Transcription
Hello everybody, and welcome to Commodity Culture, where our goal is to make you a better investor in the commodities sector. My name is Jesse Day, and on this episode, I'm thrilled to welcome Michael Oliver to the program. An expert in the commodities sector with five decades of experience, an expert in momentum-based technical analysis, and the founder of momentum structural analysis.
We're going to focus on the silver market today and get Michael's view on where we are in the current cycle for the metal, including his thoughts on the gold-silver ratio, the current supply deficit, and perhaps the most important question of all: is silver still money? We're also going to dive into the gold sector, get his thoughts on uranium energy, and so much more. I hope you'll enjoy my conversation with Michael Oliver.
Michael Oliver, great to have you back on Commodity Culture. Before we dive into silver, gold, and the commodities sector, I'd first like to get your view on the broad market. So, talk to us about the big three indices—the S&P, the NASDAQ, the Dow Jones—how you see them performing up ahead. I know we've had a lot of discussions where you were fairly bearish. We have seen, um, particularly after the Liberation Day fiasco, the markets take quite a hit. Seems like they're recovering now. What are your thoughts?
Uh, I don't trust the recovery. The damage, technically, by our metrics—which is to say price is one thing. Okay, that's what everybody sees. Like Joe Granville said a couple of decades ago, you know, everybody believes it; it's probably wrong. Okay. But anyway, we look at momentum of price, and we measure it like, for example, quarterly momentum, which is a fairly long-term measure of the market where we don't measure day-to-day action. We measure like monthly bars and how are they plotted in their relationship to the ongoing three-quarter moving average. Uh, it was clear you were topping late last year, and if you look at price charts of the S&P, you'll see it was just clumping up there. You know, it was doodling around, staying firm, but it wasn't going anywhere. And in January, the very first week of the year, we had enough breakage in the S&P on our momentum charts to say, "Okay, that's it." Okay. Well, two weeks later, the market made a new high by a couple of percent above where we said sell, which is okay. We don't mind being wrong a bit. Uh, and it it went up, made a new high, and nothing happened. It rolled back over and started to slowly degrade. January, February, and it wasn't until April that they really got clobbered with the tariff stuff. Okay. But momentum had already blown all of its major multi-year trend-defining structures that it had been building since that 2022 low. You know, the market made a low then and advanced for a couple of years. Took it about a year and a half just to get back to its 2022 high. But anyway, and it fin in 2024, you exceeded the old high that occurred in 2022, and you you rolled over there. And when you rolled over slightly in price, we blew momentum structures. It's like looking at the bridge on the river quai. Okay. Boom. Okay. Price didn't have those structures. But then what happened? A bit lag to momentum. Like a month or so, we had the implosion. Well, MSA knows that you don't have a trend that goes from A to Z or Z to A. You know, it has counter-trend moves. And we predicted before that April drop that the bounce place, a place for a good bounce, would be 4,800 S&P. It stopped at 4,835. And for the NASDAQ 100, which is the sort of the leader index, but it's moving with the S&P in terms of technicals, uh, around 16,500. Well, there were some momentum reasons for that. But also, if you're an idiot with a crayon, you can go back to the 2022 price high in S&P and draw a horizontal line 4,800 area. It was the peak then in January 2022 was like 48, just above 4,800. So, what do we do? We fell back to that high, and they said, "Oh, let's buy it here." Okay. NASDAQ 100, the same story. It peaked in November of 2021, a couple of months before S&P, and it was mid-6,000s. Well, where did we stop? 16,500, right on top of the old high. And we got a good bounce, and then when Trump waved the wand again, you know what caused that first bounce? Do you remember that? Two days off the low, we exploded. Was a hu—biggest up day in history almost. That's because Trump said 90-day pause, and everybody said, "Oh boy, party on." You had this big move, and then you spent the rest of the month of April just fiddle-fiddling around mostly below that high. And then finally in May, you exceeded that high and went on up further. Now, when you look at the momentum chart that I sent you, you'll see the price chart back up near its high. But when you look at the momentum chart, you see a different picture. You see something that is back up toward the levels where we had or rendered the breakage of the momentum. There were the trend line structures, the flat floor structures on momentum. And you've gone up to that level, and all of last week you stalled there. So that chart I sent you is as of last week's close. Since then, we're down a percent or so. No big deal. But we're stalling on momentum around where the point of breakage was for momentum, the oscillator level. So we'll see whether it rolls over here. I suspect it will. I think the damage done already in January, February, and March on momentum is valid and is likely to lead to a sustained decline with counter-trend rallies. And we just saw one hell of a counter-trend rally. But that's what I think it is. That's how we assess it, counter-trend.
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And now back to the interview.
Well, let's start the commodities conversation with silver. In a recent edition of momentum structural analysis, you discussed both the weekly momentum and the long-term momentum for silver. Break that analysis down for us and why it's led you to the conclusion that silver will probably outpace gold.
First off, the silver versus gold situation is—I think I sent you that chart too—going back about 50 years. If every year you made a note of what was the highest spread reading of silver versus gold. And the way we define the spread is we simply divide silver price into an ounce of gold price, and we get a percent. And you'll find over the last 50-plus years that 21 of those 50 years silver's at least at some point during the year traded at 2% of the price of gold. Well, right now we're 1.01%. 01% the price of gold. So historically, we're very low. We've been lower, but this is very low for silver in relation to gold. Everybody knows that. Okay. When we technically analyze whether there's the potential to go back up to that—even even just the normal 2%—it's not even asking a lot. You're asking for routine recovery to a normal level. Well, that's a bubbling in the current valuation of silver to gold. Are there technicals that indicate to us that spread—analyzing the spread technically—is ready for an upturn in a surge, and we see them. We've not broken through them yet. Right now, silver, like I said, is 1.01. Divide an ounce into an—as of today as we're talking. Okay. If you get up to 1.1% price of gold, so move up a tenth of a percent, okay, that spread is going to break out on our work over a first level of breakout. And if you ever clear 1.32%—you can make a note of this if you want—1.32, I think you'll gush up to 2%. Meaning just go to the norm. Well, heck, that process involves the doubling of current valuation of silver to gold. Now, whenever silver outperforms gold, it's never in a downtrend on both markets. In other words, when silver outperforms gold, it's because there it's going up more than gold. It's never the case that silver outperforms gold because gold goes down more. You know what I mean? So, the spread breaking out to the upside is also affirming net price upside in both markets. And I think we're on the cusp of that. And I also sent you a chart of the gold and silver miners versus gold. And that is a very clear spread chart. It goes back to 2020. And why did I go back there? Well, if you'll recall, that surge that occurred from late 2019 to 2020 was not only a price surge for all the metals and the miners, but it was a relative performance surge by the miners where miners beat the pants off gold during that six or so months of that surge into mid-2020. Well, if you go to the peak of that rally, which is what this spread chart shows, you'll see it's a staircasing decline in the relative performance of the gold miners versus gold. There's a structure on that chart. If you treated it as a price chart, which in effect it is, it's price versus price. There's a downtrend structure, and there's a horizontal structure such that right now you're nudging up toward that level. In fact, that chart is as of last week's close; you're stronger than what that chart shows. You're not at the breakout level, but that breakout level is so well definable that when you break through it, expect miners to gush on the upside, not just in price, but in relative to the gold market, which they often do in bull trends, particularly later in bull trends. Uh, so we see both silver and the miners, which have been underperforming gold for the last several years, in particular since that 2020-2021 period, they look ripe to turn up versus gold. And then there's a net price issue on silver too. Uh, and you mentioned that I—I had a long-term oscillator—I showed it's a 40-week average oscillator. And what is that? That means each week we take the weekly range and we plot it on an oscillator versus where is the 40-week average. 40-week average is about like a 3/4 average. It's about the same duration as a 200-day average. So it's a long-term average. And we want to know where is this week's range in its relationship to that average. Is it above it or below it? Which case we plot the oscillator. That oscillator has a parallel channel on it that goes back to last May. And if you close this week out, and right now as we're talking, silver's been up to upper 33s. You get to the upper 34s, like 34.90 area again. Remember, it's peaked twice above 35—October of last year and March of this year. You get back up to the high 34s again, that spread's going to—I mean, not spread, that momentum chart's going to break out. Meaning momentum says I'm going—I'm going for it. Meaning go for what? A triple-top breakout in price. And I'm sure that whenever you go to 36, the price chart guys are going to say, "Well, I guess we were wrong. It's not a top. Uh, that's a triple-top breakout to 35 peaks. You go to 36." The point-and-figure guys will get all excited. I think it's going to happen. I think this rally is for real. You add a dollar to about where today's high is; it is for real. We're going to surge. And that's a net price acceleration sign for silver, which I bet will correspond to a relative performance shift by silver as well.
So, uh, one big talking point that always comes up when regarding the silver market is previous all-time highs. People point to 1980, the Hunt brothers squeeze when silver went to $50. Some people discount that. They say you can't even take that into your calculations because it was an artificially created squeeze. I wonder what your thoughts are there. And then the second all-time high when it got close to $50 once again in 2011. Obviously, in just adjusted for inflation, we're looking at triple-digit silver at this point to return to those all-time highs on a real basis. Yeah. So, what—what—what are your thoughts there? Do you watch the previous all-time highs and use that as any kind of indicator for where silver could go?
Yeah, I think silver is going to blow the hell out of those two highs. First off, like you said, they're irrelevant really. They're nominal price highs. They were exceptionally brief. If you go back and look at them, there's like thin air. They were up there for a couple of days, and then they dropped hard. So, it really isn't like an overhead ceiling. It was an exhaustion. Uh, we're in a different world now fundamentally and technically. And to reference those old highs as some kind of level to clear, fine. If you want to do that, do it. My personal investment strategy right now is that I think silver could easily go to $100, $200 the next year or so. I'm serious. Uh, and gold go a lot higher as well, of course, but silver outpace gold. But in this particular surge that I think we're on the cusp of triggering, like I said, get up to that 34.90 on momentum, it's going to break out. And you get up to 35, you're back to a triple top. It's a hat of top. Silver never tops, even with double tops, much less triple tops. That's a launch pad. But when you go through that level and touch 36 for all the price chart guys, they know they got a breakout. I think that next move will likely carry you up into the 60s to 70 zone. Not going to be any more precise than that. But I think $50 won't even be a pause point. In other words, I think you're going to get a quantum leap here up out of this history of silver. And in—in other words, put it somewhere remotely where gold is. You know, gold's peak in 1980 was $850. Peak in 2011 was 1,920. Okay. Well, gold's gone way beyond those old highs, and silver still caps below them. That's a joke. Uh, I don't reference those old highs as meaningful. They're just—it's a number that I suspect that when you take it out, a lot of people will say, "Gee, I better own some silver." Okay. Uh, and frankly, once they gush it for about 10 or 15 bucks, I might take some call profits. Uh, but that's—that's what I think is likely to occur over the next handful of months, maybe a quarter or two.
Yeah, great analysis. Um, according to data from the Silver Institute's website, we're in the fifth consecutive year of silver demand outpacing supply. So we're in deficit here for five consecutive years or into the fifth year. I know you focus mostly on technical analysis, uh, but are you also watching the supply-demand fundamentals, and—and what are your thoughts here on this supply deficit?
No, I'm not watching them. I do realize that, but as you said, it's been true for five years. Okay. Well, I guess for the last five years, silver's risen. Okay. You know, uh, if you stand back and look at it. U, but no, I—I think that there's other factors. Yes, I think the industrial demand for silver is a pinch factor, and it could be a headline event type thing. And we know it's now shifted to solar panels, you know, the cells that operate. Uh, and therefore that demand is pretty solid, and it's growing annually, and uh, therefore silver, you know, got that—that game in hand, and people haven't paid that much attention to it. And there's some point where that could create a supply pinch that gets a headline-type story, you know, that motivates a surge, for example, like the surge I just talked about. Maybe somewhere in the midst of that—that's going to be a focal point, but it's always been there as you've said. You know, it's been there for a couple of years now. Uh, so I don't—I don't think it's a timing thing. It's just a background feature that's—that's objective, and it's real. Uh, I think the real thing that's going to drive silver is that it—just like gold—has been money for thousands of years. Okay? So it's—you don't just say, "Oh, well, it's not money anymore." Well, the world doesn't know that. Okay, we—we might think that, but um, I—I think that it's not—not the case. There's a large assumption, for instance, back in that April selloff in silver where gold had a single-percent drop when the stock market collapsed, and everybody said, "Oh, we got to sell silver because the stock market's breaking." And so, they sold it just like they did, let's say, copper or the Bloomberg. At the same time, they treated silver not like gold. There was no comparison. Silver's collapse was huge. You went from $35 to 27.5. Most of that in two and a half trading days, by the way. And about two days later, you'd erased half of that loss, and you're back above 30 again. But that kind of collapse—there's an assumption that silver is connected to commodities. But if you go back historically, silver is connected trend-wise to gold. And often the commodity complex does not trend with gold. It did in the late 70s. I think it's about to do it again. But for example, if you go back to 2015 where gold and silver made a low, major low, and it advanced. The Bloomberg hit a low, but it kept going down through 2020. Bloomberg commodity index didn't collapse; it just kept going down. All during that time, gold doubled, and silver exploded. And yet commodities went down. So don't make the error of trying to confuse the industrial aspect of silver with a normal commodity. Uh, it—it is a monetary metal, and it will catch up to gold.
Well, let's hone in on gold now because you recently wrote in MSA, go back 25 years—almost an investment lifetime—to January 2000. Gold is up over 11-fold, while the S&P 500 is up only four—over fourfold. People tend to focus on short-term trends, obviously, especially in our current era of social media and meme coins and all of that, but you're saying in the long term, gold has actually been a better investment than the broad stock market. Do you expect this to continue? And—and what are the technical indicators that—that lead you to this conclusion?
Yeah, it's—uh, the—I—I sent you the spread charts of that—of gold—first of the gold and silver miners versus the stock market, and it goes back to 2020, and u—what I showed there in the spreads was that like GDX had been around .710 of a percent of the price of the S&P since uh 2022. You know, just—so—in other words, for the last three years. Frankly, you could have thrown a dart, and if you could have bought GDX and made more money than the stock market, it was a coin toss. Now, you've made a lot more because in the last four months, gold miners have blasted out strongly on a spread chart versus that—so—so parformance action that they produced since 2022. But gold since 2022 has had built this range—dividing its price into an S&P—and you get this spread chart that's basically going sideways. You broke out of it about four months ago and exploded, and the point I made in that report is if you go back two years, okay, forget the precise point. It's just May to May. Okay, you go back two years to May 2023, and—and this is as of last week. So, it's even higher now. Gold's up 62.3% since May of 2023 for two years. S&P is up 42%. Okay, gold's beat it by 20% over the last two years. Okay, not a bad spread. Long gold, short the stock market, even though the stock market went up. If you go back just the last year—May of last year—and say, well, okay, where's gold versus S&P? Gold's up 30—this again, this is as of Friday—37.2% in the last year. S&P is up 12.9. Actually, it's not; it's lower than that now because of last week. So, like triple over the last year. Gold. Okay. So, two years it's up more. One year it's up more. And I said, "What the heck? Let's go back 25 years, a quarter of a century. Gold's up 11-fold, and S&P is up four-fold." Oh, yeah. Big ups and downs. Yeah. Oh, I admit it. That's like a human investment lifetime almost—25 years. Said, "Hey, I'm going to buy gold." What the heck? My granddad did. He told me I should own gold. So, I bought it, you know. Okay. It just sits in my closet. Okay. And I've 11—11-fold gain versus a—for a quadrupling in the S&P since 2000. Okay. So, I mean, you know, throw a dart where you want. Yeah, you can find times when gold is down more than…
The S&P, but basically from, you know, a year ago, two years ago, you probably go five years, is the same story. Gold is beating the S&P. And yet, you don't hear that on Fox Business News or on CNBC, or etc. You know, it it's always cheering the stock market. Nobody's mentioning the bloody fact that gold is beating the pants off the stock market, and it does it consistently.
So yeah, there have been some actually negative articles, um, about gold recently. I believe the BBC put one out. Barron's put out a magazine cover that was looked like it was bullish gold, but I think in the depths of the article, they kind of started to say that, well, maybe this isn't the right way to go. It's risky, etc., etc. Kind of pushing people away more than anything.
Um, I want to talk about gold and silver mining equities here. What is your current analysis of the precious metals miners, and would you say that right now is a good entry point for those looking to deploy capital in in that space?
Yeah, net price-wise, just talking net price now, we know that we had a surge that peaked in mid-2020 or in the case of silver early 2021. Then gold continued. It went into a range sideways just above 2,000, like three or four times to get above 2,000; they'd sell it. They'd sell it. They'd sell it. And it never would collapse really. The biggest single drop you ever had in that four-year period was 20%, and that was brief. Most of the most of the range was like in a 15% range. If that were the stock market, nobody would care. But with gold, it was a disaster. Okay.
Anyway, in March of last year, gold was coming up through 2,000 yet again. No big deal. It had been there three or four times. So you sell it again, right? We said no. This time it's different. It's going to blow. Silver was in a 25 to 26 zone. We said it's going to blow to the upside. It shot up into 33, I think, by last May, you know, uh, and then ultimately 35. And the gold miners like GDX at that point in time was 31 and a half. Okay. Right now we're trading just short of 50. Okay. So they had a net price breakout at that point.
Uh, but on a relative basis, even despite that surge we saw in the gold miners over the last year, it still wasn't enough to break its spread out, which I've included in the charts I sent you as a GDX versus gold going back to 2020. There's a trend line that an idiot could draw, but it's on the spread chart. And you're that spread is a week old. So, it's actually pushing up toward that trend line as we speak. That trend line is a multi-point, very clear structure. In other words, if this were a price chart, you'd say, "Oo, I'm going to buy the breakout." Okay, I think we're on the cusp of that breakout.
At which point, the miners, while they've been strong, like over the last year, it was 31 and a half, and we said, "Buy in March. We're resuming the bull trend." We said, "Well, you've gone up a nice percent, right? Beat the heck out of the stock market, but it's going to beat gold at that point. And I think what that indicates, and this is what we've been arguing, is that it's highly likely that when the miners shift to the upside, it will be one of the causal factors will be money moving out of the stock market.
Now, that spread has started to firm up since late last year, the miners versus gold. You'll see on the chart, it's come up. It's not broken out yet, but it's risen. Well, what's happened in the stock market over those months? It dropped. Okay. And the pullback we just had in the GDX versus the gold spread, minor little pullback last month, and it may not be in effect right now, frankly, uh, was when when the stock market rallied. Okay. But when the money flows out of the stock market, it goes somewhere else. And most investors and large asset managers aren't prone to go buy silver futures or gold futures, uh, or even just raw bullion. They want to own stocks, and you know that some of these stocks put out good good earnings and and dividends. You know, NUMAT, for example.
Uh, I think that flow is probably one of the factors that will cause the miners to reassert themselves on a spread basis versus gold is simply the money moving out of this sinking battleship and moving over into this tiny little category. And it's a tiny category; you know that it's it's a wet bar of soap issue if you suddenly get money moving into it. And I think we're that's what this chart in effect says is that that stock market break that is underway, we argue despite the recent rally, uh, will generate that. And there's other factors as well that that are in play that have not been in play for a while. One is the T-bond market. We've been arguing for a couple of weeks. It looks like there's a T-bond crisis shaping up. And now suddenly I hear on the news today, oh my gosh, something's wrong over there. We've been warning something's wrong over there.
The other factor is the dollar. The dollar was stuck in a dull range for about two and a half years, a 7% range. It was up, down, up, down, meaning the yen and the euro were effectively dull as well because that's what comprises most of the dollar index. We got bearish in April, uh, excuse me, the close of March; dollar index was 104. Why? We'd broken an annual momentum uptrend that went back more than a back two decades. In other words, you look at the dollar and you don't see the breakage. We look at the annual momentum and you see this massive multi-year breakage. We went all the way down to 98 after that break, which also took out some price floors on the dollar. Had been around 100 for the past couple of years. They went to 98. So, they even broke the price floors, and then they had a three-point rally up to 101. Right now, we're back down near 99 again. I'm going to bet if you ever touch that low tick again, the price guys are going to wet their pants. Meaning, you go back and touch 98 again, the price guys are going to say, "Oh gosh, that rally failed." And when the dollar gets volatile on the downside, that suddenly becomes an upset factor for a lot of other categories, particularly foreign investors who own our bonds, foreign investors who own our stock market. All of a sudden, they're getting gutted by the the money unit they had to use to buy it. You get the point. Okay.
So I think that's another factor out there that could help move the money out of stocks, out of bonds as well into the monetary metals.
Any thoughts on uranium here? I know you pay attention to momentum and to uh technical analysis above fundamentals as we've been discussing, but the fundamentals just keep looking better and better for nuclear energy and for the uranium demand picture, and the equities have been heading in kind of the opposite direction of all of this seemingly bullish news. Um, I think today uranium is doing quite well, the the equities, but boy is it incredibly volatile; the equities, they can rise and then absolutely collapse the next day. It it seems to be a pattern that has many tapping out and throwing in the towel. You're hearing the moans and cries of speculators on social media. Um, do you have any insights to the technical side of things to to explain maybe why this disconnect is occurring?
We we update all the commodities every month, and uranium is one of them, and including on that one we'd run URA, which is the ETF of uranium miners. Okay. And producers context; MSA turned a long-term bullish on uranium coming up through 20 bucks back in 2017 or 18. It was okay. We stayed long-term bullish. Annual momentum had broken out. That's a very long-term trend metric when you measure price versus a three-year average. Not just getting above the average, but the structure that's built on the momentum chart. We saw a positive momentum breakout seven years ago, okay? And we went to over 100. And during that process, there were many zigzags in uranium. Okay? None of which broke the annual momentum trend. They were just counter-trend sell-offs. Last August, coming down through 85, we said, "Watch out. We're going to get a correction, and it's probably going to take you down toward the three-year average or the 36-month average," which in fact we did. We got slightly below them. No big deal. Now, we're reasserting ourselves. We thought that would be around where you found the support, like in the upper to mid-60s on uranium. I think right now we're back up in the 70s, right? Okay. I think that was the corrective low. I think uranium is now a buy. The question is how long does it take to really get itself going again? Even if that was the low. Okay, let's assume that was the low. We do. Does it mean it's an instant buy? You're going to go back to the high right away? I don't know. I think you may have to work for it. But from an investment point of view, I think that was the correction. That was it. The long-term trend remains up.
URRA is it sort of behaves like the gold miners. You know how they they panic sometimes. Gold will drop a little bit, and they'll puke. Gold will go up a bit, and they explode. You know, URRA got way ahead of itself a handful of months ago. It got way up above its recent highs while uranium was dropping. I said, "What are these guys drinking? You know, uranium's correcting, and they're trying to make a new high." Well, sure enough, that new high puked. They dropped URA down hard. So anybody in URA should have just looked over the other chart of uranium. So what's going on here, guys? It's it's a little bit too much too soon. I think URRA is stable now. I think it'll reassert itself. But in watching URRA, and we put we put out specific numbers on it every month, we update them. Uh, and it's not far below some numbers that say, okay, we're coming back up. But if you're in URRA, that pay attention to uranium. Make sure it's agreeing what what with your uranium holdings. Uh, and I think it's back in line with uranium now because it had that give up. But I I think right now uranium in the category is basically a safe and probably a good investment place. Not as good as silver, okay, but but a good place to be if you want to be. And I think this is true basically with most commodities as well.
And a quick followup there because you're watching the spot price, right, when it comes to the the uranium price and um that only accounts for futures.
Yeah. Oh, you're you're watching uranium futures. That's very interesting because I've I've heard that the futures market is a little bit broken in terms of, you know, comparing it to like the oil futures or gold futures. How do you track the price through the futures market?
Well, I we just take the price. It's nominal really because they don't trade much at all. It's hardly tradable. So, we we admit that. But it is adjusted daily. They have a settlement price. Multiple contracts, and so we just simply track the front month contract of uranium and rotate to the next month uh that in effect is futures spot. Okay. And it gives you a ballpark. We're not we're not concerned about you know buck here or there frankly. Uh, we're looking at the bigger picture, and we know it's not a viable trading vehicle. The futures certainly aren't, and the the miners are where to be. But I think that uranium is now telling us net price-wise that it it's okay. I think it's it had its puke, had its correction. I got a little overdone. I think it's now stabilized, and the next direction is up.
And what about uh energy equities? The oil and gas sector. Another sector that has been beaten down. WTI fell below $60 um in the aftermath of Liberation Day. I think we're we're above 60 now, ticking up. But boy, did the equities get hit, and a lot of them appear to be extraordinarily undervalued. If you are bullish on oil and natural gas for the future, what what are your thoughts on the sector?
Well, when we run the Bloomberg Commodity Index, the mama of the the whole sector, which is a fairly well-balanced index, it's not excessively heavily weighted for energy, for example. Some other commodity indexes are overwhelmingly energy. But in the last big surge we had in commodities, which was from October 2020 when we got major bullish, we said there's an explosion about to occur. Bloomberg went from 70 bucks to 140. It doubled. Well, crude oil was a leader in that group. The front end of that leadership among the commodities basically all of them went up. Okay. But it was definitely an outperformer. This time it's a real laggard because while you've got grains bottoming and other commodities, but copper especially, crude oil had that little plunge where you had these two years of price lows at 65 65 65; any with a crayon could draw it, and you went down and blew that low, and so they ran all the stops. They got down to like 55. A couple of weeks later, they came back up to 6490, 6480 and tried to push back above that floor. It couldn't do it. Why? Because some guy with his crayon saw that line and said, "I'm going to short it there." You drop back down again. Not not a new low this time. Now you're back up in the 62 area. Just sort of not doing much. What we're saying is this. We think that was a bear trap, not a sustainable downside breakout, that when you get back above that price low at 65, like you close a week out credibly over 65, that's wake-up time. That's telling you, hey, that was a bear trap. That wasn't real. Okay, was a phantom breakout exhaustion. Our long-term momentum of crude has structures on it, meaning downtrend structures that are so clear and you can't see them on the price chart. Can't see the same trend lines such that you get up around 69 on one of our metrics and around 72 on the other one, it's going to blow out to the upside, and those numbers will adjust down between now and next quarter such that basically you don't want to get back up in the upper 60s once you get into next quarter if you're a bear. You get back in the upper 60s, you're going to launch. So I think at that point crude oil, which is now a laggard within the commodity complex, will suddenly get back in line with what the Bloomberg is doing. Not that it necessarily will be an outperformer again like it was 20 2022, but you know it'll be strong. It has the momentum dynamics if it can get up to those levels. So, I'd say get above 65, wake up, upper 60s, really pay attention as we'll be defining breakout structures that should create a real surge, initial surge plus a trend. Uh, but it's definitely a laggard right now.
And what about copper and any other base metals that that you're watching right now? Um, what what are your thoughts there? What's your analysis telling you?
We mainly watch copper, and it is, as far as we're concerned, in a bull trend. Yes, it has big sharp pullbacks, but it behaves pretty much in line with the Bloomberg. There have been a there was a time in that recent surge in copper that got well above five where it was doing something that the Bloomberg wasn't doing. Bloomberg was basing, but Copper said, "I'm coming out of here." And it got yanked back down. So I I really suggest that when you look at these commodities within the Bloomberg, you also ought to look at the Bloomberg itself because I think it provides evidence for a general commodity rise. Meaning money is moving into what? A cheap asset and moving out of an expensive asset. If I say cheap asset, what do I mean? Bloomberg right now is 102 something. In 2008 it was 237. Okay. In 2011 when gold peaked it was like I think 170 something. Okay. So even now, well off its low which was below 60 in 2020. Yeah. You're up nicely, and you're still below that surge in 2022 which traded at 140, but you're basing; you've been going nowhere for two years on the downside. Just either side of 100. We've already had enough evidence that it's turning up on quarterly momentum. What we're waiting for now is annual momentum, and it says up around up above 106 and a half on a monthly close. You better wake up because it's going to really move then. And I think what it's again it's a situation where money moves. The Fed creates money. They always do. But they increase the flow from time to time, and they lower rates artificially. I think this bond crisis that we've got, especially when the stock market starts to generate negative data points, which it will, they're going to start doing the game again. In other words, if they're they're going to get very aggressive in monetary growth and stimulus, etc., etc., QES. Uh, at that point, that money is going to go somewhere, but it never goes into a failing stock market. Go back to 2000, 2002, 2007, and 9. They cut rates all the way down, and it didn't help a bit. It went elsewhere, and I think the Bloomberg is indicating to us some of that money flow is already moving over there into that historically cheap category and the stocks that are related to those commodities. But I would look at copper, but I would look over my shoulder at Bloomberg to make sure it's saying, "Yep, I agree with you."
Well, a lot of the charts we've been showing today and and a lot of the information you've been giving us um is available through your service, Momentum Structural Analysis, where you give a more frequent and detailed breakdown of commodities. You talk about Bitcoin, you talk about a lot of different assets, the broad market. Um, what break it down for us. Talk to us about Momentum Structural Analysis and how people can can subscribe to the service.
Well, you know, I was when I first got in the business at 75, my boss was the chairman of the Comx and also the head of Hutton's commodity division, and he was a a price chartist, you know, with technician. And uh, even had a back office where they would there'd be a woman who would create charts every day for people to copy and reference. She'd do them by hand. This is, you know, pre pre-Excel. Okay. Okay. And uh, but so I learned price chart analysis, which everybody, you know, everybody does that. Okay, uptrends, horizontal lines. But I evolved away from that in the 1980s, and I caught the crash in '87. Not in a big way, but I caught it clean and clear. And I used puts, and I was in and out. I got out a little too early actually. I got out too early on the crash day. But uh, I could see it coming because quarterly momentum was speaking a totally different picture than what the price chart was saying. Price chart was just diddling around, dropping a little bit. Wasn't breaking anything, but quarterly momentum was blowing a floor. It had gone back two years on momentum, and when it broke it, it just crashed within a couple of weeks or so. 30-point, 30% plus. So momentum of price tends to give you a different view than what you see when you look at price because what is price? Price is a distorted measure. Why is it distorted? Because it's a money unit. And if you measure a commodity over the years or a stock over the years and don't factor in the ongoing collapse or decay in the real value of that money unit, your yardstick is changing year by bloody year. And every decade almost that money supply in the US almost doubles. So it means if you bought a stock at 10 bucks and it's at 20 and you think you're making money, no, you're not. If it's taken 10 years, you're probably losing money. uh, and and so you it's a bad yardstick, then you can't get totally away from that yardstick because we measure via euro the yen or our case the dollar. What we do is we take a step away by creating a moving average, which is a dynamic that's created not just by the price of the commodity and the price of the money unit at the same time but over time. So a dull market will create very little movement in its moving averages, but a dynamic market will create dynamic movement in its moving averages. Hence that yardstick changes more reflective of the action of the market rather than just the currency unit. Okay? So, it takes you a step away, and it gives you almost all the time a warning of topping action or bottoming action before you can see it on the price chart.
Great. Well, I'll put a link in the description below to Momentum Structural Analysis so people can check that out. I highly recommend the service. A lot of tons of great info. I I get it myself. Um, thank
You once again, Michael, for coming on. It's been a blast, and I'm looking forward to our next conversation. Appreciate it. Thank you. And thank you for joining us today.
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