#278: Death & Gold Crosses

Michael Berman, Ph.D.
April 22, 2025

Today is my 54th birthday, so excuse me if I start with something a little philosophical.

I think it is important to have an opinion. If you are a strategist, it is incumbent on you to have a view; fence-sitters are boring and usually get splinters. Good strategy involves constantly updating your views as new information comes in—thinking in probabilities, not certainties.

Over the weekend I failed and then succeeded on my quest for a better understanding of the world we live in. I encountered a know-all who had 0% doubt in everything political, economic, real estate, cars, health, etc…. I am normally quite even-tempered and mild-mannered, but I failed on Saturday night. For some reason I got triggered; it wasn’t my finest moment. I was quick to apologise and accept responsibility for my outburst.

The positive I took from the weekend was that as investors, traders, and members of society, it is important to always keep an open mind to a different perspective. I am pretty sure I display a level of certainty in these letters that is probably not fitting my level of competence. My outburst gave me an opportunity to see how I might come across to some with some of my flippant remarks. One is never too old, there is always room for growth.

I have my mum and son in town for my birthday—what a blessing.

You can find the research portal I am building in public here.

S2N Spotlight

There is a lot of talk at the moment about Death Crosses, i.e., when the 50-day crosses below the 200-day moving average. The US dollar looks like it is in more of a death spiral than a cross. This strategy has been a very good one for trading the dollar.

The S&P 500 entered a death cross about 10 days ago. It hasn’t been as good a strategy with stocks.

On the opposite end of the spectrum, gold is very much in the bull phase of its signal. The strategy is pretty much the same as buy and hold.

The bond total return index is surprisingly still in a bull market signal despite the goings-on in the bond market. This is not the kind of strategy you would apply to the bond market based on the results below.

S2N Observations

The dollar continues to weaken in the face of the trade wars. This is a subject that isn’t going away. I like this chart from a visual perspective; that is, assuming 100 is a magic number, which I think is fair.

For the first time in a long time, I am nervous about gold in the short term. I think the yellow metal is too extended and due for a pullback. We are at a record gap above the 200-day moving average.

Over the years I have noticed that Bitcoin often behaves more like a growth stock than a safe haven. I have noticed in the last 10 days that Bitcoin is starting to hold its ground despite the Nasdaq selloff.

To check myself, I looked at the correlation of Bitcoin with the Nasdaq 100 over 1 month and 1 year. To be honest, I expected to see a drop-off in the correlation over the short term, but there has been anything but that. In the longer-term 1-year window, it is also still near the highs. This makes me cautious to call on Bitcoin to break from its Nasdaq animal spirits and be more like gold.

What I am trying to say is that I am probably still unsure if Bitcoin is going to act the way it was intended in the face of a financial crisis. Perhaps too many people have leveraged themselves to get exposure to this asset class. I sadly don’t have enough conviction to get off the fence here. I will be more constructive at lower levels.