Podcast: Play in new window
This week on the McAlvany Weekly Commentary, David McAlvany interviews technical analyst Michael Oliver, founder of Momentum Structural Analysis (MSA), about what he describes as the most important chart in global markets today: the long-term gold vs. S&P 500 spread. According to Oliver, this relationship has now broken decisively, signaling a major structural shift that could reshape asset allocation for years to come.
For more than four decades, Michael Oliver has applied his proprietary momentum-based methodology to stocks, commodities, bonds, currencies, and major market spreads. His firm, Momentum Structural Analysis, provides detailed long-term momentum research to institutions, fund managers, and private investors seeking to understand major market turns before they become obvious through traditional price charting. In this conversation, he explains why the gold/S&P 500 breakout matters, why silver may be preparing for a much larger move, and what his momentum models are signaling across multiple asset classes.
Download Michael Oliver’s November 16 MSA Sample Report
A full sample of Michael’s recent research is available here:
MSA Sample Report – November 16, 2025 (PDF)
This report includes long-term momentum charts across equities, commodities, monetary metals, and fixed income, along with commentary explaining why MSA focuses on momentum structures rather than conventional price action.
Explore Momentum Structural Analysis
Listeners who want to learn more about Michael Oliver’s work should visit the MSA website:
Momentum Structural Analysis – Official Website
https://www.olivermsa.com/
Additional free sample reports are available directly through MSA here:
Request Free Sample Reports from MSA
https://www.olivermsa.com/contactsample-reports.html
On the MSA site, readers will find:
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Background on Michael’s methodology
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Recent sample analysis
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Details on the asset classes he covers
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Contact information to reach him directly
At the end of the interview, Michael encourages interested listeners to email him through his website with questions or to request additional sample reports. His contact details are available on the MSA contact page.
About This Episode
In this week’s discussion, topics include:
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Why momentum often leads price at major inflection points
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The gold/S&P 500 spread and what its breakout implies for equities and hard assets
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Silver’s structural positioning and long-term potential
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The Bloomberg Commodity Index and signs of a broader commodity shift
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Momentum deterioration in long-term Treasuries and potential implications for government debt
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Bitcoin’s structural breakdown and its impact on broader risk assets
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The case for a multi-year shift toward monetary metals and tangible assets
This interview offers a clear, momentum-driven framework for understanding current market dynamics and longer-term transitions.
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Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany.
David, before we get to our guest, Michael Oliver, I’d like to just express to our clients that we normally talk about fundamentals. There are really, in the markets, two types of traders, I would say, or analysts: fundamental analysts and technical. But the next couple of weeks, you’d like to include the technicals because oftentimes that’s where you’re making your decisions.
David: Well, certainly, when we’re managing portfolios, both forms of analysis are critical to us. So MSA has been part of our analysis for years. And again, we blend both the fundamental and technical analysis. Of course, there’s multiple schools of thought within technical analysis, so having a broad picture and various inputs gives a healthy perspective, point and counterpoint. It’s almost building in the devil’s advocacy into conversations in-house. And I would highly recommend folks who are intrigued by this to look at MSA as a service, as a subscription, and consider it as a regular read. It’ll bring a unique insight into the markets.
Kevin: Yes, and if you’d like to see the material that we’re talking about directly, go to mcalvany.com/commentary or go to our YouTube channel.
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David: Well, in 18 years of doing this podcast, we’ve had a lot of different guests on. We’ve got central bankers and academics, industry experts, professional bond traders, chief economists at Wall Street firms, even a few market technicians.
Michael, we’ve read your materials at MSA for many years, but have been remiss in not having you as a guest. We’re going to do two weeks back to back with technical analysts that bring a unique set of insights using different but I think complementary models. Next week, we’ll look at Elliott Wave. This week, we want to look under the hood at MSA. MSA stands for Momentum Structural Analysis. We’ll look at your models and the implications of your analysis for a host of asset classes. So thank you for joining us. Let’s follow up in 2026 and see how things are progressing.
Michael: Okay, that’d be great.
David: Well, I want to cover a lot of ground today, ambitious perhaps, but I’d like to cover currencies, bonds, equities, commodities—specifically gold and silver. I think we’re at inflection points in many of these markets, and seeing them as a mosaic may be helpful. Can you start with exploring the importance of momentum, and point to the differentiating factors in your style of analysis? I mean, we’re talking about structural messages, intersection.
Michael: Sure. Everybody looks at price charts. They draw lines. They look for “structures,” meaning like a three-point uptrend line or a floor that’s been used repeatedly by a stock or an index, et cetera. And when those break, they think, “Okay, that’s actionable.” We apply the same concepts to momentum with some sophistication. We use parallel channel analysis and so forth, but why don’t we focus on price? And the reason is that, invariably, 99% of the time—maybe I’m exaggerating a bit, but probably not—when a market makes a top or bottom, it is most clear on momentum well before price smacks you in the face. Okay?
And usually, like a stock market bear, you’re 20%, 30% off the high before the public even wakes up to the reality that it isn’t just a correction. And momentum will have spoken first. This is true with gold, commodities, stock market. It doesn’t matter which market we apply it [to]. Another reason for it is— Let me try to explain this a bit.
When we measure things in everyday reality, people say, “Oh, my stock is up.” Okay, well, that’s a measure by the dollar—the dollar as a yardstick. And I don’t mean dollar versus the euro or dollar versus the yen. I’m talking about dollar is real buying power. And we know that every decade, if you look at an M2 chart and you go from January of ’60 to January ’70, January ’70 to January ’80, and measure how much it’s grown, you’ll find it’s like 80 to 90% every decade, quantity of money. So that means prices that have gone up that much really aren’t making money. All you’re doing is keeping up with the decay in the piece of paper.
So how do you divorce yourself from that in your analysis? Because your analysis using price charts—meaning a piece of plastic currency, yen, euro, whatever you’re using—is changing all the time. You don’t factor that in. And so you bought a stock at 10 bucks and it’s at 20. You’re not really making money over a decade. You break even. What we try to do to take a partial step away from using a fiat currency as your yardstick is to run momentum studies of the market itself.
Now, what do I mean? Everybody plots moving averages on price charts, long-term averages, short-term, all this stuff. And what they think when it crosses over 100, it’s important. It often isn’t. But what we do is we oscillate price. Let’s say, what’s this month’s high in the S&P, low, and close this month on a monthly bar? How is that in relation to, let’s say, a three-quarter moving average? Is it above it or below it?
The zero line on the oscillator being the three-quarter moving average. So you’re either above it or you’re below it. You create an oscillator where you’re oscillating around a dynamic that is moving, and the movement of that moving average—up in a strong market or down in a weak market—is partly determined, yes, by the decay in the money unit. It affects that average. But mostly it’s caused by the dynamics of the market itself. So you’ve partly filtered out the use of simply using a stupid yardstick that is plastic. Okay? That’s the intellectual explanation of why we use momentum as opposed to obviousness or price. Okay. Enough said.
David: Well, so the most important chart of all, and this is how you’ve described it a couple of months now. Gold versus the S&P 500. Great place to start. This will launch our conversation on equities and precious metals. Our listeners will be familiar with the Dow/gold ratio. You choose the S&P. What does this chart imply, and what signal are you waiting for?
Michael: Okay. Well, when we measure the gold, we use the front month futures active contract. Right now, that would be December gold. We take it’s monthly close, we divide it into the price of the S&P 500 and express that result as a percent. Right now, if you look at Dec. gold and measured against the S&P, it’s about 62% price of gold versus S&P. So you plot that on the oscillator—on the spread chart, excuse me. And spread chart merely measures price versus price. So it’s not momentum, but it’s a different way of looking at action between two markets.
So what we’re looking at is the difference between a monetary metal, the MOMA metal, and paper asset category that is arguably in a bubble like we’ve never seen in the 100 years in the US stock market. Since 2009, the S&P has gone up a dozen fold. The Nasdaq-100 has gone up 20 fold over a span of 15 years. You can’t find a bull market in history that we look back and call a bubble like ’29 top, dot-com top, mortgage market top. Those were all called bubbles, but they’re trivial compared to what’s happened over the last 15 years in terms of multiple gain and span of time.
And when you look at M2 or you look at a fed funds rate chart, you can sit back and say, “Ah, no wonder it went up. Cheech & Chong time, free money.” And it happened to go into the stock market, which often it does. The problem is, whenever one of those bubbles breaks, reality takes over and government can throw all the money they want at it and it won’t work. They cut rates, they do QEs, the market still goes down, the money goes elsewhere because investors decided, finally, it’s time to go elsewhere. And one of those places has always been gold, period, exclamation point.
’29 to ’32, you couldn’t buy gold because Roosevelt illegalized it. It was banned, seized, but Home State Mining went up like a thousand percent when the market dropped 80-something percent.
So anyway, right now we want to measure that spread because we want to know when there’s a technical breakout that says, “Okay, not only is gold doing better than the S&P,” like it has actually over the last two years, dramatically, “but it’s broken out through something significant.” And when you plot that spread chart and you go back, in 2011 gold peaked, its performance dropped after that. Especially in 2013, that’s when gold really started to collapse in price. So its relative performance to the S&P was in collapse mode then. Dropped down toward 50%.
Since 2011 through ’15 when it made its price low in ’15, you can plot from rally highs on that spread. You’ll see where gold surged in performance and then pulled back, surged. But it built a large—now 11-year wide—base that any guy with a crayon and a ruler could plot if he were plotting the spread chart.
You are now out above the four-point trend line that defines that base. In other words, you close the month, five days trading days left because there’s a holiday next week. Five trading days left at 60% or higher. And right now we’re about 62, I think, last I checked, and maybe even higher than that. You’ve got a breakout.
So with that spread chart saying, if you just walked into the room and somebody plopped that on the table in front of you and didn’t tell you what it was, you’d say, “Hey, this is breaking out. I got to buy this.” What it’s telling you is, this is a fresh, massive, multi-year breakout of one asset versus another. Meaning—for the people who argue, “Hey, gold’s old, it’s overdone; Elliott Wave says we got to do this, that”—it’s only just begun. That spread is announcing: this relationship is now breaking out. Money’s now going to flow freshly into gold even more than you’ve seen and out of the stock market.
So that spread is a table-pounder. It says, from an investment perspective. You’d better reorient your investments fully because one category is now going to beat—not just marginally beat the S&P, but beat the pants off of it. Again, something is happening to cause that. We don’t have to get into that, but that’s a main table pounding chart we’re looking at. You could throw all your other charts away. That’s the one that’s most important.
David: Okay. So the S&P gold chart, most important chart to watch. Price spread, breaking out over 60% for the month. That’s your key number. Is this one of those rare moments with price speaking before momentum? Are there momentum spread triggers to key in on after this price spread?
Michael: Yeah, we run momentum of this spread as well. It’s not shown on the chart that I sent you, but we run momentum of it. You’ve already broken out. Okay? And momentum often will lead price, and the spread chart is really price versus price. Correct? Okay. So you want to factor that out. You can run that spread versus some long-term moving average, and you’ll see that it’s broken out in momentum. But we’re waiting on the spread to do it itself. It’s subtle enough, massive enough, and hardly anybody’s looking at it. They’re looking at RSI on gold being overdone or something.
Anyway, that’s a table-pounder, and it says there’s a major asset class shift only just beginning between—not precious metals—monetary metals and the stock market. By the way, if you plot that same chart versus the Dow Industrials going back to 2013 (like that chart does) or against the New York Composite Index (very broad indices), when the Dow is not front-end loaded with two or three AI stocks (yes, it’s got them in there, but they’re not so front-end loaded like the Nasdaq-100 or the S&P, and the New York Composite is certainly not front-end loaded with AI stocks), gold’s already broken out versus them.
David: Yeah, so it’s on the move. You’re looking for final confirmation with the S&P, which has been—
Michael: Yeah. Yeah. Call it, not the lead, the Nasdaq-100 is the leader index, but I’ll take the S&P because it’s heavily distorted to its top. You take the top three or four (mostly AI-related) stocks, tech stocks, and they constitute like 30% of the whole index. And for the Nasdaq, the same group constitutes 50% of the whole index. But why even call them indexes? But anyway, okay. Anyway, it’s a major asset class shift. Pay attention to it.
David: So off the 2015 lows, gold has risen fourfold. Some technical analysts argue for a correction to the breakout at 3,400.
Michael: Yeah, right.
David: Before a resumption of the uptrend. Is this time, or, I should say, if this time is different, why is it different?
Michael: We’ve seen a lot of boom-busts in the stock market, and those usually generate—in fact, they always generate—horrible data points, mostly after the market is broken substantially. Then suddenly— Oh, you may have had a trickle of some negative here, negative there, but the avalanche of blood in the data points comes, let’s say 20%, 30% off the high when people finally say, “Oh gosh, it’s not a correction. Okay.”
I think we’ll know that. I think the average Joe on the street will know that next year. Not necessarily between now and the end of the year, I think we’ll position ourselves for more disaster next—for the S&P, I’m talking. But right now, that spread is saying smart money is already moving. Something’s happening here. And we already know there’s some big asset managers who’ve expressed— I think it was Morgan Stanley or Goldman Sachs, a month ago, said, “Hey, the 60-40 rule should be changed. Instead of 60% stocks, 40 T-bonds, it should be 60, 20% bonds, 20% gold.”
It really should be more like 60% gold, 20/20 from our point of view. But that’s a hell of an admission from a massive—a firm like that. That’s a hard swallow for them to take to admit that. But frankly, the T-bonds have not been at all an alternative. Look at what’s happened this last week in the stock market. T-bonds are doing nothing. They’re picking their teeth.
David: Well, I want to come to Treasuries in a bit. From a supply and demand perspective, gold has been propelled in large measure by central bank buying in recent years. How would you weight that gold/S&P 500 breakout? Is an improvement in the spread, is it driven by S&P 500 weakness or improvement in the gold price? Or are you getting both numerator and denominator?
Michael: Well, S&P has been strong during that time. Since 2015 on up, 10 years, it’s gone up. Gold’s beat it pretty good, that’s all. People don’t recognize that. They’re only now recognizing it, and yet they’re putting out disclaimers like it’s got to correct because the Elliott Wave says so, or it’s had too much.
By the way, context, if you logarithmically ratio scale prior bull markets in gold since it was legalized under Ford in 1975, there’ve been two big bull markets. There were eight-fold moves measuring from bear low to the bull high. The 1976 bear low at around a hundred, after having been at 275, to the 1980 high was an eight-fold price move. Up 2001, it turned up from lows around 260 and went to 1,920, another eight-fold move spanning a different amount of time, but still eight-fold.
We started from a low at 1,050 in December 2015. The math says, “Oh, I’m just going to match what I’ve done twice before, I’d be well in the 8,000s.” Okay? So even from that perspective, we’re only halfway to doing what we did then under conditions then that don’t compare to what’s built up now in terms of the size of the stock market bubble, certain economic flaws that are about to be exposed, that are hinted at sometimes, but not fully.
Other ambush type market events which we’ve defined, such as within the financial sector— We’ve been watching key components of XLF—and by the way, XLF, the financial sector—when the S&P came back and made a new high after that April low, financials did too, but it was trivial. And now they’re back below the highs they saw early this year, late in 2024—XLF is. S&P would be at 6,100 if it did that. Also, bitcoin, we’ve been bearish on bitcoin, defining that it could crash a couple of months back because it had a quarterly momentum trend structure that if you looked only at it, forgot the price chart of bitcoin (which was alluring to everybody), you had a structure on Bitcoin quarterly momentum. Tthat’s when you plot each month’s bar versus a three-quarter average. At the zero line, meaning it kept coming down to its three-quarter average over the last—since 2023, there were three prior hits on that average.
So on the oscillator you had a floor at the zero line, boom, boom. You didn’t see it on the price chart. Okay? You blew that when you went through 101,390 a couple weeks ago. Where are we now? 86,000. Okay. It’s only been a handful of days. We think bitcoins are going to crash or nearly crash, meaning rapidly move to around 60,000 before it completes this particular decline. Now, it may take two, three months or it may take another two weeks, but that’s going to have wave impact on the stock market. Why? Because bitcoin didn’t use to be, but now people are up to their hips in it, companies included—even Visa, which has broken quarterly momentum last month. And now it’s what? About a month ago you could— Bitcoin was interchangeable with— You could use it to pay with bitcoin.
Great. Okay. So you have big companies now up to their hip again in crypto vulnerability, so when it breaks, it’s not insignificant. And there’s a lot of things out there like that. Commercial real estate’s another one. You could look at AI all you want—and it’s breaking, too—but there’s other factors out there that could clobber you in a big way.
David: So the gold/silver ratio is your number two chart to watch, and it’s something we’ve traded for decades. We look at— 80:1 seems to be a line in the sand. That corresponds to your 1.25% momentum trigger, silver price expressed as a percentage of—
Michael: Yeah, we do it a different way. Yeah. Right. Yeah. That spread— You’ve got the chart? Yeah, and what it shows is week to week closes. Remember back in 2020 when gold and silver surged from a March low up to late 2020? Silver doubled in price, basically, and gold went up 40%. So naturally silver spread shot up, it outperformed gold.
But since then— Remember, they went into this range-bound situation since 2020 highs in gold. In fact, it was just above 2,000 and it stayed there for a couple years, with the worst drop being 20% in price, but it basically went into a range. But in that time, gold and silver miners retreated marginally, stair-casing while gold went sideways. So they underperformed, and you can see on that spread chart that silver underperformed gold during that time. Not that it didn’t go up in price, it did, but you went up less than gold—until recently, of course.
You can see on that chart that there’s a green line on that top chart, which is the spread, and you get above 1.31% and you blow a multi-year ceiling off that spread. And we argue when that event occurs—and I bet it occurs pretty soon after gold breaking out versus the S&P—you’re going to launch further and dramatically—silver versus gold—so that silver will take your breath away compared to what gold is doing on the upside.
And silver is, we know it’s very cheap in relation to gold, historically. And I think you could go, in a heartbeat, to 2%, which is nearly a doubling from where you are now, around 1.26, and more likely over 3%. Well, think about that. Let’s say gold goes to its normal 8,000, another eight-fold. Okay? And then let’s say you assume that’s all it’s going to do, which it isn’t, by the way, it’s going to go a lot further, but let’s just assume it gets there. What’s three times that? Okay? Silver will take your breath away. Go ahead, I’m sorry.
David: Well, the rough translation, so we talk about the 1.25% momentum trigger, then you’ve got to close over 1.31. You use that number—which for us, again, using the gold/silver ratio, would be 75:1—
Michael: Okay, it would make sense on that chart as well then.
David: Yeah, and that’s where it begins to pick up speed.
Michael: Okay. Yeah.
David: 80 is your breakout, 75 is really where you’ve got further confirmation and now you’re moving-
Michael: Okay. Ours is at 1.31. You’ve hit it so perfectly, like to the decimal over the last three years has been the peak. Now, when I run momentum of that spread, we’re at that structure already. Even though the spread is not up at 1.31 or 1.32 to break out, it’s at 1.26, but momentum of that spread is already at that pending triple-top breakout.
So again, momentum is saying, “Yep, it’s going to happen.” Okay? But what’s so interesting is that gold’s about to blast through an 11-year wide base versus the stock market. And coincident with that, silver says, “Okay, I’m back,” all at once, and by the way, if you go back and look at the ’79 explosion in silver, where it had been going on for a couple of years and suddenly, in five months, silver like quintupled, okay?
Or go back to the 2000, like September of 2010. You’d already been going up for a handful of years in silver and gold, but at that point that spread broke out again and silver went up two and a half fold in six months. That spread is very important, that silver/gold spread. It could lead to dynamics.
David: Yeah. Ian McAvity, a good friend from decades ago, a family friend. He used to always describe: when you’re in a full-fledged bull market in metals, you’ll see the ratio between 40 and 65. And so to be at 80, this is confirmation of getting into that full-fledged dynamic. We’ve seen the gold/silver momentum trigger teased multiple times, but failed to close over in a meaningful fashion, and then it reverses down. What gives you the conviction the breakout is imminent as opposed to a prolonged continuation of teasing momentum breakage?
Michael: Let’s see. The momentum of the spread says I’m right to go. I’m ready to go. I’m at the structure. In fact, you may close out above it this week if you close tomorrow out at certain levels just above where you are right now on the spread.
Okay. If that occurs, if momentum breaks out—I’m talking like 36-month average momentum, 10-month average, 40-week average momentum— All kinds of long-term metrics say, “Hey, I’m breaking out,” meaning the spread will follow. But whenever you develop structures on spread charts— This is not true with price necessarily because price everybody looks at. Most people don’t look at spread charts. But you develop a clear structure, let’s say like a three or four point downtrend or a ceiling that’s been hit two or three times. Okay?
You do that with intent. In other words, the action of that market—the spread, or the momentum—is saying, “I have intent. I’m building a starting gate, and you may not know that I’m building a starting gate because you’re looking at price over there,” but momentum is saying, “I’m building a starting gate,” or the spread does, with intent. You don’t see those things developed, and then the market says, “Oh, I’m just going to fade away.”
David: So contrary to your typical financial advisor who’d say—probably not participating thus far in the precious metals market moves—”Hey, this is overdone, clearly we’re ready to move lower.” You’re saying, “No, actually this is just beginning?”
Michael: From that asset class point of view, a major shift is freshly occurring, and when you break out of that gold/S&P spread—and of course silver will follow gold and likely lead it, as we’ve talked about—you don’t break out over an 11-year base and go up for two months. Okay? You’re probably going up for several years, meaning both asset classes are going to perform in the way that spread suggests for a long time, not just the next two months. If that were something you plotted and only went back two months, I’d say, “Yeah, fine. You get a little spurt.” This is an 11-year base.
David: So silver, $50 a price cap for many decades. Are we talking about the old ceiling becoming the new floor? What would you say that momentum and structure imply for the direction and the velocity of the silver price?
Michael: Yeah, the $50 is an idiot number, pardon me? Because one, if those two $50 highs occurred in the last few years, okay, I’d say maybe it’s important. But they occurred in 1980 and in 2011. Those are ancient years. Money supply growth between those times— If silver matched the same price levels factoring in the decay in the money unit, silver would be in the hundreds of dollars. And frankly I think when the silver/gold spread breaks out you’re probably going to see, in the next couple quarters after that, silver move well up into the hundreds, maybe even 200, because if you factor out the money unit issue you’d be 200 bucks, and I don’t know where you’d be against 1980. Maybe 500 in real dollar terms.
And by the way, we did a study of copper and lead. Okay? Going back— Yeah, you’ve seen those charts.
David: Yeah, mm-hmm.
Michael: They were in a range of reality for decades. Copper—went up and down just like silver—50 bucks, 15, 50, 15, et cetera. When they broke out of that range, copper did it in late 2005, early ‘6, broke out of a multi-decade range and quadrupled in price in a few quarters, and then lived in a new reality. Violent, yes. Big sell-offs in it. But a whole new reality that was four times the average price of the old reality.
The exact same thing happened to lead at a different time, 2007. But the point was that when they moved out of the old reality and said, “Hey, this has been ridiculous. I should have been higher anyway,” they did it with a whoosh. They probably overshot. That’s fine. Markets do that. But when you’re undervalued for too long, and silver— Look at the gold chart going back to 1980. What was its high? Then what was the ’11 high? Silver still traded around those same price levels? What’s going on here? It’s going to change, and dramatically.
David: Oh, we get a new technical term for the day, whoosh.
Michael: Yeah, and if you’re not there, you’re going to miss it.
David: What you’re suggesting with silver is a new price regime. What I might describe, or have described, as a generational repricing. Compare that new price regime to other commodities. You mentioned lead, you mentioned copper. What about the Bloomberg Commodities Index? Are we entering a favorable environment for commodities exposure?
Michael: Bloomberg Commodity Index, first off, think about price, just that. Go back to 2008. Commodities peaked then and also made a secondary high in 2011 when gold peaked. Bloomberg Commodity Index in 2008 was at 238, and in 2011 it was at 170-plus. Right now it’s at a 107 and 108. Okay?
The surge that occurred from the Bloomberg— When it got below 60 back in mid to late 2020, it was going down. When gold made it low in 2015 at a thousand and something, and it moved up to 2,000, doubled between 2015, 2020, Bloomberg was continuing down during those five years. It went down and got under 60. When it turned up out of that hole, we put out a report that said, “commodity explosion happening.” It doubled. It went up to 140 by early 2022. That was its first statement, it says, “Okay, I’ve had enough.” Okay, it’s still cheap.
So 140 versus a 238 in 2008, okay, drop back down under a hundred. And for the last two years, Bloomberg has gone dead in a range about five or 10 points either side of a hundred. You broke out an October of a momentum base that says, “Second wave commencing.” Okay?
Right now that was at 106.52 was our trigger number. You’ve reached up to 110 since then. Right now you’re trading around 108, which is still above the breakout. We think Bloomberg as an asset class is now going to join on the tailwinds of gold—not that it’s always in sync with gold. It is not—though in the 2000 to 2008 period it was, and even the secondary high in ’11. But it’s just breaking out on its own merits, and when you spread it versus the S&P, which we did recently, you can see what looks like a dead base, meaning, “I’m just not going lower.” Okay? “I’ve had it.” And if you uptick not much, it says, “I’m coming out of here.”
So that’s another asset category that, from an investment perspective for let’s say the next decade, it’s time maybe to get out of the paper bloated bubble and move into the stuff under your feet. Okay? The grounded reality, okay?
David: If you can stub your toe on it, we like to say.
Michael: Yeah, yeah. Or you can smell it. Okay, cow manure is going to go up as much— Better than the S&P. Okay?
David: Well, so again, the way you count the gold/silver ratio, going back a little bit, silver as a percentage of the gold price. 1.25 today, 1.32 as a confirmation breakout.
Michael: Right, yeah.
David: We’ve talked about these. Where would you expect to run out of steam? 2% puts you at that 50:1. 3% is how we would reference a 33:1. 4%? 5%?
Michael: Let me tell you. You go back 50 years and plot a bar graph where you plot only the highest reading each year that silver had on a monthly close versus gold. If you go back 50 years, ’75 to the present, you’ll find that 20 of the 50 years at least were 2%. That’s almost routine, in other words. It’s saying 2% is not abnormal.
David: 50:1 ratio.
Michael: Those weren’t always great big bull years. In the bull years, ’79 to ’80, for example, you were at 6.5%. In the bull year of 2010 and ’11, silver was 3.5%.
Once you break out of the current spread base that we’ve defined, at least going to 2% is almost meaningless. It’s routine. We’re in a bull market, after all. Probably, it’d go to 3% plus. And I’m not saying it’s going to top there because, again, silver for 50 years has been contained.
There’s arguments why that’s occurred, and I’m not going to discuss the fundamentals, but the technicals have been weirdly contained. Heck, copper hasn’t been retained, lead hasn’t been retained, fertilizer hasn’t been contained. But silver has been.
When it unleashes, not only will its price go seemingly berserk—not really—but its spread will too. I’m not sure where that spread’s going. I’m really not. I don’t have a target except to say if it went to 2, that’s nothing. Okay?
David: 20 times that’s happened in the last 50 years. Don’t be surprised by that.
Michael: Yeah, I do. But why not break the pattern of the last 50 years on the spread relationship as well if you’re going to break the pattern on the price relationship?
David: The previous silver/gold momentum breakouts you outlined in 1979 and 2010 marked the end of the bull markets.
Michael: Bull markets, yeah. Mm-hmm.
David: Yeah. Now the expectation is the silver/gold momentum breakout isn’t marking the end this time. We’ve spoken to your fundamental factors supporting this view, as well as noted that gold has yet to make its eight-fold moves, per the previous bull market dimensions.
Are there momentum factors you see which would support that expectation?
Michael: It looks to us like this time around gold versus S&P states something. It says this is fresh. Keep that in mind: this is fresh. The public will realize that when they realize that the S&P is only up, what?, right now about 10% on the year, something like that, maybe, and gold is up, gosh— “My buddy down the street and granddad told me to collect those gold coins and they didn’t do it.”
They’re finally going to realize, but that’ll come probably when the stock market really gut-hits them, not when you’re just 20% off the high, but when you’re 30 or 40. And they look at all the things on their financial personal horizon, where they’ve been late on their mortgage a couple of times, they’re maxed out on their credit card, they’re past due on their credit card. This is individual stuff I’m talking now. Plus corporations have a lot of stuff that’s hidden, that’s deep in the commercial real estate markets as well, that isn’t obvious.
Suddenly the thing on your horizon that kept you smiling was, hey, my retirement account’s up on the year. Great, super. I got just enough to retire. And suddenly, 30% of it’s gone, and you have to say, “Gosh, I got to go work at Walmart.” That’s when panic sets in. And this is not just US. We know Japan. This is a debt crisis like we’ve never seen—
David: Global in nature.
Michael: The US government, Japanese government, UK government. We’re talking about a crisis in their central banks and their bonds. Not mortgages, but government debt. And when we get to the T-bonds we can talk about that, because that’s a piece of dynamite that is— Something’s wrong there, and they’ve even acknowledged it.
But there’s factors out there way beyond an AI bubble that are in play here, that will sink the economy in a way where people now can’t take what happened in 2008 and ’09 again. They’re not in a position to do it. And already you can see the breakage in different areas.
We’re projecting, for example, there won’t be a Fed ultimately. There will be an academic rebellion against it because academicians do influence politics. They’re sometimes involved in government. But even friends of the Fed have been saying, “Hey, this hasn’t been working very well.” They’re always late to the game, and when they do finally act, like lower the rates or print money, it doesn’t seem to work. Their bubble is already broken.
But this time we got a dynamite stick, because we’ve got the government debt, we’ve got— There is a mortgage problem now, too. We’ve got corporate debt issues, especially— Look, for example, at RWR. It’s an ETF of commercial real estate. It didn’t make new highs when the S&P did. It had a rally off the April low, but it just went lame about halfway back to its highs, and now it’s rolling over again. That’s too big of a sector to have any failures in. And there’s some that are close because they’re heavily into debt—commercial debt—and we’ve got the government debt.
We had the president of the New York Fed, I think his name is Williams, a week or so ago made a statement—and you don’t make statements like this without prior approval—the Fed is going to probably start buying T-bonds. “Buying bonds,” he said. He didn’t define it any better than that. He said his reason was because they want to cut rates. It’s nothing to do with the economy, it’s just the “illiquidity.” That was his way of sidestepping further questions.
But they make a statement like that, that the Fed is going to print to buy government bonds— Where’s the money come from? They’re going to buy it. Not mortgages. Back in the COVID event, remember they actually went in and bought commercial debt ETFs, and helped boost that rally. This time we’re talking about buying US government debt. What’s wrong there, guys? It has not been the 40% alternative. You had this huge drop in the S&P today, and you’ve had big slabs over the last week.
You look at the T-bonds, they didn’t even wake up, they didn’t rally. What’s going on?
David: Maybe that’s what Mike Wilson at Morgan Stanley is looking at. The dynamics have shifted. They’ve shifted now for a couple of years. You can go back to 2022, same dynamic, you had stocks and bonds selling—
Michael: No recovery. No recovery.
David: Yeah. It’s not a hedge for your portfolio.
Coming back to gold. Gold relative to XAU, your thoughts?
Michael: Just like gold dropped versus the S&P, especially starting in 2008 and then especially as gold started to collapse in 2012, ’13, ’14, ’15, XAU collapsed off the page. The gold and silver miners in general, GDX or XAU, collapsed to effectively zero.
Let me put it this way: If you measured XAU back in the ’80s, the ’90s, 2000 into about 2008, there was a range of performance readings where the plotted monthly close—XAU divided into an ounce of gold—where it was living in a range from 17.5% of that ounce of gold to 30-plus percent.
It was living in this 15% range. Up and down, up and down, that was its reality of performance. When the collapse came, it went to 4%. If that were a price chart, you’d say, hey, is it going to go to zero? Of course it can’t. They produce this stuff.
Since then, you’ve gone from that 4% low, with a couple highs up above 8%, and right now you’re in the 7% area— You ever get XAU out above that 8% again, divide XAU into an ounce of gold. And we’ve had strength in XAU since about April, May. They surged more than gold did. Recently they’ve had violence, but they’re out above the 2011 high finally.
That spread is firm, but it’s not a breakout. You get above that 8% level one more time, you’re going to break out of a decade-wide base with the gold and silver miners, because XAU includes both, where there’s nothing between you and that 8% level and 17.5%.
You look at that spread chart and treat it as a price chart and you’d say, hey, this guy breaks out, it’s open field running. Before you even bump anything that might be— In other words, you could double and a half the miners versus gold over the next year or so—
David: With gold performing well. Just the miners—
Michael: Gold performing well, them beating the pants off gold. My preference is silver, gold-silver miners, then gold. That order.
David: It probably doesn’t even need to be stated, but XAU relative to S&P, it’s similar to—
Michael: Similar situation, yes. You’re right, you’re dead right. It’s slightly lagged to the gold S&P spread, but it’s not far. It wouldn’t take a lot for it to produce a breakout month as well.
David: And you can see, just in price performance this year, you’ve got the miners indexes up 100, 120% versus 10, 15% for the S&P.
Yeah.
David: And we have yet to break out, which is the intriguing piece.
Michael: Of the spread. Yeah, you’re quite right. And when that makes a statement, that’s another table-pounder because it says, hey, if you don’t want to buy gold, you don’t want to buy silver or futures, you don’t want to buy silver bullion ETFs. You got miners, they have earnings, get checks or dividends. Newmont plays pretty good, I think. It went from… What? 30, 40 bucks to all of a sudden, bang, 90.
David: Mm-hmm.
Michael: It didn’t shock us because Momentum said it was likely to explode, but that’s the kind of behavior. What if they’re undervalued still? Which they are, relative to gold and relative to the S&P. If they break out of those spreads, wow, relative performance.
David: That’s another technical phrase. We’ve got “whoosh” and we’ve got “wow”. We’re working on our vocabulary.
Michael: Yeah.
David: Treasury’s skipped the Fed policy, short-term considerations, breaking news, headline stuff. What is developing in the U.S. Treasury bond market?
Michael: We measure the 30-year T-bond futures. They’ve been around since I got in the future side of the business in ’75. I think they started in ’76 or something. Anyway. They measure 30-year bonds and they’re not affected greatly by Fed policy. Fed policy affects short end. In fact, when they had a rate cut in the past, rate cuts a year or so ago in September and then recently, T-bonds’ yields went up.
You look at the price chart of T-bonds, they dropped from a 190 level in 2020 down to 117. And like you said, in 2022 you could draw a line sideways on price, meaning they’re higher on yields. And we’ve been laying either side of that line for three years now, no recovery. There have been three efforts to recover, and each one of them has been a dud, meaning to drop yields at rise price.
Right now we’re trading around 116. You ever get down to 111.5, put your helmet on. Recent lows this year have been just above 110. But you get to 111.5, expect a downside panic, the kind that would garner headlines and Fed attention.
David: Your focus is on technicals. When you slide over to a fundamental conversation, you begin to make sense of why it’s showing up in the technicals. You have $2 trillion in debt. We’re not in the middle of war. This is not a global pandemic. This is not a recession, and yet this is levels of spending ordinarily seen in those—
Michael: It’s not just us. You can’t have this event, even in Japan. You can’t have a country like that sink. Even the new prime minister, the woman who’s a Trump-like person, she said, “We’re going to print, print, print.” My gosh, you would think that’s coming from somebody else than a Trump-type person, a conservative. Instead, it’s print all the money you need to save this damn debt market. Whoa, what does that mean?
David: Yeah, and watch the yen. She says print the first time it’s 1.52 to the dollar, prints the second time it’s 1.55, now it’s 1.57. She just keeps on saying, “Print, print, print.”
Michael: Yeah, well, we’re going to be doing the same thing, so it’s all relative degradation.
David: Yields run in long, multi-decade cycles. What are the implications of much-higher for much-longer on yields and what parameters would you put on time and distance?
Michael: I don’t have that, except to say that you know because of the debt crisis situation that many companies are in right now, particularly commercial real estate but others as well, crises helped spark by the bitcoin collapse or the stock market implosion, doubt on the part of investors, unemployment, all these things will cause government to have to print, and therefore further degrade the real value of their bonds. So, it’s a competing degradation.
The fact that the Dollar Index upticks a bit, really it’s gone nowhere since the April crash. Dollar Index dropped from— We sold it at 104-something, it dropped into the mid 90s. Right now it’s around 100. It’s comatose. It’s all competitive degradation. And the question is— I don’t know what the outcome’s going to be. Because frankly, when you get into that kind of crisis and doubt exists for Japanese, UK, maybe European, but certainly ours as well, where do you go? What do you do?
David: You hit on this earlier when you’re talking about the potential eradication of the Fed, dismissal. You’re talking about a crisis of confidence where the “smartest guys in the room”—700 PhDs at the Marriner Eccles building—if they can’t figure it out, who can? That’s when I think you’ve got significant dollar problems. The dollar, our currency, your problem, as John Connally once said. From a technical perspective, at what point does it become our currency, our problem?
Michael: I don’t know. The Dollar Index correlation, for example, to gold is very pathetic. It’s not good. If you take, for example, when gold bottomed in 2015 at 1,050, the Dollar Index was where? Around 98. Since then, the Dollar Index has been both above and below that level. Now it’s trading, let’s call it, at that level. Where’s gold? Four times the price.
So, if you use the Dollar Index as your reason to buy or not buy gold, you miss the move. Okay. But the Dollar Index broke annual momentum measured by a couple of our long-term metrics back in April when it came down to 104.20. Okay. We said sell. It plummeted into April—just like the stock market did, by the way. Keep that correlation in mind, January through April, May, and so forth, just like the stock market. When the stock market rallied, what did the dollar keep doing? Going down. It tried to rally, but it’s basically been spinning its wheels all year long, either side of, let’s say, 99. So it’s really not had any action, and yet it’s broken.
We think probably it’s going to break more and go down and even challenge the lows at 70. It occurred decades ago. But I almost don’t know whether that’s relevant because, again, we’re dealing with competing against what? Well, heck, you take the euro and the yen, they constitute 70% of the dollar index. Is that really an index? Is NASDAQ 100 an index with four or five stocks constituting 50%—? You get my point. So I’m not sure what the dollar “index” value means. I’d rather look at M2 and what the real buying power of the dollar is, and it sucks. Okay. When your granddad built a house, it costs $4,500. When your dad built one, it was 45,000. Median home price now is 450,000.
David: But we’re all wealthier, right?
Michael: Yeah. We’re getting rich right now. It’s meaningless.
David: Well, we did cover the S&P relative to gold, but tech leadership has been the critical aspect there. Maybe you could comment on some of the equity market leaders, the NVIDIAs, Microsoft, some of the AI names, which really are dragging the index prices higher.
Michael: Well, right now they are, and they’ve doubled what the S&P did since 2009, so they’re definitely the leaders. This was true at the dot-com high. What happened from 2000 to 2002? S&P had 50% drop. NASDAQ 100 dropped 82%. By the way, it took NASDAQ 100 until the year 2016 to even get back to the nominal price high it saw in 2000. In real dollar terms, it probably took till 2020 to get back to the real mark. You get my point. So, yeah. Ultimately, AI will be weaker, or tech will be weaker, than the broad market. Whether it is right now is not a big issue. It’s just catching up. Okay.
There’s other factors, other indexes within the market that are too important to ignore. Financials. We even picked out Visa and MasterCard. We know that credit card debt is a problem right now, and delinquencies. And sure enough, their charts are breaking through massive quarterly momentum floors going back several years. You don’t see it on the price chart. Bitcoin’s joining in. Suddenly, financial repercussions there.
So I’m not sure about the Forex issue, but the one I’m watching right now that is huge, because it’s bigger than the stock market, is T-bonds. You can’t afford those guys to go from lame to another downside break. Even if the Fed comes in with fire hoses, you can’t afford to even have that break begin because confidence will go out the window, and then there’s the one alternative.
David: Yeah, there’s a trade-off. If they’re going to support the T-bond market, it’s got to hurt the dollar. I mean, it comes at a price.
Michael: Well, yeah, you’re going to have to print money, and are we going to print more than the Europeans and maybe in the UK? I don’t know. I frankly don’t care, but it’s going to be a— It’s not one government versus another. We’re all in the same group now, and there’s too many members of the club that are weak.
David: Bitcoin you’ve touched on a little bit. Cryptos, walk us through the deterioration in the charts.
Michael: Yeah. Well, as I said that you can look at a bitcoin chart—and remember, it’s 57% of the crypto market. So you can look at Ethereum all you want to. Recently, when it made that new high, well, it’s a bear trap—a bull trap, excuse me. It was a trap, and it’s only like 17% of the crypto market. So we’re focused on bitcoin. As it goes, crypto will go. Okay. Forget everything else.
When you look at a bitcoin chart, you’ve had this layered surging bull market. We got bullish in 2023 when it was in the 20,000s, but since then you’ve had this wave after wave in price. But if you’ll look at the price chart even, you’ll notice that the waves since 2024, it’s gotten a little more anemic each time. Yeah, it’s a new high, but it doesn’t surge quite the same strength, and it doesn’t go quite the same distance that the prior one did. So even on the price chart, you can see some languishing.
But when you plot momentum, you’ve got a structure from hell, and it’s the exact same momentum structure that the S&P-500 had in 1987 before its crash. You had a multi-year floor where the S&P in its rise kept touching back down to its rising three-quarter average, using that as a floor. On the momentum chart, it was a flat floor. When you broke that in early October ’87—and I caught that crash, I was a futures broker, not in a big way, but I caught it with puts—like in a week or so, it crashed 30-something percent. That’s a crash dimension, 30% in a couple of weeks. Right now, we’ve not done that in bitcoin yet. Heck, maybe the next week or two we might, but it blew the floor at 101,390, and we had another floor broken at 108,000, by the way, under a different metric, 100-week momentum.
We argued that when you break that floor, you might not want to wait till the end of the month close to be sure it was a monthly closing breakage because sometimes in the middle of the month you might go to hell like it did in ’87, and it looks like we’re doing that. Even when the S&P had these sharp rallies intra-week, you see bitcoin, it can’t get up off the pavement. It stops, but it doesn’t really rally. You can overlay a NASDAQ 100 monthly price chart on top of a bitcoin price chart and go back to 2020, do that on your screen and you’ll notice they’re overlays. In fact, we did this a few months ago and took the price scale off of both so you wouldn’t know which is which, and you couldn’t tell the difference. Now, suddenly, bitcoin made a new high, what?, six weeks ago, seven weeks ago, 127.
David: October 5th.
Michael: Yeah. Oh, you got it. Okay. Now you’re 20, 27, 30, whatever. You’ve basically collapsed, and only now— Maybe NDX is going to play the same game. I suspect the real damage in the stock market’s going to show up next year, not this year because some annual momentum reasons for that, but Bitcoin is broken, and it hasn’t even hit “the stops” as far as I’m concerned. I think those are around 74,000. You hit that, I think you could be at 60,000 in a heartbeat, and that’s where I would say, “Yeah, you might bounce here. Don’t get long. This is a broken beast. It’s not going to recover.”
David: It’s a different market than equities, too, in the sense that there’s not a market-maker per se. So we know what it looks like on the way up. We have yet to experience it on the way down now that it’s been popularized and made its way into the generalist portfolio. So to recap, the three most important charts are gold versus the S&P, silver versus gold, and I would say just from what you said about a long-term trend, the Bloomberg Commodities Index. You think we’ve covered our bases?
Michael: Yeah, I think so. I think it is saying to us, it’s just starting. Therefore, from an investment grade point of view, not a trading perspective, what’s going to happen next three, six months. But over the next several years at least, we have an asset class shift into reality—not paper money, not fiat currency, whatever; it’s not even worth the paper at some point—and into what your granddad told you to collect.
David: It’s physical assets. So the most important breakdown and trigger levels for those that are allocating assets, from now to the end of the year, if you have one action point to take, pay attention to these breakdowns into—
Michael: I would say that if you’re not heavily into monetary metals—and even the base metals are acting well this time because Bloomberg is. Copper is correlated not to gold, but it’s correlated to the Bloomberg, and oil will even join this. It’s a laggard right now, but it will join. But you want to shift your focus to hard assets, especially monetary metals.
My own personal preference of the reasons I’ve explained is not gold, but is silver this time, silver miners over gold miners. I think they have a lot more to go in the upside over the next year or two, and I think a lot of that will expose itself, one, when you break the gold S&P spread out, which I think might be this month, might be next Friday. Okay. Two, you break that silver/gold spread out over 1.31, like 1.32%, even a weekly close there. Put your helmet on, emphasize silver, silver miners, and begin to shift into investments that are related to hard assets, commodities, agricultural commodities, stuff like that.
David: Michael, thanks for sharing your insights with us today. I’m sure our listeners will want to look into the MSA service, Momentum Structural Analysis. Tell us how they can get in touch with you.
Michael: Our website is OliverMSA.com. Take your time. We explain our unorthodox methodology fairly well, give a lot of archival reports, show on tops and bottoms of the stock market, for example, what momentum said. But if you want some sample reports, just email me. You’ll find [my email address] on one of the pages of my [website] and [I’ll] send you samples. We cover all four major asset categories, so it’s not just narrow focus.
David: Yeah, I highly recommend it. It’s something that comes into our conversations in-house all the time. Please take advantage of the opportunity. I think we are at inflection points in many of these markets, and so thanks for bringing that mosaic into the picture for us. Let’s touch base in 2026 and see what we see as follow through.
Michael: Thank you.
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Kevin: Well, what a great interview. I’ll tell you, I want to at least go back and look at those three charts that we’re talking about, those what he called table-pounders. For our audio listeners right now, if you’d like to see the charts, go to mcalvany.com/commentary or go to our YouTube channel.
David: Right. The commentary has been going for 18 years now, and what we’ve tried to do from the first show till today is provide context for people making their most important financial decisions, and I think today’s interview certainly adds to that.
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You’ve been listening to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany and our guest today, Michael Oliver. You can find us at mcalvany.com and you can call us at 800-525-9556.
This has been the McAlvany Weekly Commentary. The views expressed should not be considered to be a solicitation or a recommendation for your investment portfolio. You should consult a professional financial advisor to assess your suitability for risk and investment. Join us again next week for a new edition of the McAlvany Weekly Commentary.
