(Kitco News) - In a stark warning to investors, 49-year market veteran Bert Dohmen said the current market is the most dangerously speculative he has seen in his career, predicting a severe downturn that could be "the worst that we've seen since 1929."
Speaking exclusively to Kitco News on Tuesday, the editor of the Wellington Letter warned that record levels of leverage have set the stage for a "fiasco of margin calls going out that people cannot meet, and they will lose everything."
The warning comes as gold and silver prices surge on safe-haven demand, with spot gold pushing past $3,530 an ounce. This flight to hard assets coincides with new data showing the U.S. industrial economy has been in contraction for six straight months.
"The markets are a game nowadays. They're controlled by the algo traders and the HFT [high-frequency trading]," Dohmen said, pointing to what he sees as a fragile market structure. He noted that the recent rally in small-cap stocks was not genuine buying but a massive "short squeeze," and that the market's health is precarious, with about half of the stocks in the Russell 2000 having no earnings at all.
The core of his concern lies in the record $1 trillion in NYSE margin debt. He referenced the aftermath of the 1987 crash, when Wall Street firms began foreclosing on the homes of investors who couldn't meet margin calls. "How many people do you think know that they can lose their house?" Dohmen asked. "This could be the worst that we've seen since 1929."
Distrust in Data and a Takedown of Bitcoin
Throughout the interview, Dohmen expressed profound skepticism of official economic data, particularly the jobs numbers from the Bureau of Labor Statistics. "We call it the BLS - stands for Bureau of Lying Statistics," he said. "All these economic statistics out of Washington, they are untrustworthy. You cannot trust them. They're as bad as those numbers that come out of China."
He reserved some of his sharpest criticism for the cryptocurrency market, calling Bitcoin "a figment of the imagination" with an intrinsic value of "zero." He drew a direct parallel to the largest fraud in financial history to illustrate the risk. "Bernie Madoff had the biggest profits... until they found out he made no trades," Dohmen said. "The scams will go to record highs."
Gold, Geopolitics, and a 2031 Forecast
For precious metals investors, Dohmen offered a nuanced outlook. He believes that in the initial phase of a sharp market decline, gold and silver will also be sold off as they are used as "a source of cash... to meet margin calls." However, he sees this as a precursor to the second phase, when central banks inevitably print more money and investors flock to safety. "That is when you really want to buy gold and silver," he advised.
Based on a 400-year cycle study he conducted in 1980, Dohmen revealed his surprisingly specific long-term forecast: "The next top in gold in the secular bull market would be in the year 2031."
Dohmen's analysis connects market risk directly to a volatile geopolitical landscape, which he describes as a "return to colonialism for resources." He believes the world is entering a period of "tremendous wars," making hard assets the only true safe haven.
His final advice to investors was a call for independent thought. "Don't believe any of it," he urged. "Do your own thinking. Your brain has much more power than theirs."
To get the full analysis, watch the in-depth interview with Bert Dohmen above.