Transcription
If this is going to be a crash like 2000, yeah, it can pull back 50 to 80%. It will be very painful. I'm more than 50% in cash currently.
So, you're at the highest liquidity position that you've ever had.
I think so. Yes. I believe that we're still in this huge secular bull market in gold. I have a worst case scenario at $3,500. Once gold takes out this all-time high, the next leg higher will take us to 10,000. Florian, I have a great shirt that says triple-digit silver. When can I wear it again?
I'm not so excited about Bitcoin anymore. It might be possible that it has seen its best time.
You're totally out of Bitcoin and all crypto.
Yeah. Yeah. Yeah. I I don't have anything. We are clearly in a crypto winter. Crypto winters usually always end with a total blood bath and we haven't seen that yet.
Um, so we haven't seen the crypto blood bath yet. How bad could it be? How bad could this Bitcoin blood bath get?
I want to see a really a panic in the street and we have seen low sentiment levels, no doubt about that, but I have not seen real panic in the crypto world yet.
So, Florian, you're negative on crypto. You don't see a major breakout in gold for I believe you said at least another year as well. You're sitting out of equity markets because you're just being patient because you think that there could be a big correction there. What are you excited about? Is there an asset that you see opportunities in right now?
This is the real story with Michelle McCori.
Hello, I'm Michelle McCori and this is the real story. Thank you for joining us. My next guest was among the early market analysts to correctly identify gold's breakout from its multi-year cup and handle pattern around the 2000 level. A call that proved remarkably timely and remarkably correct as gold went on to rally to record highs. So where does he see gold going to next? What is his outlook on silver on the miners, on equity markets, and on the macroeconomy at large? Joining me now for all of that and more is Florian Groomers, managing director of Midas Touch Consulting, an independent research and consulting firm specializing in precious metals, commodities, and digital assets for institutional and high net worth investors. Florian, good to have you with us.
Thank you for having me again, Michelle. It's a pleasure to be here.
All right, Florian, we're going to dive straight into it. Back in early 2024, you and I spoke. You correctly identified the breakout from gold's multi-year cup and handle pattern around the 2000 to 2100 level just before gold surged to a series of record highs. It hit that $3,000 mark in the timeline you said it would blew right past that to hit uh 4,000 5,000. We got 5600 gold at the end of January and then a very dramatic drop to around $4,000. Now, so seeing as you're such an expert chart reader and pattern analyzer, where are we in this pattern now? How are you reading gold now?
Yeah, I think first of all, it's very important to to make it clear that I believe that we're still in this huge secular bull market in gold. I think uh we are right now seeing a healthy breather after a spectacular run up. uh gold went up from 1615 to $5,600 in three and a half years and it is totally normal uh that it needs now some time to digest this move. Uh it's been a spectacular rally 250% gain for the the old school metal. Um so I think we are in a healthy correction. It might take a bit longer than many gold bugs wish or would have imagined, but uh I think in the bigger picture, the uptrend is clearly intact. Uh it's just a question of time and patience now. Um I have uh a worst case scenario at $3,500, but right now it looks like the $4,000 the psychological level of $4,000 is already bringing in value buyers again. and giving basically some good support here already. So, um I'm not too worried in the in the mid to to long-term picture. Um, we have to accept it's a healthy correction. Um, and and it it could take a bit longer. I think maybe third, fourth quarter, maybe even early next year, but uh later than that, I think uh we're going to see the bull market continue.
All right. Before we get to the bull market, what are the key signals that you're watching to determine whether this correction is indeed nearing its end?
Well, I mean, the the final confirmation that this conf this correction is over is of course a new all-time high, right? So, uh and trading around 4,000 right now and having the all-time high at 5,600, it's clear that there is quite a lot of work to do to get us back to this all-time high. Um, so that would be the final confirmation. But um I think first of all from a sentiment perspective ideally at the bottom you want to see real panic and fear. We don't see that yet but um once you have that then it's very likely that the the the sentiment uh the vibe around gold so to speak swings from the one extreme meaning fear and and panic to the other extreme again which is greed and euphoria. Um, so that that is usually the best signal that you get but you get those signals only every few years. Sometimes you have to wait five to 10 years to get this kind of signal. And of course it would be for example the the front page indicator a big important international newspaper writing about gold saying it will never rise again. It's over forever. That would be a beautiful clear buy signal. While on the other hand, if everyone raves about gold and is investing and buying into gold like we've seen in in the last few months of last year and then in January of course that is the stigma where you want to be a little bit more cautious and usually you get these sentiment peaks. So, uh sentiment is as I said before unfortunately only giving rare signals and you have to be very patient for it. Um, I think from a technical perspective, if we get back above the 200 day moving average, let's say 4,500, 4,600, that would already improve the situation. And if we want to look a little bit on the chart here, um, so this is the the longer term picture here for gold. This is the triple bottom down here uh at 1615. And you can see the strong rally up to 5,600 as of uh late January this year. And since then, gold came down nearly 30% so far. And it's trying to find some support here around the $4,000 level, which has been also support here uh last autumn. So, if we can go back uh to this 200 day moving average, which is the red line here, you can see it's still rising. that would take us to 4,480 right now. That would be already a signal that the market is stabilizing again. Uh but obviously this will take some time. Gold needs to rally uh $450 from here and then of course hold above this average. So I think it will take a few months at least to get us back up to this kind of more bullish setup here in the higher 4,000 kind of range. And that's mainly the the technicals that I'm waiting for. Um, and uh, yeah, I think from a fundamental perspective uh uh I think we we will see or need to see uh a bit uh more dovish speak from from the Fed and we would also need to see uh central bank buying increasing again.
Okay. Okay, before we get to the fundamentals, I just want to clarify that you see 3500 as your ultimate support level. You do not foresee gold breaking below 3500.
On an intraday basis. Maybe a a dip during a week. Why not? But I think that is the worst case scenario around this $3,500 level. It's been an important uh top on the runup. And I think if we would really come come back down to this area, it would be a very strong support and I'm very sure that around these levels, lots of value buyers will step in. So that's my worst case scenario. Yes.
All right. I want to talk about the ETF outflows that we've seen recently. Uh you talk about sentiment and global goldbacked ETFs posted 38.3 tons in outflows last week. That is the largest weekly outflow since September of 2022. This was led by North America at around 23.6 tons, followed by Asia and Europe at uh 5.9 tons. Asian down 8.7 tons. Now, in dollar terms, Florian, these funds posted about $4.7 billion in withdrawals. The largest weekly outflow on record, and the largest US goldbacked ETF, GLD alone saw $2 billion in outflows, the fourth largest this year. Uh, so far in June, GLD recorded uh 3.2 2 billion in withdrawals on track for its second worst month since February 2021 after uh a record 8.5 billion in outflows in March. This is a credit to data from the Kesi letter. So when you see record outflows from goldbacked ETFs, do you read that as bearish or do you read that as a contrarian signal? How do you look at that? And you know, how important are these ETF flows in your analysis compared with central bank buying which is continuing and physical demand? How do you factor all of this in?
Yeah, it's a it's a good question. Um maybe we can go back to my chart because um if I correctly heard you, you you said that there was the largest outflow since September 2022. Um and 2022 uh September was exactly uh when uh this bull run started uh exactly here down here.
Okay.
So uh I think it's a contrarian signal. Um uh on the way up especially here during this time we mainly heard the news that western investors were not buying gold ETFs. Uh uh we didn't see any increases. it was mainly driven by physical demand from from Asia especially of course from China and the Chinese central bank. So we we had these discussions uh during this way up uh all the time here and um there was no ETF demand. It was not the ETF buyers driving the price up. The ETF buyers came into the market up here and now they are the weak hands. They throwing out their positions and I think it's a contrarian signal. Okay, of course, uh we're talking about paper gold when we talk about ETFs mostly. Uh physical gold seems to be telling us something else, Florian. One of the best ways to measure real physical demand for gold is by looking at comx deliveries. And you know, most futures contracts are settled in cash before they expire. But buyers have been standing for delivery. They're taking possession of actual physical gold. And we're seeing something interesting there. In June, the dollar value of physical gold delivered through COMX was the highest ever recorded for the month of June, rising nearly 70% compared with June of last year. Buyers also took delivery on more than 8,000 additional gold contracts versus a year earlier. So, investors, institutions are increasingly moving towards owning the physical metal itself. What does that tell you? What does that signal? Who is taking delivery? How do you read this?
Well, I mean it clearly shows that the investors, the people, the central banks, the countries who take the physical gold are the strong hands and the ETF buyers are the weak hands. Um I mean myself, I've been saying this for the last 25 years. You want to own your precious metals physically in your own hand and not via an ETF. There are some advantages of course if you invest into an ETF meaning low commissions you can quickly and easily move in and out but that's exactly the problem right because if you get a downtrend like we are experiencing right now that's where the weekends then throw in their positions. So um no I mean it's a it's a clear trend that we are seeing. I think overall the influence on of the comx and the western markets on on on the pricing or the price finding on gold is is slowly but surely diminishing. But uh exactly that is happening also on on the comics that yeah physical buyers uh step in and and want to have delivery and and that has created stress or at least pressure uh since the last two years already. Um and I think this will continue. um it is a way to uh uh amass larger positions physically in gold and um I mean in in our space in the in the gold box space so to speak um we've been discussing this com situation for years and decades and I think slowly but surely it is losing its its influence um simply because the physical demand from from Asia is so strong that uh it doesn't play that role anymore I I think it's much more important to to understand that besides the Shanghai gold exchange, China now is working and building another gold exchange in in Hong Kong which I think will um attract much more even western buying because it's much easier to do banking in Hong Kong than in Shanghai.
Right and you know, we have been emphasizing that we've been emphasizing the physical delivery and the competition coming uh from these Asian exchanges and yet gold is stubbornly down from that 5600 high. So why are we down? How how would you explain that? You said it's just a healthy correction. Is is that a sufficient explanation?
Yeah, I think it's that simple in the end of the day. If you run up a hill, at some point you need to take a break, right? It's
All right. So So let so let's go to this let's go to this hill, right? because again you were very correct in calling that breakout from the 2100 level charting uh the pattern the cup and handle pattern as you did. Talk us through the next levels that you see here and over what time period you anticipate the next high to be reached.
Yeah. Okay. So in the in the short term I think we we are probably close to the typical early summer bottom kind of uh process here and um I think let's say 4,000 roughly speaking will hold. Maybe we get one more dip towards 4,900 4,850. That's always possible. Um but we are seeing right as we speak the last few days uh gold dipped below 4,000 and then immediately came back up and never closed below 4,000. So um I think that is uh actually very important to understand. If we zoom into the chart here, you can see um here the the the last few days. Um it always came back up again. So I think we we are in a in a bottom process here and um uh I think for the summer I'm actually cautiously bull bullish here. I think we're going to get a recovery, a bounce back towards this falling 50-day moving average and then also towards the 200 day moving average. So that should take us 4,500 I think is possible. maybe August or September and then I I think it will be interesting to see how this recovery has played out. I would assume it could still be that we see another new low in the third and fourth quarter for gold somewhere between 3,00 500 and 4,000. And once we made that final low of this correction, yeah, I think step by step we will go back up. Um, and uh of course we have uh we have quite some resistance here on the way up. Not only those uh two moving averages, but as you can see here the the the 4,500 4,400 and then of course up here 4,800 and then the around $5,000 number. So there is quite some resistance but step by step gold will work its way up again. And um I think maybe let's say in one and a half years, two years, we will certainly trade back up above 5,000, 5,500, maybe already new all-time highs. And I think once gold takes out this all-time high, the next leg higher will take us to 10,000.
So in in a two-year time frame, just to be clear.
I think within the next two years, we're going to see the turnaround and and we're going to see new all-time highs in gold. Um not not sure if we're going to see 10,000 already. I think that could take a little bit longer, but I I think within the next two years, we're going to see this bull market uh come back and take out the all-time highs.
So, you do not foresee gold breaking above 5600 for the next 18 to 24 months?
Let's say at least not within the next 12 months. I mean, you can get a spike, but I think sustainably breaking out of this will be difficult.
And then you see it rallying potentially to 10,000 over what time frame?
Yeah, I think at least 10,000. And uh that could be done over the next three, four or five years. Yeah.
All right. You know, we had Jim Rickard saying he could see $10,000 gold by the end of this year. You're telling me you could see $10,000 gold in the next five years. It's quite a diverging opinion there.
Yeah. Yeah. I I mean I have learned that things usually take longer in the markets. Uh so I mean we have been talking about $5,000 goal 20 years ago already, right? And it took much longer and then once this move finally started with the breakout above 2,000 then it felt like everything happened very quickly. So um I I think it will take some time. We are oversold on the weekly chart now. That's a good setup now for the next few weeks, maybe two, three months even. Um, but if you look on on even larger time frames like a monthly chart, uh, it will take it will take some time until gold can come back up. I think
Before we continue my conversation with Florian, a quick thank you to you for watching. Please subscribe to the channel if you haven't already, and please do share our content. I really appreciate you helping us grow this community. And a big thank you to my partners at Miles Franklin, one of the most respected and trusted names in precious metals for nearly four decades. Now, whether you're looking to diversify your portfolio, protect your purchasing power, or simply better understand the role that gold and silver can play in your financial strategy, Miles Franklin has been helping investors navigate the precious metals market for generations. Their team of experienced advisers and brokers can help you evaluate your options and make informed decisions based on your individual goals. So, contact info at mousefranklin.com. And now, back to my conversation with Florian. Right. Again, you know, it's not necessarily a good thing when you have gold at $10,000 in terms of what it means for your money and your purchasing power. And I want to focus on the US M2 money supply now because the M2 money supply surged by roughly 248 billion in May, reaching a record 23.1 trillion. Now that was the largest monthly increase since May of 2021. Year to date, Florian M2 is up nearly $699 billion. That's the biggest January to May increase in five years. So money supply uh now stands about 1.3 trillion above its previous March 2022 peak. Since 2000, US money supply has grown at an average annual rate of more than 6%. So, even though we've got this Fed talking tough on inflation, being interpreted as hawkish, the market is now pricing in no rate cuts, maybe even a rate hike under Kevin Walsh. You look at this backdrop and there's more money coming into the system. Money supply is expanding and it is expanding fast. What does this tell you? Are we looking at a new wave of inflation here, monetary inflation? What is the impact on gold?
Yeah, I mean this money printing is going on for years and decades. I always say that we are in a confetti party since the early 1970s basically. Um and it it is continuing and it has to continue otherwise uh this this will act like a black hole the whole financial system and suddenly disappear. So uh they will continue and of course that will push gold prices higher over the longer run. Um but it's not something that is like linearly constantly correlated right I mean you you had you have seen gold running up very steeply over the last two three years now it's taking a breather but the money supply is still expanding and gold will catch up to it again in in the next few years but it is not something where gold immediately reacts to it u but that that is the story I mean that we're all talking about that's why you are investing in hard assets um that That's why there's uh so many people nowadays talking about sound money because they constantly diluting your your fiat money, right? And it will continue. Um, that's part of the cracker boom theory. Uh and uh it will continue. Uh that's that's for sure. I mean, once we see more cracks and problems in the stock market, they will ramp up money supply even faster. and and the numbers that you just shared, I mean making it makes clear that on average you need to make at least 6 to 8% per year just to basically uh yeah keep your purchasing power. Uh otherwise you can buy less and less with your fiat money and it's actually already challenging to consistently do six to 8% per year for the normal investor.
Well, how does gold's return compare with that?
Well, I mean, gold is up uh dramatically since the last 25 years. I started uh buying my first ounce of gold.
But if we look at it on on a year-over-year uh annualized return.
Oh well, it depends of course always where you start calculating it. But it is usually somewhere between eight and I would say seven and 9% somewhere. That's the the usual uh uh on average return over a long period of time. And that exactly reflects the increase in money supply, right? So again, we've got the money supply increasing um but perception that we're going to have a hawkish Fed under chairman Kevin Walsh. He made some comments on Wednesday at the ECB forum on central banking. Now he declined to give any signal as to what the Fed may do at its meeting later this month, but he did note that inflation was too elevated. saying, and I'm quoting him, we're all in the price stability business. That might not be our only business. But if there was a common thing I heard over the last couple of days, it was open-mindedness on these questions of AI, open-mindedness on productivity. But we've all looked around and we've seen that prices are too high. Uh at the same time he also said that inflation risks have come down largely because energy prices have fallen since the US and Iran signed that memorandum of understanding still unclear exactly what the situation is there. So you know what do you read uh from Wars? What are your Fed expectations in light of these comments and just in general as he promises a new regime under his leadership?
Yeah, I mean first of all uh whenever there's a change in the in the fed chair uh the markets uh tend to have some problems or they need some time to adjust and to learn and understand the new Fed speech and um uh or Fed speak and um uh on average the stock market is down in the first three months after a change in the Fed chair. Um, at the same time, I mean, they're trying to manage expectations. They're trying to manage the dollar. They're trying to manage America. It's a very complicated job. It's a very difficult job. I I would not want to do it. Um, but he cannot come out and immediately tell everybody, we're going to lower interest rates as soon as there's the next problem showing up. Uh, uh, and at the same time, he wasn't that hawkish in my impression. The market interpreted very hawkish. uh I think the the the interest rates in America are on the verge of breaking out to the upside. That's something given uh uh these huge debt loads in America is is something that will be more and more difficult to manage. So it's it's quite quite a quite a thin uh kind of path there on here. Um, I think they're trying to of course create an image that that he's strong and hawkish and wants to be the next Paul Voca, but I I doubt that he's first of all is that type of personality and second I don't think he's able to do it because he he he's been basically chosen by Trump. Trump wants the the the interest rates lower and um once there is any problem in the stock market uh you can be sure that the the Fed will come out again uh to rescue the markets. So um overall in the big picture the same thing that we have seen over the last 20 30 40 years will continue basically um but they trying to manage it right now trying to create an image of him as being very hawkish and strong.
So the Fed put this notion that the Fed comes in to the rescue if the stock market starts to wobble. And look, we've had lots of guests on this show, Florian, saying that they're bearish on the stock market because this AIdriven euphoria cannot continue. What is your outlook on US equity markets now?
Yeah, I'm also getting more and more cautious to be honest. Um, the main reason maybe we can share that chart as well. Um, the main reason really is this big runup in the in the semiconductors. uh this SOX um ETF uh that you can see here since basically um last year uh in April. So over the last 14 months uh this ETF went up 330% nearly parabolic rise if you zoom out. Uh I mean this is not a healthy chart. Okay, this is just way too steep, way too fast, way too parabolic. And um the worry is that this has to come down at some point. Uh of course uh uh as you pointed out uh many people have been bearish all the way up uh starting over the last few years and it was never the right time to uh short the stock market. Uh it was never the the right time to to miss out on on these massive gains. But I think the air is getting really thin now. Um so you want to be very careful. I think uh not only that we have sell in May and that we have margin speculation at all-time highs and that we just had recently Space Space X coming to the market, largest IPO ever, Wall Street changed all the rules to chase retail into this IPO and the IPO itself was a disappointment. Now a few weeks later, everybody who bought since the IPO is basically down. Um while Musk has been selling fantasies in space which I don't think will happen anytime soon it will probably take 10 20 years at least. Um so we have a very overbought overheated stock market. When when something goes that parabolic you want to be very careful and um that is exactly the the issue that I have with with the whole financial system or the situation right now that if this starts to correct and come come down here I mean usually and we can see this already it takes a while back and forth. It's it's a topping process here. This is not something that rolls down immediately like the metals do. Um um so this can take a while but uh we are coming into September uh October in in two months. So uh let's see. I think uh this looks like a top. it looks like we're going to get a pullback and then um then we have to see how quickly the Fed will react and if they are still able to to save these markets like they did in the past because um as you know this whole bubble or this whole uh increase in in in in the stock market has been driven by just a very few uh stocks. It used to be the magnificent 7 even those are not ringing anymore. it's just the AI stocks now and um I think it's they are selling a huge promise u for for the future and it will simply take time and we have seen that in the past if you remember the the internet bubble uh in the in the late 1990s uh we've seen a very similar situation and then it took still 10 years before we all started to buy on a daily basis on Amazon um this investment boom back in the early in the late 90s created the infra infrastructure the backbone of the internet and and the world that we now know and take for granted. Um and the same is now I think happening in AI. So meaning in 10 20 years most likely it will be totally normal that robots are doing everything everything's digital everything's connected. But on the way to that scenario we're going to most likely see a big disappointment very soon because this investment boom is just a bit too much and it's crazy and it's dangerous. So are you not exposed to the equity markets right now? What is your current exposure to US equities if any?
I have very little exposure to the equity markets. I mean I'm more of a precious metals and commodity guy and a digital asset guy. Um uh I I have a large liquidity position. I I never had that high of a liquidity position. I'm I'm more than 50% in cash currently.
So you're at the highest liquidity position that you've ever had.
Uh I think so. Yes.
So ju just on on this pullback that you're expecting? I mean how bad of a pullback do you think the equity markets could see if this AI bubble bursts?
I mean if this is going to be a crash like 2000, yeah, it can pull back 50 to 80%. It will be very painful. It could also be uh uh going back and maybe we can look at take a look at the S&P 500. It shows it a little bit better. If you zoom out here, you can see like usually in the last few years, it's been always enough to have these these these pullbacks here. And during those pullbacks, it always felt like the end of the world. Everybody freaked out. And in the end, it was just 10%. Here it was 20% 10% 6 to 8%. So maybe um um something like this uh uh is is is is maybe even just back to the 200 day moving average would already be enough to release some of that hot air in in the markets. It's like a pressure cooker. Sometimes you have to release the hot air and and get rid of the pressure. So maybe that's already enough. I I think it could get a bit worse and then depending on how the Fed will will react and how quickly they will react. Uh this could morph into a big crash or it's just a healthy correction and then the markets can continue move higher again because central bankers politicians and then in the end of the day most of the investors are interested in rising stock market. So
And and and to that point, Florian, I mean, many would argue that yes, we've had bubbles before and yes, we had the dotcom bubble, but that markets are just very structurally different now than they were back then. And not just because of this mentality of buying the dip and that markets have been conditioned that the Fed is going to step in, but also largely because of passive investing. And we got another big structural shift happening in US markets now. The new Trump accounts program. Now that officially launches on July 4th. It's already gaining corporate backing. Just this week, Micron announced a $250 million commitment. Um, and these this is going to help fund accounts for up to 1 million children. Now, under the program, every eligible American child born between 2025 and 2028 receives a $1,000 government funded investment account. Families can contribute up to $5,000 a year. But here's the interesting thing. By law, those funds must be invested in low-cost index funds tracking the US stock market. So, you know, tracking the S&P 500, for example. Now, take that, layer that on top of the passive investing revolution that we've already seen. Every month, hundreds of billions of dollars flow automatically into index funds through auto deductions for 401k programs, pensions, target date funds, ETFs. Passive funds aren't asking whether a stock is cheap or expensive. They just buy the companies according to their weight in the index. It's just on autopilot. So the largest companies just continue receiving the largest inflows regardless of the fundamentals, regardless of the valuation. When you combine these structural flows again with this new government program effectively introduces another generation of Americans to investing through index funds, are we creating a permanent source of demand that just supports the US stock market for years to come? I mean, does this just perpetuate the cycle? Maybe we never see another crash because of something like this.
Yeah, maybe. Maybe they invented the Pepto Mobile here for the for the stock market. Um uh I mean it you're exactly right. I mean this is one of the reasons why the stock market has been going up relentlessly higher over the last few years even though it's been just a very few selected stocks who've been driving the indices higher. Um, I'm I'm absolutely pro uh helping children to to start investing early on. Um, at the same time, the the the track record of Mr. Trump is questionable. Um, so uh I mean any
Well, let's forget let's forget the the Trump, you know, side of this. Um, and let's forget, I mean, many people would say, "Well, it's not fair to my child that was born in 2024 that when they want to enter the market, they're going to have higher asset prices because they didn't qualify into this uh birth window of the Trump administration." But whether it's right, whether it's wrong, my question is, what does this mean for the markets in terms of artificially propping up markets? We've just become so divorced from fundamentals. You were supposed to invest in a company because you wanted to help it grow because you felt like you could participate in its dividends, in its revenue. And now again, everything is just uh the price to earnings ratios are so distorted and we just have this constant trickle, the steady flow into these uh index funds, which you know distorts real valuations, distorts what the market is like. Does this like fundamentally change how we should view investing where big corrections are just not possible anymore?
Yeah, I mean it it could be. I I think you're still going to get some pullbacks here and there like I showed just before in the S&P 500 chart like 5 to 10% pullbacks is normal. I mean that happens every year at least once or twice and it will happen in the future as well. And and and to your point, I mean, exactly that happened over the last two three years that whenever we got these kind of pullbacks, 10% felt already crazy and they immediately changed their tone and did everything to prop up markets again. And and of course with these deep capital markets in America and these government funded programs and also for example, I mean, Wall Street changed all the rules to get every retail investor into IPO of of SpaceX. I mean they doing everything to prop up the stock market and uh you should not fight against this. So I I just making that clear. I'm not advising to shorting the stock market here. I just think that we're right now in a situation early July. The next two months is the summer time. uh you want to take it a little bit easy and uh the market has gone up quite dramatically especially the semiconductors and I wouldn't be surprised to see a deeper pullback here at this
And let's reassess by in in September early October usually that's the time where you want to go back into the the stock market and usually you don't miss out too much during the summer months so that's my thinking right now I I'm not calling the crash here immediately I I think there is a higher probability for it than before but at the same time. It could be that just a a summer dip and then by late September, early October the party continues. Yes.
So, if you had to point to one risk that the market is underpricing today, what would it be?
Um, I think uh oil supply is being uh uh uh totally uh wrongly priced into the markets currently. I think oil came down very hard. uh it's basically testing its breakout level from before the Iran war. Um there was an open gap. So somehow it's good that this gap is now getting closed. But um uh I think that uh oil flows, oil supplies are still very tight. Most of the western countries have used up their inventories and uh I would be very surprised if if oil stays that low and even continues lower. So I think the market is currently wrongly pricing the risk of oil supply.
Where do you see oil going?
Oh, I think it could bounce up rather quickly towards uh $80. Um and then we have to see how things play out in the summer because of course in a situation where the stock market suffers and then we had the war the Iran war and we had higher oil prices, there could be some demand destruction at some point. Uh but I think 80 $80 easily for oil again. Yes.
By by when? By the end of summer, by beginning of Q4.
Yeah. Yeah. Exactly. I think late August, September, I guess latest, maybe quicker, depending, of course, also what they do uh in terms of their ceasefire negotiations and uh how they continue with that. Um, I mean, it's I think it's much more complicated than people believe. I think it will take months if not years until they come up with a real agreement.
So investors are mispricing, underestimating the the oil uh risk here. Um, but I think you touched on this. Some people are saying there could be less demand because of a slowing economy. Does is this something you're seeing as as a big macro outlook and how does that factor in to your position on oil?
I mean, we're seeing this already. I mean everywhere I go I can tell you that taxi drivers uh telling me their stories that that they don't have much business going on anymore. This is now going on for months and months. Um I I think there is a special situation right now in America or given the the the football championship uh which probably has created a lot of short-term jobs. Um, but uh uh yeah I think if if you talk to the average normal people I mean nobody is raving and and happy about the economic economic situation right now. Um, so it's just the 1% of the very wealthy people, they make a killing in the stock market. Maybe the top 10% are still doing more money than ever before, but the vast majority of people are are actually having a very hard time because everything is rising. Everything's becoming more expensive. Um, so that that K-shaped economy and inflation just surging everywhere. So, given everything you're seeing, Florian, how are you positioning your own portfolio today?
Yeah, as I mean, I'm a first of all, I'm a long-term physical holder of gold and silver, and I've been adding to this uh pullback starting at 4,400 slowly. I'm I have been buying more now around 4,000 and I will buy even more around 3,500. So, I'm constantly increasing my physical stack in gold and silver. And I'm also buying platinum, by the way. Um so that's uh I think at least uh I think it's 30% already the metals. Um and then um I have some exposure to to mining stocks of course and uh oil and gas stocks and um as I said 50% is in cash and liquidity right now. So um I'm waiting for the summer to pass by. I will take it a bit more easy. Um and then by yeah usually Jackson Hole meeting end of August gives you already an idea of where things might go and then September will give us more clarity what's going on with the stock market. Is it just a dip during the summer months and then it's time to to be back in October or is this maybe really uh uh the top of of this AI bubble?
Yeah, we'll we'll see on that one. Uh you mentioned silver. But let's touch on that quickly because uh silver has also seen a very sharp correction, falling back to just under $60 an ounce after that very dramatic rally earlier this year. Silver peaking near an all-time high of around $121 an ounce in late January. What's your outlook on silver?
Yeah, I mean it usually silver follows gold most of the time until uh in the final inning of a of a bull run, then it takes over and basically is doing its own thing. And um that's exactly what we've seen in in late January or let's say between last year autumn and then late January. Um, so it went up to $121, new all-time high, spectacular rally, but of course, uh, a big big move higher o over the last three and a half years. So, if we go back to my chart here, um, silver, uh, if we zoom out, uh, last year, uh, in, uh, April down here, uh, this rally basically really started at, uh, around $28 and that was also the time when the stock market had correction. corrected. So on the last few days of that stock market correction, silver quickly joined the party, fell below $30, marked this low here, and then we had this spectacular run up to $121. And um if we even zoom out further, 2022, we talked about that time frame already. That's where this real rally really started around 7 $1750 and overall that's an increase of nearly 600% to the top and of course here it got more and more parabolic and the last few weeks and months have been really parabolic. So, it's totally normal that this needs to correct and take a breather and come back down. And uh it's coming back down to this uh broad support around the $50 level um which used to be the former all-time high in 1980 and then again in 2011. Uh let me zoom out again here. So, this is this huge cup and handle pattern in in in silver uh over the last 45 years. We got the breakout. Now, we're coming back from this all-time high, testing that $50 range here. Uh we have already achieved the first target out of this uh handle. If you take that depth of the handle and put it on the the breakout level here, it's it's not it's a linear chart. So, on a logarithmic chart, you will see it a little better. But basically, 110 was the the price target out of this handle. We achieved it. And in the very long run, uh I'm still waiting for for the price target out of this huge cup, which should take us to $200 to $500. But this will take again uh at least a few years. Um so in the short term, I think around this $55 uh to $60 range here, we have already good support. Maybe we test this uh $50 level a little bit lower here. But similar to gold, I think we're making a a short-term bottom bottom here. Now, in the next few days, I have already seen the lows. And I think over the next few weeks and maybe two months, silver will also move back up to its 200 day moving average. And then I wouldn't be surprised third or fourth quarter to see one more lower low here around the $50 range. And and that's probably the low from where go silver then can start railing higher again. So long-term bullish, midterm a little bit cautious or still thinking that we could see another low. Short-term I'm I'm bullish for silver.
Okay. We could still break below 50 though. You're saying you're not convinced that 50 is a support level?
It is a No, 50 is a support level. Um, but markets tend to also sometimes quickly dip below those round numbers and then the last few weekends who had like their stops around these round numbers get shaken out. So 50 is yeah let's say 45 to 50. I think that range is a very strong support for silver.
Well JP Morgan Floren is saying that silver could still average around $81 an ounce in 2026 supported by global demand. What do you make of that?
I mean silver is a technology met metal nowadays right? It's it's more and more an industrial metal because you need it for all these data centers. Uh uh and and I think we're going to learn much more use cases in the future that will drive demand from the industry worldwide for silver. So, and it's tight and all the silver has been used up. So, it's contrary to gold which is sleeping in in the vaults everywhere on the planet. Silver is gone. You know, nobody will recycle it.
Right. Well, the Silver Institute is saying that we're still on a six-year supply deficit there. But if we do have this blow up in AI that you think is inevitable, what do you think
means for silver? What does that mean for silver if some of its industrial demand is linked to this AI expansion and electrification?
Yeah, exactly. I mean, that is the the issue that I have generally with everything right now. That I I want to see what is the stock market doing over the next two, three months. If this moves into a bit more turbulent water, I would say, then it will affect all other markets. And, um, we are seeing right now, coming back to gold, 4,000 is a very strong support. We're seeing in in in silver, 55 to 60 is a strong support. So that's already where the value buyers are coming in. My worst-case scenarios for $3,500 gold and let's say $45 to $50 silver will only happen if we get more uh stress in the financial markets because the stock markets are moving down.
Florian, I have a great shirt that says triple-digit silver. When can I wear it again?
Um, I would say in 2028.
Oh wow, that's going to sit in my closet for a long time. 2028 is when I can pull out my triple-digit silver shirt.
No, you should you should pull it up now and and motivate everybody to buy more silver, you know.
So 2028 is when you see silver hitting that triple-digit mark again.
Yeah. Yeah.
Well, you've uh you you've disappointed a lot of investors here. I can I can tell you that much. Let's go back to this. Uh
Sorry, but let me let me uh explain it. I mean, look, I I I've been in metals now for 25 years, and I've been always a very passionate gold bull, right? Um, and gold buck and silver buck. Um, but I learned the hard way that these corrections take some time, and it it takes longer than you can imagine or wish for. And it's been always the right uh thing in hindsight to just be patient and wait and not have too high of an expectation. Uh the markets will come back up and and with physical metals, you can easily sit through these pullbacks and corrections, no problem at all. The problems always show up if you have leverage or if you have paper gold and silver positions via ETFs, for example. And of course, investing in mining stocks also makes the whole thing a little bit more complicated. If you hold the physical metal, it's totally easy, right?
Well, if you're patient and just hold it. Sure. Uh, you said that you're taking it easy this summer uh waiting to see how things settle down. And that is, you know, that adage, sell in May and go away. But it's interesting though, because statistically, it is in fact incorrect roughly two-thirds of the time over the long term. Florian, the stock market actually posts a positive return during the May to October period, about 66% to 75% of the time. Uh, that's according to research published by firms like CFRA Research and Fidelity Investments. So, you know, it's interesting. I've also always thought, sell in May, go away, we have these summer doldrums, but but turns out that uh that is not the right approach 66% to 75% of the time. But this summer, you think you're just chilling.
Yes. Yes, for sure. It's been very hot here in Europe already. Uh, as I explained, I think the market
Because you guys don't have air conditioning.
Exactly. Exactly. So, that's what I bullish. Ice cream and and air conditioning. Yeah. I think people will will buy a lot of air conditioners here in in in Europe and they're all sold out.
If if your uh, you know, climate change narratives allow for that. I believe there's some regulations that prohibit some. I don't know what it's like in Bavaria, Germany. I know other parts in Europe like individual homeowners have some limitations on buying air conditioners. But uh, you know, my gripe in Florida, they turn the air conditioning a little too high for my likings. Um, but let's shift and talk about Bitcoin and crypto because you said, you know, you specialize in precious metals and in digital assets. And look, I mean, you were again, very, very, very correct when it came to Bitcoin in the early days. I remember you and I spoke uh at a crypto conference in Dubai. I think it was around 2022. You practically tracked the Bitcoin movement uh to the tea. You told me it would hit 100K. You gave me the correct timeline of when it would hit 100K and what needed to happen, including those ETFs. So, Bitcoin not looking so great right now, dropping below 60,000 uh at the time of this interview. What's your outlook on Bitcoin?
Yeah, I I mean, it's not a secret that I'm not so excited about Bitcoin anymore like I used to be. Um, um, it it might be possible that it has seen its best time. Um, but who knows? I mean, you also don't want to bet against Bitcoin. Um, that's also a lesson that I learned over the years. Um, uh, we are clearly in a crypto winter. Every four years, there's this bare market downturn. Uh, we've seen pullbacks of 90%, 95%, 75% in the last few cycles. This time uh it also came down hard, but uh currently holding around the $60,000 level. Um, it again also depends a little bit on what the stock market will do over the next few months. Uh uh and and what the the interest rate policy will will be. Uh, but currently we are in a downtrend. Uh, I don't have any indication that we've seen the final low and this market is turning around. But let's look also here on the chart for Bitcoin. Um, so if we zoom out here, um, this is the whole downtrend. Bitcoin came down uh 55 or 54% since the top in last October. And the big question is, why is Bitcoin down while everything else went up during the same time frame, basically? And maybe it is still true that Bitcoin is one of the prettiest markets uh and and is just reflecting much more honest uh what's going on in terms of money supply or or let's say liquidity within the system. Um, anyway, it's down. It it it failed at the 200-day moving average. It is very oversold. So if you look here on the on the weekly stochastics, for example, you can see that um it's very oversold. Um, usually uh uh at some point you get a bottom here. So I I would not rule out that also Bitcoin can maybe recover a little bit over the next few weeks, but I think the downtrend is still very much in place. And the issue that I have is really that two uh uh famous people uh Sailor and Lee are publicly uh long with leverage basically in uh the sector. And the history or the the statistics from the past tell us that in any of those down cycles, bare markets, crypto winters, uh these big famous players somehow uh yeah, got into big trouble. Last time it was uh FTX, of course. Um, so I would be very cautious at the moment. Uh, thinking too positively. But seasonality-wise, Bitcoin usually finds a bottom somewhere in early mid-October. Um, I I could still see it pulling back maybe to let's maybe 50,000, maybe a little bit lower, 45,000. I think that's a range where it's very likely going to go. Um, and then we have to see, but I'm not so excited about crypto anymore, to be honest.
You're not excited about crypto anymore. You were one of the biggest uh Bitcoin bulls that I met that was also a precious metals bull. So, you sort of uh made that rare case of holding both physical gold and actual Bitcoin, self-custody of Bitcoin. Are you still holding your Bitcoin?
No, I'm I sold everything in crypto last October. I'm totally out.
You're totally out of Bitcoin and all crypto?
Yeah. Yeah, I I don't have anything anymore.
You sold last October. That's pretty good. It sounds like you sold at the high.
Yeah, more or less. More or less. And we had some stops, I think, for for our public portfolios. We had a stop at $95,000 and that got hit uh I think November, October, November. So, yeah. Uh, no, I didn't like this whole hype anymore. I thought that Wall Street embraced Bitcoin and it changed everything and it was not about sound money anymore. I also think that um the the the quantum computing will become a larger and larger problem for for Bitcoin because it's an old-school technology. And the the beautiful idea of of how to find uh consensus uh and making it very complicated so that nobody could change the rules themselves now also create the problem that if you need to upgrade the whole technology, it will be just very slow until everybody agrees on what to do. And and I think in these uh fast-moving world nowadays where AI is taking over uh and quantum computing is coming. I I think the risk is not worth finding this out with my own money. So um I think they will take way too long and it will be too slow uh uh to come up with solutions against this. And this will be, by the way, for for many other technologies the same problem. So, just uh just very simply, who can still run a computer from 25 years a 10 or 15 years ago, right? I mean, even your 5-year-old iPhone is already hard to use and not compatible with most of the apps and things that you need. So uh I think that's the biggest issue for for Bitcoin now.
So, just to be clear, your main uh thesis for getting out of your Bitcoin position, is it because you feel like it's become overly financialized and is no longer representative of sound money with all of these derivative products, or because you think it's technologically outdated or will be technologically outdated with the rise of quantum computing, or both?
Yeah, those two reasons. And the third one is simply the experience that it was always way too painful to sit through these crypto invested. So uh that's why I decided to completely move out and and and wait and see until maybe there is some clearer signals that we have a bottom or that there is a turning point coming. Usually in the past, we've seen huge drama and panic around the turning point, and that's not what we have seen yet. But there's constant talk about what's going on with uh Michael Sailor and strategy and can they survive if Bitcoin goes lower? And I mean, that's actually the whole situation. Wherever you go talking with Bitcoiners, that's the only problem, the only discussions because that's really the issue out there at the moment. And and so I don't have a real answer, but I just tell you opportunistically, I I don't want to be part of this like finding it out with my own money, what's what's the outcome of So, uh, I'm on the sideline.
All right. Well, just to play devil's advocate here, I mean, a lot of the Bitcoiners will say, "Yes, we're preparing for quantum computing. Solutions have been made to uh do a a split on the blockchain, move it over to quantum uh resistant fork." I'm not going to pretend that I understand the uh computational and technical details there, but they are obviously addressing that. You know, Michael Sailor comes out and he says, "I'm fine. I'm good. I don't need to sell any Bitcoin." That he sold just to prove liquidity, just to prove that the thesis works. Um, and you know, we've heard the phrase that Bitcoin is dead many times before, after the 2018 crash, after the 2021, 2022 bare market, after every major Bitcoin draw down, every major Bitcoin winter. We've heard Bitcoin is dead. Bitcoin is dead. Yet Bitcoin has repeatedly survived those cycles and gone on to make new highs.
Uh, and also, you know, we're hearing more and more about this idea of Bitcoin being used as uh a sovereign reserve asset. I mean, we know that gold is rising as a neutral reserve asset replacing US Treasuries, but the thinking has been that uh central banks are going to start using Bitcoin. We started to see uh some of that in play during this Iran conflict. Recently, the um uh Coinbase's John Deino, he's the head of institutional uh strategy at Coinbase, he was speaking on CNBC. He claims that over 40 countries have committed to buying Bitcoin in some fashion for their national balance sheets. Let's take a listen to that.
blockchain and cryptocurrency to solve the problem of deep fakes via artificial intelligence. Uh, we've seen over 40 countries uh commit to buying Bitcoin uh in some fashion for their national balance sheets or other. So I'm seeing every day a deluge of new institutional investors that are interested in the asset class. So I appreciate for folks who don't have that perspective. They're looking for some grand gesture or grand event. Um, but for those of us who have the luxury of being on the inside, uh, all we're all all we're seeing is steady growth, even if the headlines don't match that.
What are your thoughts there?
Yeah, I I mean, look, I'm not betting against it. I told you this before. Don't bet against Bitcoin. I mean, I'm open-minded enough, hopefully, to to to figure out once the turning point is there and then I might be getting very interested again. Uh, things are always changing in our lives and also in the markets, and you have to be open-minded and understand that there is periods that things go up and then there's periods where they go down. And as I told you before, living through these crypto vinders has been just very painful and and uh I don't like losing uh uh so much uh uh in terms of my net worth. So uh uh uh that's why I'm not doing it. But I'm aware that of course, I mean, these the talks about using Bitcoin in in combination w with AI against deep fakes. Yeah, it's it's not nothing new. I mean, we we have been talking about this two years ago. I haven't seen any real technology yet figuring it out exactly, but um, I'm I'm totally open-minded to that if if there is a change. My experience is crypto winters usually always end with a total blood bath, and we haven't seen that yet. Um, so
We haven't seen the crypto blood bath yet. How bad could it be? How bad could this Bitcoin blood bath yet get?
Maybe. I mean, let's Okay, let's let's let's clarify. It's it's not necessarily that price completely crashed. The last cycle, for example, I think Bitcoin made a low around 20K and then it took another four, five, six months until it finally made the final low at 15 or 16K, 15,800. Right. So, um, that was rather a slow, uh, grinding lower kind of way to the turning point. But at the turning point, we heard terrible news. FTX blowing up, huge problems. A few of the altcoins like Solana completely imploded. That's the type of environment I want to see, you know, and and and we haven't seen that yet.
So, you needed for it to get much, much, much worse before it gets better?
At least in terms of sentiment, you know. Uh, I'm not saying it has to crash to 5,000 and then everybody will finally freak out, but I I want to see a really uh a panic in the street. And we have seen low sentiment levels, no doubt about that, but I have not seen real panic in in the crypto world yet.
And your negativity applies to all digital assets right now?
Yeah, I mean, Bitcoin has been always the trust layer for the whole digital asset space. I have not seen anything else taken over. Uh, so I I think if as long as Bitcoin uh has a challenging time, it will affect all the other markets too. All the other coins and everything within the digital asset space. You know, for people that think uh being a silver investor is challenging, sometimes being a Bitcoin investor can be a much more uh volatile and and fun and exciting uh ride and uh requires a strong stomach for that as well. Um, okay, so Florian, you're negative on crypto. You're not giving me triple-digit silver until 2028. You don't see a major breakout in gold for, I believe you said, at least another year as well. Uh, you're sitting out of equity markets because uh, you know, you're just being patient because you think that there could be a big correction there. What what are you excited about? Is there an asset that you see opportunities in right now?
Not really, unfortunately. I would tell you immediately. Um, and uh, I learned also over the years that there is sometimes uh, the situation where there's nothing to do and you just have to wait and do your research, be open-minded, be on the outlook for whatever new comes around. But uh, I don't see anything immediately right now. I think Chinese stocks are interesting. Maybe solar is getting interesting again. Uh, I'm still interested in the oil sector. Um, I'm also watching the miners for the short term. I think stock like Agnico Eagle, if if gold can turn around here and find a bottom and rally to 4,500, Agnico Eagle is probably a good play for the next few weeks. Um, but uh I as I as I tried to lay it out, I I'm a bit cautious here. I want to see how equity markets behave into September, October.
Okay. You're cautious, you're patient, you're enjoying your ice cream and air conditioning in summer,
Uh,
And perhaps composing some music as well in the time.
That's what I should do actually.
I believe you have uh quite an extensive record of music composition.
Yeah. Yeah. Yeah. I have quite a catalog that I produced over the years. Um, don't find as much time for it as I wish to, to be very honest here, but um, yes, I've been I had a quite creative period in my life.
Well, it sounds like uh the some adult drums may provide you with a time to work on your music. Um, sounds to me like you're saying that the best asset an investor can have right now is patience.
Exactly. Exactly. I think that's something that investors really need to understand. And again, I'm telling you from my past, my personal experience, uh, I've been very impatient when I started in the markets, and the markets taught me the hard way that you have to calm down and wait. Let the market come to you. Have a plan. Don't chase any news, any hot tip, and just wait. There is a time for everything. And usually the summertime is more of a time to relax, hang out with friends and family. Also just rest and and and enjoy life to be ready for for the more intensive and probably more prosperous uh uh or in terms of more good uh volume-driven setups in the stock market and in in in general in financial markets starting in September, October.
So would that be your highest point of conviction right now?
Yes.
All right, Florian, thank you. Uh, based on your advice, we should all relax, chill out, uh, you know, take some time, stop and smell the roses, listen to the music, maybe compose some music. For people that want to that people want to take this time and learn more about you, where can they find you and your work?
Uh, on my website, midestouchminusconsulting.com. Uh, we also have a free Telegram channel. I have a free swap stack where I send out the daily charts on gold and silver. Um, of course, as well on X and LinkedIn. Um, so yeah, that's that's where people can find me.
All right. Well, Florian, we will uh catch up with you after the summer. Maybe we'll have that uh that Santa rally as we typically get uh towards the end of the year. See where we are. But um, until then, relax, enjoy yourself, stay cool. Thank you so much, Florian Rumors.
Thank you very much.
And as always, thank you for watching. If you found this conversation insightful, educational, interesting, entertaining, hopefully all of the above, please be sure to like, share, and subscribe. It really helps us grow this community. And if you would like to learn more about building a precious metal strategy, you can reach out to info@mfranklin.com. There's a team of specialized advisors and brokers that can guide you according to your personal circumstances. Also, check out milesfranklin.com. As always, we love to hear from you. So, leave us your comments. Feel free to praise, whine, or just opine. We will see you soon from me, Michelle McCrory, and the rest of the team. Until then, stay sovereign.
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