faith or or you think this is just kind of a you know trying to make it more I think they they know what's going to happen but what is inevitable? China has bought much more gold than the official transactions tell you. they're they're not reporting all of their gold buying and uh so we right now this weekend in fact at the SEO meeting the Shanghai group um we had uh basically unification which is incredible u and very dangerous for the US but India and uh China and Russia now they're the best friends after this meeting this weekend you know and we always tried to keep prevent them from f putting an alliance together. Now they are the best friends. Now this is uh together these three countries have 36% of the world's population. That is a big amount. 36%. Do you know what the US is? US is 4.1% of the world's population. And this is where Mr. Trump is so wrong. He thinks that everybody needs the US consumer. Okay, he's wrong. What would happen right now, for example, if these three nations having 36% of the world's population say we don't need to trade with the US. If they want to raise our terrorists to 25 or 50%, we don't have to trade with them at all. We don't need their consumers. You know, we've got enough consumers outside of the United States. And in fact, we don't even have to do anything more. We don't even have to supply them with our stuff. They we were just not going to even sell to the United States. Can you imagine if these three nations suddenly decide not to sell their stuff to the US, you know, the shelves at Costco and Walmart, etc., Target, they're going to be bare, you know, because you take a look at all the merchandises you see on those shelves, turn them upside down and see where they're made, you know, they're made in these three countries, most of them, you know. So, I think we are much more vulnerable to them boycotting the US than us boycotting them. Yeah. Yeah. Interesting perspective. I mean, we got to be realistic about the alliance to India and China still have significant unresolved border disputes that have led to deadly clashes. I think it was just this week Prime Minister Modi and President Xi were pledging to resolve those very tensions. I mean, how durable can this anti-American block really be when it's, you know, two most populist members have deep-seated long-term conflicts of interest with each other? I I think that right now the big game changer is Gaza. Yeah. And the world cannot tolerate a genocide. You know, there was an old saying after World War II, never again. Well, we have it again. Okay? Genocide is being committed in Gaza. Okay? It's a systematic starvation of the people, the civilians. They always talk about Hamas. Hamas is 1.7% of the population. They're negligible. Nobody pays attention to Hamas in Gaza, you know. I mean, the people in in the Palestinians are just as afraid of Hamas as anyone else. So, they're they're basically going to be eliminated. But the we are or not we although you could say the US is saying nothing about the genocide in Gaza. This is incredible that our so-called humanitarian president is now speaking out against what is going on in Gaza. But the rest of the world is looking right in immediate countries around Israel. 400 million Muslims. You think they're going to stand still forever? They're going to let this go on. You know, I I see over the next months just tremendous wars breaking out. You're going to see another war with Iran and Israel, etc. And without uh the United States, Israel cannot survive very long. You know, it's a matter of weeks. So, we have to get involved. You're going to probably see US troops on the ground in the Middle East and u because the fix is in. Let's call it that. Yeah. I mean, okay, let's let's hone into this for a second. And I think we only have about 10 minutes left. B, but I I want to ask you because in this report that you put out in your new letter, you do make the explosive claim that conflicts in Gaza, Iran, and Venezuela are part of a coordinated, you call it a return to colonialism for resources. You know, these are things you won't hear on the mainstream media, but what specific evidence do you kind of have here? What's the most single compelling piece that you would have for this thesis? Well, just watch what uh the US president does. The first thing was to go to Canada. Oh, we want to make that a state, you know, of the United States. Okay. So then Greenland, Greenland. Oh, we'll ask Denmark to sell us Greenland, you know, he's on acquisition uh trip here. He wants to enlarge the borders of the United States. And um so Gaza, the idea is to make it a luxury resort. That's why they they have been very effective in leveling Gaza. There's hardly a building standing anywhere even in Gaza city which is the biggest city. Uh and uh so you know 2 million Palestinians there and uh Israel has tried to negotiate see if other countries will take them other countries will not they don't want to get involved. So u what's the only alternative to just get rid of them somehow. Okay. So that's that's where we are now. This and now the next thing is Venezuela. We already have atomic submarines, battleships, everything offshore of Venezuela. Doesn't get much publicity in the US. We're not supposed to know about that. But um you know, if you go and watch some of the podcast of the most intelligent and global uh observers, you will see what's going on right now. We are ready to have an attack on Venezuela. Venezuela is the has the third largest oil and gas reserves in the world. Wouldn't that be nice for Chevron or Exxant to have? Okay. But aside from that, Venezuela has precious stones, emerald. They've got very large emerald deposits. So, this is a wonderful acquisition. Just invade Venezuela and you've got all of their natural resources. This is where we're at. It's it's hard to believe. It is really hard to believe that the US would go to this extent. But what else? What are other reasons to atomic submarines off of Venezuela? For what purpose? Right. So, Burke, I mean, let's let's connect this directly to the market then and bring it back. I mean, if if your thesis is correct, what's the most immediate risk? Is it a sudden oil price shock from a confrontation with Iran, Venezuela? Uh I don't think you can say there's one major risk. I think the risks are so big from all directions that I would not want to take a chance with my investments being immune from it. You know the only uh safe haven is precious metals uh at this point because they cannot be manufactured at will by the central banks. That's it. So, uh, everything else, you know, forget AI. I love AI. I think a the boom of AI over over the next 10, 15 years is still underestimated by the majority of people. We use AI in my company. And it's I mean, I call it magic. It is absolutely incredible what you can do with, you know, most people only know AI for search, you know, as a substitute for Google. No, there's so much more you can do. And I mean the AI can make a complicated legal document of five, six pages for you in two seconds. It's incredible. You know, so the power is there. But you know, we have human beings as ahead of these countries and human beings are generally not very smart. Okay? Especially the ones in politics. I have a saying is if you can't get a job anywhere else, you can always get a job in politics. That's a good saying. I might use that one. Uh I know it's a big pivot here, but I got to ask you just before we leave you on Asia. So I want to bring back your current analysis on China. I mean with their ongoing property crisis, do you think they're more likely to kind of export deflation to the world or will they just manage to stimulate their way out? Well, this is the the question, deflation or inflation? You know inflation you know is also way underestimated. You we hear about oh inflation is going down. It was 9% and now it's only 2 1/2% something like that. Well that is not correct. It's the that is the rate of inflation. When it goes from 9 to 2.5%. That doesn't mean inflation has gone down. The rate of inflation has gone down but inflation is still rising. The value of your currency is still declining. The purchasing power if it even if it's only 2 and a half%. But prices are still rising. Most people uh don't get that. And of course the shills on TV uh they don't tell you that. They say, "Oh, inflation is great. I hardly worry 2 and a half%." No, your the purchasing power of your savings are still declining 2 and a half% a year at that rate, you know, and and that is what the phony statistics actual inflation, the way shadow stats measures it, which is using a 1980 methodology, you know, before they start making all the numbers phony is closer to 10% right now. And when you go to the supermarket, you will see that. You know, again, I go to a supermarket maybe once a month just to see the prices. You know, if you go more often, you don't notice it, but once a month, you really notice. Wow. Look at this. Is more expensive. You pick up any item and it's more expensive than the month before. You know, it's it's incredible what's happening. And we're being told that inflation is not a problem. Yeah. Of course. And I mean, you know, gold at an all-time high. We have a lot of people looking to that as kind of an alternative during this time in the economy. I'm curious to just kind of give me your gold forecast for our Kitco listeners. But also, where does silver fit in? I mean, it's finally breaking above $40. Do you see it as just a a high beta play on gold or does it have its own unique drivers? Well, let me say one other thing. Money supply. Watch money supply. This is what put my business on the map in 1977 when the new Federal Reserve uh uh chairman 1978 said we're not going to fight inflation with tight money. We're going to do with high interest rates and I said that means inflation full speed ahead. Okay, if you tight money, see on TV they propagate this fction that tight money is rising interest rates. That's totally wrong. Tight money means when you go to a bank and you're creditw worthy and the bank says, "We know you're good for the money, but we can't make a loan to you." That's tight money. Okay? And that's what Paul Bker did in 1980. Okay? But rising interest rates with loose money is wildly inflationary. And that's why in 1978 we wrote we said with this policy at the Federal Reserve we're going to see double digit inflation doubledigit interest rates. I we predicted 20% prime rate which the chief economist of Goldman Sachs Gary Wangowski said was absurd. He said that in a seminar I went to and I said isn't absurd if if inflation goes high enough. So we had a 20% prime rate in early uh 1980. Then the Federal Reserve got a little scared that they were being too tight. They loosened up for a few months. And then we watched money supply, but the seasonally unadjusted, the ones the seasonally unadjusted means that they they cannot fudge the numbers. Okay, those are actual numbers. And uh we noticed that in July of uh 1980 he said oh by with this policy we're going to have a new record high in the prime rate over 20% by the end of this year. On December 10th 1980 we had a prime rate of 21.5%. New high. Okay. So this is what happens. But so what you'll hear on TV with all of these shills from Wall Street is not real. Don't believe any of it. Don't believe any of it. Do your own thinking. You know, your brain has much more power than theirs. Yeah. So, so I mean, you're saying that that instead this will ignite a a stagflationary crisis where both economic growth and the stock market kind of falter while inflation reacelerates. Yes. Yes. And you know, you asked about silver. You're right. And I really hadn't recommended silver for some time but I think a few months ago we said focus on silver right now because silver is also used as an industrial metal and silver had been lagging gold for some time and so I said it's time for silver to catch up. It's a poor man's gold and silver is going to really outperform gold for a while and uh I think we're starting to see that now, you know. So, uh by the way, my long-term forecast uh in 1980 was the next top in gold in the secular bull market would be in the year 2031. Wow. Okay. So, you still have some time. Interesting. That's going to be good for people people listening. And what so what's your message to investors in mining stocks? I mean, are they essential leverage for the coming bull market in metals or a liability that could go bankrupt if this crash you foresee? Very good question, Jeremy. Um, I don't like mining stocks in general for the long term, but there there are short-term periods when mining stocks do better. And right now they have a lot of catching up to do to the earnings gains that they're going to show because the the price of gold and silver has gone up. The the mining stocks have not done that well, but they're they're catching up right now. So, but the mining stocks have a lot of problems, especially mines that are located in countries like in Africa and so on because those countries, they're going broke. And when they start going broke, they will confiscate the M mines. So you have to be aware that the mines that your mining stock owns are going to be confiscated. Could be m confiscated or they will have strikes and then you have natural disasters, mines flooding and so on. So you're exposed to a lot of risk with the gold and silver miners. You don't if you buy the metal, you don't have those risks. Interesting. Okay. Well said. That jurisdictional risk has certainly been noted by a lot of analysts this year. And Bert, okay, let's let's wrap this up even though I don't want to. I could talk to you for hours, but as we zoom out and and we talk about everything we talked about today, it's a very high conviction forecast. And I'm curious for somebody on the other side. I mean, what specific data point or event would happen for you to admit maybe your thesis is wrong and you turn bullish? The only thing that can u continue to drive the market up is money supply growth. And this is why you know here over the last several months we looked at the M2 chart money supply M2 nonseasonally adjusted number and the the chart formation told us it's going to have an upside breakout. I said the Fed says it's tight. That's a lie. That's a total lie. The Fed is not being tight. Money supply M2 is going to go to new record highs very soon and it just did the last number that came out last week was a new record high for money supply M2. Okay, so we are there. So money is necessary to drive stocks up. When money supply shrinks then you want to sell stocks because then stocks become a source of money. People sell stocks in order to get money so they can buy groceries, they can pay the rent or the mortgage, etc. You know, money is a is is the crux of everything, you know. Yeah. So, watch the money. I was looking at the Fed uh the Fed just said that the seasonally adjusted M2 money supply for July 2025 stood at 22.12 trillion. Quite a bit. Yeah. Yeah, it is. And the latest number that's out now from last week is August 4th. So there's always about a month lag, you know, four to six week lag in those numbers. It's it's amazing today's univer super fast computers and it takes them four to six weeks to give us the money supply now. Yeah, no kidding. Okay. Well, let me ask you to to wrap this up. I mean, let's assume that you're 100% correct and this crisis unfolds like you've called out these past corrections. I mean what does the world look like on the other side? Is it is it a quick recovery, a long depression or something else entirely? Well, that is a huge question and it all depends on what the central banks do, you know, and the natural reaction for central banks is what they did in every other big calamity. They print money. That's so many things to do. They print a lot of money and uh but we we've got a problem right now. The problem already exists. We cannot sell long-term treasury bonds anymore to foreigners. It used to be the foreign central banks were big buyers, especially China. Well, they're sellers now, you know. So, who's going to buy all this confetti? Yeah. Yeah. That is the big question. Yeah. Pick up the pieces. Okay. Interesting. I mean, Bert, it's been incredibly detailed analysis from you. And I'm curious, you know, just before we leave you, for the investor at home who's convinced by your argument and wants to take action, what's the very first thing they should do when this interview is over? Uh, the first thing they should do is subscribe to our Bert Dolman's Wellington letter on our website, which is dormanc capital.com, and uh you will get analysis that you will not get anywhere else. And we put out about um an issue twice a month usually and each issue is about 24 25 pages single space a lot of reading a lot of analysis a lot of thinking goes into it nowadays you know there there's really a a darth of people who do thinking you know really I've noticed that nobody does any thinking the guys on TV you hear them it's all the typical dribble that you hear from everyone even a Most wives they will tell you the stuff you know yeah interest rates go up and that means tight money bologoney it does not mean tight money you know means expensive money. Yeah. Yeah. Well yeah be be aware of what everyone believes when when we are when suddenly our view of the markets becomes the majority view. We know it's going to be wrong. We have to go back to the drawing boards and adjust our forecast except us, right, Bert? No, I'm just kidding. All right. No, you have to Jeremy, you have terrific guest and I don't consider UTV. You know, I'm glad to hear it. I'm glad to hear it. Podcasts are so wonderful. It's the only thing that they cannot fudge the main channels. They all bought and they they they total line. They have their their agenda and that's what they tell you. They're all a bunch of lies, but podcast, this is the uncontrollable mechanism we have for the truth. Yeah, I appreciate it and thank you for coming with us. We just try to get to the uh to the story here. It's not about me, it's about the guests and that's Bert Domen, editor and founder of the Wellington Letter. Thanks again for your time, Bert. Appreciate it as always. Thank you very much. Okay, have a beautiful day. You too. We'll speak soon. All right, so the central question remains, are we at the peak of a historic bubble or is this time truly different? Now, the data we've discussed today suggests that at the very least caution is warranted. Now, we're here to ask the questions like you just heard, mainstream won't. I'm Jeremy Saffron. This is Kicko News. We'll see you next time. Thank you for watching. [Music] Heat. Heat. [Music]
‘The Data is a Lie’: Analyst Who Called 3 Crashes Reveals What's Really Happening
Summary
Transcript
[Music] Hey everyone, welcome back. I'm Jeremy Saffron. Well, gold has just stormed to a new all-time high, breaking above $3,500 an ounce on the spot chart. Quite crazy to see. I think almost 3526 at the moment. Now, silver also on a tear, surging past the $40, almost at 41. And this is the kind of classic flight to safety you see when investors are getting nervous again. And there's good reason for it. This morning, we got the latest ISM manufacturing report, which confirmed the US industrial economy has now been in contraction for six straight months. That brings us to the central puzzle for every serious investor right now. How can the S&P 500 trade near a record high when a key pillar of the real economy is flashing red and hard assets are soaring? Now, to get these answers, you have to talk to somebody who's navigated these exact conditions before. Our guest today is Bert Domen. And for 49 years, he's been the editor of the highly respected Wellington letter, guiding investors through booms, busts, and everything in between. Now, track record of contrarian calls is extensive, including warnings issued to his clients ahead of the 1987 crash, the dot bust in 2000 and the 2008 financial crisis. Now, we invited him back today because his latest analysis is one of the most serious he's published in years, connecting the dots between market speculation, geopolitics, and the economy. Bert, it's great to see you again and to have you with us today. Thanks for this. It's always great to be with you, Jeremy. You're the best. I appreciate that. I mean, we were talking just off camera. There's always lots to kind of get into it. We saw these new ISM data, but let let's get straight into it. I mean, you see the same numbers as me over here, and a few weeks ago, you predicted what you called the day of the top. Uh what do you believe the market is fundamentally mispricing right now? Yeah. Several weeks ago, we wrote, "What will the day of the top look like?" And how will you know it's the it's the top or probable top? And so the uh the important thing is what what the game is. The markets are a game nowadays. They're controlled by the algo traders and the HFT. So that's all it is. They go against the majority. When the majority is long, they go short. When everybody's short, they go long. So that's what the game is. Forget about all the fundamentals and all that stuff. These are the ripples. The big thing is what will the big players do? Do you know that elbow traders right now they make up over 80% of the daily volume in the stock market? You know, how do you think? I mean, I know people that try to trade day trade the markets. I said, "How do you think you can really out trade with your laptop the computers of the algos which can enter 90,000 trades, not shares, trades per second?" Okay, I got to ask you, I mean, you know, we're talking about those algos and the algorithm. AI is just getting more and more crazy as we know. I mean, how has that fundamentally changed the market structure that you've analyzed for almost 50 years, Bird? I mean, do these algos make the short squeezes and bull traps that you've described much more dangerous for the average investor? Exactly. We never used to have these big multiple situations where stocks are down 20 and 30% at the opening. This doesn't happen. There's no one in his right mind that would buy a stock that's opening 30 30% down, you know. So this is um uh all manipulation and manipulation is supposed to be against the law but here it is. So when we describe what the day of the top will look like said it's going to be like this. You're gonna have a big down gap opening as we have seen in individual stocks up to that time, but this time it's going to be the major indices. Big down gaps and that locks all the bulls in with losses. People will not sell anything they hold at a loss, which is a big mistake when you're trading the markets. The markets, the first loss is the best loss. That's an old saying we've had for the last 50 years. And so when uh when markets open up down this big, everybody sits there and waits for a bounce so they can get out even. And getting out even is the most expensive exercise you can do. You know, you want to take your loss when it's small. You don't want it to get bigger. And forget about the get out even because they want to lock you in. And that's what the big down gaps that we had today for example uh uh do they just lock people in with big losses and then the these people they write it all the way down. You have to remember that all the shares that are outstanding they have to have an owner on the way into a bare market. When the market is down 50% or some indices are down 80% as they have been in other bare markets. Somebody has to own those shares. Wall Street doesn't want to own those shares all the way down. So you are the elected back holder. Yeah. So you're creating liquidity for what you're saying. These sellers, these algos as well. Yes. Yeah. Exactly. The ALOS I mean for them it's it's lunch money. You know they are in the market maybe for a few hours perhaps maybe a day depending on uh who it is and so on. They're in it for a short term. You know, they don't care about fundamentals and all that stuff. That doesn't matter. That's why it's always I have to smile when on TV they say, "Well, the market is down today because investors were worried about this and this." Yeah, that's that's not true. Well, we got to talk a little bit too because your letter stated that this recent rally in small caps was a massive short squeeze, not real buying as we just kind of talked about. And I mean, if that buying wasn't genuine, let's talk about the market breadth here. I mean, we know a handful of large tech stocks have driven the gains. Your letter notes about half the stocks in the Russell 2000 have no earnings at all. I mean, how vulnerable is the entire market when a few stocks are holding it up? Very vulnerable. This, you know, the valuation measures, they're not timing vehicles, but they tell you how vulnerable the market is. And the market right now is at all-time record highs going back aboutund 100 years. We've never seen such uh speculation uh as we have now. And those tops, they're always in place for a short time and then the market goes south. So this is where we are right now. And these record values I I cannot see how people can buy stocks that have a PE ratios or P sales price to sales ratio of 200 to one like a Palanteer. Then you've got snowflake and all some of these other stocks price earnings ratio of 500. Do people even know what it means when you buy a stock at a PE ratio 500? If all the profits of the company would go to you if you bought the company, all the profits would take you 500 years just to get your own money back. No profit. What about leverage? I mean, I was reading your your your note and the New York Stock Exchange margin debt has surpassed a trillion dollars. I mean, from your perspective, why does that level of leverage mean? What is it? What what does it mean for the stability if we see a sharp downturn? It it is the the most critical part of what's going to happen in the next big downturn, which I think may have started today. And u you know, I remember the 1987 crash. It was on September 4th. So that was about 5 weeks ahead of the crash. We um we managed money at that time and u so we got into 77% cash at that time and um because we could tell our technicals we use advanced technical analysis told us that the big money was exiting the market and that's what you want to go for. The big money does not want to stay on the way down. So then we had the crash you know and um so it was very timely the we said that was portfolio u insurance was the the strategy that was being pushed at that time. So this company in Los Angeles went around to institutions you never have to sell a stock if you think the market is going to go down you just uh sell short the index futures. They called that portfolio insurance. said, "This is a ridiculous because the floor traders are always on the other sides of these trades. They're the guys on the floor." And he said, "If they see all these orders coming in to sell short the indices, they're going to go to the sidelines and have a cup of coffee and watch the fund." Is this what you're seeing today? I mean, we talked about it briefly. You you think we we saw the top maybe today? I mean, the bulls would argue that as a percentage of total market cap, today's debt margin isn't as dangerous as in past cycles. But I mean what do you what are we seeing? How do you respond? Well, let me finish the other thought was a margin debt. We had a a few weeks later we had a meeting uh was a vice president of big Wall Street firm Persing. They came and he said, "Oh yeah, I'm going all over the country and so on." And I said, "Why do you have to travel so much?" He said, "Well, I'm foreclosing on houses." And I said, "I didn't know you were in real estate." He said, "We're not. These are for closing of people who can't meet their margin calls. How many margin call um people or margin players which you know you have to have $5,000 in your account and you can qualify to buy on margin. How many people do you think know that they can lose their house? Mhm. I I don't think there there very many people that know that they can lose their house, you know. So that's what's going to happen in in this downturn. People have been buying these zero day options. They start trading in the morning and they expire on the same day. Over the majority of call options are now the zero day options. This is ridiculous. Most of the people are in the double and triple leverage ETFs. They're they're all going to get margin calls they cannot meet, you know. So, we're going to see a fiasco of margin calls going out that people cannot meet and they will lose everything. Yeah, that's wild to hear. I mean, when you start thinking about these short uh shorting cycles, we've seen it before. I mean, how widespread do you believe that this specific risk is for the average American investor today? Well, right now the margin call is at an all-time record high, the the the margin buying. Okay. So, this could be the worst that we've seen since 1929. You know, I hate to be gloomed there. I I never believed all the people that were talking about bloom and gloom, but this time I take a look at how stretched out everyone is and how nobody cares about earnings anymore. They they've got the meme stocks, etc. I said, "This is insane that people are are buying at these valuation levels." You know, nobody cares about valuations. I mean, what do you think buying a stock is? You know, I mean, a lot of I've heard people say, "Oh, that all doesn't matter. If it's going up, buy it." Yeah. Well, that's not the best reason to buy a stock. Yeah. Yeah. Well said. I got to ask you about some of the data, too, Bert. I mean, the big jobs report is coming out this Friday, and your letter suggests that a weak report is coming and that it could prick the bubble. What are you seeing in the underlying labor data that gives you that conviction? I mean, if that's the case, maybe we're not at the top of the market today. Maybe it's then we have been in a recession for the last two years is being hidden by largely by the jobs numbers. We have written how phony the jobs numbers are in in January 2023. So that's 2 and 1/2 years ago now. Uh there was a jobs report for January and just said 514,000 new jobs have been created in January. I said that's impossible. January is always down because seasonal workers they leave, you know. And so we looked on the BLS website, their own website. this we call it the BLS stands for Bureau of Lying Statistics and uh so and they showed two and a half million job losses not 514,000 gains so they the the the published number that was on TV was over $3 million wrong can you believe that people believe it so luckily here Mr. Trump and his people they they called the BLS on to task on this and they fired the head of the BLS which was really a very high time but this is this this is labor statistics Jeremy I'm talking also about GDP statistic all these economic statistics out of Washington they are untrustworthy you cannot trust them they're as bad as those numbers that come out of China and we have never believed the numbers out of China as bad as the numbers out of China. I'm going to remember that because you know if they have been basically putting out these numbers and we've been reporting here at Kiko for for almost years now about the numbers changing whether it's the BLS and some other financial data. But if they do put out some Goldilocks report, you know, not too hot, not too cold, wouldn't that be the perfect catalyst for the next leg up in stocks? Kind of like what you're saying has been happening all year. The next leg up in stocks. Yeah. You go from record valuation levels to even higher record valuation levels. It could happen. You know, pigs can fly. I've heard I've never seen one fly, but maybe pigs can fly. I don't know. I got to ask you about the divergence, too. It was another fun fact in your report. You were early to point out that divergence between Bitcoin and the NASDAQ. And for years, they've moved together. But why is Bitcoin's recent weakness such a critical leading indicator for you, Bird? I mean, I think it's about 110 today. Yeah, I think the cryptos, you know, I've said that from the beginning, and of course, I know they've had good gains and so on. They've also had 80% declines and so on. So, the corrections in cryptos are pretty bad. But when it comes right down to it, a cryptocurrency or Bitcoin is a figment of the imagination. There is no intrinsic value. The intrinsic value is zero. You give them good spendable money that anyone will take and they give you a key with a number. That's it. Okay. So, somebody ends up with something valuable that you had and they give you a number, a digital number. And what is the value of that number? Can you buy a beer for it? Can you buy a loaf of bread? Can you go to a Safeway supermarket and buy groceries with it? No. What do you What can you do with it? Or you could or you can use it for smuggling drugs. Well, I don't have any urge or need to smuggle drugs. I got to ask you. I mean, you know, a lot of people will be writing me when they see this and they're going to say, "Hey, you got to call them out on this." I mean, the market cap has surpassed a trillion dollars on the Bitcoin, making it larger than any or many, I should say, of the world's largest banks and companies. But how do you reconcile something having that much real world value with the idea that it's not real? Yeah. Bernie Maidov had the biggest uh profits alleged option trading very profitable record profits and so on until they found out he made no trades. They were phony entries. Okay. So scams will go to record highs from time to times. I consider all the cryptos a big scam. Well, we uh we know that you prefer gold to Bitcoin right now and you've been stacking that for a long time. I want to talk a little bit about your process. I mean, after 49 years, what are the first things you look at every morning that you get just to get your bearings to the market when you wake up in Hawaii? Well, the most important parts of the market for me is first of all the um the bonds. I want to see if bonds are up or down. I want to see what the dollar is doing. Then what the precious metals are doing and then I go to the major indices, you know. So that that's basically the process. And u uh we look very much at uh volume. A lot of people use that use technical analysis, they only look at RSI or MACD or moving averages and so on. But they missed the critical component and that is a volume. You want to know what volume is. Volume times price gives you the amount of money. So if you don't have uh the volume, you don't know how much money is being traded or going in or going out. So we measure supply versus demand versus using an indicator. We call it the do money flow. It's an indicator we develop do money flow and it tells us if money is going out or going in. And what we've seen over the last six weeks, we have seen well the indices have been going up like the NASDAQ and so on. the um the money flow has been uh declining. So money had been flowing out even as the indices went up. So that tells you the big money is saying bye-bye. Have fun guys, you know. So that's what what we call a bearish divergence. Bearish divergence. And you always want to use indicators that the masses don't use. People have no idea money flow. Oh yeah, you find how do you calculate and so on. No, it's too complicated. People are basically lazy, you know. But when it comes to your life's earnings, you should not be lazy. You should be willing to work at it, you know. I mean, even at my young age, I'm still working 12 hours a day. You know, I don't consider it work because I enjoy it. It's a challenge. Every day is a challenge. I was going to ask you, I mean, is there been a major call maybe that you kind of got wrong and and then you taught yourself about the potential blind spot in your analysis? Uh, no. You know, with the manipulation today, it's easy to be wrong. We for 48 years, we basically called most markets within a a day or two. Okay? And that is using advanced technical analysis. It's become tougher since 2007. In 2007, they made it possible for the highfrequency trading and the algo traders to sell short without waiting for an uptick. We had the uptick rule in place since 1933 was Joe Kennedy who was a big manipulator in the 1929 crash. He and his guys crashed the market in 1929 and then they made him head of the SEC and he said well if we would have had an optic rule in place we could not have manipulated the market downward. That means that if you put an order into sell short the the order before that had to be on an uptick higher price even if it's only at 18. And uh so that optic rule was in place in 1933 and in 2007 they did away with it quietly and and we we we read it. We said, "Oh, something is up. There's going to be a crash next year and they want to make a big uh big money out of that." And of course, we have the crash in 2008, you know. So this was all manipulated. People have no idea. They think the SEC is there to protect them. No, the SEC is there to protect their friends, you know. So, a lot of money is being made with these manipulations and uh so uh the up move uh in early April in the stock market. Um we said that it's going to be a bare market rally, but we'll probably have a couple of the indices making new highs by a small amount. uh but we don't want to play this. This is too dangerous because it doesn't necessarily have to happen that uh they will go as far as few indices making new highs. So we sat that one out. Yes, we could have made a lot of money in that rally but we had gold and silver and they made a lot of money for us. And then you ask about gold before you know in uh 1980 gold had hit $800 an ounce. Okay. So we were along for the whole ride from 197 onward. 77 is when I started my business and uh so uh we're along for the ride but then we got a sell signal on our indicators. We said okay time to sell, take profits. It's it's been fun. And then we we did a cycle study on gold going back 400 years. So that was about 200 years in the US and 200 years we had to go to the data from Britain. And um so uh we said okay this is going to be a 20-year bare market in gold. People thought that was crazy because they were still waiting for $3,000 gold at that time. But it happened. When was the bottom of that bare market? Year 2000. exactly 20 years uh after 1980. And it was amazing to us even because usually cycles they they're move a little bit to the left or to the right. You know they're off by a few years and so on. But um the bottom was in the year 2000 and um you know people want to know what what the second part of the uh cycle study said is how far the next up move would be. So far it's correct. Okay. So, we said in 1980 how high this market would rise. The the current bull market, it's a secular bull market. You always have to differentiate between a cyclical bull and bare market and a secular secular is very long-term. Yeah. And bring it home for investors too. I mean, and gold is obviously trading at all-time highs, but you warn of a liquidity crisis where everything gets sold. I mean, how does an investor kind of reconcile those two powerful forces? Yes, that's a very good point. See, in in the first part of a bare market when the markets just tumble, you know, and um everybody has to scramble because they're getting margin calls. So, they sell what they can sell and gold and silver of course does have bids and then they will sell that too. And in the first phase of a decline like that, gold and silver will be declined because it's being used as a source of cash to meet margin calls. But then uh comes the second phase and that is when all that urgent selling is out of the way and that is when you really want to buy gold and silver uh that second phase because then everybody goes to um safety and gold and silver is considered the only safe thing because the central banks then will step on the accelerator manufacture as much money as they can as they did in year 2020 2020 21 and um that means that your money is worth less. The purchasing power of your money declines and the only safety uh for that is gold silver they will go up. So gold and silver you know gold has been an island of saving for thousands of years. It's not going to change. Yeah. Yeah. Yeah. And I mean to your point, India, it was just a new report this morning saying India just cut 14.5 billion dollars of US treasuries in a year while adding those 40 tons of gold and China has been trimming its holdings too. Is is that proof that the even bigger reserve holders are starting to lose faith or or you think this is just kind of a you know trying to make it more I think they they know what's going to happen but what is inevitable? China has bought much more gold than the official transactions tell you. they're they're not reporting all of their gold buying and uh so we right now this weekend in fact at the SEO meeting the Shanghai group um we had uh basically unification which is incredible u and very dangerous for the US but India and uh China and Russia now they're the best friends after this meeting this weekend you know and we always tried to keep prevent them from f putting an alliance together. Now they are the best friends. Now this is uh together these three countries have 36% of the world's population. That is a big amount. 36%. Do you know what the US is? US is 4.1% of the world's population. And this is where Mr. Trump is so wrong. He thinks that everybody needs the US consumer. Okay, he's wrong. What would happen right now, for example, if these three nations having 36% of the world's population say we don't need to trade with the US. If they want to raise our terrorists to 25 or 50%, we don't have to trade with them at all. We don't need their consumers. You know, we've got enough consumers outside of the United States. And in fact, we don't even have to do anything more. We don't even have to supply them with our stuff. They we were just not going to even sell to the United States. Can you imagine if these three nations suddenly decide not to sell their stuff to the US, you know, the shelves at Costco and Walmart, etc., Target, they're going to be bare, you know, because you take a look at all the merchandises you see on those shelves, turn them upside down and see where they're made, you know, they're made in these three countries, most of them, you know. So, I think we are much more vulnerable to them boycotting the US than us boycotting them. Yeah. Yeah. Interesting perspective. I mean, we got to be realistic about the alliance to India and China still have significant unresolved border disputes that have led to deadly clashes. I think it was just this week Prime Minister Modi and President Xi were pledging to resolve those very tensions. I mean, how durable can this anti-American block really be when it's, you know, two most populist members have deep-seated long-term conflicts of interest with each other? I I think that right now the big game changer is Gaza. Yeah. And the world cannot tolerate a genocide. You know, there was an old saying after World War II, never again. Well, we have it again. Okay? Genocide is being committed in Gaza. Okay? It's a systematic starvation of the people, the civilians. They always talk about Hamas. Hamas is 1.7% of the population. They're negligible. Nobody pays attention to Hamas in Gaza, you know. I mean, the people in in the Palestinians are just as afraid of Hamas as anyone else. So, they're they're basically going to be eliminated. But the we are or not we although you could say the US is saying nothing about the genocide in Gaza. This is incredible that our so-called humanitarian president is now speaking out against what is going on in Gaza. But the rest of the world is looking right in immediate countries around Israel. 400 million Muslims. You think they're going to stand still forever? They're going to let this go on. You know, I I see over the next months just tremendous wars breaking out. You're going to see another war with Iran and Israel, etc. And without uh the United States, Israel cannot survive very long. You know, it's a matter of weeks. So, we have to get involved. You're going to probably see US troops on the ground in the Middle East and u because the fix is in. Let's call it that. Yeah. I mean, okay, let's let's hone into this for a second. And I think we only have about 10 minutes left. B, but I I want to ask you because in this report that you put out in your new letter, you do make the explosive claim that conflicts in Gaza, Iran, and Venezuela are part of a coordinated, you call it a return to colonialism for resources. You know, these are things you won't hear on the mainstream media, but what specific evidence do you kind of have here? What's the most single compelling piece that you would have for this thesis? Well, just watch what uh the US president does. The first thing was to go to Canada. Oh, we want to make that a state, you know, of the United States. Okay. So then Greenland, Greenland. Oh, we'll ask Denmark to sell us Greenland, you know, he's on acquisition uh trip here. He wants to enlarge the borders of the United States. And um so Gaza, the idea is to make it a luxury resort. That's why they they have been very effective in leveling Gaza. There's hardly a building standing anywhere even in Gaza city which is the biggest city. Uh and uh so you know 2 million Palestinians there and uh Israel has tried to negotiate see if other countries will take them other countries will not they don't want to get involved. So u what's the only alternative to just get rid of them somehow. Okay. So that's that's where we are now. This and now the next thing is Venezuela. We already have atomic submarines, battleships, everything offshore of Venezuela. Doesn't get much publicity in the US. We're not supposed to know about that. But um you know, if you go and watch some of the podcast of the most intelligent and global uh observers, you will see what's going on right now. We are ready to have an attack on Venezuela. Venezuela is the has the third largest oil and gas reserves in the world. Wouldn't that be nice for Chevron or Exxant to have? Okay. But aside from that, Venezuela has precious stones, emerald. They've got very large emerald deposits. So, this is a wonderful acquisition. Just invade Venezuela and you've got all of their natural resources. This is where we're at. It's it's hard to believe. It is really hard to believe that the US would go to this extent. But what else? What are other reasons to atomic submarines off of Venezuela? For what purpose? Right. So, Burke, I mean, let's let's connect this directly to the market then and bring it back. I mean, if if your thesis is correct, what's the most immediate risk? Is it a sudden oil price shock from a confrontation with Iran, Venezuela? Uh I don't think you can say there's one major risk. I think the risks are so big from all directions that I would not want to take a chance with my investments being immune from it. You know the only uh safe haven is precious metals uh at this point because they cannot be manufactured at will by the central banks. That's it. So, uh, everything else, you know, forget AI. I love AI. I think a the boom of AI over over the next 10, 15 years is still underestimated by the majority of people. We use AI in my company. And it's I mean, I call it magic. It is absolutely incredible what you can do with, you know, most people only know AI for search, you know, as a substitute for Google. No, there's so much more you can do. And I mean the AI can make a complicated legal document of five, six pages for you in two seconds. It's incredible. You know, so the power is there. But you know, we have human beings as ahead of these countries and human beings are generally not very smart. Okay? Especially the ones in politics. I have a saying is if you can't get a job anywhere else, you can always get a job in politics. That's a good saying. I might use that one. Uh I know it's a big pivot here, but I got to ask you just before we leave you on Asia. So I want to bring back your current analysis on China. I mean with their ongoing property crisis, do you think they're more likely to kind of export deflation to the world or will they just manage to stimulate their way out? Well, this is the the question, deflation or inflation? You know inflation you know is also way underestimated. You we hear about oh inflation is going down. It was 9% and now it's only 2 1/2% something like that. Well that is not correct. It's the that is the rate of inflation. When it goes from 9 to 2.5%. That doesn't mean inflation has gone down. The rate of inflation has gone down but inflation is still rising. The value of your currency is still declining. The purchasing power if it even if it's only 2 and a half%. But prices are still rising. Most people uh don't get that. And of course the shills on TV uh they don't tell you that. They say, "Oh, inflation is great. I hardly worry 2 and a half%." No, your the purchasing power of your savings are still declining 2 and a half% a year at that rate, you know, and and that is what the phony statistics actual inflation, the way shadow stats measures it, which is using a 1980 methodology, you know, before they start making all the numbers phony is closer to 10% right now. And when you go to the supermarket, you will see that. You know, again, I go to a supermarket maybe once a month just to see the prices. You know, if you go more often, you don't notice it, but once a month, you really notice. Wow. Look at this. Is more expensive. You pick up any item and it's more expensive than the month before. You know, it's it's incredible what's happening. And we're being told that inflation is not a problem. Yeah. Of course. And I mean, you know, gold at an all-time high. We have a lot of people looking to that as kind of an alternative during this time in the economy. I'm curious to just kind of give me your gold forecast for our Kitco listeners. But also, where does silver fit in? I mean, it's finally breaking above $40. Do you see it as just a a high beta play on gold or does it have its own unique drivers? Well, let me say one other thing. Money supply. Watch money supply. This is what put my business on the map in 1977 when the new Federal Reserve uh uh chairman 1978 said we're not going to fight inflation with tight money. We're going to do with high interest rates and I said that means inflation full speed ahead. Okay, if you tight money, see on TV they propagate this fction that tight money is rising interest rates. That's totally wrong. Tight money means when you go to a bank and you're creditw worthy and the bank says, "We know you're good for the money, but we can't make a loan to you." That's tight money. Okay? And that's what Paul Bker did in 1980. Okay? But rising interest rates with loose money is wildly inflationary. And that's why in 1978 we wrote we said with this policy at the Federal Reserve we're going to see double digit inflation doubledigit interest rates. I we predicted 20% prime rate which the chief economist of Goldman Sachs Gary Wangowski said was absurd. He said that in a seminar I went to and I said isn't absurd if if inflation goes high enough. So we had a 20% prime rate in early uh 1980. Then the Federal Reserve got a little scared that they were being too tight. They loosened up for a few months. And then we watched money supply, but the seasonally unadjusted, the ones the seasonally unadjusted means that they they cannot fudge the numbers. Okay, those are actual numbers. And uh we noticed that in July of uh 1980 he said oh by with this policy we're going to have a new record high in the prime rate over 20% by the end of this year. On December 10th 1980 we had a prime rate of 21.5%. New high. Okay. So this is what happens. But so what you'll hear on TV with all of these shills from Wall Street is not real. Don't believe any of it. Don't believe any of it. Do your own thinking. You know, your brain has much more power than theirs. Yeah. So, so I mean, you're saying that that instead this will ignite a a stagflationary crisis where both economic growth and the stock market kind of falter while inflation reacelerates. Yes. Yes. And you know, you asked about silver. You're right. And I really hadn't recommended silver for some time but I think a few months ago we said focus on silver right now because silver is also used as an industrial metal and silver had been lagging gold for some time and so I said it's time for silver to catch up. It's a poor man's gold and silver is going to really outperform gold for a while and uh I think we're starting to see that now, you know. So, uh by the way, my long-term forecast uh in 1980 was the next top in gold in the secular bull market would be in the year 2031. Wow. Okay. So, you still have some time. Interesting. That's going to be good for people people listening. And what so what's your message to investors in mining stocks? I mean, are they essential leverage for the coming bull market in metals or a liability that could go bankrupt if this crash you foresee? Very good question, Jeremy. Um, I don't like mining stocks in general for the long term, but there there are short-term periods when mining stocks do better. And right now they have a lot of catching up to do to the earnings gains that they're going to show because the the price of gold and silver has gone up. The the mining stocks have not done that well, but they're they're catching up right now. So, but the mining stocks have a lot of problems, especially mines that are located in countries like in Africa and so on because those countries, they're going broke. And when they start going broke, they will confiscate the M mines. So you have to be aware that the mines that your mining stock owns are going to be confiscated. Could be m confiscated or they will have strikes and then you have natural disasters, mines flooding and so on. So you're exposed to a lot of risk with the gold and silver miners. You don't if you buy the metal, you don't have those risks. Interesting. Okay. Well said. That jurisdictional risk has certainly been noted by a lot of analysts this year. And Bert, okay, let's let's wrap this up even though I don't want to. I could talk to you for hours, but as we zoom out and and we talk about everything we talked about today, it's a very high conviction forecast. And I'm curious for somebody on the other side. I mean, what specific data point or event would happen for you to admit maybe your thesis is wrong and you turn bullish? The only thing that can u continue to drive the market up is money supply growth. And this is why you know here over the last several months we looked at the M2 chart money supply M2 nonseasonally adjusted number and the the chart formation told us it's going to have an upside breakout. I said the Fed says it's tight. That's a lie. That's a total lie. The Fed is not being tight. Money supply M2 is going to go to new record highs very soon and it just did the last number that came out last week was a new record high for money supply M2. Okay, so we are there. So money is necessary to drive stocks up. When money supply shrinks then you want to sell stocks because then stocks become a source of money. People sell stocks in order to get money so they can buy groceries, they can pay the rent or the mortgage, etc. You know, money is a is is the crux of everything, you know. Yeah. So, watch the money. I was looking at the Fed uh the Fed just said that the seasonally adjusted M2 money supply for July 2025 stood at 22.12 trillion. Quite a bit. Yeah. Yeah, it is. And the latest number that's out now from last week is August 4th. So there's always about a month lag, you know, four to six week lag in those numbers. It's it's amazing today's univer super fast computers and it takes them four to six weeks to give us the money supply now. Yeah, no kidding. Okay. Well, let me ask you to to wrap this up. I mean, let's assume that you're 100% correct and this crisis unfolds like you've called out these past corrections. I mean what does the world look like on the other side? Is it is it a quick recovery, a long depression or something else entirely? Well, that is a huge question and it all depends on what the central banks do, you know, and the natural reaction for central banks is what they did in every other big calamity. They print money. That's so many things to do. They print a lot of money and uh but we we've got a problem right now. The problem already exists. We cannot sell long-term treasury bonds anymore to foreigners. It used to be the foreign central banks were big buyers, especially China. Well, they're sellers now, you know. So, who's going to buy all this confetti? Yeah. Yeah. That is the big question. Yeah. Pick up the pieces. Okay. Interesting. I mean, Bert, it's been incredibly detailed analysis from you. And I'm curious, you know, just before we leave you, for the investor at home who's convinced by your argument and wants to take action, what's the very first thing they should do when this interview is over? Uh, the first thing they should do is subscribe to our Bert Dolman's Wellington letter on our website, which is dormanc capital.com, and uh you will get analysis that you will not get anywhere else. And we put out about um an issue twice a month usually and each issue is about 24 25 pages single space a lot of reading a lot of analysis a lot of thinking goes into it nowadays you know there there's really a a darth of people who do thinking you know really I've noticed that nobody does any thinking the guys on TV you hear them it's all the typical dribble that you hear from everyone even a Most wives they will tell you the stuff you know yeah interest rates go up and that means tight money bologoney it does not mean tight money you know means expensive money. Yeah. Yeah. Well yeah be be aware of what everyone believes when when we are when suddenly our view of the markets becomes the majority view. We know it's going to be wrong. We have to go back to the drawing boards and adjust our forecast except us, right, Bert? No, I'm just kidding. All right. No, you have to Jeremy, you have terrific guest and I don't consider UTV. You know, I'm glad to hear it. I'm glad to hear it. Podcasts are so wonderful. It's the only thing that they cannot fudge the main channels. They all bought and they they they total line. They have their their agenda and that's what they tell you. They're all a bunch of lies, but podcast, this is the uncontrollable mechanism we have for the truth. Yeah, I appreciate it and thank you for coming with us. We just try to get to the uh to the story here. It's not about me, it's about the guests and that's Bert Domen, editor and founder of the Wellington Letter. Thanks again for your time, Bert. Appreciate it as always. Thank you very much. Okay, have a beautiful day. You too. We'll speak soon. All right, so the central question remains, are we at the peak of a historic bubble or is this time truly different? Now, the data we've discussed today suggests that at the very least caution is warranted. Now, we're here to ask the questions like you just heard, mainstream won't. I'm Jeremy Saffron. This is Kicko News. We'll see you next time. Thank you for watching. [Music] Heat. Heat. [Music]