Massive Stock Market Meltdown Looming? Gold Primed for Explosive Surge | Chris Vermeulen

Craig: Hello again from Sprott Money News and sprottmoney.com. It's the month of September. Things often get a little dicey in September and October, especially in the equity markets. So it's time to check the charts, with your monthly "Precious Metals Projection" video. I am your host, Craig Hemke. Joining us is my usual co-host, Chris Vermeulen of thetechnicaltraders.com. Chris, good to see you.

Chris: Good to see you, Craig. Always a pleasure.

Craig: Hey, two things before we get going. One, as I always ask you to remember, remember Sprott Money. They sponsor and pay for all these podcasts and videos. So, thank them. Thank them with a like or a subscribe on whatever channel you're watching, or be sure to check out sprottmoney.com anytime you are in the market. Look at that, new, [inaudible 00:00:46] Eternal Sun or something, those are called. They got those Sprott rounds. They got that referral program. Any order over $500 gets free shipping. So, buy yourself some physical silver, some physical gold, at sprottmoney.com, or call them up at 888-861-0775. One other promo, for our Canadian friends. My good friend Chris is going to be at the MoneyShow, in Toronto, here in this upcoming weekend, on Friday the 13th, and again on Saturday the 14th. If you're attending the MoneyShow in Toronto, Chris, what? You got, like, a booth? You're giving a couple of talks. How do people come find you?

Chris: Yeah, I think around 2:00, 2:30 on Friday, I'm doing a talk, talking about asset revesting, and how to kind of attack this potential bear market coming. And I've got a bunch of cool giveaways, some gold giveaways, actually, believe it or not. And I've got a booth there, and I'm gonna be book-signing. Everybody who attends gets my book for free at the front door, so I can sign it, we can chat. And then on Saturday, I'm doing a longer workshop, talking about the nitty-gritty of gold, the equities markets, bonds, the economy, real estate, talking about those cycles at play. So, yeah, lots of cool stuff going on this weekend there.

Craig: Real-life celebrity, in person. Christopher Vermeulen. How about that? Hey, and by the way, usually I see your smiling visage when you talk, but instead I'm getting the Sprott Money page cycling through. There he is. Hey. So, when you go to the MoneyShow, this is who you're looking for. This guy right here.

Chris: Right here. Right here.

Craig: Anyway, that's awesome. Again, please... I mean, I'm sure it's gonna be a great show, with other great speakers, too. But Chris will be there, if you wanna stop by and say hello. All right. Let's dig in. We do these usually in about the first week of the month. When we were back in August, only a month ago, we had this Japanese yen carry trade unwind was all the rage. The Japanese yen had been going... The dollar/yen been going down, which meant the yen was strengthening, which meant this carry trade was unwinding because of a little itty-bitty rate hike in Japan. Everybody's freaking out. Billions and billions or whatever of dollars need to be liquidated. On August the 5th, not only were the markets down, gold was down, silver was down. And then we got into the week, and everything seemed to bounce back, and they've been now kind of stable for a couple of weeks. So, let's start there, since it's been an eventful four weeks, Chris. What do you see in the equity markets in general?

Chris: Yeah, I think there's kind of a big play going on in the equities markets. And if we take a look at the chart, the QQQ is a pretty good example. We can zoom way back here in time. And I like to use like Stan Weinstein's four-stage analysis, and he uses the 150-day moving average to get an idea of are you in a bullish or bearish environment? And I have overlaid that with this blue line on the chart. And so, just so people get a visual from a really simple high level here, these are the four stages that the market goes through. And everybody likes a stage two, which is a bull market. I believe we are in this stage three topping phase. Lots of things coming together. Economic data, unemployment's going up, debt's rising. I mean, there's all kinds of things happening that are telling us the economy's slowing. But long story short is, if the moving average is sloping up, and price is generally above the 150-day moving average, then we're in a bullish phase. But when the price starts to test the 150-day, or the 150-day starts to flatline, then we're in either a big pause before going higher, or we're on the verge of a stage four. And I believe we're in a stage three because there's a lot of things unfolding telling us not only is the stock market weakening and trends are changing, with rates, and all kinds of other stuff, the economic data is also starting to change.

So, when we look at this chart, for example, of the QQQ, I mean, there has been a ton of fear over the past few sessions. But the reality is, the moving average has been up. We have the QQQ above it. We go into a bearish environment in 2022. We are still in this rising trend environment. Now, the market is definitely showing increased volatility. It's pulled back a few times to test this level. So, we are actually seeing this type of price action that's happening behind the scenes, like, under the hood of the market, is actually very similar to over here. So, I believe we're starting to actually run out of steam with this bull market leg. And we just have to see what's happening. But it's pretty crazy, because we really only had two big down days that caused most of this most recent damage. And of course, it caused, like, massive panic in the markets over the past few sessions. And that's telling us everybody's really jumpy. So, I do think we're close to a major trend coming to an end, and we go into a bigger pause or sideways move, and maybe it bleeds into something way bigger, like a stage four financial reset, like 2008, or the tech bubble. But I think everybody needs to be aware. Volatility is high. Underlying technicals are corroding and breaking down, and telling us that there's not a whole lot of upside, if any, left. And be aware, it's about to, you know, we're gonna have to change our strategies to benefit from falling prices here, versus trying to benefit from rising pricing.

Craig: Yeah. Yeah, on the daily chart, kind of looks like there's a little double top there, which, to me, is, I mean, kind of a classic double top. A spike up, and then you pull back, and then you get a rounded...

Chris: Yeah.

Craig: ...second [crosstalk 00:06:25]

Chris: And also, like, generally, the markets top out in August, and sell off through September and October. So, we're, like, walking right into it, right? Like, it's, like, prime time for the markets to sell off. They did top out in August, and now they're starting that slide. So, seasonality-wise, you know, people think, you know, everything's falling apart, but really, the market's just having a pullback. This is what it does, on average, every year in this time. But there are obviously, there's a lot of technicals behind the scenes that say, okay, this one could be the start of something big, but again, it's nothing out of the norm at this point. It's just a market correction, and that's about it.

Craig: Okay. To make it appear [inaudible 00:07:03] it's out of the norm, what do you, watch those lows on August the 5th? I mean, would you have to break down and close below those, or what should people keep an eye on?

Chris: Yeah. I mean, the NASDAQ, from a short-term basis, actually started a downtrend a couple days ago, from our technical standpoint, from our shorter-term strategy. So, it's actually showing some big distribution selling. You can actually see that with the volume spikes over the last two weeks. Every big spike has been big selling institutions, people unloading shares. We had, the previous several weeks was massive selling. So, the NASDAQ's kind of turned down from that regard. The S&P500 is still holding up, holding onto a thread. It has potential to have a bounce and rally. So, the market has this mixed signal. And overall, I mean, I wouldn't be in the NASDAQ right now. We're not in the NASDAQ, simply because it's telling us it wants to go lower. Seasonality-wise is pointing there. So, I mean, we don't bet on falling prices right now. Instead, we'll move to a different asset, that'll hold value and go up while the stock market chops around. And that's kind of our core strategy, is when the market is in a stage three correcting, or in a bull phase, we just move out of stocks, and move into something else. When we start one of these big stage four declines, that can last months and months, or years, that's when we buy inverse ETFs, because that's when the market falls consistently, like, week or month after month. So, right now, we just, getting away from stocks, looking at potentially bonds, which you and I talked about, I think, in good detail last time, and why I'm excited about the bond market over the next year or two.

Craig: Well, and we bring this up because folks that remember the morning of August the 5th, if it had a bid, it was getting liquidated. And the precious metals trade 23 hours a day. So gold fell about $100 in about four or five hours before the COMEX even opened back on that day. So, this is important, and it's something that, especially if you're a trader, you need to be following. You know, let me ask you about another one. Again, something having a bid that gets liquidated. The crude oil chart, the continuous front month crude oil chart, posted its lowest weekly close, back on Friday the 6th, lowest weekly close since March of 2023. And again, there you go. Everybody can see that. I wanna get your thoughts on this, because I look at that, I see, it seems like every hedge fund is bearishly positioned. All the big sell-side banks are putting out bearish calls, as if they're just trying to draw everybody in on the short side. But what do you see in the chart?

Chris: Yeah, I mean, the chart definitely looks bearish to me. Obviously, we've had this massive oversold, like, negative-value crude oil, to, like, way up here to nosebleed, almost record highs. And now it's pulled back, and it's in this, what looks like as a pause, a bear flag, pointing to lower pricing. And just based on this price action, of what's been unfolding, it is pointing to about $45 a barrel, or potentially lower. If we just kind of put a line, I mean, I think it could go to $40 fairly easily. And it's been there many, many times. Really, just only a couple years ago, it was way below that, and going all the way back... So, I do feel like we're heading into weaker times. Many countries are already in a recession. I think demand, things are just on the cusp of slowing down. And I think that's probably why I believe we're seeing oil go down. I think we're seeing less demand. I think investors are starting to bet on less demand being needed. So, I am expecting it to break down. To me, it looks really bearish. But as you said, the market has a great way of trying to get everybody short, and then going the other way. But the chart, to me, is bearish, and it's starting to break down.

Craig: Well, and again, why do we mention this? Well, crude oil at $40 or $45 would probably give you some idea what the global economy is doing at that point.

Chris: Yep.

Craig: Now, that doesn't lead you to into one side of the trade or the other for the precious metals, because you could say, well, you know, we, all kinds of QE might be coming if the global economy's that bad. But if crude's getting dumped out, and if the stock market's going down, you know, you may get an opposite trade first, like we had back in 2008 into early 2009. Let's take a look at the gold and silver charts, because they're an interesting dichotomy. Gold has had just a heck of a year. It's up probably 25% year to date. It's, I mean, we should all be excited, right? I mean, it's broken out. You got the weekly... Are those weekly or monthly candles [crosstalk 00:11:38]

Chris: This is a monthly chart, yeah.

Craig: How many green candles is that in a row, my friend? Can you count them? It's a lot.

Chris: Oh, man. I mean [crosstalk 00:11:45]

Craig: [crosstalk 00:11:45] I guess there's a little itty-bitty red one in there.

Chris: Yeah, but it is super bullish. I mean, this is, like, gold is primed and ready. It's already rallying. It's bullish on pretty much every chart timeframe right now, so, I mean, no one can complain. It looks really good. The daily chart, when we drop to it, has had a beautiful little pause. It's been trading sideways, towards the 20-day moving average. There's been some weakness and some fear in the market, which has kind of muted gold a little bit, but it hasn't fallen. It's just paused. And I think we're about to see it start to move higher again, and have another leg up. And I think $2650, $2700 is just, any day, any week here, it's gonna pop and rally there. And once it gets there, that's a big measured move. You and I have talked about it before.

Craig: Right. Right.

Chris: It's, like, a 20-year cycle measured move. It's this bullish, just this, over this year, also points there, a longer-term... So, there's multiple timeframes that point to $2700 or so, is kind of right dab in the middle. And once it reaches that, I do think the stock market will probably have topped, or very close to the top, and I don't think gold will go a whole lot higher until I think we have a financial reset. And this is something you and I have been talking about for, really, a couple years, as this, you know, when we look at gold here on the monthly chart, we've been in this multi-year consolidation. And, you know, this measured move, just based on this low and this rally and this pullback, is still telling us $2700. And this is going back...you know, we started to map this out somewhere over here in 2023, saying 2027 is the next major measured move. And if we were to take that from this high to this low, it also gives us the same one. That's, like, a 24-year pattern that plays out, so it's gonna be really interesting, we hit that level, how gold reacts at that point. And I think it'll be a turning point, not just for gold, but it'll be a turning point for the economy. A lot of assets, I think, you know, things always have a weird way of lining up, right? And they all happen together.

Craig: Mm-hmm. What's not lining up, and maybe...we'll do this chart for sure, and we'll see what else is on your mind, is the silver market. I've been, on a fundamental side, I've been trying to at least explain what's on my mind. I see silver kind of as, like, a hinge in the middle of a seesaw, with gold on one side and copper on the other.

Chris: Right.

Craig: And since May, gold's gone up and broken out and made new highs, but copper's down about 20%, and silver's just kind of right in the middle, down 10%. So, what do you see? I mean, all I see there is lower highs and lower lows. [inaudible 00:14:24] this chart higher, a move from here off that blue line, you wanna come down and get a little double bottom, about $26.50. What do you see?

Chris: Yeah. I mean, overall, the chart, I mean, I think we're in a time, with the major cycles at play, and, you know, major bull market cycle, I think, coming to an end, a stage three top, the economy about to go for a downswing. Everything is coming together for precious metals to be in this sweet spot. Gold naturally holds up generally almost always better, and wants to go higher in this window. Silver should follow suit. Now, this beautiful run-up, and this kind of three-wave correction, is a very good sign. It's actually this little three-wave correction right here that breaks this low, that spooks a lot of people out. We can see there's a lot of fear, and people bailed out of the play. And now it's trying to stabilize, and build a launch pad and a base to start the next run, because technically, you know, this is a, we can use Fibonacci measured move, where we would draw these lines, and it points us to $34 to $36 an ounce, fairly conservative for silver. So, silver, I mean, it needs that rocket ship to get sparked to take off. And it's a more conservative...not a conservative. It's a more aggressive play, that fear in the markets will pull it down. It's not quite the same global safe haven play as gold, which is why it's more volatile. And it's a tiny market. But overall, I mean, it's like trading, silver, to me, is like a junior micro cap stock, you know, in...it's just totally different than gold. Gold is like a big large cap, a big-moving beast, that's stable, and then silver's the micro cap of them. And once it starts to run, it's gonna be pretty good. I mean, it's bounced off the 50-day here. And I think this multi-wave correction is enough to shake things up, confuse people. And if it can find traction and break that, and close above 30, I think we're off to the races to $34 or $36.

Craig: If that happens, let's do one more, how about the GDX? You know, if silver goes to the... Well, first, I should point out, silver and GDX are very closely correlated. Just even look at the chart, you'll recognize long-term how much they look alike. Can you pull up a monthly chart of the GDX? I'd like to see what you think of this, and show, have people look at the same thing. There's what I call the mother of all pennants on this. That peak back in August 2011, under the "E" and the word "MINERS" up there. Next one over. Yeah. That connects perfectly, perfectly, to the peak in 2020 and the peak in 2022. Look at that. Isn't that crazy?

Chris: Yeah.

Craig: Hey, you draw one off that low in early 2016, and you got the lower band of that pennant, and it pretty much catches all those.

Chris: Yep. Yeah.

Craig: So, what we have here is the early stages of a breakout of a 13-year pattern, Chris. You would expect, at least I would expect, some kind of back-test, right? [inaudible 00:17:30] what had been resistance is support. In your experience, you have that long of a pattern that you're finally resolving. How long does it, is it a sharp resolution, and it really takes off fast, or is it something that plays out over, it was 13 years. Does it need a year to play out? What do you think of that?

Chris: Yeah. I mean, I think the miners space is still gonna have a lot of struggles. I do think gold, silver, and miners here, I think we could see GDX maybe push up to $45, maybe squeeze, like, up into the low $50s, if we get one more final, like, real kick, real push in the precious metals space. But overall, I mean, we had this major top, and then, really, it went into this major bottoming formation. We've carved out a bottom forever. We started to see some big bouts of buying, where investors moved in, and that busted through, and now it's faded down into that base, and now it's starting to come to life. As you pointed out, it's breaking through this falling trendline, and it is showing signs of life, that it wants to go higher. So, I like it. I mean, we're long GDX, and I think we've got some upside potential here, and I think it's short-lived. It's a trade. I believe, if we go through a market correction, I think GDX will be right back down where it is, or lower, and then you reenter it once we go through a stage four decline, a reset, and then it'll be a big opportunity after that. So, the whole precious metals space, I'm bullish on over the next couple weeks, couple of months, depending how long the market wants to drag this out. But, to me, it's not a long-term buy here. Not yet.

Craig: All right. Can I ask you to pull one more from the archives, while we're at it?

Chris: Sure.

Craig: Because I realized I forgot earlier you had the S&P seasonals up, and how August and September is typically a kind of a tough time. How... There you go. Brother, look, you are on it. Check that out.

Chris: Yeah. Obviously, September, right pretty much where we are right now is where gold finds traction, and takes off, into October. And the daily chart is, like, teed up perfectly for this. It's just had, like, a two-week pause. It's hit the...it's faded into the 20-day moving average, which naturally acts as support. Seasonality-wise, for some reason, everybody wants to buy it right now this time of year, and wants to drive it up. So, I mean, I like gold. Gold should rally, potentially, into the end of the year, obviously not in a straight line, but I'm expecting, in the next two weeks, we should hit $2,700, or, at least in December, once this upward whole trend seasonality-wise has moved in. So, everything is pointing to $2,700, roughly, on gold.

Craig: Well, that next peak on that chart is about the next time we're gonna record one of these videos, Chris.

Chris: Yeah, pretty much.

Craig: How about that?

Chris: Yeah.

Craig: So, this will be fun to watch. I mean, there'll be a lot of water under the bridge, over the next four weeks, before we record again. Most importantly, that next FOMC meeting. [inaudible 00:20:38] on Wednesday the 18th. And we'll find out whether the Fed's gonna cut 25 basis points or 50. Probably...in my view, 25. Powell's a little too pragmatic to do 50, but it'll all be in what he says afterwards, that press conference, how he answers questions, what he says, how he says it. We'll get that behind us. Gosh, we'll probably have another jobs report in the U.S. There's all kinds of stuff that's gonna happen in the next four weeks. I can't wait to see how the charts look the next time we get together.

Chris: For sure. Yep.

Craig: Well, I hope everything goes well at the MoneyShow this week. And again, invite everybody to stop by, see Chris. I don't know if Sprott Money's gonna be there, but I, you know, they probably will be. I don't know. You might look for that booth too, if they are. And anyway, be sure to stop by sprottmoney.com at least, and get yourself some physical metal on the way out. Never a bad time to add to your stack. And I think, with everything else going on in the world, it's certainly a good time to give that some thought. 888-861-0775 is the phone number. Ring them up, and see if they can help you out. Chris, thank you so much for your time. It's always fascinating, and I'll look forward to seeing you again next month.

Chris: Yeah, thanks, Craig. Take care. Bye-bye.

Craig: From all of us here at Sprott Money, sprottmoney.com, thanks for watching. Keep an eye on this channel, though. Still early in September. There's more to come here this month, and we'll look forward to talking to you again soon. Bye-bye.