Deflationary Shock: Gold to $4,000 & Oil to $40, just like 2008 | Mike McGlone

In a recent in-depth interview with Soar Financially, Bloomberg's Senior Commodity Strategist Mike McGlone delivered a stark forecast for global markets. Drawing parallels to the 2008 financial crisis, McGlone outlined his expectation for a significant deflationary shock, predicting a surge in gold prices to $4,000 per ounce and a dramatic drop in crude oil to $40 a barrel.

McGlone, a veteran market analyst with a deep understanding of commodity cycles, joined Soar Financially host Kai Hoffen to dissect the impact of tariffs, evolving global economic dynamics, and the contrasting fortunes of various asset classes. His analysis, grounded in decades of market observation and trading pit experience, painted a picture of a world grappling with the unwinding of post-pandemic inflation and the potential for a sharp reversal in risk assets.

Echoes of the Past: Deflationary Pressures Mount

McGlone emphasized that the inflationary peak of 2022 has not been fully digested by the market and that new trade barriers could accelerate a move towards deflation. He highlighted the historically elevated valuation of the US stock market as a key vulnerability.

"We still haven't wiped out [the inflation peak] yet and it's way overdue," McGlone stated, adding that the current environment presents a "worthy catalyst for just reverting of the rapid advance of risk assets." He pointed to the significant decline in US stock market capitalization this year as tangible evidence of this deflationary force taking hold.

Turning to the energy sector, McGlone presented a bearish outlook for crude oil, suggesting a return to levels around $40 per barrel. He based this prediction on the fundamental principle that commodity prices ultimately gravitate towards their cost of production, which he noted is decreasing due to technological advancements and regulatory factors.

"For the last 20 years, every time it popped above 100, it didn't bottom till around 40. And now I think that's where it's going. It's just a question of time," McGlone asserted. He also highlighted the increasing supply of US crude oil and liquid fuels coupled with potentially decreasing global demand.

While copper prices experienced a recent surge, McGlone views this as likely unsustainable, driven by short-term factors like tariff speculation. He anticipates a correction back to the $4 per pound range, particularly if the US stock market continues its downward trend, impacting overall industrial demand.

"Part of the reason the number one reason copper is going to go down is because it went up. It's just the way copper works," McGlone explained, emphasizing the cyclical nature of the metal often seen as a barometer for global economic health.