The Secret Gold Formula - Know What Gold Will Do Next

**SPEAKER_1** (0:01)
Welcome to the Money Tree Investing Podcast. Stock market, wealth, personal finance, value stocks. Invest in your life.

**Kirk Chisholm** (0:11)
Hello, Smart Money Tree Podcast listeners. Welcome to this week's show. My name is Kirk Chisholm. I'll be your host, and today I'm joined with Doug Heagren. Hey, Doug.

**Douglas Heagren** (0:17)
Good morning, Kirk. Welcome back from vacation, you lucky dog.

**Kirk Chisholm** (0:22)
Thank you.

**Douglas Heagren** (0:22)
Well, you were lucky last week, not now, sorry.

**Kirk Chisholm** (0:24)
Yeah, I don't feel lucky, Doug. I woke up and I'm like, oh crap, I gotta go to work.

**Douglas Heagren** (0:29)
Do you feel lucky? Well, do you?

**Kirk Chisholm** (0:31)
I think this is the first time I've actually had a vacation and thoroughly just enjoyed the vacation, not worked, just took it off. And I was like, you know, market's kind of boring. I'm just going to take time off. And what do you know? And I missed a few things.

**Douglas Heagren** (0:45)
Yeah, just a bit. Some real creative. And what do we say about the bond markets? What's the rule on bond markets? What do they tell you?

**Kirk Chisholm** (0:52)
Who is it who said, it was Carville, who said something along the lines of, when I die, I want to come back as the bond market because I can push everybody around?

**Douglas Heagren** (1:01)
I'm going to take a look at that. Hold on.

**Kirk Chisholm** (1:03)
I don't know if he originated it, but he definitely said it. And it's true. Yeah, James Carville. I mean, if you think about the markets, everybody's interested in the stock market because, hey, we can make a billion dollars overnight, investing in stocks. And the reality is, is all the smart people are in the bond market. The smartest people are in the bond market. And the stock market is what's sexy, but the bond market is really where the real money is. It's so much larger than the stock market. People don't realize that. And bonds are boring. Nobody wants to invest in bonds because they're boring. And they want to invest in the stocks because, hey, it made like 2 percent yesterday.
It's small thinking. At the end of the day, for most people, stocks are probably still better. But in general, the really smart people invest in bonds. So just something to keep in mind. And a lot happened in the bond market. What happened in the bond market last week, Doug?

**Douglas Heagren** (1:56)
Yeah. So bond yields surged to multi-decade highs. They triggered historic emergency intervention by the US. Treasury. That turbulent week finally spilled over in the equity markets. The Dow, S&P, NASDAQ all had tempered weekly losses, and really tempered because it was a late Friday rally. You can touch on this why you never trade on Mondays and Fridays, or at least you better know what you're doing. Investors are looking at issues with higher expected deficits. Turns out that inflation might not be transient after all.
Sticky inflation. A massive $40 trillion national debt milestone. We've got geopolitical friction with Iran. By the way, it's Monday, it's August 24th, and overnight, I haven't even looked at what the impact is going to be, but they were saying there was a massive amount of oil now finally coming out straight of Hormuz. That's going to have some impacts for sure. I think I've heard that before though. Yeah, I've heard that before. I don't know the latest on the actuality and what that means, and what triggered this latest, but here's what it means. We'll go back forth a little bit. We are entering a major danger zone this week. It's prompted unexpected defensive actions from Washington. No surprise. I don't know, I think it's August 24th. We just said some primaries. There's something major going on here in November that might be prompting some little more urgency from- Just a little bit. Yeah, just a little bit. We had a 30-year yield spike surge to a 20-year high of 5.3 percent, which by the way, for those panicking, it's still historically low. I mean, go back to the 80s when we were close to 20 percent on these. But the problem for everyone listening, there's pros and cons. A, historically, this is more in line with averages. But the negative of it is, this is something that nobody really living today, whether they lived through it before, which a majority of investors have not. They've been just used to this frothy markets, that no matter what happens, and frothy economy that no matter what happens, prompted by lots of M2 money. We've talked about that at Nausium. But at the other side is even people that have been through it. Memories are short. We see this all the time with every market in economic situations, that people forget what they went through before. It's really interesting to see how they react and what they don't learn from history.