Why Markets Are Doomed to Collapse, Gold To $36,000! | Henrik Zeberg
What this covers
In this interview, Kai Hoffmann speaks with Henrik Zeberg, Chief Market Strategist at swissblock, about key macroeconomic trends, including the potential for a recession, the current state of the U.S. labor market, and the role of central banks in gold purchasing. They also discuss the likelihood of a deflationary bust, why markets are doomed to collapse, the divergence in performance between gold and miners, and what these shifts mean for investors. Tune in for insights on asset valuations, yield curves, and the broader economic outlook.
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👨💼 Guest: Henrik Zeberg, Head Macro Economist 🏢 Company: Swissblock 🌎 https://swissblock.net/ 𝕏 @henrikzeberg 📅 Recording date: November 22, 2024
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Timestamps 00:00 Intro 00:40 Soft Landing or Recession? 02:50 U.S. Labor Market Weakness 05:15 Global Economic Tensions: Germany, China, Japan 07:45 Yield Curves and Recession Indicators 10:30 Inflation Misunderstood: The Fed’s Lagging View 14:00 Deflationary Bust Explained 17:00 U.S. vs. Japan: Different Economic Paths 21:00 The Role of Gold in an Uncertain Future 25:00 Central Banks and Gold Buying 28:30 Gold vs. Miners: Diverging Performances 31:00 Outro
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Henrik Zberg argues that a deflationary asset bubble burst is imminent in Q1 2025, driven by deteriorating labor market momentum and inverted yield curves, which will force the Fed to reverse course with QE and monetization, ultimately creating a long-term inflationary environment favoring gold as monetary reset asset.
- Labor market showing deterioration via rising continuous jobless claims and extended unemployment duration despite stable headline unemployment rate
- Multiple leading indicators (10y-3m yield spread near inversion, initial claims setup, two-year yields declining) signal recession onset within 6-12 months
- Asset valuations at historic extremes (203% market cap-to-GDP, 16% CAGR since 2008) create deflationary bust conditions that necessitate Fed policy reversal into debt monetization
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The economy has shifted from a deflationary environment (begun in 1981 with Volcker's inflation-fighting) to a new inflationary environment after Corona stimulus; this is a fundamental 40-year regime change.
“we have shifted from what is a deflationary environment which was set in Motion in 1981 some say it was vulker I say it was the environment around the whole economic environment but the when he killed the inflation um and until what we saw after Corona the inverse fker was what we saw after Corona where there was an extreme overstimulating of the global economy at a time where you had a supply crisis this is the opposite of what fulker did was to hike rates into something where he should have lower rates”
The US labor market is rolling over despite the headline unemployment rate of 4.2% remaining stable; the key leading indicator is momentum of change, visible in rising continuous jobless claims, rising average length of unemployment (now at levels unseen since the 1950s-2009 period), and significant discrepancies between household survey and BLS establishment survey employment figures.
“if you look into the continuous claims you'll start to see that they roll up if you look into the revisions on the nfps you'll see that they actually come down you actually had quite a lot of [something] this year already which is normally what we see and if you look into also the part of where we look at the household survey versus the what we coming out with the BLS you'll see also that there are big discrepancies”
The Fed is not driving yields; rather, market yields are determined by the balance of supply and demand for capital in the broader economy, so when economic slowdown occurs, yields naturally roll over regardless of Fed action, as seen in 2023 and May-September 2024.
“so first of all again the FED uh is not driving yields I mean this is a common misunderstanding yields Market yields is based on the demand for Capital and the supply of capital so when you have a Slowdown in the economy yields will start to roll over and that happened in 23 we started to see that decline then we saw an acceleration of that decline from May of this year then from September on late September we saw a spike”
Market yields are based on demand for capital and supply of capital, not Fed policy; the Fed does not drive yields despite common market assumption that it does.
“first of all again the FED uh is not driving yields I mean this is a common misunderstanding yields Market yields is based on the demand for Capital and the supply of capital”
Most people focus on short-term market movements and miss the underlying trend; the key is to observe momentum in fundamental indicators (unemployment, yields, consumer behavior) rather than day-to-day price action.
“I actually I don't use that too much I mean this is where what the med likes to do they like to say well you know that this comes in and that changes the picture well it doesn't guess what it's a 50 trillion uh dollar e economy across the globe or Northern I don't know what the global GDP is right now”
Trump administration's stated desire to have a say in Fed interest rate policy is extremely bad for financial stability and inflation globally, despite the superficial appeal of political control over monetary policy.
“the US new US president said oh I want have a say when it comes to interest rates is that a good or a bad idea do you think you can do better or bad idea extremely bad idea I mean I cannot explain how bad it is it'll be good for inflation but uh it'll be extremely bad for the stability of the world”
England's sale of gold reserves near $200 per ounce during the 1999-2001 period (so-called 'Golden Brown' under Gordon Brown) is an example of central banks being poor market timers, buying/selling at the worst times, though it reflects structural need for diversification.
“I've noticed also that central banks are not normally the uh the best timing uh best timers of buying on to buy gold I mean England sold it uh what was $200 per ounce or something at the bottom I it was yeah golden brown I think it was”
The Yen was relatively strong in the late 1980s and early 1990s but has since deteriorated such that it is 'not really a factor anymore,' reflecting the outcome of Japan's decades of low rates and stimulus
“cuz the Yen was fairly strong back in the late '80s early '90s it's disappeared it's not really a factor anymore uh interest rates are near zero and debt is at 250% or whatever 240 something that doesn't matter”
Oil and copper prices are declining or rolling over, signaling reduced demand pressure consistent with deflation rather than inflation, contradicting Fed narrative about inflation risks.
“when oil is about to roll over and has had actually quite a big drop you see copper doing the same and you see that you know again also coming back to Germany here you'll have the I mean the set ew was a terrible numbers we saw here”
Fed Chair Powell initially said inflation would be 'about 2 to 2.5% maximum' but it flew up to 9%, demonstrating shocking incompetence in understanding inflation dynamics.
“you saw Yen was out saying oh we think it'll be about 2 2 and a half% as a maximum boom and then it flew up to nine I mean that just shows how little they understand what they doing honestly I mean it's shocking actually”
The Fed is looking at lagging indicators (inflation) when they should be looking at leading indicators (yield spreads, unemployment momentum), causing them to remain far behind the curve and making the eventual crash harder.
“the FED is so mistaken they are way behind the curve when it comes to uh looking at the economy and that has to do with the lacking leading indicators in the whole understanding of that they look at inflation inflation is lacking the economy”
The Fed's fear of inflation is misguided because the post-Corona inflation was driven by supply shock + excessive demand stimulus, not by Fed policy alone; now oil and copper are rolling over and demand is weak globally, indicating deflation, not inflation risk.
“what we had was a supply crisis in Corona where we just you know put a lot of demand into the world so everybody was stimulating the whole you know every Administration around the world was stimulating when you have a supply shock and you then de put Demand on it you get inflation and now the FED is spooked of that so if you look at the inflation level that we have right now”
The US is different from Japan because Japan maintained room in global interest rate environment while pursuing stimulus; the US cannot do the same without causing global interest rate pressure, and Japan is now at the end of its stimulus cycle at zero rates.
“I think we are different not the we we but the US is different from from Japan in the way that um Japan has actually been in a has been leading in that cycle so they have been able to do that while there was still enough of room for the rest of the world to can maintain you know manageable levels in terms of interest rates and so on but Japan has just G full you know cycle and they are just at the end of that cycle they at the moment where Keen said we're all dead because what do you do when you have stimulated you know down to zero”
The Fed was discussing inflation and fear of inflation in December 2007, the month the recession began, which was actually the onset of a huge deflationary bust—a historical parallel to current inflation concerns despite deflationary pressures.
“they were also talking about inflation and fear of inflation in December 2007 which was the month of the recession setting in which was a huge defl deflationary bust I mean now again the same they talk about oh the fear of recession at this point when oil is about to roll over”
Higher bond yields and DXY strength at 120+ would be headwinds (not tailwinds) for gold, so gold needs both to reverse lower for a sustainable bull market to form.
“absolutely not it's absolutely no higher bond yields and the Dixie at 120 will not be good for gold no a Tailwind absolutely”
Continuous jobless claims are moving up and the average length of unemployment is moving up, reaching higher levels than at any point from the 1950s through 2009, indicating deteriorating labor market conditions despite the headline unemployment rate remaining at 4.2%.
“if you look at the average length of unemployment it's moving up that means that now we are moving into something where we we Haven you know the higher levels of the unemployment in terms of how long people are unemployed than we have had you know in the whole period from 1950s through 2009”
The Fed's political independence is critical to global financial stability; allowing a president to have influence over interest rate decisions would be 'extremely bad for the stability of the world.'
“extremely bad idea I mean I cannot explain how bad it is it'll be good for inflation but uh it'll be extremely bad for the stability of the world”
Geopolitical shocks (attacks, disruptions) create temporary market spikes but fade quickly because the global economy depends on so many factors that individual events have negligible impact relative to underlying fundamentals.
“we have seen it often we have seen attacks here and there it you know kind of makes a spike on the day but then we're back to the into the and that's because the global economy is dependent on so many factors that's thinking it might be a good story that you know media says okay now this comes in and that changes everything it's a great story but it's not just how things work”
Global economy shows weakness across multiple regions—Germany has terrible ZEW sentiment numbers, China and Japan are not looking great, and there is capital rotation into the US rather than global synchronized growth, indicating broad deflationary pressure rather than stable expansion.
“if you look to the rest of the world and you look to Germany and you look to China and you look to Japan things are not looking great topping in stock markets around the world and we actually start to see that Capital rotation into the to the US”
Revisions to non-farm payroll data have been significantly downward throughout 2024, indicating the labor market weakness is real and spreading, contradicting the headline job creation numbers.
“if you look into the revisions on the nfps you'll see that they actually come down you actually had quite a lot of Aion this year already”
The Fed is substantially behind the curve and mistaken in its policy stance because it focuses on lagging inflation data rather than forward-looking economic indicators; inflation peaked months ago and is now declining sharply (as evidenced by oil and copper), yet the Fed remains hawkish, which will force a harder crash.
“the FED is so mistaken they are way behind the curve when it comes to uh looking at the economy and that has to do with the lacking leading indicators in the whole understanding of that they look at inflation inflation is lacking the economy”
Evidence of financial institution failure has already begun in Japan, and this deterioration will continue and spread to the rest of the world as the cycle matures
“I think that is going to be the case actually I think you actually have started to see some of that in Japan already and I think that falling out has not stopped yet I think we are at a pause from the break from what we saw in in August but I think it's going to continue in Japan with the financial institutions there and I think you're going to see that coming to the rest of the world also”
Gold has bubble characteristics in the short-term (people jumping in too fast on inflation narrative) but is not in the full-cycle bull market yet; it is bouncing from a low (difficult to chart in person but verifiable on charts) and will decline strongly into the deflationary phase.
“it's bubbling at this point where people have been too fast and jumping in on this on the inflationary thing does not mean that you know it's not right because it is but it does not mean that it's straight up from here you you probably can guess the full-up question the purpose of gold is different than it is making flat more silver even nowadays it is it's a monetary metal sure”
Long-term bond yields are unlikely to make new all-time lows; instead, a circular bottom has been formed and yields will decline into the recession but then establish a higher low before beginning a multi-year climb driven by the inflationary regime.
“I actually thought that if you two years ago before the also around the yeah two years years ago it was probably a bit different view there but I think it seems like now that we have actually seen the the the the cirular bottom and that we're going to still see the decline into the recession because it's all about the macro environment so even though you know people say yeah we'll be risky you know it's we we don't want to be in bonds you want to be in bonds with when if the economy hits a recession”
The 10-year minus 3-month yield spread is very close to uninversion, and when it uninverts (spreads widen), it will signal that economic unraveling is imminent, serving as a key recession indicator alongside initial jobless claims spike.
“one of them is the 10year minus the threeyear yield if you look 10 year me the minus the three months sorry yield and if you look at that that starts that's very close to un inversion un inversion of that will be that we mean that we are very close to things that start things to to unravel”
Central banks buying gold is not primarily about timing ability or asset allocation, but rather response to increasing global uncertainty and unprecedented debt levels requiring diversification away from fiat systems
“obviously we are moving into a more uncertain World we're moving into a world now where where debt is you know so big as it is so I think it's good and fine I hope the Danish Central Bank does the same but but I think it's not enough to to to um withstand the kind of pressure we going to see from a deflationary bust”
The 10-year minus 3-month yield spread is very close to uninversion, and when it uninverts (yield curve normalizes after inversion), it signals that recession is imminent or has already begun.
“one of them is the 10year minus the threeyear yield if you look 10 year me the minus the three months sorry yield and if you look at that that starts that's very close to un inversion un inversion of that will be that we mean that we are very close to things that start things to to unravel”
Political leadership (like Trump entering office) cannot change fundamental economic trajectory because the economy is driven by underlying credit cycles and consumer conditions, not by policy announcements.
“so when people think oh now Trump comes in and something can happen and he's a businessman then everything will be fine it's not happening like that it's a super tanker where you'll have to understand the general basics of things and that is you know how is the consumer doing and the basic driver of that is how much are they paying in interest rates”
A $15 trillion refinancing of short-term Treasury bills in 2025 could trigger a liquidity crisis as banks have reduced their ability to absorb new debt issuance, potentially creating the conditions for a credit crunch.
“next year I've talked with other guests about that as well seems to be a massive liquidity year or pivotal liquidity year because I think $15 trillion I need to look up that number actually keep using 15 it might be something else but um that needs to get refinanced and a lot of it is short-term T builds yeah um do you see any issues with that”
When the Fed finally recognizes deflation (staring it in the face), they will engage in quantitative easing, helicopter money, large-scale asset purchases, and debt monetization to combat the spiral, creating a new policy environment.
“Oh you mean reaction meaning QE all of a sudden likeing we talking about something the moment after when they look deflation the stare at deflation in their eyes again then that that's the reaction that's the QE that's the helicopter money that is the whatever they doing buying of assets or whatever they could you know do to pump up things again monetize debt monetize debt the bonds”
The US does not have a soft landing because the consumer is still struggling, evidenced by rising credit card delinquencies and broad consumer unhappiness, despite the stock market being up 750 points since 2008 (a 16% compounded annual rate) which is not normal and represents the biggest bubble ever.
“we do not have a soft landing and everybody who speaks of a soft Landing will have to tell me how can you have a soft Landing when the consumer is still struggling as they are and if you look at the stock market also we are up 750 since 2008 that's a compounded annual rate of around 16% per year every year that is not normal”
Major macro shocks (elections, stimulus announcements, policy shifts) are overweighted by media narratives but have minimal lasting impact on the 50-trillion-dollar global economy; the true drivers are household behavior (consumption, employment, housing decisions) and interest rate impacts on consumers, which move slowly and predictably regardless of headline shocks.
“I actually I don't use that too much I mean this is where what the med likes to do they like to say well you know that this comes in and that changes the picture well it doesn't guess what it's a 50 trillion uh dollar e economy across the globe or Northern I don't know what the global GDP is right now and even though things will change it's not about that it's about Mr and Mrs Johnson or whatever we call in Denmark and Germany also what they do on a daily basis it's about the job market it's about the housing market”
A deflationary bust means the asset valuation bubble will deflate (valuations shrink, enormous value is lost) and trigger a credit crunch as banks struggle with collateral deterioration and borrower defaults, creating a self-reinforcing cycle of asset sales and credit contraction.
“so deflationary bus what will that mean that will simply mean that the the hot balloon here is going to there's going to be you know the common hole in that the air is going to come out which means that valuations will shrink it's going to be bad a lot of value will be lost and you're going to see a credit crunch”
The Fed has never successfully prevented recessions; every time Zberg's business cycle model has predicted recession, it has materialized despite Fed action, including February 2008 when the Fed was explicitly standing by to prevent recession but were already three months into the recession itself.
“they they haven't you know saved the economy ever first of all when whenever my business cycle model model has been suggesting we're going to have a recession it has come every time despite what the FED is doing the Fed was even standing in 2008 in February saying oh we're ready in 2008 ready to um to to to uh to interact if we we see a recession guess what we were three months into the recession”
The largest asset bubble in history has formed, measurable by market capitalization-to-GDP ratio now at 203% (nearly double 2007's 129% and 2000's 129%, and far exceeding 1929's levels); combined with forward P/E ratios at levels last seen in those historic bubbles, plus explosive growth in cryptocurrencies, meme coins, and a 16% annualized stock market return since 2008.
“for in so many par we can just look at it say when you look at the market GDP to cap uh to sorry the market capitalization to uh to C to GDP in the US we are 203% that is almost double what we had in uh 2007 double what we had in 1929 which were great huge bubbles”
2025 will be a pivot year with massive liquidity needs; approximately $15 trillion of debt (primarily short-term Treasury bills) requires refinancing, and if the deflationary crisis hits during that refinancing cycle, it will create a perfect storm of credit contraction and liquidity stress.
“cuz next year I've talked with other guests about that as well seems to be a massive liquidity year or pivotal liquidity year because I think $15 trillion I need to look up that number actually keep using 15 it might be something else but um that needs to get refinanced and a lot of it is short-term T builds yeah um do you see any issues with that like what does your analysis tell you do you see a liquidity crisis maybe looming”
The 10-year yield at 4.4% versus the 5% highs reflects term risk concerns; bonds are not being repriced with new all-time lows coming, but instead reflect a circular (not marginal) bottom with yields still declining into recession before bottoming at a level higher than previous lows.
“so so that's back to the as I said the inflationary environment that I think we moved into I think there is a uh We've SE simply seen a major shift that's going to be clear for us when we get a few years down the road but I think there's a major shift here and it's actually meaning that we're not going to see a new all-time lows and bonds I sorry yelds I actually thought that if you two years ago before the also around the yeah two years years ago it was probably a bit different view there but I think it seems like now that we have actually seen the the the the cirular bottom and that we're going to still see the decline into the recession because it's all about the macro environment so even though you know people say yeah we'll be risky you know it's we we don't want to be in bonds you want to be in bonds with when if the economy hits a recession and so I think there is a uh the yields will still be coming down in the next let's say 6 12 months time frame and then you're going to see that there's probably going to be a new bottom a little higher than what we saw on the alltime lows”
The United States differs from Japan in that Japan was already leading the deflationary cycle globally while the world still had room for manageable interest rates elsewhere; the US, being larger and more systemically important, will trigger global interest rate stress and cannot replicate Japan's stimulus program indefinitely without strangling the rest of the world.
“I think we are different not the we we but the US is different from from Japan in the way that um Japan has actually been in a has been leading in that cycle so they have been able to do that while there was still enough of room for the rest of the world to can maintain you know manageable levels in terms of interest rates and so on but Japan has just G full you know cycle and they are just at the end of that cycle”
Japan's debt-to-GDP ratio of ~240-250% 'doesn't matter' because the Bank of Japan controls its own currency and can monetize at will, making traditional debt constraints irrelevant.
“interest rates are near zero and debt is at 250% or whatever 240 something that doesn't matter”
Market capitalization to GDP in the US is at 203%, which is almost double what it was in 2007 and 1929 (two previous huge bubbles) and was at 129% during the 2000 tech bubble.
“when you look at the market GDP to cap uh to sorry the market capitalization to uh to C to GDP in the US we are 203% that is almost double what we had in uh 2007 double what we had in 1929 which were great huge bubbles we uh and it was at 129 in in in 2000 which was a ridiculous big bubble”
If you can't pay back a $10 million loan, you have a problem; if you can't pay back a $100 million loan, the bank has a problem; and if you can't pay back larger loans, the financial system has a problem—and this cascading failure is what will unfold.
“you can't back to 10 you can't pay back a $10 million loan you have a problem you can't pay back a $100 million loan the bank has a problem”
Investors should study the 1950s and 1960s paradigm rather than the 2010s or 1970s to understand the coming economic environment, as current regime shift mirrors that transition period more closely than recent history.
“we need to start learning from not from we saw in the 70s or what we last the last 10 years we need to start learning from what we saw in the 1950s and 1960s and 1970s you know that's the path we are embarking on as I see it”
A structural regime shift occurred post-Corona: the world moved from a 40-year deflationary environment (initiated by Volcker's rate hikes in 1981) into a new long-term inflationary environment; the post-Corona stimulus was the inverse of Volcker's policy (overstimulation during supply crisis rather than rate hikes during demand crisis), marking the inflection.
“we have shifted from what is a deflationary environment which was set in Motion in 1981 some say it was vulker I say it was the environment around the whole economic environment but the when he killed the inflation um and until what we saw after Corona the inverse fker was what we saw after Corona where there was an extreme overstimulating of the global economy at a time where you had a supply crisis this is the opposite of what fulker did was to hike rates into something where he should have lower rates”
The economy is a 'super tanker' that turns slowly; even though recession signals are building, the turn is gradual and macro shocks (elections, stimulus announcements) do not meaningfully alter the underlying trajectory.
“the economy is a super tanker a super tanker doesn't turn on the dime it turn slowly and what we start to see is that turn and if we just look hard enough we'll actually see that there are many indication of that turn”
Gold can rise to 36,000 per ounce within 10 years, representing 20x appreciation from current levels, due to the shift into new inflationary environment and anticipated debt monetization.
“I mean as I said I'll also say that today I mean I so I I I don't get carried out on and burned on the fire I mean I I I think I I my target would be that gold could be at 36,000 uh by 36 so in let's say in 10 years time we could be like many many many many times higher than where we are today 20 times higher”
Investors who can weather the near-term 6-12 month deflationary bust will find extremely fantastic investment opportunities ahead once the system resets, as the structural shift to inflation will create generational wealth creation in hard assets and gold.
“what we need to factor in is just what is happening the next 6 12 months from here and if you can weather that and you can withstand that then you will probably be able to you know have some of the best investment you can ever find out there because I think when the whole thing I was start saying collapses but when you when we we need to have sound sound money coming back into the system then I think gold will have a key factor for in that”
The stock market has returned 750% total, or approximately 16% compounded annual rate of return per year every year since 2008, which is not normal and indicates the biggest bubble ever.
“if you look at the stock market also we are up 750 since 2008 that's a compounded annual rate of around 16% per year every year that is not normal”
Once asset prices decline, normal consumer prices will also decline until the Fed reacts with QE, at which point the process reverses into inflation.
“when you get a recession you're going to see normal prices also coming down so you are going to see a strong decline in prices for a certain amount of time until the moment when the FED reacts”
The Fed has never successfully saved an economy; when Zberg's business cycle model indicated recession was coming, it arrived every time regardless of Fed actions, including February 2008 when the Fed claimed readiness for a recession that had already begun three months prior.
“they they haven't you know saved the economy ever first of all when whenever my business cycle model model has been suggesting we're going to have a recession it has come every time despite what the FED is doing the Fed was even standing in 2008 in February saying oh we're ready in 2008 ready to um to to to uh to interact if we we see a recession guess what we were three months into the recession”
When the economy slows, yield curves roll over and short-term rates drop faster than long-term rates; this happened in 2023 (acceleration in rate decline) and again from May through late September 2024, with the spike after that being a short-term bounce.
“so when you have a Slowdown in the economy yields will start to roll over and that happened in 23 we started to see that decline then we saw an acceleration of that decline from May of this year then from September on late September we saw a spike”
A deflationary bust will mean that the asset valuation bubble has a hole in it, air comes out, valuations shrink dramatically, significant value is lost, and a credit crunch ensues as banks face losses.
“so deflationary bus what will that mean that will simply mean that the the hot balloon here is going to there's going to be you know the common hole in that the air is going to come out which means that valuations will shrink it's going to be bad a lot of value will be lost and you're going to see a credit crunch”
The strong US Dollar has been driven by capital rotation from other countries into the US; this strength has been remarkable given that risk assets should be falling during periods of dollar strength.
“I think the reason it's been so strong is because you see the capital rotation from other count so Capital coming in from other countries into the us and that simply pushed the Dixie up and that has you know the strength that we have seen in Risk assets despite that has been quite remarkable”
Gold has risen 50% from its 2011 highs, but silver is down 45%, platinum is down 40-45%, and gold miners are down 40-43% from their 2011 highs, which raises the question of whether gold is in a bubble or whether the disconnect reflects gold's unique role as a monetary metal.
“if you look at gold you'll actually see that gold is up 50% from the 2011 Highs but you'll see the silver is down like 45% um the uh Platinum is down like 45 or 40% and gold miners are down like 40% 43% from that those highs”
Central banks have been buying gold due to geopolitical uncertainty and rising debt, but central bank buying alone will not be sufficient to support gold prices during a major deflationary bust when credit crunches force asset sales.
“obviously we are moving into a more uncertain World we're moving into a world now where where debt is you know so big as it is so I think it's good and fine I hope the Danish Central Bank does the same but but I think it's not enough to to to um withstand the kind of pressure we going to see from a deflationary bust”
The consumer is currently struggling with rising delinquencies on credit cards and other consumer debt indicators, making a soft landing impossible regardless of policy actions.
“we do not have a soft landing and everybody who speaks of a soft Landing will have to tell me how can you have a soft Landing when the consumer is still struggling as they are if you start to look at the delinquencies on credit cards if you look at you know everything that has to do with the US consumers they are not happy at this point here”
Core PCE inflation is at 2.1% against the Fed's 2% target, but the Fed is being too hawkish by pumping the brakes on rate cuts, which is like 'kicking somebody who's already on the ground' and will deepen the coming recession.
“it feels like they're they're already beating somebody who's already on the ground like they're kicking somebody that's on the ground like they're over overdoing it overdoing it”
Gold targets of 36,000 per ounce within 10 years are not surprising given the long-term inflationary regime, debt monetization, and eventual monetary reset; this represents roughly 20x current price, driven by currency debasement and sound money restoration.
“I mean I so I I I don't get carried out on and burned on the fire I mean I I I think I I my target would be that gold could be at 36,000 uh by 36 so in let's say in 10 years time we could be like many many many many times higher than where we are today 20 times higher why because I think that we are moving into as I said the new inflationary environment and I think that we're going to see also that there'll be a lot of debt monetization”
There is a stationary period coming where neither bonds nor equities will perform well, as inflation is reintroduced into pricing, making both asset classes vulnerable to structural headwinds.
“I think we even going into a stationary period which will be you know very bad for BS and equities so you're actually putting quite a bit of uh weight on the on the term risk as well”
Investors should currently hold short-duration fixed income (1-2 year T-bills) rather than longer-term bonds, to minimize duration risk in the deflationary bust before later benefiting from the reflation cycle
“if there's recession hits in the next 3 or 6 months you'd rather own like 2 years or one year uh t- builds yeah at this point yeah yeah okay”
The US Dollar Index (DXY) will spike to around 1,075 as a short-term top in late 2024, then decline substantially below 100 over the following period; this dollar weakness (capital rotation reversal) will power a risk-on environment in assets across the board.
“I actually think that was just a spike today so I just checked it here but uh but I actually think that the uh I think there probably be a top end now and I think we're going to see the Dix 1075 actually exactly yeah just a spike but I think you're going to see that as a a top a shortterm top now then you're going to see that you actually drop uh some some uh death below 100 and uh on the Dixie”
If the US pursues Japanese-style stimulus, Trump may intentionally devalue the US dollar in order to 'make America great again' via export competitiveness and perceived economic boost
“so I see the US going the same way and Trump in the office he might devalue the US dollar just to make the America great again”
Scott Bessent, suggested as US Treasury Secretary, is a proponent of Japanese-style monetary policy (Abenomics), which involves buying government debt and inflating away debt through money creation.
“Scott bessent I'm not sure if you've heard the name it's come up but he was suggested as a new treasury secretary in the US and he's a big fan of shinsu ABA meaning like Japanese policies like let's buy our own debt and just inflate our way out of it”
The market expects continued strength in the economy and risk assets, but this is delayed recession by 2-3 months due to Corona-era stimulus effects compared to the 2008 financial crisis timeline.
“which maybe to due to all the stimulus that came out of Corona which has you know we delayed by 3 months to to a normal recession to the financial crisis two two to three months in in terms of delay that's that's all”
Financial institutions in Japan are already beginning to wobble and fail, with problems that started in August 2024; this is the leading edge of a global financial crisis that will spread to the rest of the world later.
“I think that is going to be the case actually I think you actually have started to see some of that in Japan already and I think that falling out has not stopped yet I think we are at a pause from the break from what we saw in in August but I think it's going to continue in Japan with the financial institutions there”
In the short term (next 6-12 months), gold will not perform well, but when the Fed and US Administration react to deflation through QE and debt monetization, gold and silver will benefit enormously.
“I don't think in the shortterm range range we're going to see something great for gold but I think what's going to be the reaction from the US Administration and from the FED is going to create the the perfect environment for gold and for for silver and so on”
When the US Dollar Index reaches 120-122, the rest of the world will be strangled by the strong dollar; this will force the Fed and US Administration to react by reversing policy, creating a new inflationary environment.
“at that point I think you you're going to see a big reaction from the fed from the US administration because otherwise the rest of the world will simply be strangled I mean everything will just be strangled if we get to 122 uh and beyond that”
A stagflationary period may occur where bonds and equities both perform poorly due to the combination of economic weakness and resurgent inflation.
“I think there is a chance that people are now starting to think okay inflation is actually a real thing again and that is going to be priced into bonds which means that there will be a uh a time where where bonds is not a good thing to hold for a longer time and if I get it right I think we even going into a stationary period which will be you know very bad for BS and equities”
The only viable option now is accepting the inevitable deflationary bust and cliff, as the Fed can no longer prevent or substantially delay the cycle that has already begun turning
“we are you know heading towards the cliff yeah the cliff is the deflationary bust yes right”
Zberg expects jobless claims to spike and accelerate into Q1 2025, marking the beginning of obvious recession conditions.
“I think into q1 you're going to see you know Spike starting to accelerate”
The Fed will not cut rates in the December 2024 meeting and will remain hawkish; only in January 2025, after the new president is sworn in, will the Fed begin to consider data-dependent policy, but action will be delayed.
“I mean they they they that would mean that they would have to look into their leading indicators Oh you mean reaction meaning QE all of a sudden likeing we talking about something the moment after when they look deflation the stare at deflation in their eyes again then that that's the reaction that's the QE”
The US Dollar Index (DXY) currently around 106-107 may have just topped and could soon see a decline below 100, which would reverse the capital rotation that has been driving US equity strength and power a broader risk-on environment.
“Dixie you you touched on uh we're right around 1065 right now it's ticked up tremendously last few weeks um the trajectories intact to hit 120 125 I think you mentioned not from not from here and I actually think that was just a spike today so I just checked it here but uh but I actually think that the uh I think there probably be a top end now and I think we're going to see the Dix 1075 actually exactly yeah just a spike but I think you're going to see that as a a top a shortterm top now then you're going to see that you actually drop uh some some uh death below 100 and uh on the Dixie and I think that is going to power the whole risk on environment”
Bitcoin will underperform gold in the long term; while gold will outperform other assets as the sound money restoration occurs, Bitcoin (and other cryptocurrencies) will face structural headwinds and will not be a core store of value in the reset system.
“I think gold will be a better asset coming from uh let's say 25 into um into the 30s 20 2030s fantastic”
Zberg expects no Fed rate reaction in December and sees January 28th as too distant for meaningful action, requiring the Fed to look at leading indicators which it currently ignores
“like did you expect a reaction in the next two meetings like December I'm personally expecting nothing January 28th is the first meeting after the new president is in the office so way way way out I mean they they they that would mean that they would have to look into their leading indicators”
S&P 500 will rise to 6,163 before rolling over; this represents the final top before the deflationary bust, and the rally will be faster than most expect given the structure of momentum and technical setup.
“I think I said 6163 but I may but I may have Z but 6163 yeah it's still there 63 maybe be the top end of it but I think that's where we're going to go to uh and uh we we have seen uh yeah the the structure structure that I'm looking the structure I looked into is leading us right there and I think it's going to be faster than most people think”
Currently, at late November 2024, Zberg remains 'very bullish' and 'risk on,' expecting the S&P 500 to reach his target of 6,163 before a significant fallout begins in Q1 2025.
“I'm not saying it right now right here this is H we are late November here just so so everybody understands that I'm very very bullish I'm still risk on”
Silver is at risk of further correction; it has formed a wedge pattern on weekly charts and has fallen out of that wedge, now probably retesting it; the technical setup suggests lower prices ahead.
“if you look at the silver for instance it um it moved up in a kind of a wedge on the uh on the weekly and it fell out of that wedge now it's probably retesting that wedge and I think is going to come down further I think there's a good chance we have seen the top in silver and gold at this point”
The everything rally (all asset classes moving up in tandem in late 2024) is not a normal market signal; it reflects the final blow-off phase before the deflationary crash, driven by momentum and FOMO rather than fundamental divergence.
“just just price price mechanism or just the price tables here actually in front of me it seems like we've got a bit of an everything R going on just the last couple of days which is a bit confusing cuz gold is recovering the Dixie is spiking as you mentioned why is everything moving up especially in tandem which is a bit confusing yeah but I I think the the the interday or the the you know developments is not something that that's not how I go by things”
Silver has moved up in a wedge pattern on the weekly chart and has now fallen out of that wedge; it is currently retesting the wedge and likely to come down further, suggesting a top may have been made in silver.
“if you look at the silver for instance it um it moved up in a kind of a wedge on the uh on the weekly and it fell out of that wedge now it's probably retesting that wedge and I think is going to come down further I think there's a good chance we have seen the top in silver and gold at this point”
Central banks are not normally good at timing gold purchases; England sold gold at $200/ounce at the bottom of the market, demonstrating poor tactical execution despite sound strategic rationale.
“first of all I i've noticed also that central banks are not normally the uh the best timing uh best timers of buying on to buy gold I mean England sold it uh what was $200 per ounce or something at the bottom”
The '20-year yield is the real dollar' thesis is an interesting alternative framework, but the key insight is that long-term yields reflect the shift to an inflationary environment regardless of which specific tenor is most informative.
“um like we had a really good discussion with chrisan vatan here about the 20 year he sees the 20 year as the real dollar okay um which is interesting it's a bit of a different thesis but I kind of kind of understand where he's coming from looking at the 10 year at 4.4 the high was around 5% yield um on that like where where do you see things going”
The stock market has experienced 'everything rallies' recently (gold, DXY, stocks all rising together) despite historically moving in opposite directions, which doesn't persist on longer timeframes and is short-term noise.
“looking at just just price price mechanism or just the price tables here actually in front of me it seems like we've got a bit of an everything R going on just the last couple of days which is a bit confusing cuz gold is recovering the Dixie is spiking as you mentioned why is everything moving up especially in tandem which shouldn't move up in tandem”