Transcription
In this video, I'm going to tell you about the silver and gold bottoming signal that nobody is talking about. For those who are new, I am Jordan Roy Burn and I earned the chartered market technician and master of financial technical analysis designations several years ago after extensive years of study of technical analysis and all that comes with it, including sentiment and much more. And so, without further ado, let me get to that signal.
And that signal is a steepening of the yield curve. And here is a macro chart I use for gold that includes some other important markets mostly revolving around the bond market. And so we have the yield curve here. This is the difference between the 10ens and twos. And this chart has not updated yet today, but this is up to 0.45. So the spread between the tens and twos is steepening or rising. You can see here over the last few months that's been rising. It closed this week at 0.4. 45.
Now, I've talked about it historically. The number one driver for gold fundamentally, and PIMCO did a study on this is the inverse of the real 10-year yield. So, real yields are very important. Now, real yields have been rising, but in recent years, the yield curve and the steepening of the yield curve specifically that has been a better indicator, a better fundamental indicator for gold than the real 10-year yield. So again, the curve had been flattening since the beginning of the year, flattening or declining here, we can see, but in the last couple months, it's starting to pick up. It's rising. So it closed this week at a six or seven week high or so. And people, I've been talking about this in past videos in recent weeks and months. The problem for gold, we've seen interest rates rising on the short end, the two-year yield, the long end, the 10-year yield. And I pointed out if interest rates are rising, what gold needs is it needs the 10-year or long-term interest rates to rise faster than short-term interest rates. So, that's exactly what we have been seeing in the last 5 weeks or so. So, this is a bullish fundamental development for gold. Now, that doesn't mean that gold can't break here and do a false breakdown for a little bit. But it does tell us that the fundamentals for gold are no longer bearish. In fact, that they're much less bearish and maybe even bullish.
Now, getting to my next chart, the other key development, which we are still waiting for here, is the peak in the two-year yield right here. So, this is the two-year yield, and we also have the Fed funds right here, and this is the yield curve, the tens and twos that we just talked about. And down here, this is gold. And so we can see that peaks in the 2-year yield as we see here and here were right around significant bottoms in gold. Okay, this bottom here in 2018, that was a major bottom. This bottom here at the end of 2023 was very significant. Now, gold did bottom here about a year or so earlier in 2022. We can move up here and see this is where the 2-year yield was at that time. So, it didn't go that much higher. It was volatile here, but eventually when it started rolling over big time, gold started moving up. And then, of course, gold broke out of its 13-year beautiful, super bullish cup and handle pattern. So, the peak in the 2-year yield is going to be very, very significant for gold.
Now, I think most people would say the Fed's probably not going to hike in September, but let's just assume that they'll hike. In that scenario, gold would bottom with that hike. Why? Because as you can see here with these blue arrows, when gold declines going into the start of a new rate hike cycle, you see gold bottom when they do that hike. Now, the one difference was 2022 because gold was moving up. It had that big move during the Russian invasion of Ukraine. Big move up. Then when they started hiking, gold peaked and declined. So fundamentally what we've seen is an important bottoming signal with the yield curve starting to move up. It's starting to steepen. Now the last thing is when we get that peak in the two-year yield. Maybe it's right before that September Fed meeting. That is going to be another significant catalyst for gold and precious metals. And so beyond that, when you have the two-year yield rolling over and you have the yield curve steepening, it's a very bullish combination for precious metals. And gold will not only rebound, it can rebound and then move back to its all-time high next year.
Now, moving on. I talked about this in the last video. I wrote about this this week. And people, the 30-year yield has broken out to another major high. The 10-year yield is very close. So there is major upside pressure on long-term bond yields here. Now the average interest rate on our debt right now is 3.4 trillion. Now this year they have to refinance 10 trillion of that debt and our net interest is about a trillion dollars per year right now. Now the gross interest is probably 1.4 4 1.5 and just a 1% increase in the interest rate right here. That would add another 400 billion in debt. That's 400 billion in interest on the debt. And if we look at federal revenue right now, it's somewhere over 5 trillion. So 400 billion divided by 5 trillion, you know, that's another 67% somewhere in that realm. And then you'd see this the gross here that would rise by another 7% like that. And then the net here that would probably rise not by 7% but maybe four or five percent. And if you look at the net interest okay that is already pushing above this level here. Okay. And I mean this is the highest you have to go back to the beginning of the great depression. So this is a serious problem when you have upside pressure on long-term yields when a huge amount of debt has to be refinanced. And people at some point the Treasury, the Fed, they're going to have to get in there and intervene and manipulate the bond market and force long-term interest rates back down. So, at some time over the next year or so, we could have the Fed cutting. We could have yield curve control, capping long-term interest rates. And what do you think is going to happen to gold and silver when those policies begin and are implemented? At that point, it's going to be meaningless whether gold bottomed at 3,900 or 36 or 3,700. It's another reason why I'm a long-term buy and holder and trimmer. I will get into that a bit later.
Okay, now, this is another important thing to understand with respect to long-term interest rates or bond yields and also secular peaks in stocks. My past work has shown that we're seeing lots of similarities to the mid to late 1960s. Now, that bull market from 42 to 68 or or 49 to 68. If you're looking at the Dow, it ended at 66. You can see here the peak in 68, it was about 15% above the 66 peak. That's why I have these two red lines here. Now, here you can see the 10-year yield and the 30-year yield. Now, these lines here, this first line here for the 10ear, that's at 5%, that's at 6%. This line here is at 5%. So, this was the secular peaking area for stocks. And you can see what happened. Let's look at the 30-year yield. Look where it is now. Almost 5.3%. Okay. Once the 30-year yield moved up above 4 and a.5%, it got up to 5% here. When it went above 5% here in 1968, that basically ended the secular bull market in stocks. And same thing here. Here, if you look at the 10-year yield here, you have 5%. You can see this was the first peak in ' 66. It was at 5%, it pulled back, went above, pulled back again. Then it went above and as it moved above this peak and got close to 6%, then you had the peak in 68. So, the 30-year yield now breaking out, that's already in problem territory. The 10-year yield, as we can see, not at 5% yet. This is 5% here, this level. And so in a normal free market, what we would see is that these yields just keep rising and they eventually cause a secular peak at some point, a secular peak in stocks and then you have a recession like we had at the end of the 60s. But people, if you look at all the debt today compared to back in the late60s, there's so much more debt. So the economy, everything is far more leveraged, which is why again, we can't see a free market in the bond market. the Fed is going to have to get in there and implement yield curve control and somehow cap these yields and force them to go back down. And that's super bullish for gold and silver as we know in hard assets.
Okay, another long-term point I want to talk about is how a secular peak in the stock market that means you get a secular bull market in precious metals and hard assets. So here we can see the stock market here. Here's a total real return of bonds, gold and gold stocks. Now the yellow here for the top two, these are secular bare markets. Secular bare market in bonds right here and here. Secular barren stocks. Secular barren stocks here. Secular barren stocks again. Now remember the title. Secular peak in stocks equals a secular bull market in precious metals and hard assets. So let's go back to the Great Depression. Secular peak at 29 in the S&P. Well, the gold stocks peaked here in 1937. So they peaked eight years after that. You look at this peak here in ' 69. When did gold and gold stocks peak? 1980. It was 11 years after this peak. You go here, secular peak in 2000. Secular peak in gold and gold stocks and silver in 2011. So 11 years after 11 years after, eight years after here. So the stock market hasn't even peaked yet, which means that precious metals, this secular bull market in commodities, it's still in its infancy. And you might say, "Oh, well, we've already gone up. They only last 10 years." That's not true. Go back. Go back to the 60s and 70s. This is gold stocks here from 1960 to 1968. Okay? You could not buy gold before 1971. So, this was gold. Okay? This was your gold. And gold stocks had a 20-year secular bull market. This breakout in gold stocks, this epic breakout in 64, one of the greatest breakouts of all time, that is similar to the cup and handle breakout that we had in gold a couple years ago. So when we hit that secular peak in stocks, which is coming, that is going to be the major catalyst for precious metals and hard assets. Once that gets going, we got a bare market in stocks. Gold, gold stocks are going to crush it. Silver is going to follow. And that's why you have to be positioned in this market. You can't worry about trying to time and pick every bottom.
Okay, now, here's a daily chart of gold here, daily candle chart, silver here. It's the same thing. They've been trying to bottom here. They've been stabilizing for more than a month. Now, either we see some kind of move like this or moves like that. The bottoms in or we get before that Fed meeting, we get some kind of roll over here and final sell-off to a major major low in gold. Of course, silver would follow down to 50, maybe down to 48 as well. But people, big picture, okay? If you are in the right stocks, in the right investments, you're a long-term holder, you're in good companies that are good values, this should not worry you. If you do have some cash, then you want to be buying this weakness because a breakdown here is going to set up a major bottom.
Now, moving on here, let's look at these analog charts. Now, the circles show where we bottomed. I know it's confusing cuz I added 2008 here. And there's a lot of clutter in this chart. So the circles show the '08 bottom. That was a 73 bottom. That's the 2006 bottom. And this is where we are here and now. So either this is the bottom or we make a move like this and we bottom down here, which would be very similar to 2008 in terms of time and price. And people, if the yield curve is still steepening and the two-year yield peaks, then we're going to see a rebound like this, okay? Or like that. That's very possible. So, continue to watch the two-year yield and the yield curve.
Now, here's silver. The major declines in silver. We have 1974, 2008, 2011, 2026. Now, even 2011 put in a low here and then it had a good rebound before having that crash and water torture decline in late 2012, 2013. 74 in light blue. As we know, it did a bullish consolidation, but that was the bottom here. So, we have a bottom here. Bottom here. Here's kind of a double bottom in 2008 right here. And this is where we are for silver here and now. This actually looks weak. It looks much weaker than gold. And again, it's it's plausible we could see a move like that or we see a move like that. That doesn't scare me out of my silver stocks. I really like my silver stocks. And I'm not going to get shaken out. And look, I have a little bit of cash. So if we move down like that, it's time to be buying aggressively. If not, we stabilize and move like that, you still hold.
Now next, you know, I have to get in some comments here about sentiment. This is a new chart here which I haven't posted. So this is the allocation to GDX via ETFs. So we're looking at all the money in minor against the assets in all stock ETFs. And this is what you see for gold stocks right down here. Look where we are. This level right here is still really low compared to this entire secular bare market here. We're down here. We've barely even moved. I mean, remember in late 2025, this is where we were basically at like a 17 or 18year low. Big move up. But look, we've retraced a lot of that. So, a lot of people have come out of the gold stocks. So you have this chart, you have this data here where you have the highest net number of of fund managers saying that gold is undervalued right here. And that was as of a month ago. And this is actually the lowest reading in three and a half years or so. And this is where we were in the last secular bull. This low here I think was September. Oh, wait. This was October 2008. So once we see those fundamentals turn completely, we are going to see a really strong rebound and it's going to be sustained.
Last thing here, I have to mention this again. This is based on data from sentimentrader.com and their GLD optics indicator. So I marked all the readings that were similar to what we had a couple weeks ago. And these low readings, what do they tell you? Well, they either tell you gold is at a bottom right here and now or it makes one lower low and that's a major bottom. And this aligns with my view on gold's technicals right now that says we're either grinding out a bottom here or we get a false move lower. And boy, you look at this chart in the gold stocks. If we get a false move lower and you get a capitulation selloff, that's going to be an incredible buying opportunity in the gold stocks and quality juniors. And quality juniors is what I am all about in the daily gold premium because I have been investing in gold and silver juniors for over 20 years. And what I have learned through all my mistakes and failures and successes is that the best way to make big money during a bull market is you buy quality companies with quality assets when they are trading at good values and then you hold through the duration of that bull market. And when the position is successful, you hold and let it run. When it moves up too aggressively or gets extended or overvalued, then you trim that position. And so again, I focus on quality, but also upside potential. So I'm looking at high quality, but also quality with potential for at least 3x to 5x upside in the next two or three years. And that is based on current margins in metals prices in the sector. Because people, if we can find stocks that can do well over the next two or three years at $60 silver, $4,000 gold, what will happen if gold goes to 7,000 8,000, silver goes back to 100, 120? Those three, four, five baggers can turn into six, seven, eight, nine baggers or even 10 baggers. And when you own quality companies during the sharp draw downs like we've just experienced, you don't get phased because you understand that there's real value and that they will recover. So if you own individual companies and you're looking for some guidance and expertise and some help with your stock picking, head on over to the daily.com/premium. I promise you will not be disappointed. And to all of you who have subscribed, thank you. We appreciate you and your business.
Now, wrapping things up here, let's talk about the breadth in GDX. Now, I've updated this chart. I made this into a weekly chart. So, what we're looking at here down here is the percentage of GDX stocks that close below their 200 day moving average. And we're using a five a fiveweek moving average here, which is similar to a 20-day moving average to smooth the data and highlight the similar extreme oversold points in the gold stocks. So I have circled the very similar oversold points in the gold stocks. So we can see here here here here here here and we can see other than the points when gold stocks were in the middle of a crash like in 2008 or here in 2013 that you had a rebound basically from every point. We can see here in 2022 there was a little rebound then a bit more selling before a bigger rebound. I believe this is 50% here. But you look here, you go here, there was a rebound for a couple months, another rebound, major bottom here. Over here, this is a major bottom. This was a significant low in 2004. So sometimes it takes a month or two to set up. It's not always imminent, but the reality is gold stocks are setting up for a strong rebound. And I think it's likely than not we see a good rebound in the fall and into year end. So that's all for the video. Thank you so much for tuning in. Hope you guys had a good week. Hope you have an even better weekend ahead. And I'll talk to you guys again next week.