Bear Market To Get ‘Far Worse Than Any In Recent Memory’ | Milton Berg

Milton Berg 0:00
That’s why they haven’t sold and maybe that’s suggested that this bear market may be far worse than any bear market we’ve had in recent memory. The list longer and take us down down further than we’ve seen in recent memory is quite possible

Adam Taggart 0:17
Welcome to Wealthion. I’m Wealthion founder Adam Taggart. The financial markets enjoyed a banquet of steady stimulus in the decade following the global financial crisis and unsurprisingly rose to unprecedented heights by the end of 2021. But that support was yanked away as inflation became a problem. As a result 2022 sub painful losses in both stocks and bonds. So far in 2023, the markets have been fighting to get back their mojo with mixed results. So far. We’ve spoken with a lot of macro analysts lately on this channel. So today we speak with a top technical analyst to see what this approach is telling us about the post QE post stimulus post bubble era we find ourselves in now. Milton berg is founder and chief executive officer of MB Advisors, a premier global macro research and consulting company, offering investment advice to the world’s largest asset managers. Milton, thanks so much for joining us today.

Milton Berg 1:16
Thank you. Thanks for having me.

Adam Taggart 1:20
It’s a real pleasure. Milton’s you’re joining us from Miami and it looks like you’ve got a very nice background there of tropical beaches. So it’s a nice setting for this discussion. Yeah,

Milton Berg 1:31
it might be the calm before the storm. All right. Well, let’s

Adam Taggart 1:35
dig into that. That’s actually a good segue to my first question, which is the same question I asked everybody at the beginning of these interviews. What’s your current assessment of the global economy and financial markets?

Milton Berg 1:48
Okay, two separate questions, obviously, one an economy and the second is the markets. We have a mismanaged economy in the market and the economy has been mismanaged because you have Keynesian the central banks that attempt to stimulate market stimulate economies and then take away the stimulus assume that the market some sort of machine they can be manipulated by changing the oil every few years. The reality is that this market is, as you kind of move, move further away from the free market to it from a capitalist market more towards a government controlled market. It’s ultimately an associated type of growth we’ve seen historically, in markets worldwide. I mean, you know, many European markets peaked in 2000 2007. Stock markets, certainly when adjusted for the US dollar. So we’re in a downtrend, a long term downtrend, economically, but market stock markets and economies don’t necessarily move in the same direction. You had the Weimar Republic, you know, where you had major hyperinflation. And of course, the only place to be at that time was in stocks, or in gold. stocks do do well, when you have very strong inflation. Of course, when you have a central bank that wants to fight inflation seriously, it’s heavy invite inflation, that causes a slowdown it goes initially causes recessions and ultimately the stock market discount set in the stock market declines. We’re currently in a situation where the central banks act as if the tightening the act is a tightening, but in reality, it’s possibly the not tightening, I mean, will fit when Volcker was tightening. I believe the federal funds rate was 10%. Above the inflation rate at the peak, we’re currently slightly below the inflation rate, you know, with the federal funds rate. So rates are going up and unnecessarily tightening if they haven’t really been tightening, you really can expect the market to continue higher from here. On the other hand, if Jerome Powell and the Federal Bank, Federal Reserve and the members of the Federal Reserve are really serious about fighting inflation, cutting the money supply, they’ll probably have to raise raise the rates further, and it’s quite possible that the market hasn’t discounted that yet, and therefore the market will decline. So really, two ways to look at this I can see the market going either way. Technically, however, technically we’ve got the major major bicycle in June. The indicators I look at volume sentiment. retouching change gaps to the downside, suggested that the market bottomed in June and in fact, there was a very good call the Russell 2000 baht in the June 16, one day after the Federal Reserve decided to raise rates by 75 basis points for the first time in years. They kept continued raising rates by setting their base points till December the rustle made a new low below it’s too low. So June was a good low. Even the SP 500. Actual bear market low was in June, because it’s October closing lows only 2.45% below the joola, which is basically a successful test. NASDAQ is showing a little different picture because the NASDAQ bottomed October 13 intraday, but on a closing basis, I managed to make a minor new low on December 28, which is also technically would suggest that the lows were in so our technical picture really was very bullish. We traded for the bullish side for it nearly last year. When do you actually very well, we’ve been shorting when we researched we saw short term tops, but the technical picture was very bullish. On the other hand, things are changing currently. And it’s quite possible that the great rally that we anticipated in June and October may have ended If I could speak a little further, I’ll give you a good example, which would be the Sox index. The Sox index, reality some 50% off, its off, its October lows. And it peaked in March. It peaked in March. And it’s quite possible that that’s a bear market rally I think I have a chart which I could share with you a bear market rallies have historical bear market rallies. And this sucks 50% Rally of a short period of time which would seem to be just seemed to be a movement a bull market may actually just be a rally in a bear market if I can share the screen with you. The Philadelphia semiconductor Index declined 48.63% from its high in January of 2022 to its low in October of 2023. Evans gained 54.75% Which is where What a move and you tell yourself you know move like that must be the beginning of a bull market is kind of momentum just kind of a thrust must be the beginning of a bull market. That’s what you think to yourself. However, you look at the same thing with the Hang Seng Hang Seng declined 53% from its peak in March of 2022. And it gained 55.51% into its peak in the in February, March of this year, say hey, this can’t be a bear market rally because look at the look at the extent that this rally. However, what we find here in 1920 1930, which was the greatest bear market rally in history for the s&p 500. It also declined that strong 45% into bear market low rally 46% And then decline. It’s a major major bear market. And as you know, in that instance, the Federal Reserve lost control or maybe didn’t know how to control the markets, but you had a deflationary period restrict stocks down and it really the Federal Reserve didn’t know how to fight it. So the fact that the we’ve seen these tremendous rallies in these two great indices and stocks index was a leading index into the highs and the Hang Seng, the Chinese markets were rallying tremendously into the highs as well. And the fact that they declined in a bear market and rallied 50% over a short period of time, doesn’t necessarily tell you that’s the beginning of a bull market. It’s want to point out that graphically, the extent of the rally, although in modern times, we haven’t seen this type of bear market rally, you haven’t seen the monitoring, but we did see it in the 1920s. And that was a period of time in which many people at that point in April of 2030 thought that the problems are over market relativity percent. And it’s still it’s going to be great forever. But that wasn’t the case. And we’ve seen that happen then it was a lot of situations underlying the the the the economy that are way different than they were over the last 50 years or so we’ll go ahead and I was

Adam Taggart 7:39
just going to say it isn’t sort of that the job of a bear market rally to is to get people feeling complacent again, like okay, it’s all over, they come back in and then the bear returns and does, you know, maximum,

Milton Berg 7:54
which exactly loves you know, the investors intelligence does a newsletter survey, just in mid April, the percentage bulls got to where they were at the top of the market in November of 2021. Really? Exactly. That’s not the there wasn’t their peak that peak was earlier than that. But the fact is the bear market did was this rally do what it’s supposed to do. It deterred people who are negative into into into positive so to get the the option trading. We saw tremendous foot buying into the lows of October, October and December of 2022. But you’re not seeing a put buying currently in these rallies. So I would say yes, I think sentiment has shifted and if we’re in a bear market, it’s pretty different a bear market. The setup has shifted enough to suggest that we’re headed much lower and I have other evidence for that. And let me show you some more evidence if you don’t mind. That is the VIX. This is the VIX. I’m not showing a chart of the VIX, but if I could bring up a chart of the VIX on my Bloomberg posters do it this way as you know, the VIX and the Vx and VX n is the VIX on the N and the MDX and the Nasdaq 100. And then the x both the VIX and the VX N declined to level they were not seen in over a year. They declined in just currently in April to levels not seen since October, November December of 2022. Just as the market was peaking 2021 just says Mark was speaking. Now everybody can look at the VIX and say oh, the VIX is low and that’s pretty negative, but they really doesn’t work that way. What we do is we have to see the rate of change in the VIX, relative way. What we do is we use victimization from trend. We look at the short term vix am I going to do the secret sauce out but let’s say it’s a five day or an eight day vix relative the 30 day or 40 Day VIX, and we just look at that ratio when the ratio gets to an extreme is telling you that for some reason, over a very short period of time, a lot of complacency is sent into the market because people aren’t expecting volatility. Now what we did is, this is one of the great indicators because most people who trade don’t know how to use this type of indicator. Just again, again, it doesn’t tell you what the market is going to do. What the indicators telling you if for some reason rather, the VIX and vx and decline Sharpe The relative to whether it was over longer or shorter time declined sharply relative there was a bit of a longer period of time. All this is tells you that there’s a change ahead. Now the change may be acceleration to the upside, the change may be acceleration to the downside, half the times, but it signals the market accelerate to the upside, the other half of the time the market declines in at the end of a bear market rally on top of a bull market I’ve isolated in this chart, I’ve highlighted all the instances where you got the same single in vx and deviation. But they took place either at the end of a bull market or at the end of a bear market rally is the VX n. And the next chart shows you that we’ve seen it 20 times in the past, we saw this particular signal on the VA exam, on average and median gain after a C equals 1.08% Meet the market and the SP didn’t peak exactly and that they obviously, but the median gain was 1.08%, when the VX N gave this signal, the maximum gave ever seen was 2.72% of 17 days. Currently, the s&p has gained 0.96% and six days below the median. And you look at the median decline after a signal successful sell signal with minus 23.43%. So when we look at this signal, this is telling me maybe the markets gonna accelerate to the downside, we’re gonna get news this afternoon from the Federal Reserve, that’s gonna get people to accept it to buy stocks, and maybe it’s stocks going to rally. But since based on other indicators we’re looking at, we’re betting here that the market is going to decline based on the VIX and sell signal. But it’s we’re very tight stops, because historically, the market shouldn’t go against us by more than 2.36%. Before the decline begins. So far, I’ve only went against us by 0.96%. Anyway, this is the VXX signal, the VX signal is far fewer. And I think all the signals that worked before a correction of the end of a bull market. And in this case, we the market in Sydney, April 21, the market gains 0.7% In five days, the median gain is 2.2 offers in 90 days. So again, we’re short, although I say Tim, it’s possible that a bull market began and we had a bottom in June about an October bottom in December. And it’s possible gonna go much higher in a bull market. But the reality is, I get, although it’s possible, I could possibly be wrong. And maybe it’s just a great bear market rally we hadn’t in the 20s and 30s. And we’re headed lower. So this is an indicator that I designed to pinpoint the end of bear market rally that signal you now and then I’m going to give the benefit of doubt to the negative side. And that’s why we’re short. And this is the maximum win against a sequel was 2.68% to the upside, the median to two point 12. Thus far, we’re only at 0.775 days, we’re actually making money on the short because the market is below where it was April 21. And April 20. That’s this particular indicator, it’s negative for us.

Adam Taggart 12:40
Got it. And so Milton, if I if I follow this correctly, you’re looking at deviations and volatility you’re looking at when we’ve seen similar setups before in market history. And you’re I’m in particular, looking at the column here all the way at the right, so the total decline within one year. And the other table you showed it was like same area like mediative minus 23, or something like that. So that that is once you see these same conditions, the market then historically has dropped over the coming year by a certain amount. So when you’re taking a short position right now, what sort of duration? Are you expecting to hold that over? Is it is it a play for the coming year, or you have a shorter timeframe,

Milton Berg 13:27
I would say if somebody wants to trade based on this alone, they let’s see this one indicator, these is top 3.68% above the close of April 22. That hold it this isn’t one year, it’s a total decline within one year, we’ll get the maximum decline within 12 months, the market may have bought in six months later, or nine months later, or three months later. This is the maximum years from the time you were short, until the maximum profit you would made if you cover the exact right day now. Okay, got it then. All right, we don’t want to look at 30 days, 60 days, 90 days, that’s not what we generally look at, we look at the maximum decline within a 30 day period within a 90 day period within a one year period is the maximum decline of the s&p dirt within one year, it may decline in May, a bull market may begin six months later and maybe help for you to lose money. But what we do is we go from signal to signal we sell on a short signals we buy on our bicycles. And we’re going to be short until we get a bicycle or until we’re stopped out.

Adam Taggart 14:22
Got it. So so just to repeat that back to you. You’ve gotten a sell signal. So you’ve gone short, and you’re expecting ish, a decline of about 25%. And that’ll kind of as you get close to that amount that’ll probably tell you it’s time to start lightening up because you’ve, you’ve captured what you historically would expect to get.

Milton Berg 14:42
Based on this indicator alone. If for the bear market rally decline of say we’re between 13.52% and 45 41% is expected the median is 25. We’re not expecting the media we’re expecting somewhere between 13% and 45%. On the other hand, the signal may fail as you pointed out This signal doesn’t tell you what the market is going to do. This signal tells you that there’s been a major change in the VIX, which sometimes needs acceleration to the upside, and sometimes leads to continue to bear market and the bigger market rally. And sometimes VIX is justified in declining because markets headed up sometimes VIX is not justified, because at the end of the bear market rally, we’re giving the benefit of doubt together bear market rally for many reasons other than the signal. But we’re trading based on the signal we were long, and I’m gonna do very well for the year I’m not even thinking about it. This was my performance, our performance numbers were doing very well. We’re done. We’re in robust 20% engaged in the year but we actually well traded mostly from mostly from the long side. But we were short on February 6, because February 2 shows showed evidence of a climax top which maybe to show you later on. So we have to we so February 2, didn’t follow through series got shorter, February 6, we got long, somewhere around March 21, six or seven days after demonstrative Lo, this signal to us that suggested to us that this whole thing may be a bear market rally, and we therefore when short, that’s based on this alone.

Adam Taggart 16:05
Okay, great. And, you know, we’re talking about just this indicator right here. But as you’ve intimated, you don’t look at just one indicator, you look at a basket of them. So what other indicators are you looking at right now to help inform your short strategy?

Milton Berg 16:19
Well, before we look at other indicators, let’s let’s see how the market has been acting. Let’s see if it’s acting properly. Now, this is a this looks at every bull market since 1957, not all true bull markets, but they’re all instances where the market a bull moves, some of the moves took place within a bull market. And it wasn’t right off a bear market low. But most of these are actually off bear market lows. So we have 23 instances in the past, with the s&p made a bear market low and held a low and was in a new bull market. As you can see, if you look carefully, in median gain within 12 months, not 12 months from the date of the low, the median gain of the SP five within 12 months is 33.55 33.35%. And you’ll look most of these are really around the 30% level or more. It’s quite the market, the SP is quite strong, after it makes a bear market and bottom quite strong. And whether it’s 9060, or 62, or 75, or 84 or 2002. Very great signals median gain within 12 months at 27%. But I say to myself, we’re now 138 days since the market made its low on October 12. What are the big deal market done today 138. Now you see we’re up 15 point 17%. Let’s go down the list in 2020, roughly 2% By day 138 2000 At 28% in 2016 of 19%. Two thirds live of 25 Selling songs only two instances where the market will form weaker than it is currently. One was way back in 1957 when the s&p was only appropriate 8% By day 138. And the second time was 2002, which was a triple bottom. First bottom was July 2, bottom was October 3 volume was in March, which is slightly higher low and that gate 18.6. That’s not even in the performance. At this point. Your things change from day to day on my memory the period right now looks like is only one instance in the past where the gain was below the current 15 point 17%. Right. So far I this is one day actually made a difference in off the off the 2002 low in any event. So something Sunday might be different here. I asked myself, Why should this billboard market be so different than 2322? of the previous 23? bull markets? Yep, why should that be? And maybe because they’re not a bull market at all. Maybe it’s just a bear market rally, as we said, a gain of 16 we gained 16.85% in 77 days of October low. We haven’t made a new high since then. Maybe that was the top of a bull market rally bear market rally. And that’s why we’re so weak. That’s one of the things I look at these

Adam Taggart 18:56
are just to restate what you said there. So historically, bull market rallies after a bear market bottom are pretty strong as your data show very strong, very strong. And what we’re seeing from the October lows, this time round is is weak on a relative basis. And so that is giving you pessimism that, hey, maybe this actually isn’t a new bull market. This is maybe just a bear market rally and therefore, you know, caution is needed.

Milton Berg 19:27
Exactly. This is nothing more than that. Look at the s&p 500 which is you know, going SP 500, as currently exists was created on March 4 1957. Prior to that, and only 90 stocks in the s&p was was actually the s&p 90 became the SP 500 A march 4 1957. So I’m just thinking maybe back in 57. You know, it’s still early, early in the history of the s&p. That’s the only time we did worse than we did now but it’s really very troublesome. The NAS that we see here is where the bull market when the rally ready peak you had the final peak for the tune of 52 days for today. For 1999, the market gained 22.45% 111 days and then declined in 1978. Again 23.4% 132 days any event were underperforming all the situation that’s looking at the s&p. And let’s look at something more let’s look at something which is quite more serious and this this divergence this weakness, let’s look at the Russell 2000. This is the Russell 2000. It bottomed in June, as I said the s&p the Federal Reserve started getting aggressive on June 15. The following day was a lowest closing low for the Russell 2000. In the bear market since then, as you can see, it never made a lower low in on September 30. To close point three 7% above

its its June low. Now this look at this

table, let’s go let’s look at the June low because that was a closing low off the June low is 2019 days, within one year. Within one year, the median gain in the Russell is far better the s&p which is 30%. Changes 48.33% true they toward the 19. The median gain is 48.52% were ups 4.99%. This tells me that something clearly is different, at least for the small cap stocks.

Adam Taggart 21:16
Yeah, that is much weaker than my indicators told

Milton Berg 21:19
me that June was an important low, we should have been followed either by a bull market or a test of the low fall by a bull market. The reality is this index 2000 stocks in the Russell is certainly not behaving the way you’d expect it to behave if a bull market has actually begun. Now as you can see the meeting gain within tour to to the day to day to 19 is 48.52%. We’re only at 4.9. I’m not, let’s get the benefit of doubt that the June law wasn’t the real low, September 30, which was point three 7%. Above that, let’s say that was a real low, let’s go to December 26. Even there, it’s 150 days since then run four point 60% versus median of 330 7%. Something’s wrong, something is different. That’s giving me the reason to think that although we had major panic selling in June, coupled by additional pounds, say in October, coupled by a test of the lows in the NASDAQ in December, which is the these are the earmarks of a bull market. It’s quite possible that what we’re getting is a bear market rally. Let me get back to the first thing we spoke about 1929 If you think that the panic we saw in June or October what was significant, there was nothing like the panic we saw in 1929. Right? So based on oversold readings, Nikkei 29 Low should have held for a number of years should have been followed by a number of years of a bull market, but didn’t because the underlying fundamental forces were against the technical forces. This is what I see now. Although you had major oversold readings in June and in October, still, and you got a rally subsequent to that. But you had the same thing in 29. You had major oversold in October, November 2019. It didn’t lead to a bull market lead to strong bear market rally. Like it’s doing the Hang Seng up 50% Like so the stocks at 50%. I’ve seen the NASDAQ up 22% In a very short period of time. Although it looks good, it looks good. That doesn’t mean that the NY situation is good. As evidenced by this table, the Russell 2000 Look at look at comparison chart. This black thick line is the current Russell 2000. And the other lines are the 14th. And the responses of bull markets were way way, way below what you’d expect.

Adam Taggart 23:27
Yeah, just on a relative basis that that

doesn’t give you a lot of optimism.

Milton Berg 23:34
Right now give me another reason to be negative. This is the reason I share this my clients back in October, November. And many very concerned about we were as a witch betrayed for the bullseye fund last year and been very successful. There’s been a lot of a lot of upside moves. But right now we’re short and we and we benefited from being short this year as well. We shorted a February 6. But let me just show you what I share with my fly. I’ve actually shared 11 charts and I’m going to share about seven of them with you now. But this is what’s missing if it’s a bull market, what’s missing? In other words, let’s assume we’re in a bull market. What’s missing? It’s obvious what’s missing is the Fed has an easier because normally bull markets are associated with the Fed easing because that’s a fundamental basis. Everyone can agree what’s missing from this bull market is the fact that the Federal Reserve has not has not eased. But technically there are many other factors that are missing from this bull market. And I’ll just add them right here. Number one

volume early on in bull markets.

You see this is also a deviation indicator. Look at the five day new extraction volume versus 90 day here. There’s no secret when we look at five day volume versus 90 Day volume. As you can see bull markets and 1975 9078 1980 to 1987 1991 2000 to 2011 and 2020 all began with a crossing above the 50 the 100 and 180 at 5% level, we haven’t hit that at this point. So if we’re in a bull market, I ask myself, okay, if there had been bull mark you didn’t see didn’t see that 2009 lows. But most people want can see that surge in five the volume relative to 90 day volume, we haven’t seen it. That’s one reason to be cautious. Of course, this is not enough of a reason to tell me we’re not in a bull market, or something to have the data in the back of your head. If we’re in a bull market. Why isn’t volume acting the way it normally expertly in a bull market? That’s the screen. And there? Yeah, that’s number one. We had 11, only eight. Number two find a way to change this actually hands going back to 1928. But it’s not a discharge. Every bull market going back to 1928 began with a five day rate of change in the s&p 500 or greater than 7.4%. Now, it doesn’t always take place. Within five days off the low. Sometimes it takes place, you know, 10 days 2030, even a couple of months off the low. But most often it takes place at or near the low, which is all of a sudden the market oversold and people are short and the market certainly turns to the upside on a dime. And the market at a minimum of seven point 40% Within five days over a five day period.

Adam Taggart 26:12
Everybody’s scrambling to get bullish right, or short

Milton Berg 26:15
term for most it’s usually short covering bullish comes later on. And short covering comes early. And the bullish is comes later on. Because short short people are short joba traders and people are bullish, generally investors. So the traders get out early and the investor is getting a little later.

Adam Taggart 26:30
And if you’re short and you’re caught in a short squeeze, you just gotta stop the bleeding, right? You just got to do whatever it takes. Exactly.

Milton Berg 26:36
So Nike, the Nike 70 Lowe’s you saw when he said the foremost maybe to Lowe’s at 70. Lowe’s. You saw it at the 99. Actually, in 1998. The last rally, it was a major rally in 2000. You saw it at the 2002 low so 2009 low 2011 2020. Didn’t see now the maximum we saw off the June low which I believe was a real interest rate the real bear market low was 6.68% of the of the October low was only 6.36%. And this is lacking. You have two things lacking that find the volume relative to 90 The volume is lacking. And we have five day rate of change is lacking. You don’t see the scramble to the upside. Why not? If it’s a bull market, you

should see it. Okay, Clear? Clear.

Let’s get to next one. What’s missing? Well, this is not as clear because this doesn’t happen in every bull market. But it happens often enough that I like to discuss it. This is where the New York Stock Exchange upside volume has a downside, right. What does that mean? In other words, every day in New York Stock Exchange, some stocks are trading to the upside and some tracks to trade to the downside. We take the total volume of the stock trade to the upside. And we divide that by the total volume of stocks trade to the downside. And the threshold we look for as nine to one. Now many, many bull markets began with two days in a row two days in a row of more than nine times as much upside Vironment downside volume. And you can see these these charts are just highlight 2020 or highlight 2011. I have highlighted the other nine. But reality is you usually see these double nights where I’ve survived these two in a row when you haven’t seen it. Currently, it’s in my weakest problem because we did see two out of three days we didn’t see two out of two days. We said we did see two or three days. Maybe that’s enough. Okay, but we did not see two days in a row. We said two days out of three days. Let’s get to the next day indicate this is more serious because this is the this is an oversold indicator. bear markets and with oversold conditions. One way of measuring those conditions is looking at the s&p 516 new highs minus 60s new lows over total issues traded and as you can see bull markets in 87 bull market 2002 bull market to garden live in 2018 to 20 were oversold enough to get below the 50% threshold we got the maximum we got to was 40% Early on in the bear market we haven’t get the kind of oversold you normally get is also lacking in other words, in order to get a new bull market. At least if you’re a technical analyst you say it should be preceded by a bear market and oversold condition in a bear market. If for some reason people weren’t convinced enough in the bear market to sell to cause oversold conditions. That’s a very very weak bottom of the bottle that may not last. So this is just evidence of mainly led but okay, but it’s a flip side to this coin. Let’s assume I’m wrong. And let’s assume that every bear market needs to show an oversold condition with for example the 2015 wall to that 16 Odd showrooms and condition now you’re only down 60% We’re down 25% So you can’t really compare it. But let’s just assume that I’m wrong you don’t be as oversold as a want to be but what about on the upside? A bull market should begin with some good strength to the upside seeking new highs. Now this version the same thing as a previous chart rather look at new lows, look at new highs what the 60 day net new high three of 30% The s&p 500. You saw that at the 1982, low Nike 91. Low. So that the the 19 2003 2009 2010 2020 so on, does not see at the current world national upside search of new highs, new highs, a lack, you know, as you know, many of the charts in it, but new highs are really, really lucky not only in the s&p 500, but also in the NASDAQ. The New York Stock Exchange is still showing more new lows and new highs and the New York Stock Exchange. So So there’s something very, very missing from this bull market. Why then one new lows, new highs so long into this move. The move began in October, or January, even December should start seeing more and more devices because he the downtrend in this line, we’re not seeing celebration, new highs. Actually since February 2, we see a major deceleration in the rise and a major increase in new lows. And this is another reason to be skeptical about this market on its purely technical basis. Now, Adam, I know I’ve seen many of your interviews. And I know fundamentally, you could give probably dozens dozens of reasons to see a bear market ahead, based on ATVs. I mean, the many many reasons be pessimistic. But since we’re technicians, a fundamental reason to be pessimistic is not a reason to be out of the market. Let’s face it, the success of 50% Hang Seng is 50% and speeds up 20% or 16%. Excuse me. And as it’s up 22%. And you work, we will attrition the upside even though there’s no logical reasons the market will rally because even in bear markets markets rally, as you know, the greatest bear market from 1993 1980 33, there were four separate rallies in the dow of greater than 25%. So I’m going to point out that I know you’ve done many fundamental reasons to be negative, I’m just giving you the technical reasons to be negative. And this is number one.

Adam Taggart 31:41
And that’s why we have you on the program here for

Milton Berg 31:44
to to confirm the fundamentals. But again,

Adam Taggart 31:48
well that and also to if there’s a story to be made that hey, you know, we think they’re gonna go up in the short term before the fundamentals really matter. Although it sounds like you’re now in a sell mode. But yeah,

Milton Berg 31:58
now we still have back a shift because just this afternoon when the Fed comes out, we never know let’s see what but I’ll get to that in a moment. This is something else. Another oversold indicator we just missed this indicator, bear market you should end when 90% of the s&p 500 stocks trade below the 20 day moving average. That’s basically what happened in the reverse Obama that’s the that’s a call for low. It’s a great indicator of course it gets full single, but every bull market or most of the markets begin with our oversold reading 7582 2002 2009 2011 2018 2020. We just missed it this time. We just missed it. We got close, it got cold we didn’t quite there. So it’s close, but no cigar. Since I’ve given you a list of 11. You know, you could discount this one, there’s still enough reason to think that something’s different this time he has also this should have gotten and it certainly hasn’t thrusted to the upside as it should have should have. And this is another upside for us. This is a more of a longer term indicator. This is a six day versus 18 Day momentum deviation. Okay, basically look at the 60 rating sheet in the s&p versus a total of at the moment in the s&p 16 They have rating the deviation and the single 74 Bottom single a to parliament the one vitamin D to the two to the 20. But look at this, look how low it’s now it has an effect in the pricing and just look how, look how we can This is bull markets, right? Something’s different. Something is different now. Something How can be something different, NASDAQ has rally 22% The stocks has rallied 25% or 50%. And even the s&p has rallied 16%. But yes, either measly rally is relative to what you’d expect in a bull market. And for those who show strong rally that sucks. We’ve seen this we’ve seen this movie before. We saw that in the 1920s the Great Bear market rally which was the came after it which would lead to the greatest bear market in history. And this is a real proprietary oversold indicator. We have 18 indicators we put together that isolate from buy to sell from overbought, oversold. And as you can see, from all these Bs every time you see a D cup also the present level takes place in a bear market bond that actually did signal in 2016. This signal 2018 2011 1988 this signal in 2002. But the reality is it didn’t signal currently. So you didn’t get as oversold. You should have gotten in this bull market or each and oscillators. Now what does that tell you? People say that’s pretty healthy market. It doesn’t get oversold. The metal guy would say well, the marketing it also that means there’s reason to buy people reasons to buy, well, maybe they’re the wrong reasons to buy. Maybe people have been so convinced that you ought to own stocks to make money over the long term. And we’ve been convinced by many people you’ve had on your show, actually, you know that says stocks in the long run and you must always buy stocks and never liquidate your stocks. So maybe people are still convicted they could ever be true beer market doesn’t come back to new highs. And that’s why they haven’t sold and maybe that’s suggested that this beer market may be far worse than any bear market we’ve had in recent memory may last longer than Because don’t don’t further than we’ve seen in recent memory is quite positive. Yeah, it’s

Adam Taggart 35:04
interesting, as you said, we’ve had plenty of experts here that can make that argument from a fundamentals point of view. But to hear you, considering it from a technical point of view is really interesting, you know, that it could be prolonged and more extreme than than a regular bear market?

Milton Berg 35:23
Well, it’s fine, but it’s far more to this can show you it’s why why why should I expect the kind of bull market we had getting from 80 to 80? On let’s say, it’s 1980 is a fundamental reason why you should not expect it currently. And this is probably it’s a fundamental argument. Now, we use fundamental indicators in a technical way. In other words, sometimes we use mental data, but we act upon it in a technical manner, in this particular in this particular instance. is still there. Yes, it is. It’s a very fundamental data. But it’s going to, it’s going to moment, it’s going to give you a reason to suggest that the bull markets we see in the future will not be like the one we saw in the past. Basically, this is the 30 year Treasury that Treasury yields peaked October 26 1981, at 15.212%. So I’m gonna lock that in. And we’re done great. As you know, Gary Shilling was very bullish on bonds at the time, and he and his family bought zero coupon bonds. And they kept rolling him over from every year from 1981 to 2020. And, and they showed a return and now let me just show the the lowest yield was 0.99%. We went from 15 point 21 in 2081 to 0.99% in 2020.

Now, the next chart shows that that bonds get

a zero coupon bond rolled every year for 30 years returned 18% per annum bond, wow, government bonds, stocks returned live with three 3%. So bonds with Lucy stocks is one of the stocks that are boosting bonds, those bonds are boosting stocks, I can argue the reason we have such a great bull market the reason every dip up we should have been bought from 1980 until now was because you had a major major bull market and bond which really just reflects the major major liberal the liberal Federal Reserve policies. The Keynesian Federal Reserve policy is what it reflects, it doesn’t matter what it reflects your the bonds game, he keeps in Puranam on a zero coupon patience, relative to stocks, which gained 11.32%. But I’m not trying to start by doing better than stocks, I’m saying the reason, stock did as well as they did, because of the underlying strength of the bond market could bond stocks, this stock price discounted by the bond by the bond yield, the greater the bond yield, the more hurdle there is for stock to move up. The lower the bond yield, the less of a hurdle. And if you if you believe in this theory, which I do not believe that stock discount future stream of earnings and dividends, then of course, any minor change in bond yields has a major change in stock and stock stock returns. But this is this is a very important shot these two charts, this great bear market and yield with bull market and bonds is probably the source for a good portion of the moving stocks. Now going along now that we know that we’re on a bull market in bonds about 0.99% over 4% At one point, I don’t think you can expect the types of market patterns and stocks in the future that you’ve seen over the last 40 years or so I don’t expect to see that. In other words, this allows for a more extended bear market in stocks than we’ve had over the last 40 years.

Adam Taggart 38:42
Got it. And so let me let me just opine on that for a moment further. So we had this massive financial market tailwind, as yields just went down decade after decade after decade. And you know, 30 year yield bottomed right under 1%. There and 2020. You’re not necessarily calling for a reversal of this, because I think you can make the argument would be really hard for the economy to sustain the same type of yields that it had a couple of decades ago because the debt is so much worse right now. But even if and there’s a lot of people that expect that rates will come back down, you know, once the Fed pivots, but you can’t go much lower than 1%. So even if we just go sideways for a couple of decades, that’s still not the same sort of tailwind that we had before. Right?

Milton Berg 39:37
That’s exactly that’s exactly the point. I’m making the this decline in bond yields from 15% to 0.9. It will never happen in our lifetime. Not not in my private not in your lifetime. Probably not in my children’s lifetime because you first have to get a yield back up to 50% for it, get it back down to 0.99%. This is a historical anomaly. And I think this is one of the reasons that allowed for the A great bull market in stocks that we’ve seen over the period by totally great even just flattens out, the trend will no longer be down for yields over this long term basis, and therefore, you will not necessarily see the great bull market in equities. Right.

Adam Taggart 40:13
So our best case scenario is no tailwind. And of course, the worst case scenario is if for some reason rates do go higher over the next decade or two, the worst case scenario is actual headwinds as opposed to tail winds. It’s just a different world. Yeah.

Milton Berg 40:28
But if rates go up because we like the WIPO Republic or like, like Venezuela, or Zimbabwe, rates go up because if it loses control of inflation, stocks will move up. But just won’t move up relative the inflation rate will still underperform inflation will restart will be some sort of a hedge. Even if bond yields move up as long as bond yields move up because of inflation. In other words, bonds have to catch up to inflation rates as well, if you have a temperate inflation rate, there’s no way you have a 30 year Treasury yielding 3%. So that yield 8% or 9%, is still be below the inflation rate. And that can allow stocks to rally on an annual basis, but not on a real basis. So you have to always remember when you measure markets, historically, we have to look at nominal basis and real basis. For example, some European markets mean to all claim highs now in the local currencies, but on the US dollar basis, they made the height in 2007. So you have to keep that in mind real returns we have good real returns in stocks last 40 years, and are expect good real returns and stocks over the next on the future. Due to one of the reasons because of the fact that Treasury would look canola with declined from 15% to point nine 9%. That does mean that anytime yields will go up stocks will have to go down just means on a relative basis. They will not perform as well they had in the past in bull markets is really weird.

Adam Taggart 41:49
Okay, if I can Milton, let me just ask you to opine on a on a macro question, which is inflation. So So you and I are recording this minutes before. We’re going to hear what the Federal Reserve decided to do here in May. Odds are that they’re going to hike by 25 basis points. Folks will know by the time this video comes out what happened here. My question for you is do you. I’m just asking you to guess here. But But do you think that the Fed will be able to get inflation under control, you know, through the rest of the year, and we’ll start 2024 from some basis where inflation just hasn’t been the issue that it has been? Or do you think that inflation is now going to be a secular problem for us?

Milton Berg 42:41
I think the Fed is serious about fighting inflation, they could get inflation down. I think there’s a there’s that just it really, really depends on what the Federal Reserve really, really wants to do. If they want to get inflation down. They can there’ll be many, many accidents on the way the United States government will have to stop spending as much money as they spend, but they could do if they wanted to do it. I don’t know what’s going on. And Jerome Powell said, I don’t know what he really wants to do. And he doesn’t want to lose his job. And he wants to end he wants to please the president and please, please people wire and will pay pay side pay salary. But on the other hand is another factor that I haven’t discussed and that is there’s a deep deflationary pressures on the economy. And for that reason alone, we could see a decline in inflation. Deep, the deeper deflationary depression, we start seeing a little hint of it with the SVB crisis. The Treasury market is the deepest, strongest market in the world interested in gold and the two greatest markets in the world. They trade worldwide and the people use treasuries as an asset to use it as money use it as collateral. They use it to build their governments and countries and businesses. And so much of the Treasury debt outstanding and not one of the water that’s deflationary. So many people’s net worth, if you really mark the treasuries to market, net worth has declined dramatically, which means people can’t borrow as much against treasuries or liquid in the past people aren’t as wealthy as world’s best and not just People’s Pension funds. It’s government’s sovereign funds, it’s its banks, its commercial banks. It’s it’s everything. So backed on the on the strength of the US Treasury bond. So therefore, I think that the fact that Treasury bonds are in the water is very deflationary. And that is a headwind that is a tailwind for the Fed, and the Fed really wants to fight inflation. They have the fact that there’s so much on the board and as they raise rates, it’s actually more and more deflationary depression, Eric, because of the fact of all this, all of a sudden the decline in in the value of treasury money supply has been declining dramatically. As you know, many of you you’re seeing that the empty money supply, but in the modern era, money supply doesn’t really measure old money. Treasury bonds are money people could trade very easily converted either to cash or convert it to in Kibera against see so as the value of treasury bonds go down worldwide. 30 trillion outstanding of the US government, they got gone down in value by say, 6 trillion or 7 trillion over the last year, that seven six a century does less of potential money. For to my in my opinion, this is a very deflationary. So I think if the Fed raises rates, they can cause an accident, they can get inflation down the meat of the actually the cause is something we can’t even comprehend. I mean, who knows what kind of what kind of negatives can take place? If they actually intend to fight inflation? The best answer I can give is,

Adam Taggart 45:31
okay. And let me follow up on that. And I’m sorry to keep you on the macro side versus the technical but but you’re making such great points. So let’s say that these deflationary forces do bring inflation down, you know, through the rest of this year, and the Fed is leaning into killing inflation. But then something does break. Right, as you as you sort of intimated there, right. At that point, a lot of people think that the central banks will pivot, and then we’ll respond with substantial, you know, return to liquidity and easing and all that type of stuff. Now, you mentioned earlier, Weimar and hyperinflation and whatnot, do you sort of have an expectation that at some point, the central banks will flip back to in a really aggressive easing program?

Milton Berg 46:24
I’m pretty sure

that ultimately, the central banks will lose control one way or the other. I don’t know which way I mean, I don’t believe in central banking, I think in the modern era, you need a central bank, you know, central banks have started in the 19, early 1900s, when socialism and central planning was the was the end thinkers, it was a elite idea of having a central bank nightshades went very well, for 100 years without a central bank, central banks are unnecessary. Central money isn’t necessarily I mean, I mean, if I if I own some Apple shares, I should be able to go to the Apple store and buy a via a MAC MAC, by giving some of my shares away. I mean, what can that be my money? Why is money has to be $1? Why can any acid that’s transferable and tradable BB money? Anyway, I think the central bank idea is a very old fashioned idea, and the money or anything that’s tradable, anything that has a value each day could be money. But having said that, I think that this idea of a central bank, no longer is going to work, they had to wait. I mean, they never they used to only buy treasury bonds, that safest collateral the last crisis, they started buying mortgage bonds, they bought it, they bought, they took they took over Bear Stearns mortgage portfolio. I mean, this is not something a central bank should be doing. So the central bank is not a central bank, central bank, they keep our money safe. The value of the US dollar has gone down 99% Since the Federal Reserve was instituted in the early 1900s. So therefore, I’d say that no it one way or the other either would have deflate, or going to inflate, like you know, but I don’t see any central I would see I don’t think to going back to normal. If they inflate, you want to be long stocks just on a relative basis to better off and only only cash. If they’re going to deflate. You want all cash. And it’s a difficult story. But I think it will be on the point of where we’re thinking and actually get get to the way that I think we’re well beyond beyond repair at this point for the dollar and for the central bank vaults. Reflect Okay, now reflects the market we don’t know.

Adam Taggart 48:23
Well, Milton will want to have you back on again in the future repeatedly. So you can you know, share the updates on your charts with us. But if we ever get to a point where you feel like you’re getting more clarity on which route we’re gonna take there the death by fire a death by ICE, we’d love to hear you. Come on and tell us which way you’re saying.

Milton Berg 48:41
Thank you. Enjoy the interview. Appreciate all right. Well,

Adam Taggart 48:44
real quick here, just as we wrap up, I want to give you a chance to share with people because right now you’ve got to we sort of started this conversation off on on a short, you know, the shorter term outlook. In other words, your models have said hey, it’s time to sell it sounds like you’ve you’ve gotten somewhat short to a certain extent. Are there any particular asset classes or positioning strategies that you think work particularly well for what your TA is telling you right now? Well, I

Milton Berg 49:14
should have mentioned earlier, we actually got one goal with long gold and we think gold should do well this is a chart we it’s our own chart of the gold in multiple currencies. With GDP weighted there is not not just gold in all currencies but gold in multiple currencies wait for GDP. As you can see, a potential triple top but triple tops in commodities are very, very rare. Usually see a double top you see a turning at the third high that a breakout to the upside. So I can show you a little bit of a close up of this chart. Where we are now right here you see we actually broke above the 2020 highs. We both live in highs. We broke above pull back and this night the chart isn’t updated to today. 33 April 28 As of yesterday is pulled back above this red line. So technically, I think gold may be setting up for a historic rally above the previous double top. And that’s how commodities act. So we’re taking a bet on gold. And again, what we do is we have very tight stops if we get back down, but if we get above it, and we come back down bulls whine, to say something different, but this is the very first thing he talked about is not pricing gold. It’s the price of gold adjusted for currencies worldwide, and a GDP basis and GDP just basis. I don’t think you’ve seen this chart before. I think he also has this chart.

Adam Taggart 50:30
I haven’t I’ve seen a lot of gold charts. Yeah, and

Milton Berg 50:32
this is just an amazing is it an amazing playthrough. I know, I just if I could highlight a little bit more. Just to show you this is the meeting here this year. You see, what you see over here is a breakout above two previous highs. A slight pullback below it now we’re getting back above. So technically, what’s possible doesn’t have to happen, you know, it’s all probability. Technically, you can see you know, something like this in gold GDX is sort of showing similar stuff, your GDX is one of those indices that are up 60 Over 60% of its October law. Now that might be a bear market rally except Oh, somebody buy gold, which, again, people haven’t mentioned. Another you know, all technical stuff. I will get into fundamentals. But let me show you something else about gold. Here it is a should happen in this chart here. Look at this. You see this gap? Gold trades 24 hours a day. It’s very rare to see an upside gap in spot gold spot. Oh, this is that the GLD ETF this is bad old master teeth is your rear and bullish upside gap right here. Now for technicians know an upside gap or follow the breakaway gap. And this is not updated Charlie Bobino. Bullish now, way above here. So build it back up to here. Anyway, the point is, this is a we’re bullish chart formation in gold. I don’t see any technician mentioning that. It is another reason to think that maybe maybe we’re heading for that super runaway move in gold, which we haven’t really had in quite a while.

Adam Taggart 52:00
Interesting. Alright, a couple of questions for you. First, I’ve heard the old adage in technical analysis that all gaps get filled. What makes a gap bullish as opposed to one that you think is going to have to be filled?

Milton Berg 52:12
Well, that is totally untrue, to say that all gaps get filled. totally untrue.

Let me see if I can prove that just right here. Well, let me give you the best example. We’ll

get go get filled. Let me get filled eventually, maybe, maybe we should do this one.

Just because it’s such an important gap was chosen. Let’s get back to one to get mine to one. Okay. Well, I don’t have a

nine even though I don’t believe all gaps get filled, I think people to say that some some gaps, a great big great breakaway gaps that never ever gets filled. And if it comes early on in a move, that means that there’s a major change in psychology and a major change in supply and demand. And no, I wouldn’t say I wouldn’t say in this instance that you expect that gap to get filled.

Adam Taggart 53:10
Okay, if you could do me a favor, go back to the the GDP currency and GDP adjusted article you had there. Right here? Yeah. And keep it just like that. Okay, so when you first I mean, I’ve seen a lot of charts of gold, even just gold price action itself. And there’s this sort of, you know, decade plus long formation that it’s called a cup and handle formation. And this certainly looks like one and when you have the cup, and then you have the handle when the handle finishes building, then the thinking is you get that sort of, you know, off to the races run higher. Do you see this as a cup and handle here?

Milton Berg 53:56
A couple of classic company Yeah, the company who would have been here, the company handle was here, we’ll show you where what the true company one company that takes place when you had a previous high, which is right here in 2011. Right? This is the cup and say this pullback that could have been the handle right. And then to the breakout, which works out I see the market is great. But this is not a company handle at all. Because this this one is not a couple of the end of this one here. It’s just not because it’s too it’s too far below the previous high for the company handle the company approaches a prior high, pulls back and then breaks out. So I don’t see profit hill here. But if you want to get this long term chart, why not you know, cut beginning in 2011. And the handle took place in 2020 and it broke out and so that’s the breakout right above it okay to break out there. And for long term. Gold is not a short term instrument for this major long term move, but you know, people aren’t aware of people always think gold is an inflation hedge. So I always point out that this chart is not a long term chart but go pick the 1980 roughly a year if not announce the balance in the year 2000. That roughly $250 An ounce of dolphin 850 to 250. By a percentage decline over that period CPI was up 100%. We had prices doubled, and gold was cutting more than half. So that argument that gold is a as an inflation hedge, it doesn’t hold water over the over the short term over the long term. If you want to park your money away the credential, the great grandchildren the safest place to put it into gold, no question about it. Because you know that 100 years from now, 20 years from now, you’re probably saving them out for goods and services if you’re not to go damage provided. But I’ll just say that inflation with a Golden’s up there’s really no evidence for that. The perfect reason, proof against that is from 1980 to 2000. Gold was down from 850 to 250. On CPI doubled.

That’s clear evidence.

Adam Taggart 55:52
Yep. Yeah. All right. Well, two last questions about gold, and then we’ll wrap things up. First is I’m not trying to pin you on our prediction. But when you draw that arrow, you know, saying, Hey,

Milton Berg 56:05
here’s a gap in GDX. This wasn’t sold as a breakaway gap right here. Yeah, one day after the lowest latest correction, we collected 20 point 26% In three days, from the from February 24. High. And here, you want to pull a breakaway gap VC with a certain result. This was an exhaustion gap on April 30. He declined to meet at 10%. Since then, and probably headed back up, man. Yeah, we are is the fact that that the fact that that that people say gaps are always filled, they like to say, but it’s not really true that certain gaps or exhaustion gaps, they come after one move. And then the exhaustion gap the gap filled in the day to the change of trend. That’s another story. But every gap is filled. No, they’re there. They’re exhaustion gaps, they’re breakaway gaps, there are Metrion gaps, and a bridging the gap generally is not filled, but a bit especially gap must be filled in.

Adam Taggart 56:56
Okay, and that’s great clarification to hear, because I think, you know, sometimes the average investor or trader, you know, here’s a saying like that, and they assume it’s a it’s a universal law, where you’re saying no, you actually have to really understand that the trade. But sorry, getting back to the question, I’m just going to ask because I know it’s all a lot of people’s minds. If gold does break out from here the way you think it could. What sort of how high do you think it could go? I’m not saying you’re making a prediction, it’s gonna go that high, but based upon low eta,

Milton Berg 57:27
it will let me let me just say earlier moving gold or variable gold, very soon, say 40% or 60% Move and runaway move. If you’re going to see the runaway began at his breakout, you’ll see the bigger 1800.

Just give you some idea. Before you can move, we’ll take it to 2520.

But let me show you something else that goes when we ask you that question is it I’ve rolled it out to the CPI says this is the CPI ratio of golden CPI. Even if gold just goes back to the trendline right here,

scroll goes back, goes back to here.

Let’s go up to here it goes up here.

Here we go again. We’ll trade back up to the trendline.

If you took another 30% from here anyway, even in a bear market, even in a long term downtrend relative to CPI.

Adam Taggart 58:27
All right, and we’re at we’re at 2000. So 30%, the other 600 Yeah. All right. Well, it’s so it’s not in your you’re helping me out here and you’re not helping me out here. We talk a lot about gold on this channel, you’re giving us a lot of new ways to look at it, which is super fascinating. I get a lot of people who claim I’m a gold bug. And then I only bring people on this channel who were pro gold. I had no idea what your position was before you came on this channel. I do find it so interesting that so many different experts that come on this channel, whether they’re macro focused, whether they’re ta focused, whether they you know, are a blend of the two or whatever, so many of them, not all of them, but so many of them right now have been, you know, sharing that they think that gold looks particularly attractive right now and you’re giving us an additional piece of that puzzle. So thank you. As we begin to wrap up here, Milton,

Milton Berg 59:20
say the second part is a failed breakout tell you it’s going much much lower. We’re at a breakout level. You see what a brick, I’m just telling you that if this breaks out, this breaks out it’s an Rasen but if it fails, you know this is a triple top very rare. I’ll give you the evidence of validity I’m not a gold but most of the gold up on your show I believe a gold bug lunch and gold books.

Adam Taggart 59:43
They a lot of they’re really they’re not we have a couple most of them are just analysts here saying that there’s

Milton Berg 59:48
very good reason to be bullish gold because what is the money the dollar is dollar is worthless. I mean, you have a Federal Reserve debasing the dollar. Bitcoin is a fraud. Basically, it’s a fraud. So if you want to park it You can’t park your money in stocks anymore because we’re in a bear market so probably a very good place to park your money as I say anyone wants to be sure that the great grandchildren will have something of value leave them gold only than Apple stock believe anything else because things change but the fact that gold is a valuable asset will never change that will

never change

Adam Taggart 1:00:19
all right well and obviously a good way to play it if you if you are believing that gold is going to perform well you can get sort of a leveraged exposure to it by investing in the miners and it looks like your your charts here are showing that if gold goes breaks out from here the miners will probably break out even more extremely correct Yeah,

Milton Berg 1:00:36
yeah even though generally miners move at least to the ones to the upside which they’ve been doing that at this point as well. At the miners you know, the mines are way below where they weren’t 2011 They don’t have a chart 2011 You have that the way below their gold is above is to that level in price the miners way below it’s and why is it well, I like to go to the upside now it really one problem with gold miners as opposed to gold itself. Gold mines are wasting assets. The more successful they are, the less gold they have in their reserves, the more they take you out of the ground, unless you have in the ground unless you make new discoveries. When you want to buy gold, you don’t know this, I managed to launch gold fund in the United States in 19. At Oppenheimer, I managed the Atlantic Gold Fund, which at the time was the largest single United States based gold equity funds I know a little bit about gold. So gold miners you have to know the or isn’t the cleaning asset meaning that mining a lot of gold, but that making discoveries to replace it, or are they increasing asteroid mining like gold, but they have good research and development they’re able find new new assets. That’s really the key when you fly by gold. So when you buy the GDX you know, it’s just it’s just a basket. Some of the companies are great and some of them are not

safe to buy basket.

Adam Taggart 1:01:48
Right and we’ve talked a lot about in this channel so i won’t totally rehash it is if you want to play it safe and just capture the beta the industry just by GDX and play it that way. But there’s some benefit to your point of following analysts that follow the market really closely that sector really closely to put together their own baskets of what they believe is more of the wheat versus the chaff and you can get real alpha that way. Exactly

Milton Berg 1:02:13
or show a technician when you when you vote breaks out by those stocks that are breaking out don’t buy the language by the leaders. Great point if you’re buying for trade if you’re going for trade you know you’re going for investment that’s a different story. But why do you want to trade you want to get the greatest beta for the feed for your buck? You buy the stocks that are breaking out along with gold don’t buy the laggards.

Adam Taggart 1:02:35
Okay, I’m just curious is that is that advice for investing in the gold sector? Or is that advice and investing in most sectors?

Milton Berg 1:02:43
Well in most sectors

when you breaking out to new highs

it studies on the stocks outperform relative strength outperforms non relative strength that’s a general rule. You put a basket of stocks as a trader not as an investor for the long term. You’ve got to look at the lead and look at the look at ARC look at Kathy Woodson stocks with relative strength into the top but the Trump job relative strength as a declining so for trade you want to go to relative strength so I’m saying if you want to trade the gold breakout you want to do two stocks buy the gold stocks that are breaking out along with gold as opposed to the ones that are you could say safety but stocks in general you can it’s a general rule to make gold with relative strength as a trader not as an investor. Warren Buffett doesn’t go with the relative strengths that goes with the cheap stocks value stocks.

Adam Taggart 1:03:35
Yep. All right. Well, gosh Milton look I can go for two or three hours with you I just every time you say something sparks another interesting question in my mind. Real quick. I just I’d love to ask you as a favor that if you see this gold you know, potential breakouts failing. If you’ll at least send us a note so I can inform our our viewers that that you’re seeing something that might be negating it, because we should we should know relatively soon one way or the other, right?

Milton Berg 1:04:08
You shouldn’t be able to see. Okay, good. Okay, great. Well,

Adam Taggart 1:04:11
this has been fantastic moment look for folks that have really enjoyed this discussion. And thank you for giving us so much of your time and so many of your charts and I feel like we just scratched the surface of the iceberg on your charts. So we’re gonna have to have you back on again to go go through some more at some point. But for folks that have really enjoyed getting to know you through this discussion and would like to follow you and your work where should they go?

Milton Berg 1:04:33
We have a website. It’s not It’s Milton berry.com You think and we have a an email info at Milton Berg the chairman that we contact our real marketing department info at Milton burns.com.

Adam Taggart 1:04:47
Okay, great. And Milton when I edit this will put up the URL to your website into that email address as well. And thanks for having the courage to share your email address. I’m sure you get a lot of emails from folks Hear, folks, thanks so much for watching with Milton. If you’ve enjoyed this conversation half as much as I have, please do me a favor, support this channel by hitting the like button and then clicking on the red subscribe button below, as well as that little bell icon right next to it. And if you’d like some help, potentially in putting any of the strategies and tactics that Milton has talked about, into practice in your own portfolio, unless you’re already a highly experienced trader on your own, I highly recommend that you work with a financial professional advisor that takes into account all of the issues that Milton talked about here. If you’ve got a good one, great work with them, but if you don’t, or you’d like a second opinion from when you does, I then consider scheduling a free consultation with one of the financial advisors that Wealthion endorses, just go to wealthion.com To do that you fill out the short form there doesn’t cost you anything. There’s no commitment to work with these guys. It’s just a public service they offer. Milton, thank you so much. This has been a great discussion. I really look forward to having you back on the channel again soon.

Transcribed by https://otter.ai