Gold Entering Dangerous Territory and Is Gold a Meme Stock Now?

Craig Hemke (00:00)
Greetings once again from Sprott Money and SprottMoney.com. We're now into the middle part of November. That means on the calendar, it's time for your Ask the Expert segment. I'm your host, Craig Hemke as usual, and joining me this month is a new guest. Someone I just met a couple of months ago. I've had him on my TF Metals Report site, and I thought I gotta share him with everybody that watches the Sprott Money channel. He's Michael Belkin, and he is the author of The Belkin Report and The Belkin Gold Stock Report, and he has a

Michael Belkin (00:14)
What could this?

Craig Hemke (00:30)
Really interesting background been doing this a long time and he's a voice I want to introduce to everybody So anyway, Michael with that, thank you for joining me

Michael Belkin (00:38)
Thanks for having me.

Craig Hemke (00:40)
before we get started, is middle of November. means it's pretty soon going to be the holiday season. One of the most anticipated events at Sprott Money, can get the holiday gift guide. It's not there yet. Keep your eye on SprottMoney.com for that holiday gift guide. It's one the best sales they have all year and give the gift of sound money this Christmas. It's a gift that keeps giving the whole year, So keep an eye on SprottMoney.com. In the meantime, great deals, gold and silver, even some platinum. So thank them.

for putting this and funding all of this content all month long. Michael, before we get rolling, like I said, I really appreciate your work and it's unique and your background is unique. So for people that don't know you, just give everybody a couple of minutes about your background, what drew you to finance and a little bit about the building.

Michael Belkin (01:32)
Okay, so I published the Belkin report and the Belkin Gold Stock Forecast. I've been doing the Belkin report for 33 years now. My background was at Solomon Brothers. I was a quantitative strategist in prop trading, running the house account on the equity side ⁓ in the late 80s in the kind of the glory years, liars poker time. And my background before that was at UC Berkeley Business School and Statistics Department.

And I developed a forecasting model based on time series analysis. So what I do is really, it's kind of unique. I don't really know anybody else that I have a unique proprietary model. And so everything I'm looking at is a forecast. It's not like a chart that ends today. I'm looking at the next 12 periods, what's supposed to happen. So a lot of times I'm looking for turning points and those can be in different things. So the macro stuff,

Craig Hemke (02:14)
You

Michael Belkin (02:31)
is currently very bearish. I'm, you know, on the overall market, you know, we've rallied for six, seven months from the April lows after the Trump tariff thing. He turned it turned the corner. Everybody's really got bowled up at the top here. And so I see downside risk in the stock market extreme. So to me, long term forecast that's using monthly data. It looks like a long term top here. So I'm not friendly to stocks. I think

You don't want to be in the market. think the market is infected with this crazy AI euphoria and particularly meme stock people. So they really bought into this whole thing. Palantir, Meta, Tesla. So these guys are long up the wazoo. ⁓ so just to give you a little background, I was incredibly bullish on gold and gold stocks. So the Belkin report

Craig Hemke (03:12)
Yeah.

Michael Belkin (03:27)
⁓ The GDX and gold stocks were my top long recommendation all year and the GDX is still up about a hundred something percent Right, which is insane. So when I started out early this year, the forecast was up nobody liked them You know, there's been outflows from GDX all year until August and all of a sudden people are like now on board this trade and I'm going wait a minute So the the Belkin Gold Stock forecast comes out every two weeks

And the one that just came out last week is entitled Taking Profits. So I've had a major change in the last few weeks where I've been this incredible bull on gold and gold stocks. Now, just I think at the very least we go into a correction phase, right, where we're back up near the highs. They rallied up the last week or 10 days or so. And

The major problem here is, let's give you an example. So GLD is a meme stock. So that's GLD, the physical gold ETF. It's ranked number seven on the fear and greed meter of retail investor meme stocks. And that scares the heck out of me. So all of a sudden, this was not like this. When I started, when I was really bullish earlier this year, you know,

Craig Hemke (04:37)
Yeah.

Michael Belkin (04:52)
John Hathaway is a friend of mine. We were both wondering why everybody was so bearish on gold and nobody owned it. So the situation has completely changed. Now gold is like a meme stock. here's a further flesh that out. The 200 day correlation between physical gold to the S &P 500 is now 0.7. And that is really high. So basically, unfortunately, I think that gold

and silver and gold stocks have been caught up in this meme stock mania and this AI. It's just something else that these gamblers, basically the people that are basically casino players are, you know, it's just they don't care what it is. None of the background of things that matter about gold, you know. So that's the problem short term. I don't think it's the end, but I just think for the next month or two, you want to be careful. And it's changed the the this

the physical, actually the gold stocks that I recommend. I go through all, I cover all the, all the investible gold stocks, not moose pasture, things that are investible for institutions. My clients are mostly big institutions, family offices, mutual funds, hedge funds, insurance companies, sovereign wealth funds, things like that. And so these guys, you know, to move the meter, you have to be able to invest a few million at least in stock.

without shaking up too much. So I cover all of those. And so the rotation has changed a lot now, too. So the stocks that I was recommending previously have changed. So things like B2 Gold, that hasn't worked. That's out. I had First Majestic. ⁓ These did work a lot. So First Majestic, McEwen Mining, things like that. Those are no longer the stocks that look like outperform forecast.

Craig Hemke (06:33)
Thank

Michael Belkin (06:45)
So just to sum up, the overall macro view looks perilous out there. so the downside risk, just to give you an idea, when the wheels start coming off, ⁓ I do have to mention Bitcoin too. So Bitcoin is like the alternative to gold, right? And all these young ones, millennials and everybody else on the younger side of things, they've been hooked into crypto assets.

Craig Hemke (07:00)
Yeah.

Michael Belkin (07:13)
And all of a sudden, so Bitcoin today is around 100,000, 100,000, 101,000 last time I looked down from 124 or something, I think was the peak. So it's had a 20 % decline while the stock market is held up. And just to give you an idea, where do things go in sell offs? 200 week average. That's the intermediate term target in downtrends. And for Bitcoin, da, da, da, da, da, on to your, hold on to your hat.

Craig Hemke (07:21)
Yep.

Michael Belkin (07:42)
That's around 55,000. OK. And it's like 100,000. So that's that's kind of bearish. Again, back to the who who is in this market. It's these gamblers and speculators that don't really know market history. Young people haven't had it, haven't had the experience of a 50 percent decline in the market. That happened in 2008, 2009. That happened back in the tech bubble from 2000 peak to 2002 low. The adstack went down.

Craig Hemke (07:45)
Yeah, yeah, it's way down there.

Michael Belkin (08:12)
86 % back then not right away, but it's serious, you know stair step down. So ⁓ Downside risk is a lot in Bitcoin and the Bitcoin stocks Look terrible. So there's Bitcoin mining stocks. I'm short those in my work and I also run a portfolio and ask in a alpha capture fund and ⁓ So that's a hedge fund that takes ⁓ contributions from people like me as well as sell side by side

They have 188 contributors. I've been number one twice in that this year. They do a quarterly ranking. And so far this year, I'm up 77 % in that. That's market neutral. And I hate boasting, know, because the next, the first thing that happens is a bulldozer comes out of left field and flattens you. I'm not boasting, but it's a test of how the model works and how, you know, I apply it for them. so,

Basically, I was long a lot of gold stocks in Q3 and I was up 58%. So that's where the lion's share of the gains came this year. I'm completely out of that this year and I'm short, it has a short focus now and I'm short things like Bitcoin mining stocks, bunch of those, ⁓ meme stocks, Palantir, Tesla, and it's working again. So I'm up 10%, latest, it's a moving target but.

Anyways, so that's the overall view. Be careful out there. I'm a long term bull on gold and the long term forecast remains up and remains outperform and all the things that were bullish before remain bullish. Central banks are buying gold. You know, they're replacing the dollar and all that. That's not going away anytime soon. But it's just like things got ahead of themselves and the wrong people are now in the gold market. So I'm not happy with the speculators.

The people that missed the whole rally, now they're buying them at the top. The same guys that are long Bitcoin, which is crashing, Bitcoin stocks, which are crashing, meme stocks, which are starting to turn down. They haven't crashed yet. But ⁓ it's just the wrong equation. So I guess my overall view is we go into sort of a trading range where you could trade it short term ⁓ where you get these rallies like we've had the last 10 days in gold stocks. But ⁓ overall,

I'd be cautious, I'd be taking profits.

Craig Hemke (10:38)
Well, that's why, part of why I sought you out, Michael, because there are so many voices out there now that have never experienced a bull market, a bear market, a pullback, right? ⁓ And I just think, well, I'm going to start putting myself in this category because I'm getting up there in age two. But some of us have seen a lot. And I think there's great valuable in that hard earned wisdom and experience that you have. ⁓

What you're describing in gold is not inconsistent at all with what I've been writing here at SprottMoney.com and with the pattern. mean, gold peaked out on April 22nd and then went sideways until the end of August, turning along in a consolidation phase before the next breakout. And it's been working a pretty consistent consolidation and then bolt pattern for about a year and a half now. in your work would then you be watching for? Because I understand, I'm thinking consolidation too. What will you be looking for?

Michael Belkin (11:16)
Right.

Craig Hemke (11:34)
say if we get into the first quarter of next year as being a sign, okay, safe to get back in the water. We're waiting for the next leg up.

Michael Belkin (11:43)
Good question. So the model forecast, so right now the intermediate term forecast, which is using weekly data. So 12 periods, 12 weeks, three months, two, three months ballpark has been going on for that is down for everything for gold, for the GDX, for the NASDAQ, for Bitcoin, all those things. So I think just everything goes into this correction phase and how bad it gets in the overall market, I think will spill over into

gold and gold stocks. I don't think they're immune. So basically what I want to see to answer your question more specifically, I want gold to be negatively correlated to the stock market. I don't want it just to be another meme stock, thing that the gamblers and speculators that don't know, S from Shinola, ⁓ about long term cycles and market tops and turning points. Those people need to get shaken out. And so basically, ⁓

I want to see the correlation change. right now I'm not, I'm not seeing it. And also same thing with silver. So silver, all of a sudden it's acted stronger in this bounce back last 10 days, but the forecast doesn't look good. ⁓ some of the silver stocks that were my favorite longs are now, they're just rolled off, you So first majestic, things like that. ⁓ Coor.

So Coors has been, of course they did a merger, so they're getting whacked on that, but that stock's been getting hit. And McEwen, is a silver play, things like that just don't look good anymore. So what does look okay, so the leading stocks, so I'm always looking for stocks that will outperform the GDX and the XAU index. And right now that's shifted in the last week or two to things like Anglo Gold, it's moved up.

Craig Hemke (13:10)
tour.

still.

Michael Belkin (13:40)
⁓ Pan-American Silver, so there's one, P-A-A-S. It was a dog, it underperformed. It's turning into an outperformer, but that might not necessarily mean it goes up. So I'm always looking at things relative and absolute. And the absolute is not up so much for anything anymore, but the outperform. So it's things, and then it's the big boys, know, Kinross, Newmont, Barrick. So Barrick has been an underperformer, right? Symbol B, B is for Barrick. Back to ⁓ Dr. Seuss here. ⁓

Craig Hemke (13:42)
Yeah.

Mm-hmm.

Michael Belkin (14:09)
Anyways, ⁓ so Barrick ⁓ has been an underperformer until a month or two ago. It's starting to outperform. And ⁓ so that's what I'm always looking for. Where can you get a bit of an advantage? So instead of the stocks that I was recommending, which were more mid-tier, some smaller ones, but mostly mid-tier ones, ⁓ those are not looking so great anymore. things, ⁓ it's more like defensive names, big large cap names.

You know, Barrick, even Newmont, those have those have been under, you know, a lot of the say the GDXJ. So the mid cap, those outperformed for a while. And now it's kind of turning. So I went through the silver stocks. They just nothing looks very exciting to me. So I just I'm just nervous. So if you made a bunch of money in the gold stocks, you might want to do something like hedge it with a with a GDX put or sell calls against it or.

Craig Hemke (14:48)
Yeah.

Michael Belkin (15:08)
Do something if you're still a long term believer in gold, I'm not saying, you know, sell everything and head for the hills, you know, but do something to be to to lock in those gains coming. These have been extraordinary gains. You know, I mean, up 100 percent. This is I mean, after you, you know, as well as I do, it was it was rough sledding for, you know, in the gold sock land for the last few years until this year.

Craig Hemke (15:20)
Right.

A decade,

Michael Belkin (15:34)
You know, we

Craig Hemke (15:34)
yeah.

Michael Belkin (15:34)
were licking our wounds and wondering, like, why isn't this stuff going up? You know, had this a lot of conversations like that with John Hathaway. ⁓ so anyways, count your blessings. I don't think it's the end of the story, but it could be kind of, you know, rough weather. You know, we have some winter, the storms start rolling in, you know, maybe a storm. You want to be able to withstand the storm and hold on to some of these gains if you've made big money in these things.

Craig Hemke (16:01)
I'm thinking of the chart that Ronnie Sterfala is the guy that writes the In Gold Re Trust report. And he always puts out a chart of gold and all the different currencies, gains and losses since the century began. So 25 years now. And there are random 25 % years in gold, three or four of them. And then they're all followed by either down or something in the single digits. Michael, we did 25 % last year. And what are we this year? 60 % on top of that?

Michael Belkin (16:29)
Right.

Craig Hemke (16:31)
⁓ Yeah, I think your message is something that everybody should be listening to. Like you said though, if you get a market, general market pullback that goes along since Bitcoin and the NASDAQ are so closely correlated. And if you get, I guess if I understand you're right, maybe the stock market pulling back 15, 20 % and Bitcoin pulling back 15, 20%, but gold maybe only going sideways. That would be a relative positive.

Michael Belkin (17:00)
Yeah, that's pretty much what I'm looking for, except going sideways could be these big short-term swings up and down. So, you know, what if we had a 15 % rally in the GDX or something in the last 10 days? ⁓ So it could easily go back, stretch to the bottom of where it was, you know, a couple of weeks ago, if not more, just kind of stretch out a one of those kind of sideways ranges. But those can tear you up. You know, if you get like up here, if you start getting bullish at the top,

Craig Hemke (17:07)
Right.

Michael Belkin (17:29)
So, know, who was it that said, Sir John Templeton, know, the time, you know, the time to buy is at the point of maximum pessimism and the time to sell is at the point of maximum optimism. And you just, think investors should really keep that in the back of their mind. The overall stock market, it's fun. So if you look at the fear and greed index, greed and fear, whatever it's called, right now it's negative.

So I mean, things like the VIX is going up, the things that go into that, that's negative for the stock market. But that's not how people are positioned. So if you look at the Association of American, American Association of the Active Investment Managers, I kind of garbled that. Anyways, it shows how committed they are to the stock market. And they still have like a super high. just hit the, two weeks ago, it hit the highest level of the year. So there's all these like fully,

Craig Hemke (18:14)
whatever that is.

Michael Belkin (18:25)
invested bears out there. These are institutional money managers. they drank the Kool-Aid, know, they think they read the tweets and they say the tariffs are great and you know, and everything is what economy is wonderful and blah, blah, blah. And they see these retail investors are all bulled up. ⁓ that has to get flushed out, you know. So we'll see how this works out. But the thing that worries me is

Right now I'm reading the new book, 1929, by the CNBC author. It's a great book. I just started it. But one of the things that jumped out to me in just reading the first few chapters of it is how invested, after the 1920s, people believed it was going up forever and that they had all their money in the market. But it's way beyond that now. So here you've got

Craig Hemke (18:59)
Oh, yeah, it's working.

Michael Belkin (19:18)
Even my son has got roped into this Robin Hood account where they deduct money. My son who hardly makes any money, you know, they deducting $100. There's this automatic deduction thing going on where they suck people into investing all in these growth stocks. And so in everyone's 401Ks and you know, it's just it's such a big thing, the stock market to everyone's wealth. And that's who's feeling, you know, so low income consumers right now. It's at the.

Craig Hemke (19:38)
Yeah.

Michael Belkin (19:46)
consumer sentiment's at like a low, right? It's like at a 20 year low almost, right? But the people with stocks are feeling, oh great, the stock market's up, you know, I'm feeling great. But so the stock market goes down 20, 30%, those people aren't going to be feeling so great anymore. And so I do have to have mentioned the AI bubble, you know, I'm sorry, I should have mentioned that at the beginning. So this is like huge over investment. So you've got a company like Metta, right? So who is investing like crazy, building these data centers.

Craig Hemke (19:51)
Mm-hmm.

No, go right ahead. It's important.

Michael Belkin (20:16)
So Meta, which is Facebook, you have to remember Meta used to be called Facebook. They renamed it Meta after the Metaverse and they sunk like tens if not hundreds of billions of dollars into Metaverse, which went nowhere, right? Do you see anybody wearing those big black glasses, you know, walking around? It just never took off. who knows, maybe it will, but it's been a total bust. So now what are they doing? They're going into

Craig Hemke (20:34)
Right.

Michael Belkin (20:44)
AI, right? We've got to be everybody's investing in AI. So we've got to buy all these Nvidia chips and build these data centers of which there's not even enough electrical electric power to provide. So the problem is, so a company like Metta, 98 % of their revenues come from advertising. The economy goes down, their revenues go down, they're basically their data center budget, AI budget is going to go down. They're to start cutting it.

Craig Hemke (20:45)
Yeah.

Michael Belkin (21:12)
So think Metta is sort of the canary in the coal mine. ⁓ I think they'll be the first to flinch where they say, wait a minute, if their stock starts going down, which it has been, by the way, Metta stock is down about 20 % from its peak. And so it's leading the Mag-7 stocks down. I think that ⁓ when you start to get the first, so it's been a follow the leader thing, gotta be in the AI, AI. So Microsoft invested AI, Amazon invested AI.

Oracle Oracle's another ones getting killed the stocks getting killed. They can't pay for all these these they don't have the the revenues to pay for this AI investment ⁓ That they that they have been promised. So anyways the whole thing the wheels are starting they're not coming off yet But they're starting to be a lug nuts coming off, you know, and there's you're starting to a warning of tires running flat so I think

⁓ it basically lost, start working in reverse and it's not like AI is going away. I'm not a Luddite. You know, I use it for, you know, for, for in my research, it's great for summarizing things. You know, it's fantastic tool. ⁓ but it's, it's not going to look like this, just like at the tech bubble top, everybody thought the internet was going to change everything in March 2000. And then the Nasdaq went down 86%. And here we are 25 years later and the internet did change things, but the leaders turned out to be somebody.

Craig Hemke (22:26)
Right.

Michael Belkin (22:34)
completely different from the way it looked at the time. So I think there'll be a shakeout in AI and that's really bearish for the stock market. And unfortunately, I think it's gonna have a spillover effect into gold and gold and gold stocks and silver and silver stocks for the next few months. I'm not a perma bear, again, this was my biggest, I was incredibly bullish on this stuff all year until about two weeks ago. So major change for me. Don't think it's gonna,

Don't think it's the end of the world, but you just want to be careful here and preserve the gains if you've made some serious gains here this year in the gold space.

Craig Hemke (23:12)
Yep. I feel the same way. And I think it's ⁓ wise, ⁓ in words of wisdom, ⁓ that you can share with everybody to not get frustrated and scared off if we're just simply another consolidation pattern. It's a time to lock in some gains. You know, one thing we don't have to worry about this year in the gold space, ⁓ Michael is tax loss selling. If you've got losses, you, you might want to look into your methodology for picking stocks, but,

Michael Belkin (23:31)
Yeah.

Yeah, right.

Craig Hemke (23:40)
Anyway, it's been great to visit with you and I know everybody watching ⁓ is now aware of, hopefully aware of what you do and respectful of your opinion. I want to make sure everyone knows where they can find your work. It's a little different. It's not like going to my site and hitting the subscribe button. I want to make sure I read this off right. ⁓ So for the Belkin report or the Goldstock report, you email one of your compadres, Mark, right? That's how we do this, correct?

Michael Belkin (24:09)
Yes.

Craig Hemke (24:10)
Okay, and that email address, if you want to learn more about Michael's work and how to access it, is mark with a C, M-A-R-C-B, so M-A-R-C-B, at HyperPyron. Did I pronounce that right? All right, which is H-Y-P-E-R-P-Y-R-O-N. So markb at hyperpyron.com. Send him an email and they'll let you know how to get in touch.

Michael Belkin (24:26)
Yes.

Craig Hemke (24:37)
and begin receiving the Belkin report. Hopefully, ⁓ Michael will receive you back on the Sprott Money platform sometime when we get into the new year, because again, if you and I are right and we consolidate and break out again, the pattern would follow that we've got some higher prices ahead once we break out once more. So it'll be fun to talk then.

Michael Belkin (24:58)
All right.

Craig Hemke (24:59)
Well, thank you for your time, Michael. Thank you everybody for watching. And again, please thank Sprott Money for putting all this content on the internet. You can like or subscribe at whichever channel you've been watching, but also keep an eye on SprottMoney.com for that holiday gift guide, which will be showing up, I'm sure within a matter of days. And keep an eye on this channel. We got more content to come as we go through the month of November. For now though, it's time to go. Thank you everybody for watching. Thank you, Michael. And we'll have more content from you, from Sprott Money before the end of the month.