Transcription
Actually, even if the bears get what they think, which is orthodox nonsense, meaning what they usually do is they like they've done this repeatedly on gold for the last couple of years. Every time gold makes a range and breaks out and you surge, they always expect it to go back and sit on top of the prior range. And it never does. It may pull back, but it doesn't go back to where they think it'll go.
Right now, there's a big consensus out there for months now, again, okay? It's 5-6 months of selling. Let's see it, guys. Uh it don't go back into the 70s again, okay? Uh a $50-55 silver. They want to go back and sit on top of the old highs. A kosher price chart thing. In these tantrum moves, that doesn't happen. You're going to get a sharp drop in silver at some point, but it'll be in a new reality. And I still think that reality is $3-500. And the move to get there will be very dramatic in the final 3 months of that move. I think so, but again, I don't expect a crash event uh type of event or sharp until we get into next quarter. Think what you might see now is you could see a drop back below 7,000, but again, dimension-wise, that's like 8-10%, you know, not not even that. Uh that's not uh even correction territory. Uh so, that's the subtle thing I'm looking for is a one, the break through the distribution zone, two, then it fizzles out, then it slowly slips back down based on whatever you want to assign the the causal factor. But you get back down under 7,000 during next quarter, you don't want to be there. That's That's when the floor could start to come out from under you. And that's when the pin, where's the money going to go? I don't think they bounce. You don't go back to that structure again. So, if you get down under that 7,000 next quarter, you're not going to bounce. You You're in death's You're in death's door. The Bridge on the River Kwai, the fuse is burning, okay, underneath the bridge. And you the the key signal would be to simply wobble off and get yourself back down into what the price guys would think is well, you know, pull back to 7,000 that ought to be support. You get back under it, that'll concern a few of them cuz you know, you're back below that launch point. Uh but momentum is screaming you've got a multi-year floor you're going to blow out. You don't break that and go down for a week, okay? You break that and go down for a couple years. Uh so again, we're looking for a stock market top. But the main factor here again is the debt market, not that what semis do. They had a blow off, I think. Uh that's what it was. Nvidia's already looking weak to us. We're breaking certain key numbers right now on it that indicate it could provide a negative force. Uh not a collapse. Again, I'm thinking next quarter before you get the collapse effect. Right now the issue is merely the ooze without headlines. Maybe even good headlines. That's the best way to top. Like the Iran thing goes away. Oh, the market should explode, right? Well, why isn't it? Uh or Russia-Ukraine thing sort of goes away cuz uh Putin finds himself in some, you know, political instability in his own country. Um and therefore that mellows away and suddenly have a beautiful world, okay? Stock market should explode, right? Okay, well, if it starts to ooze, beware. And again, I think the prime beneficiary will be gold because I know what the Fed's going to do.
>> Right.
>> When the government bond market goes lower, you higher yields when certain private credit problems pop up here and there. One here, one there. One takes his headline or two. Uh and then suddenly the Fed underneath the surface while they won't be talking about it, will be doing something. I know there's a difference between like the Shanghai price and our price. Yeah, of course they look Uh they look at the commitment of traders. They look at open interest and all these things. And these are variables that will here and there echo the positives. But they're not necessarily good timing mechanisms. And ultimately, if you see a difference between the quote paper price and the the bullion price uh you know they're both going to go up, okay? I don't know we're not going to argue about the difference between them but basically whatever that difference could shift the spread relation could shift contract widen whatever. Uh that's really not the fundamental driving it. The fundamental driving it again is the historic underpricing of silver relative to gold. Underpricing of silver relative to copper. Underpricing relative to money supply. And silver's in a tantrum. And yes, gold is is the mama but right now technically speaking as of last November we gave our last buy signal $56 silver on the close of that month. It was based on silver breaking through a 10-year wide ceiling of resistance on its relationship to gold. Where we divide silver into gold 1 oz into 1 oz, express it as a percent, plot that each month. We go back decades. For 10 years there had been a ceiling on this spread at very low relative valuation levels for silver. We broke through in November. And we have not given it back by the way. That spread is still well above the breakout. It said, "Now is time to buy silver rather than gold." And I think that will be ongoing especially for the next handful of months where silver will vastly outpace gold. And with the silver miners will outpace the gold miners as well. Frankly don't read those things.
>> Yeah.
>> Yeah, I do note that they that for example you know as I said gold has eightfold moves, okay? And if you go eightfold to 8,500, okay. Well, JP Morgan several months ago came out with a report and I didn't even read the details of it. I'm sure it was fundamentally based. They said they thought that gold could be 9,200. I forgot where they put it ultimately, you know, that kind of thing. Uh and a lot of these banks that have these monthly reports on gold they always said they'd be shifting them up but it's always by 100 bucks, 200 bucks. None of them have the horizon that something dramatic is going on here. This is we're not going to you're not going to tick your way up for years. Yes, you've done that to this point. Silver did that just to get back to 50 again, okay? But when you enter that phase late in a bull trend where suddenly reality hits, the fundamentals start to cascade like a T-bond crisis. Stock market, oh my gosh, it's not making me money anymore. Uh all these factors come into play, then suddenly the money rushes. And yes, there's emotion and there'll be a lot of headlines. But it won't be those headlines that cause it, it'll merely be those headlines and seeming data points that merely reflect what's already been going on.
Actually, even if the bears get what they think, which is orthodox nonsense, meaning what they usually do is they like they've done this repeatedly on gold for the last couple years. Every time gold makes a range and breaks out and you surge, they always expect it to go back and sit on top of the price by a range. And it never does. It may pull back, but it doesn't go back to where they think it'll go. Right now, there's a big consensus out there for months now, again, okay? It's 5 6 months of selling, let's see it, guys. Uh don't go back into the 70s again, okay? Uh a $50-55 silver. They want it to go back and sit on top of the old highs. A kosher price chart thing. Uh in these tantrum moves, that doesn't happen. You're going to get a sharp drop in silver at some point, but it'll be in a new reality. And I still think that reality is $3 to $500. And the move to get there will be very dramatic in the final 3 months of that move. The range is a little longer than I expected, but on the other hand, it's that age factor now enters.
>> Yeah.
>> Uh in other words, you've had 3 months of selling, then you've had 4 months, then you even had a drop that took out the Feb low and it went nowhere. And now it's 6 months into the selling and you're where? Trading either side of 70 for the last couple months with a low at 61. Uh okay, prove it to me. You you've had you've spent 6 months of of trying to bomb this market and you can't seem to get it going. And I think the clock says you better do it like right now. Don't uptick again cuz you uptick back into the mid-70s again, forget it. You lost. Highly likely we're coming out of here. So, I I I'm doubtful you'll see those levels that everybody expects. And I think these other factors that seem to be in sync with the silver, like ooh, a weak stock market that sells sells silver, uh etc. Uh that's going to suddenly divorce. About 8% right now XAU divided into gold. Okay, now, when you go back to the '70s, '80s, excuse me, '86 it started XAU. '80s, '90s, 2000, 2005, until 2008, that spread relationship, divide the price of XAU into an ounce of gold, was about 25%. It had highs at 35 and it had lows at 17 and 1/2. A nice box of up-down action for decades of valuation of the miners going sideways, really, oscillations, versus an ounce of gold. It dropped to 4% bear market low in 2015. When gold hit its price low and miners hit their price low, the spread hit a low at four I mean, what do you want? It's going to zero? Okay? Yeah, you want gold, well, you got to have miners, okay? Anyway, since then you built a range of basing action on the spread chart with repeated peaks up in the above 8%, like 8 and 1/2%. In fact, we went up and nipped that out marginally a few months ago in XAU versus gold. So, it sort of broke out, but GDX did not. Instead, GDX still has this range going back 11 years now, where you could draw a line across the spread chart, very low valuation levels, that you need to break through, and it won't take a lot to get that spread to break out. I think it's going to break out because this time we're hanging in there near the upper end of the range, whereas prior run-ups there fell quickly. In other words, you got gold miners relative to gold miners they puked. Okay. This time we're congested up there like we want to go through it. If you break those miners out versus gold on a spread basis, they're likely to double or triple in relative value to an ounce of gold. In other words, go back at least to the bottom end of what had been the multi-decade prior range of valuation versus compared to current levels are like a double to a triple. Uh so, it's I think there's a major surge there in the miners pending. In other words, we think you've had one already. When you break that spread out and you're about the lid's going to come off the miners. Now, what would that mean? Maybe that means investors wake up. If you don't want it to I really think it's it's a casual statement. I think you could throw a dart
>> Yeah.
>> Yeah.
>> at a list of miners and you'll probably hit mass all of them are going to go up pretty much dramatically. In fact, you can look at Newmont, which is the biggest gold miner out there. Of course, we know it's the blue chip of, you know, that that's where the big funds would buy. They wouldn't buy the juniors or anything like that. And you look at its chart and it looks like wow, what a move. It's only been a par performer to GDX. In other words, it's only matched the performance in the broad sector. It hasn't even outperformed and yet the stock has gone vertical.
>> Right.
>> Which tells you something about the sector. In other words, people are like, "Oh my gosh, this What we're looking for is symbols that have technical breakouts relative to the sector." But, without going into that, trying to microscope in this in within the sector, and those those valuations can change. You might have a miner that beats the sector for year and then underperforms, you know, it doesn't necessarily have to be out perform the whole time. But, basically, I think you could throw a dart. And I if I threw the dart, I'd throw it to silver miners.
>> Mhm.
>> I think they're going to do better than the gold miners.
>> I think we're headed for
>> monetary global a monetary economic global and political crisis.
>> Yeah.
>> And the economics, especially once the market the bubble markets break, particularly ours and Japan are two definably bubble markets. Europe is not so much a bubble as we are in terms of dimensionality of what's occurred over the last 16 years. China, for example, will go down with us, but it's not a bubble market. It's only doubled in a half since 2009 where 22-fold on Nasdaq or something. Yeah. And when US [clears throat] market breaks, uh that that's going to change a lot of the dynamics. And it's that's when this these events will start to happen. I think what's going to be on the other side of that silver explosion and gold explosion is legalization of them as currency. This country, that country, this country. Now, the Western world will be the laggard this time around.
>> Right.
>> We've had monetary backing in our money before. You know, you go back 100 years, you had gold and silver back currencies a lot of places. Now, we've had uh nearly a decade of fiat paper, you know, which which piece of paper's degrading more rapidly than the other in terms of real buying power.
>> Mhm.
>> Well,
>> [laughter]
>> it's when the public realizes that and they get hurt by the consequences of that fiat game, there's going to be an intellectual awareness among academicians too, including academicians who favored the Fed up to this point will say, "Hey, you know what? Maybe we need the you know, get some gold backing. We need maybe we need to leave fiat currencies behind." So, you may have a new reality on the next move, and not just oh, a new high and then big pull back, etc. You may reach a new global perception of what's money. I would we we will cover that, but again, what I'm thinking yes, silver's likely to hit a high and then have a sharp you could drop 100 200 bucks. You could have 500. But you're in a new reality at that point. Uh and I I first issue is to get to the new reality. Now, admittedly, when you get there, my own personal strategy is this. All my about 95% of my positions are silver bullion, unleveraged, usually through ETFs or bullion, and silver miners, about 50/50 on those two. About 95% of my portfolio is consisted of that. Once I get the silver move to the new reality, I will probably take profits, but not because I think they're going into some disastrous bear mode. There'll be a sharp sell-off, there's no question, but it won't be, you know, back to 100 or 50. It will be, you know, it will be, you know, who knows where it'll be, but the issue is getting up there first. I'm going to shift it into cash. Well, what's cash? Gold. Gold is the money that's held its value over the decades and decades. Stock market hasn't held its value. No hardly any asset in the world has held its value measured against the degradation in the real by, you know, when your granddad built a house, it was $4,500. When your dad built one, it was 45,000. You want a median home today, it's 450,000. And that tells you degradation in the money unit. It's ongoing. Yeah. It shows itself here and there. With gold, it's been perfectly safe. That's where I want to be once we get this surge over with. But right now, the issue is to capture the surge.