Gold & Silver to NEW ALL-TIME HIGH? | Michael Oliver’s Warning

Craig Hemke (00:01)
I'm your host Craig Hemke. Joining me to call it a month is Michael Oliver, the founder of Oliver Momentum Structural Analysis. You can find his work at olivermsa.com. I know Eric

He's a big fan of what Michael writes and a big fan of his work. So it's always good to visit with him. Michael, good to see you, my friend. Hey, before we get started, a couple of interesting things. is a fast approaching tax season. Are yours done yet? Michael, I got to do some stuff this weekend. I'm not looking forward to it. But it is tax season. If you are looking to fund an IRA and RRSP up in Canada, download a free investors guide from Sprott Money.

Michael Oliver (01:01)
Good to be back.

Yeah.

Craig Hemke (01:22)
to the benefits of adding gold or silver to your RRSP. And you can follow a step-by-step blueprint to get started. If you want personalized advice, book a consultation with a Sprott Money expert. There is a link in the description. One last thing, PDAC is next month in Toronto. Sprott Money will be there. Stop by booth number 2812. You might even get a chance to meet the man, the myth, the living legend, everyone's favorite retiree, Eric Sprott himself.

So stop by booth 2812 and maybe you'll see him there. Okay, Michael, with all that, hey, I wanna make sure everybody knows where you're coming from. You've been at this a long time. This is your proprietary information, this momentum structural analysis you developed. In fact, you started back at EF Hutton back in 1975 and I think it's safe to say that when Michael Oliver spoke, EF Hutton listened.

Michael Oliver (01:58)
Thank

Not quite. was in my early 20s, mid 20s, sorry. I was just learning and my boss, I trained under, they didn't have a big program, you just trained under the guy who was head of the commodity division, was also chairman of the COMEX. And so I was very fortunate. And I learned how to plot bar charts by hand. We didn't do it on my computer back then, you know. What's a computer? Okay.

Craig Hemke (02:31)
Okay.

Michael Oliver (02:39)
just price charts, you know, and he taught me the rudimentaries of technical analysis and I evolved away from that in the 1980s. I was still a futures broker and I caught the crash in 87 and I did it via a simple tool plotting each monthly price bar, the S &P, instead of as a price, oscillated it against where the three quarter moving average was that quarter. That's the number that changes once every quarter.

So it's not like a 200 day that changes every day. So instead, I didn't care whether it was above or below that average, that you could weave those averages, but there was this structure built on the momentum chart, repeated floor, where the oscillator would come down to the same level for two years. It was a floor from hell. And when you broke it in the second week of October, you crashed. Ooh, 35 % in two weeks, boom. Like 29%, 35 % in two weeks, that's what a crash is.

I think we're set up for another major top and downturn. Except this should be worse. Yeah, in the stock market. And I think that's the key factor for gold people to pay attention to now. Because when that guy goes, when the money flees, it goes somewhere else. It has always gone into gold. If you go back and examine .com top, 2007 top, mid 1970s.

Craig Hemke (03:44)
in the stock market.

Michael Oliver (04:06)
Gold roared up to 1975 while the stock market was getting killed. In fact, it crashed in 1974, the stock market. total opposites, including back in the 1930s, when the Dow dropped 82 % between 29 and 32 low, they didn't have gold because it was illegal, but home stake mining traded and went up like 1,000 % because gold miner. So gold is the alternative. So don't be deluded by

kick by kick comparisons of, today's down, so is gold. S &P had an hourly rally, so did gold. Don't get deluded by the micro, because the macro is different. And gold is going to get an infusion of new capital by investors who suddenly say, oops, I need to get out of this. And not all the money gets burned up in flames. It moves.

Another place it will move will be T-bonds and they're already starting to now catch up to what gold has already been saying, that there's money flow. That's the other alternative. So anyway, think that's the thing for gold people to watch now.

Craig Hemke (05:06)
Right. Right.

Would you be concerned

about a rapid exit, you know, where it's like a margin call liquidity event and everything with a bid gets sold or is it more gradual?

Michael Oliver (05:24)
It

could be, but crashes are unusual in markets. Yeah, in 29 we had one, in 87 you had one, but in 87 the crash ended and that was the end of the correction because it was only breaking certain metrics and its annual momentum fell down to support in that crash. So it didn't break that long-term structure. In our case, we have a different situation now. We have the oldest bull markets, 15 plus years old.

Craig Hemke (05:35)
Yeah.

Michael Oliver (05:52)
It's 18 folds for the NASDAQ 100 upside since 2009. It's eight or nine folds for the S &P. There's no prior bull market excessive top, you know, we call bubbles like the dot-com that matches this whatsoever. And so when it breaks, it's going to be nasty because errors occur in such bubbles. Personal errors, investment errors, corporate spending errors. And suddenly when you rip away the fakery,

the false notion, the price of money, for example, being artificially kept low for 15 years, even with the recent rate rise they gave us, that still reached levels that if you look back 50 years, you say, that was a rate rise? It's still very low. And 10 of those 15 years, it was zero. So you talk about drug taking, in the arm, the Fed was providing drugs to the market that.

was accepting that flow at the time, it would be the stock market. Those things change. Whenever you break the stock market, if you go look, you'll find gold and T-bonds. That's where the money then flows. And you can bet that the Fed is gonna turn on the spigot when they get data points that start to show what stock market tops always produce negative data points after the fact.

And then the Fed will be panicked. They don't want to cut because it's Trump, know, they don't want to help him out. But they're going to have to, or even their friends won't like it. Academic friends won't like it. You waited too long, guys. Anyway, that's going to help infuse the next more accelerated move in gold.

Craig Hemke (07:38)
I would imagine, again, we're going to talk about gold and silver in the mining sector, but these are all things that you follow at OliverMSA.com, correct? Okay, so everybody bookmark that page and keep Michael in mind. You want to follow along and stay ahead of the game. Michael, let's talk about those three items though, as we wrap up the month of February. It's been a heck of a month. We've started the year with eight or seven or eight consecutive green weekly candles.

Michael Oliver (07:46)
Correct.

Craig Hemke (08:08)
for gold price. We're not gonna print 52. So again, you're gonna get a red one. As we did record this on the 27th, we got one day to go in the month. I know you look at, as you said, the monthly chart and compare that to your quarterly momentum indicators and the like. For gold, what will you be watching as the month ends, we move into March.

Michael Oliver (08:09)
Thank

Huh? Huh?

Yeah.

Well, we know that gold, silver, and the miners had a major pause in the case of gold, was a pause from mid 2020 onward. Gold went in this range, like three or four times it got above 2000 and failed, 2000 failed. Well, we've warned people that is not top. Gold has never topped with multiple horizontal highs. That's the launch pad. Okay. In March of 2024,

Craig Hemke (08:39)
Mm-hmm.

Michael Oliver (08:55)
we put out a report arguing that all of the long-term metrics of silver, the miners, gold, which have either corrected or gone into a pause, like gold and silver and miners, of course, staircase down somewhat while gold was going sideways. That that was over, the pause was over, and the long-term bull trend that actually began back in 2016 by our metrics was again alive. And sure enough, gold went, know, March of last year.

It started to explode again. Silver did too. Remember, silver back then was $25 to $26. And GDX, the gold mining ATF, was $31.50. Right now it's trading either side of $40. Now, a lot of people think because of the day-to-day action and because of where, for example, GDX is in relation to its 2020 price high.

Craig Hemke (09:30)
Right, right.

Michael Oliver (09:50)
That high happened to reach 45. Right now we're trading either side of 40. We've been up to 44 recently. So we're below that high, therefore miners are weak. Well, relative to that high they are, but actually I just did a little math here with the day left in the month. If you go back 12 months, meaning the close of February 2024 through the close of 2025, one day left, gold right now is up 38.5%.

12 months. Silver's up, let's see, about 40 % and GDX is up 51%. So actually the miners, even though it doesn't feel like it, over the last year have done better than gold. Okay, now we argue technically and fundamentally as well, but we don't look at fundamentals. Those are always debatable sort of liquid issues. But I sent you a chart.

Dope With A MacBook (10:51)
Yeah.

Michael Oliver (10:51)
And

it shows the gold miners, gold and silver miners actually, represented by the XAU index, which is the Philadelphia Gold and Silver Miners Index. It's been around since the 1980s, therefore it has a lot more history than, for example, GDX. So you go back to the 1980s, and when you look at that spread chart, you'll see that from the 1980s through 2008, GDX, excuse me, XAU lived in a percentage range

of 17.5 % from the downside and about 35 % from the upside. if you divide the price of XAU into the ounce of gold, it was 17.5 % to 30 % plus of the price of gold for a couple decades. That was where it's happy zone. And it went up and down, but its low was 17.5 % repeatedly. When it broke that, in that bear market that of course hit gold, silver, and the miners in

for miners it started in 2008 but from the gold and silver 2011 they dropped in net prices so did the performance of the gold miners. XAU went down all the way to 4 % of the price of gold. mean here you pretend it's a stock trading 17 and a half to 30 something and it goes to four bucks. Okay, either it's going out of business or that's it. now and of course an index doesn't go out. Okay, anyway since

Craig Hemke (12:01)
Yeah.

Thank

Right. Right.

Michael Oliver (12:18)
The late 2015 low on that spread, which got down to about 4%, it popped up and lived in a range for 10 years above that low. Right now we're like 5 % plus. XAU divided into gold, know, expressed as a percent. And you can see that range that we've been in for 10 years, the low end of that chart, okay? Now I've also plotted a downtrend line on that spread chart going all the way back to 2000.

2000 area that's a three-point downtrend line and you'll see that for the last couple years The action of that spread has been pushing at that line, but below it still we got out above it a Handful of months ago. So you broke that three-point trend line We're watching some other metrics on that spread momentum technical and spread measurements not not fundamental assessment We know it's cheap not getting cheaper versus gold. It's held its own. In fact, it's done better

since 2015 and Gold has percent gain a little bit.

That spread, when it breaks out, will indicate to us the acceleration phase in the overall bull trend in the monetary metals. That's when the miners suddenly get the flow of money. What will help provoke that is what I said early on. When you punch a hole in that stock market bubble, that money seeks places to go. And a lot of investors aren't gold bugs, we know that, especially in the Western world. The two...

Craig Hemke (13:50)
Yeah.

Michael Oliver (13:51)
They don't like to trade silver futures or gold futures or bullion ethi, it's a little above them. So they'll buy stocks. And there's a lot of gold mining stocks that provide good earnings and dividends and so forth. And it's a stock trade. Okay, move part of your money from this part of the stock market to this part. That little tiny sector is going to get goosed by all the hands trying to grab it at once. But the thing that provokes that is not the virtue of the miners, which is great.

relative virtue versus the stock market but the sense of fear in the stock market going somewhere else and I think you're already seeing that if you could feel the tape over the last few weeks for example you might get up used to be you get a mile down day in gold and you get a major whacking in the miners and over the last few weeks the miners have held up pretty well tonally compared to

the volatility especially in silver for example. So, but anyway we think 2025 is highly likely and probably soon to be the year that you want to be fully emphasized in silver and gold and silver miners not so much gold. I think gold is going to go up big. Okay, but I think silver and the miners are both in that spread chart I showed on versus XAU in the gold. Silver has a similar situation.

where it looks right now to turn up in performance terms. So I think that's about to happen and I think that the provocation is the bust in that bubble. And I think we're on the edge.

Craig Hemke (15:32)
So for the listener, Michael, do they watch just kind of on a relative basis, the GDX or the XAU versus the gold price and kind of calculate their own percentage and you start seeing that moving back up to 10%, something like that, that'd be a summary.

Michael Oliver (15:34)
Thank

That XAU chart, consider this. Look at that chart again. Remember it's a price chart. Price versus price, the best is percent. So it really is a price chart. Treat that as a price chart and look at the base you're in. Imagine breaking up out of that base at exceptionally low levels, that it's proven it isn't going any lower. And just go up to major resistance, which is to say

The lows that it saw for decades at 17 and a half. Just assume that's all that might happen. Not going to go back to the 35. Let's say just 17. That's a tripling of the relative value of the gold mining sector versus gold. Because right now it's 5%. That's the type of move we could see where gold miners, silver all go up, but the miners go up three times as much on a percentage basis, catching up to old realities.

Similar with silver, similar type of dynamic there. And we measure it also versus spread action. Not month to month we do that, but also we get down to daily. We're looking at the micro action to try to time that upturn. And we're very close.

Craig Hemke (16:57)
Well, let's conclude with silver. I mean, obviously you like gold through any pullback and you think the shares are getting ready, almost like a value play versus a falling growth play in the stock market. But silver is such an intriguing metal. know, there's so many, I mean, think almost every other commodity has made a new all time high in the last 10 years except silver.

What are your indicators showing for silver and would you expect it to outperform gold as well? What are you looking for?

Michael Oliver (17:28)
Well, actually, as I said, it's done very well versus gold over the last year. It's really not underperformed, as most people think. Why? Because silver has these bigger pullbacks. therefore, oh, but you measure, if you're an investor, you don't care about this week or that week, you're looking at month to month, et cetera. And maybe you don't even look at it till the end of the month. Say, what happened last month? And it's very good.

Craig Hemke (17:34)
Yeah.

Michael Oliver (17:56)
But its spread relation to gold is very cheap still. It's 1.14%. Divide an ounce of silver into an ounce of gold. Now, if you go back 50 years and look at each year, how high did silver get on a percentage basis to an ounce of gold in that 50 year period? 20 of those years it reached at least 2%. Whoa! Okay, if we break out over the near-term action,

We plot it, there's a nice downtrend line on that spread right now since that October high and Sovereign at 35. The spread made a peak then and it's created a very clear downtrend structure. So when you break out above it, it's saying, okay, I'm back. Okay, Sovereign is gonna outperform. If you just take it from 1.14 % up to two, which is normal, I mean, 20 years out of 50 is hardly abnormal, and say, I'm back to, normal.

That's a doubling of the price of silver in relation to gold. So, you know, over the next year if it went to 2 % that means if you bought silver you made twice as much money as you did on in gold. And it could even be more than that. So I think we're in the same situation with silver versus gold and miners versus gold. We're on the cusp of the new money flow largely from a broken US stock market bubble seeking alternatives.

And frankly, if you do the math, you'll see that silver is up around 40 % over last 12 months, February to February. S &P just checks up 16.8%. I thought the stock market's beating the pants off gold and silver. It's up 16.7 % the last 12 months, February close to February close. And silver's up more than twice that. And yet, nobody's cheering.

Craig Hemke (19:38)
Right, right.

Michael Oliver (19:48)
Silver is a dog. Okay, well fine, whatever you want. We see it not as a dog, but as a dog on a leash that's ready to run out in front of the mama market and pull the mama market. So that's what we see for 2025 is probably the best place to be.

Craig Hemke (20:04)
You you reminded me of a frequent guest I've had here at the Sprott Money podcast. as an old friend of mine named Grant Williams and you know, Grant, mean, he had a, he had a presentation he was giving back in early 2016 called Nobody Cares, you know, and I've seen, I'm sure you've seen the numbers about the percentage of global financial advisors that have a position in, in the gold or the miners is like 1%.

Michael Oliver (20:28)
Now it's off the page. It's off the

page.

Craig Hemke (20:32)
Further

to your point, Michael, every time there's a big down day in the stock market, they talk about just the mag seven or eight or whatever. It lost $500 billion in market cap. And you think, oh my gosh, 10 % of that 500 billion, 50 billion, what would that do to our sector?

Michael Oliver (20:38)
you

Yeah.

Yeah, no, there's no question about it. And historically, the T-bonds and gold have beat the S &P during bear markets. And there have been periods in those bull markets and gold bonds where S &P was going down. And there might have been a month where, gold had a bad month too. But basically, it was part of an uptrending process. And I think we're at that point now where if you break the stock market, that money flow will cause acceleration in this

arm wrestling bowl trend that gold is in and the miners in silver. And I think you'll notice a tonal difference. be there before the mobs. Okay. Let the mobs chase it. That's fine. You know. But get there before. And that's what we're trying to time is the spread breakouts because those spread breakouts often are very well timed to the points of acceleration in price. This was true back in the 1979-80 bull.

and back in the 2010 to 2011 phase of that bull market where the spreads broke out and silver beat the pants off gold in that last year. And I think we're on the cusp now.

Craig Hemke (22:01)
I think that's music everybody's ears. Safe to say that though we've had a really good start to 2025, we're due for a little bit of a pullback and consolidation, but you don't think the highs are in for the year, it doesn't sound.

Michael Oliver (22:13)
No,

and I think this pullback consolidation, etc. is just more the repetition of... If you look at a silver chart of the last year, you know, it went from 25, 26 up to 35. Now it's trading either side at 32. Okay. But if you bought every 10 % pullback that you were offered in that move, you're beating the pants off the guy who just chased the highs. Okay? Every time it looked dark, buy it. Because the big picture says it's light, not dark.

So anytime the mobs say, oh my god, that's the top, we're gonna correct for eight months, it's going down 50, you know, buy it. And that's been the lesson, especially of the last year.

Craig Hemke (22:56)
Wise advice from a wise veteran of these markets. Gosh, getting your start back in the day, just as the COMEX was starting to trade gold futures. You've certainly seen it all over the last 50 years, Michael. it is, we're just, I'm just so grateful every time we get a chance to visit. And I know everybody watching is grateful that they took the time to do it. Thank you so much again. I want to encourage everybody, olivermsa.com.

Michael Oliver (23:07)
Yeah.

Craig Hemke (23:24)
is where you can find Michael's work, right? That's where everybody go check it out. There's some free stuff, but also subscription stuff, correct?

Michael Oliver (23:31)
Yep, request some sample reports, be happy to send them.

Dope With A MacBook (23:35)
How about that? That's a pretty good deal too. Michael, thank you so much for your time. And thanks everybody for watching. Like I said, we've come to the month of, end of the month of February, but there's certainly gonna be a lot more to come in March. So hit that subscribe button on whatever platform you've been watching so that you're notified every time there's more information that's put out by Sprott Money. Again, thank you for watching. We will do this again in March. And for now it's time to sign off. Thank you, Michael. And we'll hopefully have you back again soon.