Michael Oliver: “Bitcoin Is Broken” — Why Silver, Gold & Commodities Aren’t Done

Key Concepts

• Silver Bull Market: A strong, ongoing bull market in silver is predicted, potentially reaching the “several hundred zone” (300-500).
• Commodity Sector Strength: A nascent bull market is identified in the broader commodity sector, with breakouts in the Bloomberg Commodity Index, oil, and wheat.
• S&P 500 Topping Process: The S&P 500 is believed to be in a topping process, with a final push higher (7050-7100) anticipated before a correction.
• Momentum Structural Analysis (MSA): A proprietary technical analysis methodology focusing on long-term momentum trends and structural shifts.
• Market Tops are Counterintuitive: Market peaks often occur after positive news, masking underlying weakness.

Market Outlook: Silver & Commodities

Michael Oliver, utilizing Momentum Structural Analysis (MSA), maintains a strongly bullish outlook on silver, characterizing its recent pullback in early February as a “midpoint stumble” within a larger surge. He accurately predicted this surge at the Wealthy On SCP Silver Conference in October 2023, contrasting the prevailing sentiment of a peak. Silver’s 50-year trading range of $4-$50 defines “idiot highs,” and historical surges in 1980 and 2011, particularly the silver-to-gold spread, provide precedent for the current rally. The silver-to-gold ratio was around 1% before the recent surge, compared to 6.5% in 1980 and 3.1% in 2011.

A broader bull market is also identified in the commodity sector, evidenced by a breakout in the Bloomberg Commodity Index (peaking at 140 after a low of 60 in 2020) and positive signals from oil and wheat. Commodity-related stocks are recommended for long-term, unleveraged investors (a timeframe of a couple of years).

Equity Market Analysis: S&P 500 & Dow Jones

The S&P 500 is considered to be in a “topping process,” despite rising from approximately 6,200 to the 6,800s over the past year, mirroring patterns observed in 2000 and 2007. Intermediate-term metrics suggest further gains to 7050-7100, but long-term analysis anticipates an eventual downturn. The Dow Jones Industrial Average is also expected to rise further, exhibiting a “ludicrous” pattern of repeatedly hitting a flat ceiling, suggesting an imminent spike.

The anticipated downturn is not expected to be an immediate “crash,” but a “laborious process of zigzag type decline.” A significant crash scenario isn’t foreseen until the S&P reaches 5,400. The April 2024 low of 4,800 is a reference point, with 4,200 (600 points below that level) being the danger zone.

Factors Influencing Market Direction

Oliver dismisses tariffs as a primary driver for a market top, arguing that markets typically don’t top on negative news. He believes positive news regarding tariffs (potentially due to Supreme Court intervention, with a decision expected around February 20th) could actually cause a final market high before a decline. The fundamental reason for the eventual correction is attributed to 16 years of Federal Reserve monetary policy – including zero interest rates for 10-15 years and an exploding money supply.

Technical Analysis Methodology

Oliver’s analysis differs from traditional technical analysis by focusing on long-term momentum trends rather than short-term price fluctuations. He utilizes Momentum Charting, plotting price bars in relation to long-term moving averages (3-year, 3/4-year, 3-month) to identify momentum structures. Spread Analysis, plotting the ratio between assets (silver vs. gold, gold vs. S&P) over time, is also employed to identify breakouts and structural shifts. He identified a potential entry point for silver in June 2023 when momentum broke out before price reached $35.50. Bitcoin’s recent decline is cited as an example of momentum failing to confirm price action, predicting further downside.

Conclusion

Michael Oliver’s analysis presents a bullish outlook for silver and the commodity sector, driven by long-term momentum trends and structural shifts. While acknowledging a potential final push higher in the S&P 500, he anticipates an eventual correction rooted in long-term monetary policy. His proprietary Momentum Structural Analysis (MSA) emphasizes identifying these underlying structural changes before they are reflected in price movements, offering a unique perspective on market dynamics. Resources for further information include structuralmomentum.com and MSAOliver.com, with WealthOn.com offering free portfolio reviews.