Greg Weldon Exclusive: “Silver Is on the Launching Pad, Waiting or Ignition”

Mike Gleason: It is my privilege now to welcome in Greg Weldon, CEO and President of Weldon Financial. Greg has decades of market research, and trading experience specializing in the metals, and commodity markets and even authored a book back in 2006, titled Gold Trading Bootcamp where he accurately predicted the implosion of the U.S. credit market, and urge people to buy gold when it was only $550 an ounce. Greg is one of our favorite guests here on the money metals podcast and it's great to have them back on.

Greg, thanks for the time again and welcome. How are you?

Greg Weldon: Great, my pleasure, Mike, how you doing?

Mike Gleason: Doing very well. Well, Greg, I want to commend you first off because you absolutely were all over this move in gold. We talked to you back in early May, and you told us that silver and the industrial metals would lag, which they have. And meanwhile, despite that sluggishness and the overall metal sector, you were impressed with how gold was doing based on the fact that the dollar wasn't breaking down at the time, but you were anticipating that it would. And then gold, if it could get above $1,344, that people would want to be involved because we could see some real fireworks in a big move from there. So fast forwarding a bit, we saw gold move up in that range in early June, and it flirted with that key level of $1,344, that you spoke about for a couple of weeks. And the first close we finally got above $1,344, was last Tuesday, June 18th to close it about four $1,347 from what I saw.

And just like you said back in early May like clockwork, we then saw it gained like $80 immediately in the four or five trading days that followed that June, 18th close. So, well done on that one Greg, I've got to commend you again. So here we are now as we're talking on Wednesday afternoon, we've seen a bit of a pause on this rally. We're still looking at a spot price about $1,400. So now I'll ask you what you're looking for going forward for gold. Does the rally continue? And do we match towards $1,500 and beyond, or do we see a pullback?

Greg Weldon: Well, let's go short term first, and then backtrack because where we are right now, the high this week in the futures contract, $1,433, if you go back the interim high during the decline off the 2011 secular high, you hit an interim low in the middle of 2013 and you had a counter, what was then a counter trend rally? The high there was $1,429. So, it's interesting, you're $1,429, six years ago and you're $1,433, here and you have something of a pullback, you have something of reversal, two days left in the week, this could end up being kind of a reversal week. So yeah, it could pull back, but I think that this is not really enough of a resistance level to bail on positions. I think this pullback if it were to materialize would probably be a buying opportunity.

I could see support in the $1,360/65 area. I mean, you may not even get below $1,380, and you're already at $1,410. So another $30 down doesn't really seem like much. But for me in this first leg of this next big secular leg of this bull market, which really we could track all the way back to 1971 frankly, and this will be wave five of this gigantic secular, long-term bull market would be $1,555. So, you have further upside here, the risk-reward if you're not long already has been skewed. So, it's not the same really favorable risk-reward that we had back in – whether you’re talking about June, July – I mean this has been a process, and it has been one that has mapped out with all humility, almost precisely as we suggested it would. We said it would take patience to get to this point because really what we saw in late May, early June and in through August in particular (last year) when it really started to become visible, was the gold market de-linking from the dollar.

And when the dollar kept rallying, and gold was holding like a Rockstar at like $1,260-ish. That to me was the final piece of the puzzle. We said back in August, I did two major pieces in August, one of which was called a Bridge Too Far, and that was talking about the Fed and suggesting the Fed would actually keep raising rates into December. Taking a bridge too far, meaning one rate hiked too many, too far beyond what neutral really was. And if Powell wanted to get to neutral, and they went too far, they'd actually be a little tight, and that would set the stage for reversal of the Fed, bring the dollar into play. And that is the way this has played out in 2019. In the bigger picture dynamic though, the fact that gold held there a $1,266 or so when the dollar was making new highs, threatening to go back above 100, I mean the relative price of gold should have been something more like $1,050 to $1,100.

I can remember getting asked in interviews at that point, when gold was stagnant and it really wasn't going anywhere through early part of 2019, it was flat to down. It got up to $1,344 but failed. But the correction came right to where it had to come. The moving averages on a long term basis, we're converging bullishly right there with a 61% retracement of the move off of last year's low to that first quarter high. And again, the dollar making new heights here with a suggested that you would have broken that level. And when you didn't, that was huge. And the stage was set. And we said to me, when you look at what's going on in the world, and when you look at I think the last time we talked about this places that are multiple like Venezuela, and Argentina, and Turkey, and Pakistan, and Iran, and Uzbekistan, and Kazakhstan, even the Venezuelan situation kind of spreading into Colombia.

The number of places where currencies we're getting trashed, was one thing too that was interesting because the dollar wasn't racing to new highs in the dollar index like it was against some of these emerging market currencies. We're at a place like Angola, we talked about in the Kwanzaa, it's like, who cares about the Kwanzaa? Well, we cared. And there was a reason for that. It's an OPEC country to produce a 1.6 million barrels of oil today, which right now is more than Nigeria. And it was a currency that had just gotten slammed, and gold in Kwanzaa was at record highs. Gold in Kwanzaa was up 500% in a matter of years. So, these are the kinds of things that to me play in the big picture where we're at now, which is pretty simply this Mike, I mean growing lack of confidence, growing such suspicion that maybe central banks won't just be able to keep getting away with papering over these problems the way they do every time, the degree to which somebody like the European Central Bank, or the Bank of Japan, or the Swiss National Bank, I mean they have virtually no room to cut interest rates again. They're going to have to come up with something new and ingenious and ask me about that in a few minutes because there was something new and ingenious on the table here, which I think not a lot of people are aware of. It's going to blow you away.

But keeping with the answer here because it's important. This made the dollar the relief valve, I always talk about the dollars a relief valve. I’ve been doing this 35 years, Mike you know as well as I do, the dollar’s always the relief valve, but more so now because all these other central banks are going to look to the Fed to be basically the central banker to the world.

Because a lot of these other central banks don't have the means, they didn't raise rates like the Fed did so then they had more ammo on the back end like the Fed does. And not only that, but if it is like this thing where you see the dollar going up so dramatically in a lot of these emerging market currencies and no one even pays attention to. This meant the dollar is part of the problem. The Fed could not allow the dollar to break out through these highs around the 98, 99 level because that would have brought down the whole dynamic around emerging markets again, brought the deflationary dynamic back into commodities. We started to see the base metals break, and all of a sudden it was like, “Whoa, wait a minute. We can't let the dollar go here.”

The dollar has to be the relief valve for a variety of reasons, and the Fed will have to be the one to provide the stimulus. And that's where we got. So that's wildly bullish for me, and gold in the longer-term. So, we're very bullish on gold here in the longer term.

Mike Gleason: Now, speaking of silver, one of the big questions that metals investors are asking right now is, when is silver going to finally break out, or if it will now, when gold ran into that resistance level around $1,430, I believe it was August, of 2013, that you just alluded to, I looked it up, silver was just over $25 an ounce bound, $25.23, essentially $10 higher than it is right now. The last time gold was at this $1,430 level. So, the gold to silver ratio has gone from about 57 to 1 on that day in late August 2013, to 92 to 1 now, which is just truly astonishing. Now, historically, silver outperforms gold during a bull market in metals. So with the gold breaking out to multiyear highs, Greg, it is starting to look like the bull has returned here, yet silver is underperforming at least to this point. This is something, as I mentioned earlier, that you were anticipating when we spoke last in May, and you were right on the money there. But talk a bit about whether, or not you expect silver to start cashing up to gold, or a silver investors are going to have to tough it out a while longer.

Greg Weldon: Well, you could have asked them more timely question, and you did not set me up for this, I mean, you really didn't. I did a special on silver yesterday, and looking at the gold silver ratio at 92, it's at a 27-year high Mike. And when you look at the setup in silver, and certainly silver’s at risk, I mean if gold gets a correction here and gets back down to $1,350, silver could plunge. I don't think that's going to happen. I think you're going to see some rotation. And I think silver, I said yesterday in my piece for my clients, I said silver is sitting on the launching pad. We're waiting for the countdown, we're waiting for ignition. $16.20 is the key technical level. I think you're going to break it.

I think you're going to break out, and to me, silver offers great opportunity here. And what I'm considering doing for our money management clients, and we have massive open profits here in gold… we were long from $1,196 in gold… I am very seriously considering dumping my gold and putting it all into silver. Like right here. Like maybe soon. I would like to see $16.20 violated. I'm a little skittish about waiting for it to be violated because that would potentially, you get a lot of slippage here, and I don't want to give too much up here. Having said that, the other thing I would point out in this same vein of what you're talking about, the historic norm in these bull market phases, where it's not just gold, like it’s been. Gold is not only out performed silver, gold is outperformed the gold mining shares.

And the GDX, the ETF that tracks the gold mining shares is breaking out. And I think I mentioned on your show the NUGT, for those types of investors out there to have risk capital to burn, that are willing to jump out of airplanes type of thing. The NUGT is a triple leveraged ETF to the gold mining shares. That thing we were very bullish on this, I own it personally and it broke out. So, this is another kind of tell that silver maybe in the pipeline here is the fact that the GDX is breaking out. And the other thing I noted in our silver specialty yesterday was the SIL too, the silver miners shares. You've got Mag, you’ve got First Majestic. I mean, those have always been kind of two of my favorites.

They certainly were in 2016, we call it the low in the fourth quarter in gold and silver. And actually made a newer low in the mining shares before it broke out after our call. But those two, mining shares have already broken out. And when you look at the SIL versus the price of silver, it's flipping right now, where the silver mining shares are beginning to grab the torch of upside leadership here. So to me, all that bodes very well for silver, let alone the fact the crack in the dollar keeps widening here. And you get through the 96.50-ish level, which is right where the long term two year exponential moving average, which is a phenomenal long term trend indicator. And the recent really to me the key pivot on the downside to complete a topping pattern in the dollar index is 95.02, you're sitting right on top of both of those. The momentum has shifted in the dollar, and that puts not only silver in play, but frankly, Mike the entire commodities complex.

Mike Gleason: Speaking of the broader commodities complex here, I know you follow the Ag market as well, and I wanted to ask you about what's going on there because there's a lot of concern about how all the recent flooding in the Midwest is going to produce a very poor crop output this year. And that could have some real implications on the price of food, which could spill over to the larger commodities sector. Not to mention the terrorists from China, which are hurting our food exports. A comment on that if you would, and how likely is it that we may see some real inflation there, Greg?

Greg Weldon: Well, now I have to ask you, Mike, is someone secretly sending you the WeldonLive? Because just as special on Ags on Monday, and this is something we caught a six or, seven weeks ago because the planting numbers were horrible. I mean, the planting progress reports we watched from the USDA, and now you're even looking at some of the crop conditions reports. Now what's interesting here, and this may take a second for this answer, but it's really important to me because food price inflation has already risen from negative to around 2%, and now you have a whole line up here of food commodities that are poised to break out based on this same story, which is the unbelievable rain, and flooding, and the whole wet situation in basically the middle of the bread basket, if you will, when you look at states like, Nebraska and Iowa, and Illinois, and Indiana, and Kentucky and Ohio, really the hardest hit.

But when you look at the USDA data, which came out actually on Monday at four o'clock, eastern time. There's already kind of an uproar here going on, in terms of the farmers in the field saying that the USDA numbers may be fudged here. Now there is something called prevent planting, which is when farmers basically plant crops they know are not going to ever really be harvested, or brought to market in these kinds of situations. This is something the USDA will allow in certain circumstance as they have here, where farmers plant crops just to ensure that they get their insurance payments on these crops. So, this is a big deal. And when you look at corn, I mean the USDA is basically saying, “Okay, well corns caught up. It's basically 100% planted.” When you read some of the surveys, and there's a lot of the private agricultural services that produce surveys of farmers.

I mean, wow, Mike, I'm willing to let any of your listeners have these two reports on silver, on the Ags. But it is mind blowing to read the comments from farmers. I mean there are guys that are saying, I'm driving around my county, and I see fields that are planted 0%. I see field that had been planted that are already underwater again. And soybean farmers are now doing what they call sky planting, which means they can't get the machines onto the field because it's still too muddy, it's still raining, it's still 60 degrees in all these places. You don't have warmth, you don't have wind, is not drying out. So, they can't get the machinery onto the fields. They're dropping seeds from airplanes. Hoping that this will somehow take in the soybean crop.

When I see all of this dynamic, and then you read the conditions report which is so heavily skewed, you got more than twice as many fields are being reported parts of the crop, at least in soybeans, and corn are being reported in poor to very poor condition against halving, or worse in the crop that’s reported good or very good. The big picture here in really kind of the big wild card is yield because USDA is not cutting their yield forecasts. And yields are going to be nowhere near what the USDA is suggesting. And there are some claims by these farmers that the USDA is fudging these numbers because otherwise prices would be skyrocketing here, and they're trying to kind of contain this issue. Well, you know how it works, it's like intervening in currencies by central banks – intervention.

You could contain the currency until you can't anymore. And that's like basically holding a basketball – and I play pool basketball here all the time – you hold the ball under water, when you let go, it explodes up to the surface with some level of violence. This is what's going to happen to grain markets. We are incredibly bullish on some of these grains, particularly soybeans because I feel that the numbers are going to end up looking so much worse than they look now. Because yields, let alone Mike, if it gets hot and dry on the flip side in August, because it's a late crop, which makes it susceptible to lower yields in hot dry conditions later in the growing season. So, if you get a double whammy here, it could be devastating for the farmers. It's unfortunate for the farm community, but in terms of prices, I mean there's a ton of upside.

The other thing to think about is this has gotten to the point where livestock farmers now are concerned, that there may not be enough feed for their cows, and they may be slaughtering them earlier, bringing this to market, this could affect milk, butter, prices of dairy products certainly, beef. The potential tangent unintended consequences of this are significant, and how that plays into the CPI for food. And then I'll throw one more at you because we haven't even talked about the dollar, and the dollar, and the Ag commodity at complex are very tightly correlated. It's almost as tightly, if not even maybe more sometimes than gold is to the dollar. And in that case, you look at stuff like sugar, coffee, Cocoa, you have some of these commodities set up, very bullishly at low prices. And the thing I will mention too about soybeans that is also applicable to things like sugar. The margin for error in the supply-demand balance sheet is very thin.

Now demand might soften somewhat in China, not even related to tariffs because some of the issues with animals there, and demand for feed, but it's still going to grow. And if you don't grow the crops, and already expecting we have lower acreage and soybeans, we were expecting a lower yield, they're expecting a lower crop, and now you're going to magnify that, when you're going to have record demand, you could wipe out what has been considered a burdensome supply really fast. So, the entirety of the commodities complex, including many of the offshoots from this grain, and feed situation, and particularly as it relates to some of the soft tropical commodities, which have been severely depressed, would benefit greatly from a lower dollar. So this could be a real exciting time for the entire commodity complex. Not just gold and silver.

Mike Gleason: Yeah, it all has major implications for the dollar, and that generally has major implications for gold and silver. Gosh, so much more I want to talk to you about here, and we'll save some of that for next time, but I definitely want to give you an opportunity to talk about the Gold Investor Bootcamp, Greg. I know that's something you're really promoting right now, and it's fantastic stuff that people need to find out about because you've just heard about it, Greg absolutely, was all over this recent move in gold. I'm going to start calling him Nostradamus. He's been so dead on with these calls. Tell people about the Bootcamp. Greg

Greg Weldon: Well, it's interesting is, it’s not just about trading, we’re traders here but a lot of our clients or investors too. So the Gold Investors Bootcamp. It's available on our website. It's basically four videos. I'm going to have to cut one of the videos in half because it's like an hour and a half long, but it's essentially, for all intents and purposes, five videos, five hours, over 500 pages of text. I take you through investing a gold, number one. Do you do coins and bars? Do you call Mike Gleason, and buy silver coins, and silver bars, and so on and so forth. Do you invest in ETFs? Do you buy individual mining shares? Do you trade futures? So, I give you a breakdown of all of that, how to potentially create portfolios in a variety of ways, whether it's using my individual mining shares, the ETFs or trading the futures. What kind of risk reward parameters should be looking at? So, it was kind of a top down, bottom up dynamic around trading.

And then to me, the most interesting part of the whole Bootcamp, was why should you be interested in gold and silver right now? And that's part three. And it was really fun to do. And this all came about because my publisher, my agent, and my book was published in 2007, very early 2007, but I wrote it in 2006 by John Wiley & Sons. And to me the situation is so similar then to now in terms of the opportunity and really the mandate to have exposure to these things as a means of protection. So, it was twofold. I'm giving my publisher constantly for the last four years, “Can you write another book? Can you write another book? Can you write another book?” And finally, I'm like, “It's time to write another book.”

So, I started putting the material together, and at the same time I'm getting questions from my clients about gold and silver, about trading them, even about futures. So, I decided I could kill two birds with one stone, answer all the questions, and provide myself the material for the book, which is now not going to be done because the Bootcamp is so good that I decided, look, I'd rather sell the Bootcamp, we can get it to people quicker. It's more interactive. So, we're real excited about that. And as a result of the Bootcamp, which we ran live, and now we're selling it because it's been recorded. WeldonLive we do everything, and it's not a cheap service, it's more for institutions.

So, we actually have started building Gold-Guru.com, which is going to be our new website with a service that's going to be very affordable, and it is going to basically be hands on trading, investing in the mining shares, the ETFs, the futures markets, the underlying price. All of it will be available to retail, and institutional for client both so that website will be debuting next month as kind of an offshoot from the Bootcamp. The Bootcamp's available now, Gold-Guru.com will be available in about 30 days, and we're hoping two piggyback the two together, and provide what is needed out there. We're meeting demand, and demand from our existing clients, and demand for pretty much everyone that's coming through the Bootcamp. And I'll tell you what, the comments, and the people that have reached out to us to basically give us their critique on the Bootcamp, have been just so overwhelmingly positive.

We have not had a single negative comment. People are kind of blown away, and I just put it all out there, man. It's 100% right there everything that I believe, everything I do, and everything I think is in there. And I couldn't believe more strongly personally – and while I'm not a gold bug, you know this, we've been bears on gold many times in the last five years – but this is the time. The time is now. The amount of money that's going to be needed to be printed in this next downturn, theoretically. You're already looking at what's happening in Europe. The ECB says, they're going to stimulate more. I don't think people really understand what the ECB just told us, because it’s kind of important.

The ECB has their deposit rate. Their emergency deposit rate is set at minus 40 basis points, and they're saying we could cut rates again and they could, because you have the Riksbank in Sweden at minus 75, you've got the Swiss National Bank with a target range that the low end is minus one and a quarter. So, sure there's room to cut rates, but this really is hurting depositors, it's hurting savers, it's hurting fixed income investors. So, the ECB has hatched a plan that, I don't even know if it's really public yet, but it's being talked about kind of among the big hedge fund guys. And I'm actually having some of my big clients call me after I mentioned that like, I haven't heard about this. What is this?

The plan allegedly is for the ECB to raise interest rates, significantly. To raise the deposit rate to a 2%. And that would basically give everyone who wants to deposit money in the bank, so they can get paid rather than having to pay the ECB to hold their money. And at the same time they're going to establish a new borrowing rate that is going to be minus 200 basis points, and the banks will be able to take that money as much as they want at minus 200 basis points, and turn around and make loans to consumers, and businesses at minus 50 basis points. In other words, the ECB is going to fund the banks to basically pay consumers, and businesses to borrow more money. It's probably the most bullish story I've ever heard for gold potentially, and it's probably the beginning of the end of this whole dynamic. That's insane. It really is because the risk to central banks is greater than buying government debt, and so on and so forth.

If they institute this dynamic and it may be a two-step process, maybe a three-step process. Again, it just gets back to all the huge, big picture, multi-decade secular reasons to be bullish gold here in that central banks have so corrupted the system here with cheap money, there's no turning back. There's only one way to go. They are all in, and they will do whatever it takes, and it devalues all paper. Debt and currencies are all just IOUs at the end of the day. And this is going to create tremendous demand for gold as a protection of the purchasing power of your wealth.

Mike Gleason: Yeah, eventually you’ve got to think the chickens are going to come home to roost, and maybe we're starting to see the beginning of this. A lot of us have been surprised that the system is kind of operated as it has for so long, and maybe we're starting to see some of those fireworks start to develop.

Well, excellent, and thanks again Greg. I hope you have a wonderful weekend. Thanks so much for your comments, and enjoy your summer, and I can't wait to get back with you a before long so we can discuss how this all unfolds. Take care.

Greg Weldon: Sure. Mike, my pleasure.

Mike Gleason: Well, that will do it for this week. Thanks again to Greg Weldon of Weldon Financial. For more information, simply go to WeldonOnline.com where you can sign up for a free trial, and be sure to check out Gold Investor Bootcamp. Again, you can find all of that information at WeldonOnline.com, be sure to check that out.

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