PodcastWealthionMike McGlone

Deflation Is Coming — And Gold, Bitcoin & Copper Could All Get Hit

The guest argues that rising U.S. equities are contributing to inflation, while a sustained market decline could raise recession risks and shift the Fed toward rate cuts. He sees energy prices, Treasury yields, and expanding commodity supply as key forces shaping markets, and warns that gold, copper, and Bitcoin may be vulnerable to a stock-market downturn. His outlook includes falling energy and corn prices, possible peaks in gold and silver, and a potential Bitcoin decline to $10,000.

CommoditiesGoldBitcoinSilverEnergy MarketsRecession Risk

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Key Takeaways

At the end of September, futures priced in four more Fed hikes toward rates near 5%, but the guest says collapsing crude and energy prices could interrupt that path; he also expects the Fed’s next major moves to be rate cuts. He ties that outlook to the stock market’s economic significance, arguing that a sustained decline could raise recession and electoral risks.

The guest argues that rising U.S. equities are an inflation source, citing a nearly 14% annual S&P 500 total return and a market capitalization 2.5 times GDP. He says a 10% market decline would equal 25% of GDP, underscoring why he sees a sustained selloff as a significant economic risk.

The guest describes 10-year Treasury yields above 5% as equity-like returns and a headwind for gold, copper, and Bitcoin, while saying that level could later look like a gift if crude retreats and stock volatility rises. He also notes that futures were pricing four Fed hikes, a rate outlook he says could change if crude collapses.

The guest points to gold’s unusual risk profile: its annualized 260-day volatility was 2.2 times the S&P 500’s, and its 100-day correlation with stocks reached about 0.65 in August. Although gold was at a four-decade high relative to a Treasury long-bond index, he cautions that even a correct inflation view could leave an investor merely breaking even.

ECONOMY

Hike Pricing — At the end of September, futures priced in four more Federal Reserve rate hikes over the following year, taking rates near 5%. The guest says collapsing crude and energy prices, or a stock-market decline, could halt that path.

“But for now, as we speak, the Federal Reserve, this is the end of September, September 28th…”—

Equities And Inflation — The guest argues that rising U.S. equities are a major source of inflation. He cites an S&P 500 total return of nearly 14% for the year and market capitalization equal to 2.5 times GDP, which he calls the highest since 1928. He says a 10% market decline would equal 25% of GDP.

“But right now with S&P 500 total return still up 13 almost 14% on the year. That is your number one source of overall inflation. It's 2…”—

MARKETS

Treasury Yields — The guest says energy is contributing to rising yields. He notes that a 10-year Treasury yield above 5% offers equity-like returns, the highest level in almost a quarter century, in his view.

“Yields are going up. It's telling me it's part of a market that's being broken initially by energy…”—

Gold And Bonds — The guest calls inflation expectations an investment opportunity and says gold is at its highest level relative to a Treasury long-bond index in four decades. He links the comparison to central banks raising rates in response to energy shocks, which he considers usually transitory.

“And I think that's the next big opportunity for investors…”—

China Energy Demand — The guest says China’s crude-oil imports and total auto sales were rolling over before the war, while many new cars were EVs. He argues that this shift is encouraging the replacement of fossil fuels with technology.

“But if you look at crude oil imports from China, they're rolling over…”—

FORECASTS

Diesel Reversal — The Bloomberg heating oil index, which the guest says is actually diesel, rose 160% over one year—its largest increase since the index’s history began in 1987. He says such moves reverse and expects diesel could be down 40% by the same time next year.

“Let's look at the Bloomberg heating oil index. That's a total return index. It's actually diesel, but they still call it heating oil…”—

Natural Gas Outlook — The guest says natural gas was down about 20% year to date, compared with crude oil down about 60% and diesel up almost 130%. He calls natural gas a useful indicator and expects it to keep falling, with other energy prices following.

“The price of natural gas on our screen on a year-to-ate basis is down about 20%. Versus crude oil about 60% and diesel up almost 130%…”—

Metals Peak Risk — The guest argues that silver’s rapid price rise changes supply-demand balances with a lag. He thinks gold and silver may have peaked this year, with the peaks potentially lasting years or, if history is a guide, decades.

“Silver had a decent deficit for a while, but on a supply demand model, you also have price…”—

Is a Deflationary Cycle Coming?

McGlone argues that inflationary pressures are near a cyclical extreme and that the severe inflation following the COVID-era deflation is likely to give way to another deflationary phase.

Bond Yields, Inflation & the Fed’s Next Move

He attributes rising Treasury yields mainly to inflation expectations and a booming U.S. stock market, while saying an oil-price collapse or equity decline could halt expected Fed hikes.

Can Commodities and Bond Yields Keep Rising?

McGlone says commodity prices and yields can rise together temporarily, but energy spikes tend to curtail demand and bring more supply; he sees market valuations and inflation expectations as crucial.

Why Oil and Diesel Prices Could Crash

He expects record diesel and refined-fuel prices to reverse as high costs destroy demand and North American energy surpluses expand, aided by substitution toward electric vehicles.

Is Persistent Inflation the Wrong Narrative?

McGlone rejects the idea that deglobalization guarantees persistent inflation, pointing instead to technology, elastic supply, and expanding grain production as forces that can push prices lower.

Gold & Silver: Have Prices Already Peaked?

He says gold and silver may have peaked after unusually sharp rallies, with elevated prices, volatility, and supply responses making further gains less attractive despite their long-term store-of-value role.

Why Gold Is Acting Like a Risk Asset

McGlone sees gold behaving unusually like a risk asset, with high correlation to equities; he warns that a stock-market decline could produce larger losses in volatile assets such as metals and Bitcoin.

Iran, Oil Prices & the War Premium

He expects the Iran conflict’s oil premium to fade eventually, arguing that high fuel prices, U.S. production surpluses, and political pressure create incentives for lower prices.

Are Markets Pricing Too Many Fed Rate Hikes?

McGlone considers market expectations for four additional Fed hikes excessive and predicts rate cuts if equities weaken, since stock-market losses would threaten consumer confidence and economic growth.

“We’re All Stock Puppets”

He calls investors “stock puppets,” arguing that copper, gold, and Bitcoin are increasingly driven by U.S. equity-market direction and could fall sharply if valuations reverse.

What Happens If the Stock Market Falls 10%?

McGlone warns that a sustained 10% equity-market decline could cause roughly twice that loss in metals and other volatile assets, while also reducing inflation pressure and changing Fed policy.

Bitcoin to $10,000? McGlone’s Bearish Crypto Call

He remains bearish on Bitcoin, citing its sensitivity to stocks, competition from numerous cryptocurrencies, high interest rates, and weak relative performance; he maintains a possible $10,000 target.

Is Copper the Next Market to Break?

McGlone sees copper as vulnerable because it lags equities despite high volatility and crowded positioning, while weak Chinese property conditions add to the downside risk.

Corn, Soybeans & the Commodity Supply Cycle

He expects grain prices to face pressure as production expands, particularly in Brazil, while noting weather disruptions, biofuel demand, and farmers’ crop choices can affect supply and prices.

Why McGlone Still Sees Deflation Ahead

McGlone argues deflation remains likely because energy spikes are transitory, supply is growing, and a falling stock market would remove a key inflationary force; he cautions that precious metals may have peaked.

Soft Landing or a Major Market Break?

He favors the risk of a major market break over a soft landing, citing extreme asset valuations, historical volatility signals, high yields, and the possibility that falling equities prompt a sharp bond rally.

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Important Disclaimers

Not Investment Advice: For education only — not financial, tax or legal advice.

AI-Generated: Made by AI from source transcripts and may contain errors.

No Guarantees: Past performance does not predict future results; investing carries risk.

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