Michael Oliver: Gold’s Next Move Up Will be a Quantum Leap
Tom welcomes back Michael Oliver from Momentum Structural Analysis. Michael discusses how they use long-term monthly charts, and they plot it against a mean. These charts show momentum, and they provide a warning when the markets are about to change. Usually, the momentum tends to deviate near tops and bottoms and warns you that the big picture is about to change. They currently monitor shorter-term trends for the equity markets because the Nasdaq, Dow, and S&P are all near all-time highs.
They believe the markets are topping and points out that the large leading stocks are waning in these indexes. This could be a sign of trouble and evidence of a gradual decline into a bear market. He discusses how bonds are usually inverse to equities, and they are watching for a counter-trend rally. If significant funds get nervous, they will move to treasury bonds and gold.
He discusses gold’s activity over the past few years in relation to the equities. Gold began signaling a structural change in the market and appeared to lead the rest of the market. He discusses why they turned bearish on gold from 2012 to 2016 based purely on its breakdown in annual momentum.
Michael discusses where he thinks Treasury Bonds will head over the next year or two. He sees inflation coming like in the 1970s, and it doesn’t seem like the Fed will stop printing.
At some point, inflation will spill over and affect the bond markets, and Michael discusses how a structure could be built that would be negative for treasuries.
Michael cautions that a breakdown through 89 on the dollar index would be a big bearish indicator. Measuring the dollar against gold and commodities are both valid ways of determining value. The entire commodity complex broke out last year after momentum took off. These are the types of moves that are likely to continue for years, although there will likely be pauses as we go.
A lot of social ramifications are coming when mal-investment is finally exposed throughout the system. There will likely be a flight to safety with people deciding to move out of cities, and that may sustain lumber prices. He thinks it will be a while before the housing bubble in the US breaks.
Michael argues there are no momentum structures left to break in gold and silver. You can’t be bearish on the metals, and now the only question is how fast we rise from here. He thinks gold’s price will increase quite quickly when it moves.
Time Stamp References:
0:00 – Intro
0:33 – Charting Style
3:23 – Frothy Equity Markets
7:15 – Rollover into a bear market.
10:14 – S&P Indications
13:10 – Domino’s & Risk
16:10 – Interest Rates Long-Term
20:00 – T-Bills and Gold
23:18 – Measuring the Dollar
27:48 – Commodity Inflation
31:43 – Mal-investment
37:40 – Gold/Silver Predictions
43:54 – Silver Movement
48:13 – Spread Analysis
50:30 – Gold & Crypto
58:00 – Wrap Up
Talking Points From This Episode
- Commodity cycle shift.
- Gold and silver forecast.
- Macro Factors and Stock Markets
- US Dollar Index and the 88 levels.
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J. Michael Oliver entered the financial services industry in 1975 on the Futures side, joining E.F. Hutton’s International Commodity Division, headquartered in New York City’s Battery Park. He studied under David Johnston, head of Hutton’s Commodity Division and Chairman of the COMEX.
In the 1980s, Mike began to develop his proprietary momentum-based method of technical analysis. He learned early on that orthodox price chart technical analysis left many unanswered questions and too often deceived those who trusted in price chart breakouts, support/resistance, and so forth.
In 1987 Mike technically anticipated and caught the Crash. It was then that he decided to develop his structural momentum tools into a full analytic methodology.
In 1992 the Financial VP and head of Wachovia Bank’s Trust Department asked Mike to provide soft dollar research to Wachovia. Within a year, Mike shifted from brokerage to full-time technical research. He is also the author of The New Libertarianism: Anarcho-Capitalism.