Gold To $3,000, Oil To $40, Bitcoin To $10,000: The Deflation Trade Is Here | Mike McGlone
Speakers
Mike McGlone
— Senior Commodity Strategist, Bloomberg Intelligence
David Lin
— Founder & Host, The David Lin Report / ex-Anchor, Kitco News
Summary
Mike McGlone, Bloomberg Intelligence's Senior Commodity Strategist, lays out a deflationary macro thesis. He argues that extremely high bond yields, stretched equity valuations, and overbought precious metals and Bitcoin are setting up for a second-half correction. Key calls include short gold to $3,000, short crude oil to $40 or lower, short Bitcoin to $10,000, and long US Treasuries as a safe-haven put with positive carry.
- McGlone expects a normal midterm election year correction in the S&P 500 that will trigger a deflationary reset.
- Gold has reached bubble-like extremes versus the S&P 500, Treasuries, and its moving average, and could fall to $3,000/oz.
- WTI crude oil is in a 20-year downtrend of lower highs and lows, with US production dominance pushing prices toward average production costs around $55 and possibly $40.
- Bitcoin has already broken down despite rising equities and is heading for $10,000 as the ETF-fueled bull market unwinds.
- Long-dated US Treasury bonds yielding 5.2% act as a put on the stock market with positive carry and no decay, attracting flows from non-income assets.
- Copper is highly correlated to the S&P 500 and vulnerable to a sharp drop; hedge funds are still heavily long.
- He sees OPEC becoming increasingly redundant as the US and Canada shift the global energy supply balance, capping oil upside.
- The second half of 2026 is anticipated to bring a volatility spike and a reversal in risk assets, favoring bonds.
Ideas
Stock market extreme, correction likely
The stock market is at an extreme, with S&P 500 cap-to-public-debt ratios and valuations near 19-year highs, while volatility is at multi-decade lows. A midterm election year correction is very common, and rising bond yields are competing with equities. A drop in the S&P 500 could start a 'trade of a lifetime' as it triggers a deflationary reset across commodities and risk assets. Volatility is set to pick up in the second half.
Oil to revert to production cost near $40
WTI crude oil faces a 20-year trend of lower highs and lower lows. The US has become a net energy exporter, making OPEC increasingly redundant. Technology (EVs, efficiency) and demographics are crushing long-term demand, while average US production cost is around $55/bbl. Supply shocks are temporary; the price will revert to the cost of production, likely $40, as macro risks tilt toward deflation.
Bonds provide positive carry and equity hedge
The 30-year Treasury bond yield at 5.2% is the highest in 19 years, offering a positive carry put on the stock market with no decay. Historically extreme yield advantage over gold and equities, and a reallocation out of non-income assets like Bitcoin and precious metals into bonds is underway. If stocks drop, bond yields will fall and bond prices will rise, providing alpha.
Bitcoin bear market, heading to $10,000
Bitcoin is already in a bear market, failing to rally even with stocks up. It flunked the test as a leading indicator and will decline further when equities correct. The proliferation of thousands of competing tokens, the end of its peer-to-peer cash narrative, and the massive supply overhang from ETF buyers trapped at higher prices will force a purge. He maintains a long-standing call for Bitcoin to drop to $10,000.
Gold overvalued, set for mean reversion drop
Gold has reached extreme highs vs the S&P 500, vs Treasuries, and vs its 60-month moving average, similar to 1980 and 2011 peaks. It faces headwinds from elevated bond yields, high volatility, and a newly elevated correlation to equities. If the stock market corrects, gold will fall as part of the metals complex mean-reverting. It could drop back to its long-term moving average around $3,000/oz.
Copper drops with equities; hedge funds long
Copper is a sock puppet to the S&P 500 with a historically high correlation. Hedge funds are heavily long (30% of open interest vs 5% average). If the stock market drops even 10%, copper will likely fall 10-20% or more. The next big risk is mean reversion pulling copper down to $4-5/lb, exacerbated by China's deflationary bond yields and Trump's need for lower commodity prices.
Up Next
This The David Lin Report video, published July 30, 2026, features Mike McGlone discussing SPY, WTI, TLT, BTC, GLD, COPPER. 6 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Mike McGlone · Tickers: SPY, WTI, TLT, BTC, GLD, COPPER