Listen to the podcast here or on the go via Apple Podcasts or Spotify.
The Market Pinball Wizard’s Avi Gilburt shares why investors should be raising cash from a long-term perspective (0:40) and his expectations for the metals and oil markets (6:30).
This is an abridged version of our past conversation, The Market According To Elliot Waves With Avi Gilburt (The Market Pinball Wizard).
Transcript
Avi Gilburt: I am still not yet confident that we are indeed going to be start — we are — have indeed started that bear market. I’m not going to have a better idea for another several months. Now, what do I tell my clients and anybody who is not exactly into risk at this point in their life, I’ve been telling them that you should be raising cash. And I’ve been saying this to them since the top back in 2021. And then again on the rally back to 4,600, my analysis has told them, look, it’s time to raise cash from a long-term perspective.
If the market gives us the better inkling that is going to go back to a higher high and if you still choose, you can always get back in. But for now, the market is at a point where, you know, bigger issues seem to be coming up on the horizon. Now, again, could we get that that mini crash from, you know, let’s say wherever we top now down to 28 – 2,700 to 3,000, the market will likely rally back after that in a multiyear rally back to 4,300 to 4,600. That probably will be the last opportunity investors will have to divest before we start looking for much lower levels, like 1,800 to 2,200.
And I’m even afraid to say where the depth of this long-term bear market could take us. It could take us all the way down as deep as 1,000 on the S&P 500. And I know that’ll probably, people will probably say that that’s just not possible. Well, I’ll give you another example of, you know, when I first came on to Seeking Alpha, it was around the time where gold was going through a parabolic rally in 2011. And I wrote an article outlining gold, my expectation for gold to top. And this is during the parabolic rally that I outlined for it to top at 1915 with my calculated target or 1916.
And at the time, people thought I was crazy. Because everybody at the time were arguing not about where we’re going to top, but how far through 2,000 it was going to go. So people thought I was crazy. Even before it topped, I said, I think gold can not only top at 1915, I think it can drop down to the 1000 range. And I have to tell you I was almost laughed off of Seeking Alpha when I wrote that. As we now know, gold topped at 1921. I was off by 6 bucks on that, and I think we bottomed at 1050.
So, you know, the analysis that we do, especially on the longer term degrees, usually winds up being quite accurate. So while it may sound unbelievable at this time, I can assure you it is not. And I wish, I pray that I’m wrong in my analysis, but I can tell you that once we hit the top and once we confirm that we’ve hit a long-term top in the market, that’s what I fear.
Daniel Snyder: There’s a lot of fear coming from some of those numbers that you’re throwing out as well. I mean, seeing the S&P 500 go back to the 1000 level. I mean, that would spook every investor. Right? So I think if people are thinking long-term I mean, what was the time frame on that? I hope that’s a couple decades away, isn’t it?
Avi Gilburt: Well, to get to a 1,000 it will take us minimally 13 years. Minimally is what my expectation is.
Daniel Snyder: So people are thinking now, you say, 13 years, I’m sure there’s people that are entering retirement. Right? We know the baby boomers generation is entering retirement more and more. Millennials are older. Now Gen Z is coming into the workforce. Doesn’t that kind of make it a hard case to tell people to invest in S&P 500 now?
Avi Gilburt: I’m not telling people to invest in the S&P 500 at all. That has not been my perspective. My perspective has been a measured perspective, understanding – look I have about 8,000 clients and about a 1000 of them are money managers. And I have to understand that each and every one has a very different risk profile, a different time horizon, has different goals. So when we try to explain our perspective to our clients, we have to explain to them, you know, yes, we expect a rally here, but trying to trade for that rally may not be for everyone.
There’s additional risk associated with it. So, it’s not necessarily in investing — right now, it’s not necessarily an investing environment. There are a number of stocks that my staffs have looked at that I mean, they look like there’s some stocks that look like and have a phenomenal next 2 years. But along the same lines, you know, I am not yet confident that the market is going to make a higher high. So everybody have approached the markets very differently based upon their own – their own goals. And so we’re not telling everybody, yes, invest, invest, invest, dollar average, no. Because the potential could be that we could be in for some bigger trouble than most foresee right now.
Daniel Snyder: Alright. So that’s a lot of the S&P 500, the indexes, a lot of the stock market. What about, say, metals and commodities? I know that there’s a lot of investors that focus on that as well. What are your thoughts in that sector?
Avi Gilburt: Well, we can break that up right now into — I’m going break it up into, I’m going to bifurcate it into two perspectives. The metals market and the oil market. So I’m going to break that up into two different perspectives. On the metals market, I think the metals market is — and I wrote about this last year when I started seeing bottoming in the metals market. And I told my own clients, it was around — when we started going into the last quarter of the year, I said my expectation is we’re going to start seeing a bottoming in the complex and we’re going to see a multi-year rally out of that bottoming.
And that’s pretty much what we’ve gotten. I believe gold (GLD) I see a bottom here back in early November. And since then, we have a sizable rally, but I just think that that was just the intro. I think the main event will likely begin over the coming months. I can foresee a little bit more of a pullback if we’re lucky. If not, the market can just take off from here. I wrote an article not too long ago that my minimum target on gold was, I think, 2428. I believe that was the number. I don’t recall offhand.
Gold, as we speak right now is at about 2050. So, you know, I’m expecting at least a 20% rally in gold from here. And depending on how that rally structure takes shape, as I’m saying, how the Elliott Wave structure takes shape, if we start seeing some exceptional extensions on that rally, we could be going as high as 2,700. So, I’m 2,400 really – 2,400 region was really my minimum target on this next bigger move. Silver, should easily reach the prior highs. And in fact, the way silver is set up, we could see a repeat of the 2010 parabolic move in silver because silver has lagged so much over these last years. Silver could see a massive catch up move over these coming — over the next 2 years.
Now, as far as the miners, the miners are a little bit of a mixed bag. Some miners will not perform as well as others. I’m concerned, for example, Newmont Mining (NEM). Newmont Mining may have an issue. It may not perform as well as all the other miners. Why do I say that? Because back in April of — quick peek at the chart, if you can bear with me. Yes. Back in April of 2022 — just to give you some background, back in 2015, as the market — as the metals market was coming down into the low that I expected, we actually rolled out a mining stock service, and we rolled it out in September of 2015.
And one of the stocks that I bought at the time, clearly was Newmont. I mean, at the time, you know, Newmont was considered one of the largest and we saw some tremendous upside with it. And I think I bought it somewhere between $15 and $16 if memory served. And as the market rallied up into April of 2022, we then struck the target that I set for that rally years before. And I told my clients, when we get up into the 82 to 84 region, I’m going to be divesting of almost all of my Newmont stock that I bought in 2015.
Well, they thought I was crazy at the time, but I did. And if you look at the chart now, I think Newmont topped around 85 and then proceeded to drop down to about 37. So it lost more than 50% of its value from that point. And of course, that was the time where I was looking to buy back some of my Newmont. Not all of it. Because Newmont may not participate in the next rally that I foresee in the same manner as some of the other stocks. So, I think you have to be very careful about what you’re picking and choosing when you’re buying the mining stocks.
But if you want to just look at the general (GDX) chart, for example, my expectation is I think GDX should well exceed 50, potentially getting up as high as 65. So for now, you know, we are looking for maybe a little bit more of a pullback in GDX, but ultimately, I think GDX is getting set up to rally strongly later this year and well into next before it completes this next major rally.
Daniel Snyder: That’s some great price targets on GDX. I just want to clarify because you kind of went through silver pretty quick. You mentioned the 2011 parabolic move that happened in silver.
Avi Gilburt: 2010.
Daniel Snyder: 2010. Yep. 2010 is when it started. I believe, up in the beginning of 2011. But the price target was well over 40. Is that kind of where you’re seeing Silver go again? Is that what you said?
Avi Gilburt: Yeah. I’m expecting silver to get back up towards 50 again. Yes.
Daniel Snyder: Okay. Thank you for clarifying that. And then you said you wanted to mention about the oil markets as well. What’s going on in that segment?
Avi Gilburt:` Well, I tracked (USO) for my other — some of my other staffs tracked WTI and the futures on CL and so on and so forth. But I’ve been tracking for a lot of our clients, the ETF USO. And USO has been involved in a sizable, a very long pullback. And my expectation is, I think we can potentially see a lower low in the coming months potentially sometime maybe into the summer months.
And then I’m expecting a nice rally where we could probably see oil double off the low or come close to double off the low that we complete later in the summer, I believe. And by the way, we see the same in oil equities. We’re seeing some downside that we’ve been expecting for some time. We’re expecting oil equities to outperform most everything else as well.
Daniel Snyder: Now that’s interesting when we think about oil doubling with what’s looming on the horizon, whether it’s OPEC or recession or whatever. It’s kind of eerie, isn’t it? That it might line up?
Avi Gilburt: Well, you know, I’ve learned long ago because when I first started doing this, I would look at the news, I would look at what my chart said, and then I would just completely ignore what my chart is saying, because I would say it just can’t be. And then I learned after a few years of doing that, I learned I really shouldn’t be doing that because the chart has been a hell of a lot more accurate than anything I’m following in the news. So, you know, right now, for the most part, I generally ignore what the common perception is. Common perception in markets usually is wrong. But for now, I mean, that’s really what I’m seeing in my charts.
Daniel Snyder: Just a reminder, anything you hear on this podcast should not be considered investment advice. At times, myself or the guests, might own positions in the securities mentioned. But this is for entertainment purposes only, and you should seek advice from a licensed professional before investing. We’ll see you next episode.
Read the full article here
