Transcription
2024 belonged to Bitcoin. 2025 belonged to gold and silver. And now the big question is, what is the trade that will define 2026? We've seen, uh, crypto collapse after a historic run. Gold and silver went parabolic at the fastest pace in decades. And meanwhile, stock market volatility is still sitting near multi-year lows. So, is it strength, or is it a calm before a bigger shift? My guest today believes we may be entering what he calls a post-inflation deflation cycle, and that something else, not Bitcoin or gold, could be the next major trade. Let's break it down in plain English for a lot of these retail investors. Today, my guest is Mike Mcloone. Thanks so much for joining me on Verified Market Insiders, Mike.
>> Well, thank you, Liz. You teed me off very well on that one.
>> Yeah, right there for the golf. Well, all right. So, we're talking about Bitcoin for this year. You know, it hit all-time highs. It was, it was the train of 2025, and then gold and silver at the beginning of this year. Yet, like I said, the market volatility is still, still near these multi-year lows. I mean, that feels kind of contradictory to me. What's going on there?
>> It's not going to last long. Um, it's just a matter of time that all that volatility from, um, cryptos most notably going down, and precious metals most notably going up in terms of price, will trickle down to the stock market. Um, and to me, that's my base case this year. I walked in with that base case, and I stick with it. Stock market volatility will go up. Let's look at NASDAQ. 180-day volatility right now, it's about 15%. That's the lowest in about eight years. So I'm walking the year with that same view. Is when you expect stock market volatility to go up, pull back. And if you're more tactically oriented, just wait for opportunities. And I think they're just getting started. Um, where I think the best, um, trade this year will be, as you mentioned, you know, cryptos and gold created a lot of alpha. Cryptos died last year. Gold created a lot of, took alpha last year. And I think what's going to take alpha is good old T-bonds. And I can run you through a few charts we can use as a basis for our conversation, if you want. We can go wherever you'd like.
>> Sure. Yeah. Let's, uh, let's look at some of those bonds because I mean, that's interesting, a bond trade. I mean, you know, gold and silver are kind of the, the moves, and then Bitcoin, those are like the, the sexy stocks. So why bonds? Let's run through it.
>> Exactly. So I start by showing a chart, just the facts of, um, this is the, uh, it's basically just pointing out the US Treasury bond future. The 100-week Bollinger Band is the narrowest since right around 2008. I remember that period well. Some of us was way overweight long bonds then. Of course, I was too early, 2007. But I started in this trading pit in 1988. I thought I knew this market the best. It's been consolidating in the narrowest range, like I said, since 2008 on a 100-week basis. It's going to break out. I think it's going to break out up. And I've been wrong on this one for two years. But this to me is the macro that's kicking in. Is if you just take a look at the total of the whole measure of US Treasuries as far back as we can go in the Bloomberg terminal, is right starting around 1973, and you divide that by gold, we're at the lowest level since 1980. Basically, starting from a, a base of 100 in 1973, we're basically about 50 now, and the high was over 400 in 2000. So I look at Treasuries are the cheapest in 40 years versus gold. And okay, and gold's very expensive. At the same time, you can see that there's the potential that Bitcoin is rolling over. This will be the second down year in a row for Bitcoin if it continues, first time ever. And I think that's part of that peak in Bitcoin. And then overall, this is predicated on the bottom line for everything, for all matters, for everything, is US stock market cap to GDP is the highest on a year-end basis since 1928. So I'll just, that's kind of all the macros to the micro. Bitcoin led the way up. It was launched in 2009. It was the first cryptocurrency. And now on CoinMarketCap, there's 33 million, which I think is going to be the big problem in the space. They call it, says it has unlimited supply. It doesn't. There maybe Bitcoin does, but the whole space has unlimited supply. So what I show in this chart is Bitcoin's just gone back to that mode from 2024. 2024 was the pinnacle year. The, I think history books will show you that it was the peak year. That's the year we had the halving and the, um, ETFs launched. Very controversial. And the biggest one of them all was President Trump shifting over from, uh, converting to a zealot for cryptocurrency. So we've done, we've gone back to the mode for that year, which was $64, $64,000. The $64,000 question, closing below that level as we speak right now around 66, will signal a major tilt back towards, in my view, towards 10,000. Just a normal rotation. I think it's a matter of time. The thing that's already happened is Ethereum is doing the equivalent. What I show you in this chart is how closely related the stock market was this. This is S&P 500. Maybe it's just starting to roll over. Follow Bitcoin. Remember, Bitcoin led the way up, all risk assets, and potentially it's leading their way back down. I want to show you again the chart I featured a little bit earlier. Just take the S&P 500 divided by GDP. It's the highest since 1928 on a year-end basis. That's the Warren Buffett model. I use the S&P 500 because it's easier than actually using stock market capitalization because it's robust. And then also we have Bitcoin rolling over. To me, that's a sign that the whole thing's tilting over, but also we tilt over to things like gold. What's happened this year in gold is gold's gone parabolic. What I show you here is something you haven't seen, and that's why I show it. If you show gold relative to the Bloomberg Commodity Index, it's the highest ever. Or in this case, I'm showing the Bloomberg Commodity Index is the lowest ever versus gold. Yeah, I've been bullish gold forever, but it's got up too much risk now. It's gone up way too much versus its 60-month moving average. The velocity of the gold rally is the highest since '79 and '80. And I think gold is a major risk of simply going back to $4,000 an ounce because it's a way too overbought market. It set up too much risk. Always kicks in in markets. The same thing I show was, go ahead.
>> Look, let's go back to Bitcoin for just a second because the S&P 500, I believe you had laid over the, uh, the Bitcoin chart there. It looked like almost, and I, I think you've said this, uh, in the past, that Bitcoin is almost a leading indicator for the market. Now, we've seen Bitcoin rolling over, uh, in the last month now, and still on the way down, kind of trading between that 60 to 70 level. But if it does drop below that, uh, that key support level there, is that signaling something even more so for the market? Uh, what could happen next?
>> Well, two things. First of all, it's about an if. My view is it will. And partly, I, I point out because, um, I didn't show you a chart, but you can see it. The NASDAQ and S&P 500 volatility is absolutely buried. 180-day volatility on the S&P 500 is 11%. If we end the year here, it'll be the lowest since 2018. So you got to expect that volatility to stay low for Bitcoin to go higher. And Bitcoin's already warning you the stock market is going to go down. It's been a great leading indicator, one of the best leading indicators. If you take, divide by gold, the ounces of gold equal to one Bitcoin, that's been breaking down. So, overall, I think it's a great leading indicator for speculation. And a key thing to remember for anybody who's investing in Bitcoin is the narrative completely changed in '24. Before that, when people like me who are really bullish, most notably in 2010, when I, in 2020, when it was at 10,000, and Michael Sailor jumped on board, I called for niches data zero. But what's changed is back then, I could look forward to ETFs would be launched. I could look forward to the US government saying, you know, maybe we shouldn't pick back on, push back on an asset whose base layer is the dollar and its most enduring bull trend is a proliferation of stable coins or crypto dollars. So now they endorsed it, jumped on. But so it ruined two base cases for Bitcoin. First of all, in the past, you got in it to get away from the system. Now, if you're buying it or involved in it, you're supporting and somewhat dependent on the Trump administration. They're all involved. And before, you could consider care to bear cash, but you have that with crypto dollars anymore. We don't need that anymore. So to me, this whole space put an enduring peak in 2025. The Bloomberg Galaxy Crypto Index dropped 20% last year. So far this year, it's down about 25%. I think it's going to continue to decline. I don't see what stops it. And the bottom line is, for cryptos to go up, you basically need the stock market to go, keep going up. And it looks like that's finally rolling over.
>> And do you think that, I mean, gold kind of separated from stocks and Bitcoin, you know, gold and silver, even if you want to group them together, kind of rolled over. It was actually pretty interesting. I wrote an article about Bitcoin. Uh, it had that massive down day. I mean, I guess two, three weeks ago now, right? Had a massive down day, but gold was hitting all-time highs. Silver's hitting all-time. Not 24 hours later was I writing an article about the huge drop in gold and silver. So, does Bitcoin also lead gold and silver, or is it kind of a trickle-down effect, or does gold and silver kind of follow the markets more so than like Bitcoin, which is more of an indicator?
>> They've all disengaged. The bottom line what happened last year is I really enjoyed writing the headline a few times of doves versus pigeons. The precious metals, there's only four. Gold, silver, platinum, palladium are basically doves versus cryptos are pigeons. There's unlimited supply of them. They're everywhere, and you can't keep track of them. So, to me, that's what shifted last year. But now, the bottom line, Liz, is gold and silver just got too expensive. Silver getting above $100 an ounce, I view is a worthy short, partly because it was the greatest stretch since '79 and '80. And back then, CPI was running around 15%. Now CPI is running below 3%. It looks like it's going to drop lower towards zero. I'll show you that in a second. Um, but the reasons for silver and gold to rally, most nobody, silver, we're all mentioned things we talk about five years that kick in. It doesn't matter. Once you switch to parabolic price, you have to take your supply demand model and shift that supply higher, shift the demand lower, reset. And it looks like silver probably put in a high that might last for decades, if, if, um, history is a guide. So, right now, as we speak, it's around 78. I think it's peaked this year. I think $100 is a decent, worthy, uh, short. And I think it's more likely to head towards 50. Remember, silver is industrial, so it's got to completely depend on stock market going up. All industrial metals are from this stretch level. The difference is gold is obviously store value and an alternative asset. Zero correlation in the stock market. But its problem is it just went up too much. The narrative was great, but when you get the lowest ever, um, you know, highest ever versus broad commodities, the greatest stretch versus a 60-month moving average since '79, '80, you're supposed to back off. And per certainly people like me who've been bullish forever, you do one key thing: take profits. And that's the key thing that's happening. This is, this is a selling when they're yelling market. I think what happens when the stock market goes down, everything's going down, going to go down. Most notably, um, bond yields. And I, and I can show you one or two charts why I think they're all going down. Very simplistically, if you look at CPI, it looks like it's putting up a good, pretty good ceiling at 4%. It doesn't seem to be able to get above 4%. And, um, same thing with WTI future, looks like it can't get above 70. And there's a good reason for that. It's oversupplied. And what's normal is CPI's bottomed at zero or below zero three times since 2008. And crude oil has bottomed at or below 40 three times since 2008. I think it's going to do that potentially this year. One key thing is stopping us from doing that is there's trends already there. And that's the stock market just normalizing a little bit of volatility, backing up a little bit. And this is one thing I can really emphasize again. CPI again, you see this resistance? It's hovering. It can't get above 3%. I think it's unlikely. Now, we're all worried about it. I think it easily drops to zero. And there's one key reason why. If you look at stock market cap to GDP, it's 2.2 times. Now, the fact that we've rallied so fast, created so much wealth, and CPI stayed below 3%, 3% seems and, and suggests to me that the next big trade is post-inflation deflation. The stock market wealth effect is significant inflation, the most in 100 years. Now, that's going to revert at some point. And if you look at the last time we really had kind of deflation was when market cap to GDP went from around 1.1 to about a half. And right now, 2.2. So that's all that matters. Right now, we're at the point that the stock market is the economy. And I think most economists are starting to figure it out.
>> So why throw crude oil into the mix? What does that, what does that have to do with the cycle of, of a lot of these, I mean, your interest in going toward a different direction or a different cycle?
>> Well, so crude oil is a significant deflator. First of all, the world's most significant industrial commodity. It's deflated. Right now, it's $63 a barrel. The high in 2022 was 130. The high in 2008 was 145, and the lows have been 40 since. See that lower highs, same lows, if not the last low was negative. What changes that pattern? One key thing that changes it. We spike too high, you bring in that supply, you recall demand, and the whole world shifted to EVs. It's a classic example of rapidly advancing technology, accelerating deflationary forces. That's what's happening in AI. What person on this planet who's somewhat professional is not worried about AI either replacing you, or you certainly have to use it to enhance all your production. If you're not, you're falling behind. So those are severe deflationary forces that people like Jeff Booth pointed out in his book, The Price of Tomorrow. And he was a big Bitcoiner. But the thing that's significant about crude oil is what happened last year was unprecedented. Crude oil dropped about 20%, and gold went up almost over 60%. We've never had that wide disparity in this ancient store value going up and the most industrial commodity going down ever without it meaning something. I think it's going to mean something. And to me, it means that we're tilting towards that global recession. And the number one thing holding everything up, inflation, the track away from global recession, is US stock market. And the best leading indicator for the stock market for the last few years has been Bitcoin.
>> Do you think the, speaking of AI and electric cars, I think it's really interesting, um, that yes, advanced technology is continuing. So, you're seeing these oil prices go down. Gold and silver are also pulling back, but separate look at copper. Is that going to continue moving up, or do you see kind of a value play in that, or do you think that's already hit tops because the need for it in a lot of these EVs, a lot of this advanced technology is already there and already priced into the market?
>> So, what you said is a no-brainer. And I appreciate that. It's the price that matters. Copper made a high so far this year around 6.25. I view it right now as a worthy short. Anything popping above $6 a pound. Partly, minimum one is distorted by supply disruptions, which usually don't last very long. And the tariffs, US tariffs. It's called it the, um, economic sensitive metal. Fundamental with a PhD in economics for a reason because if you overlay copper with the S&P 500 for the last 10, 10 years, just take a, you know, a thousand couple zeros off the S&P 500, it's been the same price of copper except since 2023 or so. S&P 500 is breaking out, it's pulling that copper market along. That's the, the problem is I look at this. This is a showing divergent weakness for what used to drive it higher. I look at as, okay, show test a short there, make it prove strength because if stock market drops 10%, I fully expect copper to drop 20%. So I fully expect it to drop back below five, maybe four and a half. It's still a bull market, but it might be proven it's wrong. And I put copper and Bitcoin in very similar buckets because they had very similar patterns last year. Bitcoin is the one that broke down. They were completely dependent on beta going up, and Bitcoin's rolled over. And I, I view this as a, like it's just none of my list of worthy shorts. Silver above $100 an ounce, copper above six, crude oil above 65. These whole things are economically stock market dependent commodities that are completely dependent on that stock market to keep setting records that stay above 7,000 S&P 500. Yet a normal version towards 6,000 is way overdue. And that's why I view all those kind of things as worthy sales as a strategist.
>> Right. And, okay, so, you know, historically gold's been the safe play, right? If, if, if I'm worried about what's going on in the economy, I'm putting my money to gold. Well, now you're saying it's too expensive, especially for everyday retailers, to put that money into the market, into gold prices. So, even though that's pulling back, do you think the buy-the-dippers are going to continue, or do you think that whole trade, that money is going to go somewhere else?
>> So, here's what we're going to hear in the stock market: "Healthy correction." We haven't heard that yet. We're way overdue for that. We heard that in, we've heard that in Bitcoin since October. It hasn't worked. Heard that in all cryptos for a while. Hasn't worked. At some point, you reach an endgame. So, cryptos got trumped. Learned the lesson of expressive, excessive hubris and the sun saying it's going to go to these pine sky levels. No, I think it's an extra stocks to get trumped. But that's just normalization. But the problem is now is, yes, gold was a great place to hide. Last year was the best trade on the planet. Those of us who, you know, way overweight and forever, it, I was kind of shocked it did so well. But now, as I point out, the price is the highest since 1980 versus a basket of US Treasury securities. So I look at Treasuries as the place to be. Stay away from the market. You sit over in Treasuries and maybe pick out a little duration in the long bond. And that's what markets are telling me. And there's only one simple thing to get there and that's stock market volatility going up a little bit. But that's where gold's a problem. It's already, it's already front-run. It's already rallied too much. And if the lessons of history are examples, we could easily get to the level back in 2000 was 850, which held. And that was 1980, which held until 2007. I remember that one well. Um, means this high around 5,000 could last for a decade. I fully expect it to go back to 4,000 and silver back below 50.
>> And, you know, you use a lot of the post-inflation deflation language.
>> Yes.
>> For an everyday retail investor, I mean, what does that mean for someone's portfolio? Yes. I mean, it means that maybe that some of that money goes into, like you said, bonds, but what does that mean for prices of other things? Is that mean a recession? Could you explain a little bit more about?
>> So, my, my base case coming into this year and starting last year was that volatility will pick up this year, and the next recession will be led by cryptocurrencies of Bitcoin. They led the way up in terms of risk assets going higher, and they're going to lead the way back down. So far, that's happening. Why? Because we've had the greatest wealth creation effect ever in history on a global basis from US stocks and housing. It's just that high. So you just look for triggers for that to reverse. Well, okay, crypto's going down. Boom. Got that. You know, Bitcoin, as we speak, is 66,000. The high was, so it's down 50%. And, um, what's happening in metals, they've gone parabolic. So to me, that's the signals that something that bounces is going to trickle down to the stock market, and we're going to get some reverse wealth effect, which will be our recession. So, basically, bottom line for things like the Fed, it's not going to really matter. Um, if, when the stock market drops 10, 20% and stays down a little while, it's overdue for that. What these markets are warning us is that it will. That's clearly a deflationary force that follows inflation. So, give you one example, the most notable one was the 1930s in the US. It was post-inflation deflation. We had the inflation of the risk assets for the stock market bubble crash in 1929. We got deflation. 19, most of the last 30 years in Japan. I know that one well. Traded Japanese government bonds in 1995 as that deflation was kicking in from the inflation. But basically had a pretty significantly inflated risk asset, all mostly stocks and housing, that's still deflating. It's only recovering now, but that's 30 years ago. We have a clear significant post-deflation inflation cycle kicking in China. And a good example is the 10-year note yield in China, as we speak, is 1.78%. In the US, it's 4.12%. I think we're going that way, but their yields are so low partly because there's fewer things, ways to invest, and people are investors are clamoring into bonds, which they pushed them lower. This happened in Japan, too. That's despite the fact that they're running monetary debt to GDP around 300%, in money supply. That's most more than double the US. They're doing everything they can to fight that normal deflationary force. So, the next iteration, I expect, is we will have a decline in risk assets following cryptos in the US. We'll get that deflation from inflation, and the best performing asset this year will probably be good old Treasury long bonds.
>> And, you know, you made a good point. You said because just watching the stock market every day, just as a trader, you know, we have these corrections, but they're two, 3% max, right? And it's right back up, or maybe two down days, five down days, another rally up to all-time highs. So you said 10 to 20% down and it has to stay down. How quickly would that have to happen? It's not just these two, 3% chunks right out of five days. I mean, are you talking a quick move?
>> But that's exactly the human nature of the market right now. Is everybody expects to be up 10%. And everybody can't wait to for a dip to buy. It's just we've swung too far. This was exactly the sense I had in cryptos last year. It's too many people are bullish. So, what's going to happen? My view is we're going to initially have a 10% drop. Oh my gosh, we can't even fathom that. A Trump administration can't fathom. Just imagine what that is. If we drop, or when next time we have a 10% draw down from current levels, total market cap is around 72, 73 trillion. That'll be almost 25% of GDP on a 10% move. That's the most in 100 years. You see the problem now? That's all that matters. And exactly. Well, so, but there's great investor alternatives. And that's the bottom line. Is when you get sucked into being long risk assets forever, it can be, um, it can, you can lose your scope on what you're supposed to be doing is prudent profit taking. I'm just pointing out the cheapest assets I see on the planet right now is good old Treasuries, bonds. And the most expensive assets on the planet are stocks. Now, we've known that for a while, but cryptos have started kicking down to show that there's a warning. And what precious metals doing, they're giving you, they're telling you what's going to happen in my view. And that's why I say if there's a year to say, oh, I already clipped a 5% coupon in the long bond, which is down to 4.77 now, and they say, "Yeah, I fell behind." This is the year to take that risk, I think. But, you know, last year I thought it was very risky to be long gold in bonds, and gold was a shocker. It did so well. That's part of the thing I, to me, it's, it's, it's frightening what it's warning us.
>> Right. And, you know, when you're talking about moving assets to, or moving money over to bonds, um, is it because it's a, is it because it's a safe play, or is it because it's a price play, or maybe even both?
>> All the above. Well, Treasuries are the safest they are. And most now, now people are so trying to clamor to fight to to jump into, keep up with that inflation that they've realized it's probably peaking. What markets are showing us, and I showed you earlier, CPI can't stay above 3%. It's probably the other way. But the bottom line is, number one thing for all Treasuries is inflation, inflation expectations. And I'm pointed out earlier, I just showed you. I could show you again why I think CPI is going to zero. A very simple, simple chart overlay with crude oil. CPI going to zero is normal. Crude oil going to 40 is normal. It's happened three times, and you know, since 2008. Why not again? Same thing with, you know, with the stock market is reverting a little bit from 2.3 times GDP, maybe 1.5 times GDP. That gets CPI to zero. So if the CPI is zero, let Long Bond at 4.77 right now, probably easily drop towards China, towards 2% handle. But the bottom line is not so much where the money is flowing because the yield has to reflect inflation expectations. The point is, money can disappear. It's a cryptos right now. It just goes poof. It's the lessons I learned in trading pits. Markets can just poof, make money disappear. But once those flows kick in, I think once the bond flows kick in, it'll be a pretty unstoppable trend for at least a little while. Um, and what times sometimes, Liz, it just takes one day. So October 10th was the day that flipped the cry, the crypto market. Um, Bitcoin was well above 100. Since that day, it's been a pretty severe downtrend. Bloomberg Galaxy Crypto Index since that day has probably dropped over a third. It's going to just take one day, I think, so to flip the narrative in the stock market and people realizing, yeah, it's probably better off that, um, we focus on prudent profit taking rather than buying the dip.
>> Do you ever see bonds becoming too expensive when this, if and when you say this occurs, do you think they become too expensive and it rotates somewhere else?
>> So that's the dream, Liz. So the, uh, the dream that I had in 2021 and '22 and '23, when I was the idiot calling for every single year, I called for, uh, gold to get above $2,000 an ounce. I was wrong. And I've been calling for the stock market to have a correction forever, and I've been bullish bonds forever. But the dream is to be able to say things like I did in gold, um, and silver a couple weeks ago. Oh, silver reached the highest price ever versus crude oil and the highest price ever versus copper. And the most extended stretch versus their 60-month moving average is gold and silver in 40 years. When you can say that and you're, and you said you're on top of the trade before, that's the dream to say, take profits. That's a problem I'd like to have in, in bonds. That's, that's many bridges down the road.
>> Do you think you, despite all of these measures the banks are taking to to stop, um, and to fight deflation, do you think it's just a matter of when it's unavoidable, not if? So, I mean, I mean, as a trader, we look for volatility in markets, every time there's an announcement right from the Fed. But eventually, that kind of reverses itself. At, at what point do you think that happens? Is it become more of a problem?
>> Yeah, I, I think that's the key question. Um, and so I look at first as a trader. I mentioned trades. Obviously, I think volatility is going up. I, I keep thinking, okay, that means you probably should sell copper on rallies, sell silver on rallies, sell Bitcoin on rallies. Where you do it, it's much harder. Will you cover those shorts? It's harder. It's a different world. Um, but the big picture macro to me is we're way overdue for some normalization. And from a trading standpoint, this is going to be the best year ever. Getting coming flat. Some of us have done it already. And don't get caught off sides like all these people pouting about cryptos going down like that means you came in way too long. Sorry, but sometimes markets tell you to sell, and then don't ever, um, I think underestimate the market gods when they know you're off sides. That's what's happening now. Um, so the big picture for me is, um, this year will be tremendous for traders, but in a bear market, most notably with the exception of, of bonds, and that looks like it's just getting started.
>> And because I'm everyday trading on, you know, very small scale, you know, ups and downs, I, I, I'm very interested in the macro of it, the cycles, right? Because cycles are so fascinating, and history repeats itself, right? So, is there an example of, I mean, obviously, we didn't have Bitcoin, you know, a hundred years ago, but is there an example of kind of a cycle shift? I mean, first of all, do you agree that we're kind of on a cycle shift into something else? Um, and then can you give an example of that in history?
>> Well, right now, we'll start with that. There's, there's only two examples of how expensive the US stock market is now. Number one, versus the last year, it was the highest ever versus all the world's, um, stock markets. Now, that was the highest ever. Okay, now let's come back a little bit. But versus a normal measure of GDP, there's only two examples in history where we pick 1929, US, 1989 in Japan. Both were followed by post, that was inflation, post-inflation deflation. They followed by deflation. And sure, you pump the system liquidity into the inflation. I mentioned China's doing it, and they still have a 10-year note of 1.78%. See the trade there? And they're buying their own stocks. The ch, Japan did it for 20 years. Now they're kind of stuck because they own a lot of the market. China's buying their own stocks. But all that stuff only comes after you have that deflation of highly valued risk assets. We have the most overpriced risk assets on the planet ever now, US stock market. So you look for alternatives. Like I said, cryptos were great. That died. Gold was great. That died. Now there's only one thing left, I think, in the macro, and that's good old simple P bonds and Treasuries. But it's a great trading environment for people like you. Sometimes, you know, the best rallies come in on on bare markets. One good example, one of the key leading indicators I had for everything was MicroStrategy. Not only psychologically, but actually watching the chart and personally because I know Michael pretty well, we met and spoke a few times, and he's, he's gave me some great signals, first to buy in 2020 at, I was already bullish at 10,000, and then to sell when he doubled down above, uh, $100,000 an ounce, but sorry, a Bitcoin. But MicroStrategy's low so far has been about 100, the high was around 450. It bounced to 138 and give you a 38% bounce. Now, that was quick, but those bounces will be wicked. It whips out the shorts and gives you some great trading opportunities. I still think that stocks can go much lower, but great for trading.
>> I mean, arguably though, I mean, we're looking at this, I mean, yeah, maybe it's a late phase of a bull cycle though. So, yeah, you get a pullback, but of, of course, the bounce. I mean, at what point in a bear market are you going to catch that falling knife? You know, we haven't seen that in quite a few years. So, yeah, it's nice to have these pullbacks because of, of course, we still are in that cycle, maybe late stages of those bounces happening because we're still technically in that bull market. Um, even though some may argue that we're kind of getting out of that. But I mean, what happens when that becomes the bear market and things just start dropping and they just don't like that 10% pullback day?
>> Yeah, we're, well, that's a key thing. We were way overdue. Most of us predicted this for gold and certainly, um, silver to have 20% days. I mean, I just, I traded it 30 years ago. I remember well, it just makes you lose your hair. Um, and we're way overdue for just one day. Maybe stock market drops three, five%. Boom. Flip the switch. It's, we've already gone up a lot. Maybe that's starting today as we speak. We're down 1%. It's not a big deal. Um, but we're so overdue for that. Is there so that's, that's what happened in crypto. So our guidance, I think, to what to expect is one bridge at a time. First, we have to at least confirm getting that S&P 500 below its 200-day moving average. And that's just normal reversion. Is right. Right now, it's about 68. That's around 64 is a 200-day moving average. So, for a while, it was 10%. Below. Now, it's at least narrowing. We'll get there. We have Bitcoin rolling below its 200-day moving average. So, you look to sell rallies in that market. I think before I saw a cap around 90, and now I think the cap for Bitcoin is around 70. So, try to look to be responsively, you know, selling in that environment. I think either if you're lightening up in longs or testing new shorts. But we're far from that bear market in stocks. Once we see that, once we see, first of all, you got to get below the 200-day moving average for that to roll over. But key thing is Bitcoin's 200-day moving average has already rolled over. MicroStrategy has rolled over, and they all are kind of together. And I think it's just a matter of time that the, you know, the 10-year yield 200-day moving average has started dropping a little bit. I think it's just a matter of time that 30-year 200-day moving average is when that starts going down. That's my point is this ball hasn't even started yet, and Bitcoin's leading the way.
>> And I want to ask you, I had a, a guest on, um, a couple of weeks ago who said that when stock prices or stock markets are doing poorly, typically you see the economy doing really well. Um, do I mean, do you agree with that statement, or do you find that when that rotation of money happens into bonds because the market maybe not doing well, the economy starts to flourish?
>> The answers have changed. When you get to 2.3 times GDP in the stock market, and every 10% move is 25% of GDP, that is all that's going to matter, and that's going to be all that matters. So that's my point is that's called that was the inflation, and now we're starting a deflation, barely. Um, so all that stuff basically when people say, oh, it's good with stock market when the Fed eases, we've reached endgame. It's too late. It's that trade is over. We just got too high. I mean, stock market, they, they haven't been able to ease so much because the stock market's still keeping inflation kind of, um, he, kind of sticky. But my point is, it's not going to matter once we drop 10, 20%. We'll go to zero in CPI. We have three times the last 20 years. The thing is, it's from a much higher plateau now. Liz, when you get to that high plateau, that's what happened when bit, with cryptos and Bitcoin. I didn't think Mr. Trump was get elected. But when he did, it boosted the market, created the animal spirits, got all these silly meme coins, and now it's in that classic post-inflation deflation mode where it's going to take a long time to reach that low price cure. I think we're finally reaching near a high price cure in stocks, and the next iteration of low price cure might take a long time. In the meantime, this year alone, I think we're supposed to be buying Treasury bonds on dips, selling Bitcoin, crude oil, copper, and maybe even stocks on rallies. But the thing is, the stock market hasn't started rolling. Maybe the Nasdaq has. It put its high in October.
>> Yeah. And that's an interesting point. And, um, you know, kind of shifting things to to more commodities based. You talk a lot about a $5 basically line in the sand for commodities. Why is, why is that particular level so important?
>> Yeah. Well, I'm glad you went there. So if you take the average price of, of natural gas, corn, and copper, every time it bumps above five, and if you overlay that with the US Treasury bond, it's been bumping around 5%. Last year's high was 5.15. This year's high was 5.95, but it's the same chart. And I'd love to point those out because also those commodities are the same exact price as 20 years ago. They can't get above five. Number one thing to remember is they're highly elastic. Every time you go up, supply comes on, it crushes demand a little bit, and they go back down. Copper has been the most resilient. Both natural gas popped above five and failed despite a really cold winter. It just couldn't do it. It's the number one measure of heat, electricity, and fertilizer in this country. If you want, Mr. Trump wants to lick it. He wants that price lower. That's another thing. Corn has tried it, too. We just bring in more supply. It's so much easier to create corn every day. A good example is the average yield of a typical acre of corn, a corn acre in this country is double what it was 50 years ago. We just create more with less. So, we put those together. That's part of that deflationary bent that typically it goes down to three. It has to get low and then it resets. And that's what I think is going to happen with this long bond. It tried to get above 5%. Co, the average price of natural gas and copper and corn tried to get above 5%. They failed. I think they're going to drop to three. And one little single way to get that one thing that's day is around, um, 11%. The average 10-year average is closer to 1.78%. And a lesson I learned trading options in, in the trading pit in Chicago is volatility is always mean reverting. It's just a question of when. So basically, if you're bullish, any risk assets, you have to hope that volatility stays inordinately low for an exceptional long period of time. Wait for the pop, wait for normalization, then look to sweep in some risk assets. Right now, we're not even close.
>> So what happens when those commodities fall below that $5 level? You said that they may get down to three.
>> Maybe consolidate a little bit and pop back up and correct, or is it just, I mean, is a broader market reaction going to happen?
>> It's broad. It's so it's the cycle. The key thing to remember is certainly, um, is typically they don't, they peak around five and typically they bottom around thing. The key point is right now we're at this cycle now where potentially just peeking around five. So I look at a transition. We just popped that thing around five for a while. Most notably natural gas, it failed. Copper potentially is rolling over. Co's potentially rolling over. I just mentioned those because they're all around five. But they're the, they're most notably industrial metals, agriculture, and energy. They're the main sectors. The key point is there looks like they're just starting that rolling over process. Act accordingly, which means you look for what does that mean? Deflation from inflation, probably kicking in. Watch over the stock market. Looks like it's finally starting inflation. Collapsing cryptos signaling that way. Now find looking for, you look to sell rallies in those assets because they're rolling over. As far as finding bottoms, probably not for a little while. We're, it's not even a market to think about bottoms. It's to think about the roll over process right now. Like that, that 200-day moving average in Bitcoin. It's rolled over and it's now about 100,000.
>> What would this a little bit of a tougher question, you have to disprove your own thesis, but what in the market would prove that the market is going in a different direction? What would be the tipping point where like, oh man, maybe we delay this thesis, you know, another year, another few months?
>> Yeah. So, I've been putting that in papers. Number one, the S&P 500 has to stay above 7,000. Looks like it might have peaked. That's number one. I mean, the beta, most expensive risk asset, you know, on the planet, stays above 7,000, everything's fine. And then you look for leading indicators. But to me, that's one key indicator. My key indicator is Bitcoin. It's rolled over now. First, you know, initially 100,000 is a key level. If it can stay back above 70,000, maybe something's happening. Copper, if it can stay above six, maybe something's happening. Silver, can stay above 100, maybe it means something. Maybe it's giving us leading indicator. There's so many things there. But for now, all the, all the markets are pointing towards the risk of rollover.
>> All right, Mike, we will, uh, it's a wait and see. We'll be watching it every day obviously here at Verif Investing because we're just in the charts every day. But, uh, it was really great talking to you and I'd love to catch up with you in a few months from now if you'd be up for it, just to kind of reassess where we're at and what's happening in the macro scheme of things in, in your point of view.
>> Absolutely. Very much looking forward to it, Liz. And thank you again for having me back on.
>> All right, Mike. And, and for our viewers who are watching at home, uh, first of all, if you like this episode, please like and subscribe below. We have a lot of, uh, very interesting guests on like Mike. But if they want to see what you're thinking and look more into your world, what kind of social media or platforms can they, they look at?
>> Well, first, they can see me on your show. Thank you. I'm on X, Mike McGloin 111. Um, LinkedIn, Senior Commodity Strategist Mike Mclo. And people want to reach out, send me their email, I'm happy to put them on my distribution list. So, thank you.
>> Awesome. Thank you so much for joining me, Mike. And we cannot wait to talk to you next time.
>> Me, too.