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The McAlvany Weekly Commentary February 11, 2026 "Maybe the remainder of 2026 is boring in the physical metals. I tend to think not. And a part of that is because we're dealing with a monetary regime change that happens—you can't even say once in a generation. And the last significant monetary regime change was sort of the death of what had already died. Bretton Woods had already come to an end by the '70s, but it was sort of a global acknowledgement that Bretton Woods was dead—double dead. And less than once in a generation, you see monetary regime change." —David McAlvany

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Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick along with David McAlvany. David, on Sunday when we were watching the Super Bowl, I leaned back and I told my wife, I said, "I can't believe it was 26 years ago that we were making comments about how many dot.com ads were on the Super Bowl." At this point, it was AI ads everywhere. David: AI. Oh my gosh. Kevin: It felt so similar to 26 years ago. David: But very different than 2025. It was all crypto. Kevin: All crypto 2025. Ooh— David: Only one. Kevin: —we can talk about that later. David: Only one for Coinbase. Kevin: Yeah. So what do you think about all the AI? So there was anxiety last week and that was specifically where it was. David: Yeah, that and the FAANGs. I think you look at the FAANGs, you look at the NASDAQ 100. They were getting clobbered alongside crypto. The crypto carnage extends into this week with bitcoin remaining in the 60s and the lesser market cap cryptos are also slipping below 50% of their peak values. Bitcoin, we were third quarter last year, 126,000, so about 68,000 now, 62,200 at the low. Kevin: Well, and ethereum's getting hit as well. David: Ethereum from nearly 4,900 to 2,100, and ripple from 350 to 144. Kevin: Wow. David: So the mood has shifted. Speculation in crypto has lost the narrative and lost momentum. And of course it had that momentum up into the second or third quarter of last year. Kevin: Even though Scott Bessent is saying things that are positive from the White House, right? David: Well, absolutely. And clearly, from the Oval Office the White House has supported the efforts, set aside the massive conflicts of interest with Middle East countries investing directly in the Trump-named cryptos. Fabulous, fabulous narrative there. If you want to write some history, it's going to make its way into the history books for sure. So we've got White House support, you've got Wall Street adoption, and you wonder if or when the public throws in the towel. Liquidity dynamics are waning in that space, and you can see it beginning to impact some of the markets like private credit and private equity. And we have not seen a change in liquidity dynamics with corporate credit. That remains fairly robust. The financial market indicators that we look at every week, there's not been a massive shift, not a massive downgrade. With an increase in volatility in equities, in tech, in metals, you're not seeing a significant shift in terms of credit market dynamics yet. Certainly some pressure at the long end of the curve, certainly some pressure with sovereign paper, 10-year and beyond. And a widening between the 2-year and the 10-year in almost every jurisdiction, but certainly in the US too. So there are significant shifts within fixed income, but no real stress points within corporate credit where you are seeing stress points. Again, we come back to crypto. Michael Saylor, his strategy, the company that basically banks crypto, borrows to buy even more. Kevin: A lot of leverage. David: Yeah. It's now underwater. It was last week on its bitcoin holdings. If you look at the cost basis, they're now breathing through a snorkel, so to say. Q4, they reported just over a $12 billion loss. And I think that was for the full year. But if crypto prices don't turn very soon, Saylor will be dealing with the dark side of leveraged crypto treasury holdings. He owns over 3% of all mined bitcoins. And so just imagine a world where you've got forced liquidations. It's not improbable. Kevin: You talk about crypto, and last year we did have a lot of crypto commercials on the Super Bowl. The AI side of things, however, I think the shock this week was how much these companies are spending to show growth. David: Yeah. Worth noting, most of the tech companies are beating earnings. In fact, I think 78% of reported companies have positive results and are beating expectations, and tech companies are leading the pack there. But their share prices are getting clobbed when they're getting to the stage where they're talking about CapEx, where they're spending their money next year. Kevin: How much did you have to spend to make what you're looking like you're making? David: Well, for 2025, there was sort of record breaking. Collectively, the big five announced 650 billion in CapEx for data center and AI development in 2026. And the market is now very unclear as to, does this make sense? They're not seeing returns on that capital from 2024, 2025. And so these big numbers are coming out, and there's a little bit of a indigestion problem. So investors are— Kevin: You're talking about— David: —second guessing it. Kevin: —Google and Amazon and some of these biggies. David: Yeah. Google CapEx was announced 60 to 70 billion over what was expected. So 175 to 185 billion for the year. Kevin: Wow. David: And I think 135 was the number expected. And Amazon was 200 billion in CapEx for 2026. That's not the only spaces that are seeing pressure. Leveraged loans, private credit, as AI and tech are under pressure, these guys are kind of being sucked into the vortex too. And you're talking about non-publicly tradable junk debt of the lowest possible quality. Kevin: No buyers. David: Nope. And they'd rather just hold the portfolios and they can mark them to, instead of market, because they're privately held, mark to make believe. Kevin: Right. Like we did back in 2007, 2008. David: Right. So this is KKR, this is Blue Owl, this is Ares Management, Blackstone, Apollo, Global. Their stocks are publicly traded even if their underlying illiquid assets are not. And the stress is showing up in the performance of those names. Now down 16% to 20% year to date, some of them are off 40% to 50% from their peaks in 2025. So similar to crypto in terms of performance. The narrative for private equity, the narrative for private credit, is fading fast. You get UBS expecting default rates in private credit to move as high as 13% this year, at least according to Bloomberg. Kevin: Well, and you talk about narrative, and the narrative has been that AI's to the moon, but we also have seasonal fluctuations as well. Like the stock market in February is not usually a stellar place, right? David: Yeah. February is typically the second weakest month of the year for equities. And we've already had a rocky start in January. Q1, again, starting out on the rough side. So with 2025 attention gravitating to AI and tech, it's no surprise that we have the relative value rotation in full swing. The money's coming out of those spaces—AI, tech—and towards the Dow Jones transportation average, Dow Jones industrial average. Your basic big multinationals which have not been priced for an imaginative world, the world of tomorrow, a world where, again, it's sort of infinite growth, infinite productivity gains, and frankly, near infinite pricing. There's no cap on a market cap for a company that you attach unbound imagination to it and then come up with a price. Kevin: Yeah. It was interesting, too, to see that these AI commercials were also trying to mock the fear of AI. And I'm wondering if that also isn't to just bolster the narrative at this point, because the money has to continue to flow in. They're not making as much as they're spending is what you're saying. David: Yeah. There's a fundamental case to be made contrary to the positive narrative. Ultimately, these investments have to make money. If they don't make money, the theory is, you don't know who's going to win, so you throw money at all of them and the winner will give you such a great return it doesn't matter how much you lose in the others. But there is, beyond the fundamental case, if you're looking at the technicals in the market, NASDAQ 100 flirting with a technical breakdown at its 100-day moving average. It actually broke below that last week and is trading just slightly above it this week. If it fails to hold, you're talking about a major top being put in. So again, sort of the tech theme and the tech bias and the flows, foreign capital flows into the US predominantly going into tech. This is something that if it reverses anytime soon, could get real interesting real fast. Kevin: We could be talking about tech, we could be talking about AI and a person listening might say, "Well, I don't really own any tech or AI." But the problem is a broad market selloff. The market's been buoyed by these companies, the top seven, for years, the last couple of years. David: Yeah. Well, and that's the thing, the importance of the narrative. The AI narrative, like the crypto narrative, is losing steam. And these were successive motivators for animal spirits through 2024, through 2025. Kevin: Momentum. David: And without boundless speculative energy in the market, a broader selloff becomes more likely. I mentioned corporate credit. If that holds together, the equity markets can, too. So as goes— Kevin: Liquidity. David: —corporate credit and the ability for corporations to continue to fund themselves, ample liquidity, they'll be fine. But as I read about some major Wall Street firms—PIMCO, Blackstone, Bridgewater—they're all refashioning their portfolios in preparation for another round of inflation. They're betting that rates go higher, not lower. And if that dynamic hits the Treasury market, I think you've got a domino into corporate credit, and then ultimately a domino into equities eventually. Maybe they're wrong, rates do go lower. But anticipation of higher rates of inflation leading to higher interest rates are what you see in their portfolio shifts right now. Kevin: Okay. So this is a Kevin asking you a Kevin question. Okay. Kevin Warsh basically has already committed to lowering rates on the fed funds. How much control does he have? I mean, if everyone else is betting on higher interest rates, how does the Fed and how does the Treasury, how do we not have higher interest rates? David: It's such a funny conversation last week in a press meeting with Bessent. Will the Trump administration sue Warsh if he doesn't adequately lower rates? Kevin: Oh, wow. David: And Bessent kind of sidesteps the question is like, "Well, that's for the White House to decide." As in "maybe." Kevin: Wow. David: Maybe. Kevin: When would a Fed chairman start to get sued by the White House? David: It's a bizarre world. Kevin: Wow. David: Yeah. Warsh is committed to lower the fed funds rate, but he's also well publicized in commenting on shrinking the Fed balance sheet, which adds to an oversupply of debt instruments. In theory, that pushes up longer term rates. What will the markets look like if they prepare for his coronation in May, trying to anticipate, "Okay, how fast will he shrink the balance sheet? What's the impact for the yield curve? Do we see a continual stretching of the difference between the 2-year and the 10-year Treasury?" I mean, it's already as stretched as it's been going back to 2022. And so I think that number is probably an interesting tell. 2-year, 10-year spread. Kevin: So "buy the rumor, sell the news" is going to be interesting in May. Right? David: Yeah. Kevin: Yeah. David: He may want to shrink the Fed balance sheet, but I wonder if such a feat is possible in the context of runaway Treasury issuance. We've seen this now for a couple administrations. This is not just the 2.32 trillion that was added to the debt last year. We had 8 trillion added by the Biden administration. Kevin: Right. David: We also had 8 trillion added by Trump in his first round as president. So he started adding it up. Kevin: Trump is moving a little faster now, isn't he? David: Right. I mean, he's single-handedly responsible—or his administrations have been present when 10.23 trillion in debt has been added. We're not slowing the pace. So again, how do you shrink the balance sheet and take that supply, bring it to market, when you're already over-supplying the markets? One thing that happens in that context is rates rise. So granted it may be further out on the yield curve and maybe they're not worried about that. But I'm concerned that you start to pressure rates at the long end of the curve, even the middle of the curve, and it has a major impact on corporate finance. This is where you're constantly rolling out— Kevin: Which is the duct tape that's holding everything together, right? David: As goes corporate credit, so goes corporate equity. How realistic is it for him to lighten the Fed balance sheet in the context of an oversupplied Treasury market? I don't think it's possible. Kevin: Well, you said privately there's basically preparation for higher inflation, or at least inflation sticking where it is. Gold, through all this volatility over the last couple of weeks, it's doing really well. I mean, what's your thought on gold? Because gold also is a signal as to what we see coming. David: There's an interesting article in the Wall Street Journal on sort of anticipating higher inflation rates this year. And I printed it off, I read it, and I was completely disappointed. Well, first part of the year, that's when people are raising their prices. And then they mentioned Cheetos and Pepsi. And you're going to see a decrease in prices because they want to recapture some market share. They're realizing that consumers are being priced out of Cheetos and things like this. But their main point was, if you're servicing a pool, if you're going to increase rates, you do it at the beginning of the year and then that's where you see an inflation. So they're looking at seasonality as a factor for inflation. And maybe that is a factor. Kevin: But you're talking more systemic. David: Yeah, exactly. Kevin: Not Fritos. I mean, Fritos went up when, I mean, if you remember toilet paper Fritos and hand sanitizer for COVID. I mean, you couldn't find Fritos. That was almost a tragedy. But going back to gold, I mean, gold is still signaling that there's a long ways to go in this dollar debasement. David: Well, gold held up very well last week. Silver remains under some pressure. And this is very interesting. The miners are holding their own. And I think part of that is coming into Q4 reporting, year-end reporting. So we'll cover this maybe at the end of today's comments. Kevin: Okay. Well, one of the questions that a lot of people have is real estate's been high for a long time. Commercial real estate, part of the McAlvany Wealth Management platform is to sometimes have specialty real estate, and I don't think you have any in there right now. David: No, we manage basically four portfolios inside of one. And so specialty real estate is one segment. Global natural resources is another. Infrastructure is the third, and then the precious metals miners are fourth. So we're diversifying across 50 or 60 names, and that specialty real estate segment we left completely. Kevin: You're not seeing any bargains. David: No. And things are getting to bargain levels. The question is, is there catalyst for growth? Because we can have that portion of the portfolio in short-term Treasuries earning 3.5%, 4%, depending on what the rates are, not take the risk. And what we have in the last three years done is sidestep a 50% decline in— Kevin: In real estate. David: —in quality companies, but they are levered plays on real estate, and very sensitive to interest rates. And as interest rates have come up, now all of a sudden their growth model is somewhat impaired. So we need to see some sort of catalyst for growth, not just bargain hunting. They would be still in the category of value trap. But, yeah, I mean, if we wanted a reestablished basis today, we'd own twice the number of shares for the same dollars allocated. Still, it's not interesting enough. We can look at the reward side of the equation. Dividend yields are up because of the diminishment in share price. So all of those factors are attractive, except we can't get our arms around the risk side of the equation. And this is where, again, if there's pressure on rates, then you can continue to see balance sheet pressure for these levered real estate companies. Kevin: So what you're seeing is a continued selling of real estate at this point. David: Yeah. And even this week, real estate selling steep discounts, Brookfield Asset Management let go of a Chicago office, 87% less than the original price paid back in 2018. 306 million was the purchase price. If I did the math right, just under 40 million, 39 and change. Yeah. I mean, that's— Kevin: Well, that's a fair amount. David: Is it a bargain? Assuming that you can fill it—and one of the reasons why it's cheap is because they've got a 53% occupancy rate. So it's not like an at-capacity— It's got an issue, and the only way you can adjust for that issue is to discount the price. We continue to see the discounting occur in commercial real estate. Kevin: Well, and the beauty is when that discounting looks like it's finished, you're going to have some bargains that you can buy. David: Absolutely. Kevin: Yeah. Well, I'm going to shift gears here, Dave. One of the things that's been distressing to me over the last week or so especially, but last few weeks with the Epstein files, is the United States should be setting the tone for ethics and morality and protecting child trafficking, that type of thing. And yet at this point, it seems like the United States—the administration—is trying to make it look like it's really no big deal, and it's Europe and some of the other countries that I honestly don't think of as moral or ethical beacons for the world, they're the ones right now that are raising Cain. David: Yeah. And what is at stake ultimately is an institutional loss of confidence, whether that's because you take a reputational hit, the FBI, the DOJ, the CIA, but the Epstein files are really under minimal scrutiny here in the US. And so you could say failure to execute on Pam Bondi's part. Kevin: Which is very disappointing. David: So thanks, Pam. Thanks, Donald. So in Europe, it's the microscope which is out, and we're already seeing heads rolling. Communications, shared communications in these Epstein files, past relationships, they're forcing resignations and the ouster of friends that spent a good bit of time on Pedo Island. Kevin: Yeah. Well, and a lot of these people should be spending time in jail, not just losing their position. David: Yeah. I mean, Bondi and Trump, they're showing little interest in the trafficking and abuse of children. And these are powerfully connected, previously untouchable elites that are coming under pressure. And it is, it's overseas. The Swedish UN official, Joanna Rubinstein, she resigned. The Norwegian diplomat, Mona Juul, was fired. These are not all men, by the way. So that's an interesting twist. Norwegian chair of the Nobel Prize Committee, he ran the Nobel Prize Committee from 2009 to 2015. Kevin: Is he the one who gave Obama his Nobel Peace Prize? David: Yep. And he was an island regular, but yeah, it was also the man that awarded Obama the Nobel Prize. He's under pressure. So you've got Lithuania launching human trafficking probes. You've got Poland, France, and the UK. There's pure irony in the UK looking at this stuff. Launching investigations into officials, any officials that have ties to Epstein. Kevin: You know what's amazing, though, it's coming out that Epstein actually was seeking legal counsel on how to legally run this totally illegal operation. David: It reminds me a little bit, you go back to the nuanced conversations that Bill Clinton had when he was at the Starr Commission. I think it was— Kevin: The Kenneth Starr, wasn't it? David: Yeah. Yeah. We're talking about the definitions of things and looking for technicalities. And Kathryn Ruemmler, she's now chief legal officer and general counsel at Goldman Sachs. That's her role today. She was Obama's White House counsel. And according to the latest Epstein documents released, providing legal advice to Epstein on sex with minors. Kevin: So she was Epstein's legal counsel on that as well. David: Well, at least a friend in the Rolodex that you could call when you're looking for these critical distinctions. Kevin: That's disgusting. David: Trump has a choice to make. He can either prosecute offenders, or I think he can face the wrath of constituents. And you can't simply turn the page, as much as he'd like to. The magnitude, the breadth across the American governing class, and you're talking about national intelligence, you're talking about the banking community, the finance community, venture capital. I mean, come on. Kevin: What does he know that will break? What does he know that will break if this breaks? David: I think he's doing a solid for a lot of friends, a lot of business associates, a lot of people who— Kevin: He's protecting the swamp again. David: He had the opportunity to drain the swamp, failed to do that in his first administration. And this is the risk he's facing. The wrath of his constituents will come out if he ends up protecting, and he has a choice to make. He may continue to protect the swamp, but come on. I mean, how is Lutnick still in office as- Kevin: I mean, how is Lutnick still in office as Commerce Secretary? Is the point that the rot is so broad and runs so deep that to expose it would fully undo the upper echelons of US leadership? I would see that as a net positive. But again, I'm kind of in favor of draining the swamp. Kevin Orrick Wasn't there a movie about the elites having something like this going on called Eyes Wide Shut? I mean, maybe that's what we should call this, not the Epstein files, but eyes wide shut. David: Yeah. If you want to reestablish trust, don't defend your eyes wide shut crowd. Don't do that. Don't do that. Kevin: Right. That's not who voted him in. David: No, that's right. So, maybe Europe will shine a beam of truth into the misconduct of the global elite, maybe, because Bondi and Trump are at this point unwilling to lead. And I hope they flip the script on that. Maybe the only thing Trump will understand is a beat-down in the midterm elections, because you're talking about fly-over America may just be disgusted enough through this whole episode to be a no show. Tired, perhaps, of watching the reality show Trump is sponsoring from the Oval Office. Kevin: So, how is it that Europe is the one who's actually crying foul right now? David: Yeah, it's an interesting question. Like what's in it for them? I think it is probably not for moral and ethical reasons. Kevin: Right. You think it's a power shift there too, possibly? David: I think it's the power play. And it destabilizes the Trump regime to some degree, or at least puts pressure on friends of friends. And as far as we can tell, it's not Trump who's under the microscope here. So, I really don't understand why he's putting up as much muss and fuss as he is. Even this last week— Kevin: He wants you to focus on healthcare instead, Dave. David: That's what he said. He said, "I think it's time now for the country to get on to something else like healthcare, something people care about." Kevin: Pay no attention to the man behind the curtain. Don't look at my left hand while I'm showing the right hand a magic [unclear]— David: And I think he's missing the point. This isn't about him. It's not about a big reveal as to Trump misdeeds. It's about our society and whether rules apply to everyone. If money and status ensure that you are beyond or above the law, we're flirting with end-of-empire dynamics. I mean, the rule of law is a critical foundation we can't afford to lose. If you look at how we invest— And one of the things that we do is we look at tier one, tier two, tier three, tier four jurisdictions where we know that contract law is going to be respected, where property rights are going to be upheld. And if you begin to in any way erode the rule of law, what you are doing, as I said earlier, you're ultimately compromising institutional integrity. Kevin: When you interviewed Hernando De Soto, he talked about the contract law being so critical to the Western world and the prosperity of the Western world. That was fascinating. But Dave, there's another book and I've recommended it again to several younger guys here at the office that didn't have a chance to read it, but it was Frédéric Bastiat's The Law that was written back in the 1850s. Again, every listener should read at least the first five or six pages of that little book that was written by the Frenchman about what law is for and how it can protect you, but— David: And what it's not for, because he also raises the possibility that the law can be used as a cudgel to abuse. Kevin: Right. Lawfare. David: Lawfare. Yeah. So, going back to DeSoto's book, trillions of value can be unlocked and a middle class can thrive if they can establish clear title to their property. And in so doing, be able to leverage that, to be able to start businesses and allow free enterprise to operate in a way that is very, very much inclusive across the socioeconomic spectrum. Again, it hinges on the rule of law. Kevin: The rule of law. David: And one aspect of it. Kevin: Exactly. Exactly. Well, I think the subtitle of his book was Why Capitalism Works in the West and Nowhere Else, and it had to do with the rule of law. But let's go back to healthcare because I don't want to diminish the fact that Trump is saying let's focus on healthcare. I think most people would like to see healthcare solved. David: Yeah. I think this is certainly beyond the issues with healthcare, which if you wanted to look at it through the lens of tort reform and what it costs to deliver healthcare versus what it costs to ensure against lawsuits, I mean there's certainly reform. I think reform needed. Where I think you're aiming is with reference to the K-shaped economy, where you've got those at the top who are doing very well, those at the bottom who are not. And healthcare is one of those costs that if you do have health issues or you're just trying to ensure against the possibility of that in your life, those costs are really not affordable. Kevin: When you talk about K-shaped economy, the absence is the middle class. So, there's the low, there's the high, but middle America right now does care about healthcare. They're basically speaking up—that, and the price of food. David: Pew Research did an interesting— They do samples all the time, and it does suggest that healthcare matters to the middle class, just not in the same way that it does to Trump as sort of a redirection of attention. Three in 10 Americans rate economic conditions as excellent or good. It's 28%. So, that's the top end of the K-shape. Kevin: I thought Trump said it's never been so good. David: Well, seven in 10, 72%, rate them as fair or poor, and the majority say that they are concerned about the cost of healthcare and food and consumer goods, to which Trump responds, and he said this this week, "I think we have the best economy maybe we've ever had. 50,000, the Dow hit." Most people felt if I could do that in my fourth year, well, we did it in my first year. Kevin: I love how he measures based on the Dow. David: Right. And if he wants to own the Dow at 50,000, will he equally own the Dow at 25,000 or a more crack up boomy 100,000? I mean, we could get to 100,000. I just don't know what your dollar's worth. I mean, Dow at 100,000— Kevin: Well, didn't he predict 100,000 Dow? David: Yeah. Well, he did. "I'm predicting 100,000 on the Dow by the end of my term," and he may be right with the dollar trading 40% lower, with Starbucks coffee passing the $10 mark. Kevin: What would gold be if we have Dow of 100,000, do you think? David: 25,000? I mean— Kevin: I hope not. Yeah. David: Well, exactly. No one wants to see that. A crack up boom is good for nominal prices of all assets, but it's also the death of our middle class. Kevin: Mm-hmm. It's the middle part of the K. It doesn't exist. David: And I think it's really a generational reset into banana republic dynamics. Desperate masses whose votes are easily collected by exchanging the bare necessities of life. We can provide housing, we can provide food, and you can provide a vote. And that's the nature of a banana republic. Kevin: Can't get bare necessities out of my mind now that you said that. ♫"Look for the bear necessities..."♬ That's right. David: Well, Trump's also talking about a 15% GDP growth. Kevin: Well, you can do that with inflation, can't you? David: You can do it with a lot of debt. Kevin: The Chinese- David: A lot of government spending. Kevin: —printed a lot of money to do higher GDP. David: And that would of course be in nominal terms, 15% nominal growth, not in real terms. So, we could have double-digit GDP growth and still hover in the low single digits net of inflation. And that's what I think, coming back to Blackstone, PIMCO, Bridgewater, largest hedge fund in the world. Why are they preparing for another round of inflation? Why are they positioning their portfolios in TIPS, Treasury inflation-protected securities, and hedging against a rise in interest rates? I mean, if you're going to shoot for a 15% growth rate, you're talking about a red-hot economy, you're absolutely married to a higher inflation rate. Kevin: Well, I wonder if this is going to be the issue in 2028 when we're electing a new president, if inflation's going to be the major thing. David: Right, exactly. I mean, that could well slay the GOP in 2028. Got growth? Yes. Got stock market largesse? Maybe. Got inflation? Well, PIMCO, Bridgewater, Blackstone, they won't be surprised, and I don't think you should be either. Kevin: Okay. So, maybe Trump's legacy might just be the things he names after himself. I mean, airports in Washington DC and I think with Lincoln Center, right? David: Yeah, let's forget the contributions of Dulles. Penn Station is no more. I don't think his legacy will soon be forgotten. Let me say this because certainly the tone's been critical of the Trump administration today. There's some experiments with reestablishing economic vitality in the US, which, if successful, mark a very hope-filled trajectory for the US. Whether— Kevin: Right. So, you're not trying to be anti-Trump. You're just basically criticizing the way it's being gone about. David: If he wins, there's still losses. There's trade-offs for every choice that we make in life, and every policy comes at a price. And so, what I'm concerned about is that the price of his success will not be felt by the upper class. If you have assets, you're going to see them inflate in value. If you don't have assets, you're going to be pressured by higher rates of inflation, and that's not fair. Yeah. So, his name on DC Airport, his name on New York rail stations, his name on performing arts center, his name associated with a debt crisis and the subsequent management, which reshaped public policy for a generation. Kevin: The Trump debt crisis. Yeah, it may be coming. David: No, I think he will not be forgotten. His name will live in infamy. Maybe it'll be Del Ego or Del Taco or the Orange Borough that misidentified himself as a pachyderm for a time. He has three years to do the right thing. And I think what he needs to hear from his constituents is that they expect more of him. And if they're not vocal, then he's a guy with his finger in the wind, and wherever the wind blows, that's the way policies will be directed. Kevin: Okay. But for now— David: We can't have him caving. We can't have him turning a blind eye to abuse. Kevin: And we need to call him on it. I mean, you can still be a supporter of the administration in many ways and call the administration on the things that they're being hypocritical on. But going back to the volatility currently, because because the Nasdaq, the cryptos, all we heard was that crypto was the new gold a few years ago, and I'm not thinking that's the case. David: This last week was very notable for volatility across asset classes. And also somewhat absent was indications of stress as a result. And again, you look at VIX, fairly well contained. Kevin: The volatility index. David: You look at the VIX and the move index. You look at, again, the measures of increased likelihood of default. You can see that in CDS pricing, in credit spreads, not a lot going on, not a ton going on. Kevin: Which means there's not a lot of worry even though there's a lot of volatility. David: And yet we've got swings in the market which engulfed private credit players, very significant. We've got the Goldman Sachs Most Short Index, which looks like a frigging yo-yo. And we've got software service companies coming under massive pressure. Part of that's because Anthropic may have plugins with their AI strategy that make a lot of SaaS product irrelevant. So I mean, you could be looking at the death of software. Kevin: Right. Doesn't that happen in technological revolutions anyway? You all of a sudden have something that bypasses what you thought the road was going to be. David: Yeah. We also had volatility in banks. We had volatility in the Mag 7. We had more volatility in silver. I mean, all of these were violently up and violently down, which is a hallmark. It's a hallmark of hedges being put on. It's a hallmark of hedges being taken off. These are derivatives positions, which again, in an attempt to either speculate for gain or hedge against loss are being jerked around. And it's volatility that suggests that your buy and hold crowd right now is very, very marginal. Kevin: This is strong hands. David: Your hot money, this is your fast money crowd, which is caught from day to day with too much market exposure. Either too much short or too much exposure long. And again, the derivatives market, we include futures for silver. They're painting a very bloody tape. Kevin: Okay. So we've got crypto violently moving up and down. We've got the AI narrative, what we talked about. But gold itself, even though we've seen volatility in gold and silver, it's a different nature than what we're talking about. David: Yeah. Well, and I think for short-term volatility to extend to a longer term trend dynamic, the narrative, the narrative has to shift. And so if a narrative dies and what was sort of propping up an idea simply goes away—I can see that with AI. I can see the narrative shifting with crypto. I can see that with the broader markets when you consider valuations already stretched. Kevin: But has the narrative really shifted for gold in the last 4,000 years? David: No, I'd note a few differences in the metals market, and these are nuanced differences, but I think they're supportive to a longer-term bullish case. First of all, gold is the dominant metal. If you're talking about the precious metals, in last week it was remarkably resilient. So we have a big selloff, right? Kevin: Silver a little more pressure on the downside. David: The gold's still up 15% year-to-date. Small gain last week, 1.4%. The miners are also bucking the downtrend on a relative basis. Kevin: Is that because the profits are so high compared to what they're producing right now? David: Yeah. If you look at the Gold BUGS Index, HUI, still north of 15% gains for the year. And I think you raise a critical point. With the correction in metals, at current levels, miners are making more money than any time in history. Kevin: Yeah. So earnings, earnings are up on that. David: Yeah. Lower prices would erode that, of course. But a stabilization at these levels is a net positive for mining investors, even if a bit boring for the holders of physical metals. You own silver at 80 bucks an ounce, and it doesn't move for the next six months. Kevin: Right. David: Didn't do you any good. It didn't move. Volatility is your friend either because you either want to see a gain or you want to add to a position at a lower price. Kevin: But if you're pulling it out of the ground, what's the production cost on silver right now? David: Yeah, that's a key point. Silver, far more overbought than gold, remains under pressure. That's not necessarily positive commentary for silver per se, but for the miners, you're running an average all-in sustaining cost—that's factoring in all of your cost of production—between 18 and $25 an ounce. Kevin: That's a lot of profit. Even if we were at 60 bucks an ounce for, like you said, 60, 70 bucks an ounce. David: It's more money than they've made in their history ever, ever. I see a very positive skew for all the miners in 2026. Kevin: Well, and they had cleaned their books up. They had cleaned their management up during the dark years of the teens, the 20-teens, right? David: Yeah. And to be clear, you can throw that out. You can throw that out if the commodity prices slip further. But assuming a stabilization near these prices, you're talking about all-in sustaining costs being here and the prices that you're getting in the open market multiples of that. So if it's $18 to $25, and in fact, we've got one company in our portfolio that's closer to $14 an ounce. Kevin: Wow. David: They're making real money. Kevin: Yeah. David: They're making— Kevin: They're laughing all the way to the bank. David: So take another $10 off the price, certainly it tames enthusiasm for the space, but you're talking about companies that are minting, minting money. All-in sustaining costs for gold miners, on average, call it 1,700 bucks. Some of our companies coming in below $1,200 an ounce. Kevin: Wow. David: 1,200. So we're sitting right around 5,000. Kevin: There's a lot of earnings. David: Free cash flow is shocking. Building cash, paying down debt, expanding exploration budgets, paying dividends, buying back shares. 2026 is flat out exciting. So volatile, yes. But let's remember where we were even a year ago, $3,300 gold, silver in the 30s. In the 30s. These are substantial prices for the miners. And frankly, they're financially transformative. More is better, of course, but where we're at certainly does suffice. I mentioned value rotation from tech to transports— Kevin: Can you imagine, if that value rotation actually comes into such a tiny, tiny market, Dave, the metals market, the metals mining shares. David: It gets interesting. And people can do the math. People can do the math. So the fact that they've got more free cash flow and have the ability to expand their exploration budgets and expand their reserves and resources, this is good. This is good. Maybe the remainder of 2026 is boring in the physical metals. I tend to think not. And a part of that is because we're dealing with a monetary regime change that happens—you can't even say once in a generation. Kevin: Right. David: And the last significant monetary regime change was the death of what had already died. Bretton Woods had already come to an end by the '70s, but it was sort of a global acknowledgement that Bretton Woods was dead, double dead. And less than once in a generation you see monetary regime change. And— Kevin: I wouldn't mind boring for a while, Dave. The last couple of months in the metals market— I wouldn't mind a little bit of boring. I mean, in the long run, we know where it goes. David: What's not boring is the fight for monetary preeminence and significance. And this is not neutral territory. It's not as, if we can just maintain a stable dollar, then we'll maintain our position. We actually have competition, global competition. And you see that particularly from China where Xi Jinping, even in recent days, has basically said we will be a reserve currency. Kevin: And it takes gold to do that. Because of the exchange in Shanghai— David: Right. Morgan Lewis, who's a co-portfolio manager with McAlvany Wealth Management, pointed this out in this last week's Hard Asset Insights. Dating back to 2015, the Chinese have been very clear that the launch of the Chinese, the Shanghai Gold Exchange and the expansion of Chinese reserves, this is a long-term play towards global reserve currency status. So these are very significant trends, and they play out over long periods of time. I don't see the narrative shifting in the metals the way I do in tech, the way I do with AI, the way I do with crypto. So the value rotation will have a positive impact for hard assets more broadly, certainly more broadly than the miners. And we're enthusiastic about the whole space. Yeah, I think this is going to be a very, very intriguing and beneficial year, 2026.

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You've been listening to the McAlvany Weekly Commentary. I'm Kevin Orrick along with David McAlvany. You can find us at mcalvany.com and you can call us at 800-525-9556. This has been the McAlvany Weekly Commentary. The views expressed should not be considered to be a solicitation or a recommendation for your investment portfolio. You should consult a professional financial advisor to assess your suitability for risk and investment. Join us again next week for a new edition of the McAlvany Weekly Commentary.

• Gold & Silver Bull Market Intact After Violent Volatility
• 6 Years Of Silver Deficit Point To Higher Price
• Central Banks Are Net Buyers Of Gold

"The experience of this last week, people think volatility is their enemy. It's not. Volatility is your friend. This is the nature of ratios. It is a measure of volatility between two assets, and it's telling you when something is overvalued or undervalued. And in the 40s, silver, relative to gold, is getting overvalued, which is why we shift to the undervalued asset. You're taking risk off of the table and at the same time you're able to compound ounces, but you can't compound ounces without volatility in the ratio."  - David McAlvany

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Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick along with David McAlvany. Well, David, it never fails. I don't go out of town that often, but I was in Boston last week and I saw what happened to the market. But to be honest with you, it was nice to be in Boston during that volatility. David: Well, I think the last time we had significant market volatility, you had gone fishing. Kevin: Lake Powell, 2013. Yeah, don't remind me. I get twitchy on that one. But go back to Boston. David: We all get twitchy when you've got volatility. I get it. I get it. Anyone who's been in the markets for any period of time at all, there's battle scars, a little PTSD. Kevin: But while I was there, I was learning so much history, and Paul Revere, being a silversmith, going through the various museums and realizing that wealth back in the 1700s was fashioned into silverware. It was fashioned into cups. It was fashioned into many things just so that they could hold on to their wealth. But you had solid gold cups, spoons, you had a lot of silver, obviously beautiful silver from Paul Revere. But we look back and it's not just to be opulent. It actually was a store of wealth, and that's how it was treated. David: Well, sure. We've got the history of not being worth a Continental, right? Kevin: That's right. David: You go through periods of inflation and people want to own something real. Last week I asked, how long does this continue? Kevin: Yeah, the drop. David: Was it merely a question about gold and silver prices rising? Because when we recorded last week, we were still in the triple digits. And my response was, "Well, the question is one of global dysfunction and policy dysfunction." And you can categorize policy dysfunction in many ways, monetary policy, fiscal policy, international relations, domestic political policy objectives. These catalysts for dysfunction and uncertainty were not resolved on Friday, January 30th, with a downside whoosh. As tempting as it might be to call a top, that was not it. Kevin: And we were uncomfortable, Dave. We were talking about it. We were seeing a vertical rise on both gold and silver with no correction. And obviously, a part of that had to do with the people who were buying it. Central banks don't necessarily sell to speculate. David: And it's not the price we're concerned about. It's the pace. 65% in one month— Kevin: Rate of change. David: —that's ultimately not sustainable. That does not mean that the market is over just because you've got a correction and the market now finding its feet. So gold and silver have and they continue to register a no confidence vote. As far as I can tell, the motivating factors for a no confidence vote remain firmly in place, market volatility notwithstanding. Kevin: But many of our listeners, including myself, to be honest with you, would ask how long does this continue and how far does it go down? David: Yeah. Clearly with a violent move lower on Friday and Monday, we can pause and ask the question, how long does it continue, this up move? Is the bull market, so recently catapulted into public attention, over in a matter of months? I think not. Do recall that the speed, the pace of ascent was really the concern last week. And the pace of ascent really only picked up steam in November. Kevin: Right. It's been a strong bull market, but it started to go straight up parabolic. David: But bull markets last an extended period of time. So November to January, it hardly captures it. So is it possible that a powerful market move driven by global macro fundamentals and compelled by growing consensus that US dollar hegemony is going to be retired, have such structural changes ever concluded in such a short period of time? Not ever, not ever. Now granted, monetary regime change doesn't happen often. So we don't have many historical periods to compare to. Kevin: Well, you talked about not worth the Continental, and being around Boston where that really was the spark that started the American Revolution, but that spark actually had to do with being under the thumb of a government that couldn't pay its war debt. They had gotten to the point where they were taxing without representation, and not worth a Continental, let's face it, King George was doing something to colonists that they didn't want to have continue. And one of the things that they did was they found their own way. Gold and silver does that sometimes, doesn't it? David: Yeah. I recall that the dollar was on its way to a similar scenario where the global community was not interested in our currency. And go back to 1970s when Kissinger and company appealed to OPEC and the Saudis and extended the life of dollar hegemony past the Bretton Woods system via the petrodollar recycling commitment, where any oil traded globally was going to settle in dollars. That created a natural demand for something that had a growing supply, a disturbingly growing supply. So to whom is that appeal made now? We don't go back to OPEC, and we can't go back to the Chinese. We had the trade dollar recycling, buying lots of cheap Chinese goods, and the Chinese taking those currency units, US dollars instead of inflating the value of the currency and currency translation. They maintained trade competitive advantage, keeping their currency low, by turning it back into US Treasuries, US dollar assets. Kevin: Yeah. Well, the question, how do you close the gold window in August of 1971 without the dollar failing? The answer to the question is just what you talked about, the petrodollar. Well, you just make sure that all oil is traded in dollars, but that started going away, especially in 2022 when Ukraine was invaded and we basically told Russia they couldn't sell their oil in dollars. David: Yeah. I see the gathering throng of precious metals investors continuing for as long as uncertainty is fed by dysfunction and is fed by dereliction of duty. That's not an isolated critique of US leadership. Seeing no event or transformational shift in the thinking of global leaders, I remain compelled to treat precious metals as the lifeboat necessary to move from imperiled assets—bonds, stocks, and fiat—to safety and to solid ground. These assets are indeed, I think, imperiled by the reversal of unsustainable financial structuring. Kevin: And we're not talking, necessarily, about the mass markets buying gold right now. What we're talking about, last week, strong hands. These are people who buy gold for other reasons than speculating on price. David: Yeah. And the price moves here and there, less important. Reading HAI over the weekend—that's Hard Asset Insights that Morgan Lewis puts together for us—I agree that the secular changes afoot on a global basis in the compound spheres of trade and capital allocation and reserve asset management, those remain firmly entrenched. These changes are of a nature that one strong push up in the metals market and one strong pull down in price, that's not sufficient evidence of institutional reform, of bureaucratic sobriety, or a reset that cures the policy ills layered in over multiple generations. Kevin: Yeah. Well, again, when you're not working with short-term traders, it's sometimes hard to use the charts. But the charts are still saying that we're in a bull market, are they not? David: Yeah. There are actors and agents that have so debauched our financial markets, and wittingly or not traded short-term expediency for long-term stability. And that's a part of the nature of democracy. We've explored that with previous guests, but such shortsighted recklessness, that sets the stage for a comeuppance the likes of which we haven't seen in decades and perhaps ever. Kevin: And you're talking about this irresponsibility. It has to do with printing money and credit, right? That's really what causes this and— David: To accommodate promises that you really cannot afford to make. Kevin: And so when the announcement was made of Trump's pick for the Federal Reserve, Kevin Warsh, the aspect that hit all of a sudden was, "Okay, everybody else is irresponsible, but Kevin Warsh is going to be responsible and he's going to be a hawk." Nobody can step in there at this point and raise interest rates, can they? David: Yeah, the mechanics of raising rates in an environment where you've got growing towards $40 trillion in debt, not really possible. The idea that he is somehow hawkish, we can all be settled in our minds that's not the case. His former colleagues, employees at Bridgewater, working with Ray Dalio for years, not the case. It's just simply not the case. Kevin: Well, Trump's not going to put a guy in there that's going to cause a recession. Let's just face it. David: No. In fact, the idea that he would be more hawkish and that somehow would be why Trump picked him is at direct odds with everything that Trump has been asking. And yet the market somehow is triggered by this notion that we're in a new regime with new leadership at the Fed. And money and credit, these are basic inputs in the modern economy. And in fact, so basic we hardly think of them day in and day out. When there's too much of them, again, we think nothing of it. We benefit from the buoyancy that money and credit—in massive quantities—add to asset values the world over. And we just think that that's normal. Asset prices go up. Well, actually, they do when there's excess liquidity. And liquidity, like a rising tide, it lifts all boats. We take, just like we take money and credit for granted, we take liquidity for granted. And we attribute to ourselves and to our brilliance the results that it brings, which is a bull market in all things. Kevin: And the ability to borrow. That's the credit side. David: Yeah. We forget there's a dark side to credit. Credit ebbs and flows. And if you forget the reversal of the tide, the current will grab, the current will pull and rip you out to sea. Kevin: Well, and this is important to know. We have always talked about precious metals being a hedge, like you said, a lifeboat. You're not impressed with the momentum as far as it being a short-term trade. David: I'm not bullish on precious metals because of momentum or because of short-term gains. I remain bullish on metals because I see dysfunction multiplying on an exponential basis. We've often described gold as stupidity insurance. I'm bullish on metals because the cycle of greed has run its course, and the safe haven appeal of the metals is still in the early days. So as fears press from the subconscious to the conscious mind—and that I think is going to be led by headlines and events and market behaviors which simply illustrate the scope of dysfunction—I think that's where global investors persist in, frankly, the only opt-out instrument that keeps them liquid and loaded with options. Kevin: Well, I've got to feel, though, the violence of the downturn that we saw on Friday and Monday. It did remind me of that fishing trip in 2013. I'll never forget it. It's April 12th, 2013. It was like, oh gosh, I take one day to go fish, and the market moves more than it had moved in years. Being in Boston, though, seeing the same thing, it's interesting, Dave, how you relax. It didn't bother me this time. It's like, yeah, we had a very violent move down, but hasn't it been a violent move up the last few months? David: Yeah. You rarely see the violence of a move like we witnessed Friday of last week and Monday of this week, but it's equally true that we rarely see the violence of a move higher like we captured in late 2025 and in the early weeks of 2026 in these metals, platinum included, near verticality. Kevin: Yeah. Yeah. And so long term, we still see it going up, but it still hurts a little bit when you see it go down. I mean, nobody likes to lose money. David: It feels better to make money than to lose money, clearly. I have had both gains and losses and I'll often go home, share the screen with Mary Catherine, the good, the bad, and the ugly. Calm by nature. Kevin: Mary Catherine is. Yeah. David: Yes. Philosophical by training and practice. Kevin: Right. Boston College, by the way. David: Yeah. What does it mean if it's only a paper gain? She'll ask me. Or the flip side, what does it mean if it's only a paper loss? The most routine experience I have with deflation in the broadest sense is when my market enthusiasms are tamed by the cold shower of truth and philosophical reflection. And a strange comfort, too, comes from that removed and dispassionate observer. She doesn't seem to have the same skin in the game that I do, but it's a reminder. Oh, yeah, that's right. I mean, part of her strength is in being distanced from the market noise. Kevin: Well, and that's good for all of us to do every once in a while. Distance yourself. You have to look at this, though. Even though it is central bank buying as the main buyer right now, or institutional buying, you still have traders in the game that need to make the market go both directions to make money. David: Yeah. And certainly we've gotten to a point where profit taking is normal, and you get above $100 an ounce and there's not many investors who have cost basis at 20 and 30 who aren't thinking about having at least one foot out the door. And so "do I take some gains here?" came at a natural time, overstretched from a technical standpoint. But the bottom line is that nothing has changed except that short term traders positioning with short term thinking— I just don't see that as sufficient to upset long term trades and secular trends. I think not. Kevin: Right. But you have said that the prices are high but not overbought. Has that changed? David: I would say high, but not over-owned. Kevin: Over-owned. Okay. David: Yeah, because from a technical standpoint, they definitely were overbought. And I see that overbought condition in the charts, certainly through last week. And you can look at a variety of technical indicators that suggest that the majority of that overbought condition has already been resolved. Kevin: And that's in the trading markets. When you say overbought or oversold, that's just the futures markets. David: Well, no, not even the futures markets. When I'm looking at a chart and I'm looking at relative strength indicators, when I'm looking at momentum indicators, when I'm looking at Bollinger Bands and a variety of metrics that you can impose onto a chart, you can see where things are stretched on the upside. Kevin: And we were. David: Yeah, and we were. Kevin: Yeah. David: So I see an overbought condition, a stretched price structure in the context of a long-term structural bull market. That was the reality through the end of last week. We're not stretched in terms of time. Frankly, in terms of the momentum and how momentum is gathering in the market, we're not stretched there either. I've suggested, in the course of this bull market we pass 8,000 an ounce for gold, which implies 200-plus for silver. Kevin: You're doing that with the ratio, right? David: Conservatively assumed gold-silver ratio of about 35 to 1. We've seen better numbers than 35. I'm not taking previous best numbers as a benchmark or an expectation level. Kevin: But $8,000 gold and $200 silver still is within the bands, or the bounds, of reasonable ratio trade. David: Yeah. I think gold remains in high demand among central bank reserve allocators, and it's in increasing demand by investors. I don't think that changes anytime soon. Wall Street has finally crossed the Rubicon of advising allocations to metals, and that trend is in its infancy. Kevin: Yeah. So the 60-40 that Wall Street has for decades recommended, 60% stocks, 40% bonds— With the new 60-20-20, which makes room for precious metals, there's an awful lot of money that could come out of equities and bonds that hasn't even started yet. David: Right. It's the investment allocations in coming quarters and years that will be driven by disaffection with equity and bond portfolios, resulting from shifts in the yield curve, destabilization of the underlying currency from portfolios that are inadequately allocated to hard assets in general, to precious metals in particular. And what are they presently committed to? They're presently committed to fad-like narratives. The AI thematic is alive and well, but not forever. It's still that narrative positively colors sentiment, and as that changes I think you're talking about a significant rethink in terms of capital allocation amongst the generalist investor and on Wall Street. And as I say, that is in its infancy. To hear from Mike Wilson at Morgan Stanley, this is like fourth quarter 2025 coming to the realization that going forward— Kevin: You'd better have some metals. David: Right. I mean, again, we're talking about the beginning of a trend, not the end of a trend. Kevin: Well, and speaking of trends, okay, we're talking about a new Federal Reserve chairman, but inflation, the 2% goal on inflation, what does that look like going forward? David: Yeah. Well, inflation persisting above the 2% target and having higher interest rates is consistent with both inflation trends and, frankly, a massive oversupply of IOUs. I think that's a part of what drives the capital migration to relative value, including hard assets. So again, you're thinking conventional allocations, conventional portfolio construction. It's devoid of a precious metals allocation that is just being introduced. And so why would there be a motivation to make the change? Many people are still completely on autopilot, not considering what has just been presented as an alternative model. So I think it's when you begin to see headwinds to the bond market, which we have some, but not in extremis, nor do we have real headwinds in the stock market. Kevin: So don't be shaken. Don't be shaken by what happened Friday. David: No. Kevin: What happened Monday in the metals is just a readjustment. David: Yeah, I would not be shaken out of those positions. Whether $71 silver was the low or $4,400 gold is the low, there's no evidence that this bull market is stillborn. Won't like to hear this, but the bull market remains intact from a technical perspective, even to $46, $48. Kevin: On silver. David: And even to 3,300 on gold. A complete retest of the dual breakout points of those metals at those levels, which would be 100% retracement of the entire move. While that is not probable, again, I'll say that again: while that is not probable, it is possible, and the bull trend remains intact. So again, I repeat, it's possible, but very low probability. I would not be out of the metals market with the stakes as high as they are. Anyone with a mind to give attention to macro considerations has to see this through a different light. Kevin: Well, and I'd like to talk about the different types of declines, Dave, because sometimes there's a decline that needs to happen. The market's overplayed itself, it's done. And then the countertrend declines or rises, depending on the direction of a market, a lot of times can give you confidence that the market is going the other way, right? That the violence of the countertend move— David: Yeah. The nastiest declines in a market, in any market, come when either a trend has run its course—not the case here, in my opinion—or on a countertrend basis where the long-term trend driven by powerful, driven by secular inputs, it evolves, but can be punctuated by even more breathtaking countertrend moves. And I think it's reasonable to ask which of the two this is. I asked a series of questions last week about who and to what degree the people you know are already participating in the hard asset bull market. Kevin: Virtually no one, right? David: Right. So who is? And to what degree? Have we exhausted the buyers? Because if we were at the end of the market, the answer would be clearly yes. Everyone's in. It's the shoeshine boy talking about how much they own. This is, if you go back and if you've ever watched the movie The Big Short, there's one scene in there where he's visiting Vegas to see just how crazy the real estate market has become. And they take the time to go to a strip joint. And the stripper is talking about how she owns a rental. Oh, no, she owns, what was it? Five rentals. And she owes money on all of them. Kevin: And he knew. David: And that's all they needed to know. Kevin: Yeah. David: No income, betting on a very clear and determined future, which is that real estate values will and can only go higher from here. So I don't think that was a shoeshine boy, but— Kevin: Well, and the opposite can happen too. My first year here with your family's company was 1987. And we had that stock market crash in October of 1987. A lot of people were like, "Oh, I'll never own stocks again." But the stock market was nowhere near the end of its bull rise. David: Yeah. The 1987 stock market crash was equally breathtaking. And it was in the context of a long-term structural bull in equities. The market up-trend was complemented by a peak in interest rates, which began in 1982 and began a multi-decade decline. So capital is getting cheaper. That created the opportunity for corporations to refinance their debt, to take the borrowings and increased borrowings and begin a merger and acquisition frenzy. If you look at the number of companies listed in the early '80s versus the year 2000, you lost two, three thousand listed companies because of this gobbling up. No surprise in the context of debt getting cheaper and people expanding the debt side of their balance sheet to be able to grow. Well, there were interruptions. There were sputters. 1987 with a 22% single day derivatives meltdown. And again, nearly derailed numerous times in the '90s—the most severe episode being Long-Term Capital Management and the Asian financial crisis, that contagion, 1998. But the bull persisted till the major trend was exhausted. So circa 2000, 2002. Kevin: You were a stockbroker back then. David: I was cutting my teeth on professional investing at Morgan Stanley. For metals, short-term profit taking and a short-term correction— Kevin: That's what this is. David: —that's what this is. Kevin: Okay. David: Plain and simple. How deep does the correction go? Yeah. Momentum ran hard and fast to the upside, leaving us with month-end gains of 13% in gold and 19% in silver. So even with a correction, you just step back and look, have we made progress this year in the metals? Those are annual gains which are respectable. 13% for gold, 19% for silver. That's with the— Kevin: And this is after the correction on Friday. David: Correct. So well off the 30% and the 65% registered earlier in that week. Downside momentum can take it all back. I would trust the long-term trend and factors driving a global reallocation of capital over short-term profit taking. You're talking about two very different things going on. One is, again, limited in scope, and one is much more expansive in scope. Kevin: So when you look at the technical charts, there are ways of measuring about how far you can expect the downturn to be. David: Yeah. You always want to combine, if you can, a variety of approaches to the market. Last year we had a variety of technical analysts on the program. We had the Elliott Wave guys. We had Michael Oliver. There's also fundamental analysis. The folks at CPM Group, Jeff Christian who runs that, he was head of commodity trading for Aron Trading. They got gobbled up by Goldman Sachs and then he launched a research team more than 20 years ago. They produce the best fundamental research on gold, silver, and platinum. In fact, if you're really interested in getting to the nitty-gritty of who's buying and in what quantities, who's producing and bringing to market, he produces these books. And I encourage you to get them, read them. They're expensive, but it gives you a very clear view on the fundamentals. So on the technical side, you can look at Fibonacci retracements, you can look at moving averages, you can look at momentum indicators, you can look at channel lines, support and resistance. And all of those fit a technician's toolbox. Kevin: Okay. So that's the technicals, but on fundamentals, what you're looking at more is supply and demand and news events. David: Yeah. And on the technical side, we've found our footing. I would have been hesitant on a Saturday, Sunday, or even early Monday to have said where we're at or where we're going, because we don't know if we're going to find our feet or find our footing. And sure enough, we did. 61.8% correction for gold and silver. Kevin: That's the 618, isn't it— David: The 618. Kevin: —from Fibonacci? David: Yeah. Fibonacci was a famous mathematician, and these are things that technicians and traders are keenly aware of. You have a move, you could have a 25% decline, you could have a 38% decline, you could have a 50% decline, you could have a 68% decline, you might have a 75% decline or 100% retracement of an entire move. All of these things are normal places to correct to. The question is, what's the behavior at that point? And we have seen, this week, buyers step in at the 61.8% level. Kevin: It's like the game of KerPlunk. I don't know if you remember that when you were a kid, but KerPlunk is where the ball falls and it has different levels that it'll hit and then it'll maybe fall further, right? David: Yeah. 61.8 KerPlunk. There you go. Kevin: 61.8 KerPlunk. David: But you've got fundamentals of supply and demand, and that's a totally different way of looking at the markets. And if you ignore the fundamentals, you can be in trouble because the fundamentals can shift away from you and the whole landscape can change. On the other hand, you can pay so much attention to the fundamentals and not look at price action that you can get in trouble too. So marrying these is really important as a portfolio manager. And from a fundamental perspective, silver in particular, it persists into the sixth year of supply deficits. This is a very healthy fundamental backdrop for silver. Kevin: Yeah, because there's plenty of demand. David: And I mentioned, from a technical perspective we've already seen a 61.8% correction of the bull move. Test of the 50-day moving average bounced off at both of those levels on Monday, retested them today. And we've been moving higher since. So not to say we couldn't see more downside, but what we got in a two-day walloping was effective in taking off overbought conditions and returning measures of enthusiasm to a middle range. What often takes weeks or months, we got that cooling off in days, literally two days. Kevin: If I had to weigh out what I like better, technicals or fundamentals, I'm more of a fundamental guy. I like to see what are the facts. And so going back to Jeff Christian, because he's been in the industry forever, when you interviewed him, he went back to the 1970s. What did he have to say about this week? David: Yeah. I mean, I think what you like about fundamentals is there's some story to it. Kevin: Yeah. David: And it's not just like a Rorschach test, "Look at a picture and what does it tell you?" Kevin: That's true. David: And I think you want both, if you can get them. Jeff Christian of the CPM Group suggested over the weekend that the selloff is over this week after short term profit taking. And then you take into account Michael Oliver's spread breakout. Kevin: And that's your technician right there. David: Yeah. He reverses the math, dividing silver by the price of gold, versus what we typically do, gold divided by the price of silver. But using his metric, our first breakout was at about 1.3%. Again, take an ounce of silver divided by the price of gold. What percentage of the gold price does one ounce of silver equal? And 1.3 was the first significant breakout, and then 1.6, again, where silver equals 1.6% of the price of gold. Kevin: Where are we now? David: We ran to 2.2%. Kevin: Okay. David: And then in this correction, we retested the breakout of 1.6%. Kevin: So the technician was right. David: The Rorschach aficionado looks and says, "That's as good as you get." Kevin: That's beautiful. David: "That's as good as you get." So we're currently 1.8. So you take 89 and divide by 49.29, 1.8%. That retest is a great setup for the next leg higher. I could reference half a dozen other analysts that agree that investor allocations and indications of interest amongst their clients is growing. And again, they want to add metals to their portfolio. That inclination is on the rise. And now with a healthy pullback, they can do that without feeling like they're chasing a bullet train. It backed up and it's letting them on board. Kevin: Okay. So let's go back to ratios the way we do it, okay? Which is dividing the price of gold by an ounce of silver. Where'd we get before this correction? Didn't we get down into the low 40s? David: Yeah. Intraday, I think it was 43, maybe even 42 and a half. Kevin: Okay. David: And when we were pounding the table last week, you need to do something with a gold/silver ratio. You should be exchanging 10 to 15% of your silver for gold. The ratio is insisting that you pay attention and you take action. "Call us." Kevin: Yeah. David: Those were my words last week. Kevin: Right. David: Right. We went from, call it, 43:1 on the ratio. That's Oliver's 2.2%. He thinks we'll see 6%, which in our math would be 30:1. Just like the Dow gold ratio at 10:1. 9:1 last week, 10:1 this week. 6:1 is a maybe. 3:1, probably. 1:1, definitely. These are areas where you're taking action. Not, "Maybe we get there." But, do you take an action? Kevin: Definitely take action at 1:1. David: At 6:1, maybe you're taking action and sliding ounces to shares. At 3:1, probably. Yes. And at 1:1, definitely. So we're not done with the cycle. Either in nominal terms, if you want to price gold and silver or you want to price gold versus the stock market, we're not done with the cycle. In nominal terms, or more importantly to us, if you're looking for action items, in relative terms, as it relates to the Dow gold ratio, a significant sentiment shift in equities is likely to kick in later this year. Negative sentiment. Combine the positive sentiment in gold with negative sentiment in equities, now you're getting both the numerator and denominator both working. Thus far, we've only had one working. Gold has gone higher and it has changed considerably this ratio. But we haven't seen both numerator and denominator where the Dow is also participating. When the liquidity starts coming from the Dow, you've pointed this out, or the bond market— That is new money that the commodities market hasn't experienced yet. The experience of this last week, people think volatility is their enemy. It's not. Volatility is your friend. This is the nature of ratios. It is a measure of volatility between two assets, and it's telling you when something is overvalued or undervalued. And in the 40s, silver relative to gold is getting overvalued, which is why we shift to the undervalued asset. You're taking risk off of the table and at the same time you're able to compound ounces. But you can't compound ounces without volatility in the ratio. Kevin: Right. And you're also comparing two real things. You're never going back to cash, which is unreal in the long run. David: But I would say, you can consider going to something else. If I'm turning ounces into acres, I'm turning ounces into square feet— Kevin: Dow/gold. David: There are other reasonable asset migrations out of the metals as and when the ratio says, "Now you have a compelling value proposition." Kevin: Right. David: So combine the positive sentiment in gold with negative sentiment in equities. And, I think, there you're getting towards cycle completion. And again, for gold and silver, we've never seen a bull market end with the ratio in the 40s, 50s or 60s. So where are we at? We're mid-cycle and we just experienced a significant selloff due to profit taking, and now we're onto the next leg higher. So couple these ratio dynamics with the Bloomberg Commodity Index beginning to outperform the broader market. So again, this is hard assets and commodities, a broad cross section of it. Kevin: Real things. David: They're beginning to find their stride. And this is not the beginning of the end. This is the beginning of the beginning. Is it volatile? Yeah. But this market, in a two steps forward, one step back action, has much further to go. And I come back to this notion of, if you can help me resolve dysfunction, then I'm going to see the macro backdrop very differently. If you can help me resolve monetary policy dysfunction, fiscal policy dysfunction, international relations dysfunction, domestic political policy dysfunction, you remove the motivating factors for allocating to gold. Kevin: But the dysfunction still exists. David: Yeah. Get policymakers to wise up. Isn't it fair to say you've just reduced the need for stupidity insurance? We're simply not there yet.

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You've been listening to the McAlvany Weekly Commentary. I'm Kevin Orrick along with David McAlvany. You can find us at mcalvany.com and you can call us at 800-525-9556. This has been the McAlvany Weekly Commentary. The views expressed should not be considered to be a solicitation or a recommendation for your investment portfolio. You should consult a professional financial advisor to assess your suitability for risk and investment. Join us again next week for a new edition of the McAlvany Weekly Commentary.

• Silver 56% Up, Gold 18% Month To Date
• When To Start Swapping Silver To Gold
• A "Run" On Japanese Bonds Is Cascading To The Rest Of The World

"You can see the importance of defense. And when we look at the perspective triangle, we categorize gold and silver not as a high growth asset, even though it was one of the best performing assets—and silver—last year. And the fact that it's moving, the fact that it's performing the way it is, it's the signal that matters. What is going on? The barometer is telling you the storm is here and people are saying, 'No, I'm fine.' " —David McAlvany

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Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick, along with David McAlvany. Well, David, yesterday we did more trades as a company than we've done in what, 53 years? David: In a single day. Yeah. It was pretty high volume. Kevin: Yeah, so start with gold. David: Leading with gold and silver because why not? Risk hedging. This is really what we're seeing in the institutional market and with central banks. Risk hedging has been a dominant theme for 12 to 24 months, 18 to 24 months. And the audience, which is sensitive to various risks—it could be geopolitical risk, fiscal, many others—that audience has been expanding from the high-level institutional awareness now to the man on the street, both Wall Street and Main Street, but the man on the street. Kevin: Right. Yeah. Well, Bill King calls them the army ants, and so the man on the street may be starting to wake up. I don't know fully. Let's look at the returns right now. We don't buy metals necessarily for the rate of return, but it's been very high and very quick here this year. David: Yeah. It certainly has not created a fence that they've gone higher. So we don't buy them for that. Kevin: But we don't mind it. David: We don't scold them for that either. Kevin: We don't mind it. David: 2025 returns were impressive enough to warrant what we would consider a cooling off period, some sort of a correction. Yet in the first month of the new year, silver has streaked past 56%. Kevin: Wow. David: That's year to date—month to date, which is year to date. And of course, gold is up about 18%. So great returns for a 12-month timeframe. Of course, that's only packed into the first 28 days, not 12 months. And gold has just outperformed the S&P 500's full year 2025 returns with dividends included, and again, that's in the first 28 days of the new year. And I've said this repeatedly, careful and deliberate central bank— Well, add to central banks very deep pocketed private capital. They've front-run events, and they have been out in front of this. They've front-run events that are soon to be in the headlines. And ultimately, those headlines will drive investor capital towards the metals as the headlines capture attention from the generalist investor and your general Wall Street asset allocator. So the metals are pricey, but not anywhere close to over-owned. Kevin: And I think that's an important thing to stress. Metals are pricey right now. Morgan said it this morning in our meeting. He said, "What's going on in the world has not yet been marked to market. But what's going on with the general investor, that hasn't been marked to market either. The general investor's still not in the game." David: Yeah and it really is what's going on in the world that is being front-run. This is your big money players, your patient capital that sees festering issues, long-fuse issues, and they're not interested in being there at the moment the bomb goes off. They see a long fuse, they take action. They don't need immediate returns, they don't need immediate gratification, and they wait, and they wait, and they wait, and things play out. Kevin: You call that strong hands. David: Very strong hands. Kevin: These are strong hands. So let's talk about the dollars, though, because percentages mean not as much as dollars to people. David: Well, just to recap for January, we're up $758, that's just in the gold price since Jan 1. Silver from $71 to an intraday high of 117, trading a few dollars below that at present. A $46 per ounce year-to-date gain. Kevin: Wow. David: Year-to-date gain, right? Kevin: That's in silver. David: It's breathtaking, particularly for the ounce accumulator with cost basis, which they've set over the past two decades. And so compounded returns are powerful. You begin to see, you wait, you wait, you wait. And if you were to look back and look at your compound annual returns from those low-cost-basis ounces, wow. Wow, is I think what you can say. And we shouldn't forget platinum. It's up 24% year to date off its highs from a week ago where it had punched up to 40% year-to-date gains. Kevin: Platinum can sometimes be the forgotten sister. Platinum and palladium when it's appropriate, but you're right. But rate of change. I remember talking to you a lot about when curves start to go parabolic. The rate of change is really what's, I'll be honest with you, disturbing to me right now. David: I get nervous when the rate of change is between 100 and 150% per year. And I think everyone should be. It's not the level of the metals that is surprising, but it's the speed of the movement. What this is a reminder of is how limited in scale these markets truly are. Supply is inelastic, and when demand increases, prices adjust dramatically. So speculation of where we are in a full cycle move comes from, in my view, the buying constituents. Who's in the market now. First, in a bull market, you've got the mavericks, you've got the speculators, then the institutions and Wall Street firms, and finally you have the masses. So three phases of a bull market, early adopters, mid-cycle enthusiasts, and late entrants. And I think we are phase shifting from the mid-cycle enthusiast, largely the central bank reserve managers, including a few Wall Street firms, but they're reading the tea leaves. They're anticipating change in the debt markets and the currency markets. And then we're moving now, if I were to say, what is 2026 to 2028? I think this is the reactive crowd that is catching up to realities as they become fully baked. Kevin: Well, and you brought that out last year. You said the thing that we're still looking for is increased volume in ETFs and increased buying of gold mining shares. And we've pointed out over the last couple of months that that has happened. David: Right, but early stages of that happening. I mean, we're talking about a capital reallocation process and cycle that takes time. The bias is still toward traditional assets. I spoke with a prospective client yesterday, and sure enough, just a few months ago with half of their resources, 60/40 portfolio. Kevin: Stocks and bonds. David: And I thought that's really interesting that given the background dynamics, given the macro factors that we consider on a routine basis, that's a dangerous portfolio. You can lose on both sides of the equation, both in fixed income and in equities. And it just speaks to the volumes of brokers who are still playing by the old rules. Kevin: Well, and even the Morgan Stanley brokers, Morgan Stanley came out and said it was 60/20/20, and 20 was gold. And I know that there were Morgan Stanley brokers that said, "Oh, no, we still don't believe that." David: All the guys that I work with with one particular foundation, they're like, well, that's what they talk about, but— Kevin: They don't really mean it. David: —we're not sure that that's very realistic, maybe 5%. It was fascinating to see. Just because somebody at the top of a firm says, "This is the direction we're going," there's an adoption cycle there too. There's disbelief, in part because you favor what you know. You favor what's familiar, and metals frankly have not been in the investor lexicon, Wall Street investor lexicon, for many decades. Kevin: Well, you wrote a white paper about this last year. You were saying, basically, it's going to take fear, right? David: Yeah. So I wrote the white paper in early 2025 discussing what the gold price increase was signaling. Again, you've got market noise, you've got clear signals, and one of the best signals in recent years has been the gold price. What I said then was that gold set a new all-time high in March of 2025 at $3,145, finishing the first quarter up 19%. Kevin: That seems like a long time ago, doesn't it? $3,125? David: I think there's plenty of people who would love to buy it at 3,145. So in fact, gold set 40 new all time highs in 2024, closing out the year with a 25 and a half percent return. Gold is unlike many other assets in that the yellow metal serves as a barometer for stress, for uncertainty, and future financial market volatility. While other assets provide information about the sphere they exist in, gold provides information about a broader scope of interests, which include the global financial markets, capital flows, and trade settlement, domestic public policy, international relations, currency stability, and much more. It went on and concluded in that paper, we are at a crossroads. Ignoring the message from the gold market would be a mistake. Kevin: Well, and the message seems to be, too, Dave, we keep hearing the term dedolarization, and that is really rapidly happening. But the truth of the matter is, every fiat currency out there is being called into question. So wouldn't you say this is a currency issue? David: Yeah, and it was fascinating. Ray Dalio at the World Economic Forum last week said, "This is not dedolarization. This is defiatization." Kevin: There you go. David: Which I think that audience knows what he means, but many people don't even know what fiat is. What we see unfolding is a shift in perception and judgment of the soundness of fiat currency, and of course the debt markets as well, which have exploded in scale to what the Institute for International Finance tallies to $347 trillion. Kevin: Wow. David: That's global debt. That's a lot of IOUs. That's a lot of claims to underlying assets. Now, 346 is really interesting, but global GDP comes in at about 117 trillion. And if you let that sink in, the math no longer is sustainable. You don't have a large enough engine. Kevin: Right. You're not producing enough to keep up with the debt. David: That's right. And particularly if you have any pressure on interest rates to the upside, because you've got this mountain of debt, which some portion of it every year has to be refinanced, and it's going to be at higher numbers. That spells fiscal pressure for corporations, households, governments on a global basis. This is why this is not the 1970s. This is not the last bull market ending in 2011. The dynamics post-COVID are just a magnification of what was already in play. Kevin: We were still able to borrow our way out. I think we're losing that ability, don't you? David: Yeah. We have to have rates close to zero to avoid a debt crisis. And if rates are not contained, then central banks globally have a choice. Kevin: Inflate. Inflate or die. David: Yeah. So these numbers have been in plain sight, but for the average investor, there's been no reason, no catalyst for concern. And investors have essentially ignored the facts in favor of infinite growth fictions. So that's in the form of AI, that's in form of revolutionary technologies which change the game and mean the rules of finance no longer apply. Kevin: But your white paper said that the signal is gold right now. David: The signal is gold. Kevin: Yeah. David: The signal is gold. Precious metals continue to send an important signal. I include all of them in that. Ignoring it will cost business capital allocators and investors vast sums of money. Kevin: So if I were to picture on this table a stack of cash right now, let's say $5,000 roughly, or one little bitty gold coin that's about the size of a 50-cent piece. Right now what you're saying is at some point people are going to go, "No, I don't want this pile of cash. I want that little bitty gold coin." David: So they make their money go away, and they take the gold— Kevin: That's right. David: —instead. So Gresham's law is a monetary principle that states bad money drives out good money. Kevin: And that's the stack of cash. Bad money. David: This means that when one form of money is viewed as inferior, it is exchanged for the superior form. The good money disappears from circulation. When currency stability concerns emerge, savers seek alternatives, which in essence are there to preserve their purchasing power. So we've had different systems. We had the old bimetallist system. And you could even see then where gold would disappear and silver would be present because gold was even superior to silver under the bimetallist system. Under the fiat system—and again, this is a system of no tangible backing for paper currency—capital flows to a superior fiat. We were in Argentina back in 2004. Kevin: 2014. David: Oh, gosh. 2014. Kevin: Yeah. With Pete and Rob, we had a great trip. David: Yeah, I remember the four. Kevin: There was inflation at that point. David: So an example from Argentina is that savers keep safe deposit boxes full of US dollar cash. They don't want Argentinian pesos. They don't want them. So if inflation thresholds exceed a tolerable level, capital moves to safety. On a relative basis, US dollar cash has been viewed as better money than Argentine pesos. And you fast-forward from the old period of bimetallism to 1971 to 1976, Nixon closing the gold window and the end of the Bretton Woods agreement. Only in the present era have fiat currencies lost a stable reference to value against. What are they worth? Well, a dollar is worth X number of euros. Euros are worth X number of yen, but nothing is anchored. So currencies float and have value relative to others. There's constant shifting in terms of value. And so we come back to, really, what is gold. Gold is the king of currencies. Kevin: I picture it like a yardstick that's not made out of rubber. If you had a rubber yardstick, you could stretch it when you need it to, what have you. But gold is a solid yardstick. And to even call it a currency— It is a currency, which means we shouldn't call the fiat currency because it's really not. Right? David: Paper promises to pay. Kevin: But we've got thousands of years, right? We've got thousands of years of history. It's amazing how people still don't see it. David: Yeah. Since the Lydian Empire gold has been sort of the enduring reference point. Gold demand in the present period, it tends to rise in value when devaluation concerns are increasing, when you have competitive devaluations between trade partners. And that is a real threat. That is a present tense real threat. Even though gold is no longer a part of our monetary system, it serves as a signal for growing concerns that bad money is proliferating, and it takes on the historical good money role. Kevin: Right. Well, and I'm so often asked right now, Dave, so are you: How long is this going to last? But what they're really asking is how long is this price increase going to last? The question is a longer-term question. How long will gold preserve wealth? That's really the question that should be answered, but the price is moving so rapidly right now. It's easy to lose that focus. David: Well, capital is moving to safety, and precious metals cannot have the vast quantities of fiat currencies squeeze into them without a violent price adjustment higher. That's precisely what is happening. Kevin: Right. David: How long does it continue? Well, the question is one of global dysfunction. It's one of policy dysfunction. I mean, it can be categorized in many ways. Monetary policy, fiscal policy, international relations, domestic political policy objectives. These are the things that define the dysfunction of the world we live in, and also are the catalyst for capital moving to safety. Kevin: Morgan was reporting on what was said at Davos last week about globalization. And the way Morgan summarized it was the jig is up. Okay. At this point, this dollar system, this Bretton Woods system that we've learned to live with since 1944, it's going to change. David: Well, again, going back to Ray Dalio's comments at the WEF, he was chiding the audience, "Stop talking about the end of the global order. It's not ending. It ended." Kevin: It's already happened. David: It's already happened. So to some degree we are seeing a version of a reset and a reorientation to real things. So not only is gold shifting back towards its historic currency role, it's also being sought as an asset class that's less fragile in the context of bloated debt obligations. And that's what we saw from Morgan Stanley's chief investment officer. When he's suggesting that you cut your bond position in half, that was the old anti-fragile asset. No, you should cut that in half and introduce 20% [gold] into your portfolio. Kevin: What a radical statement. David: 60/20/20 instead of 60/40. We have yet to see a gathering of investors seeking safe haven, the safe haven qualities of gold from equity market volatility. Equity markets are pretty strong. I mean, not priced in gold. Not priced in gold at all. In fact, the Dow gold ratio has slipped to single digits. Kevin: Isn't that amazing? David: Keep that in mind as you look at your portfolio and proudly squawk about the S&P's returns, the NASDAQ's returns, last year. In real money terms, you lost your shirt. So there will be successive waves of interest in the metals as new uncertainties emerge and as new headlines underscore the frailties already present within the financial system. It's hard to fathom that these are the early stages of a move in metals, particularly for someone who's owned it for a long time. And we have plenty of clients who are taking profits, and that's fine, but it's hard to fathom that these are early stages, but these are indeed the early stages of a broader adoption cycle of metals within the everyman's asset allocation. Kevin: So you say every man. Okay. And if you get into a group, you and I are both members of groups outside of our little gold world here. And if you get in a crowd of people, whether it's at your church or whether it's at school, and just ask them, what do you think about gold? What do you think about the stock market? What do you think about $38 trillion in debt? What's your thought? David: Yeah. I would ask those questions if you're curious. How far along are we in the cycle? Who do you know that even knows what fiat currencies are? Think about that. Kevin: Well, the people we work with do. David: Well, sure. Yeah. Kevin: But outside of this place, no. David: It's a very small circle. Kevin: Yeah. David: And so for Ray Dalio, he runs the largest hedge fund in the world. Of course, hedge fund managers know the difference between fiat and a metal backed currency. They know the history of currencies. They know the history of the bond markets, the stock markets. They make money with money because they have an edge, and the edge is informational. And this is information that we already have, but the vast majority of people are not even aware of what a fiat currency is. Who do you know that is cognizant of corporate debt and government debt being near or past capacity limits? This just isn't what people do. People pick up the kids, they take them to dance, they do this, they run around and get ready for dinner. I mean, life is full of stuff that has nothing to do with what we do on a daily basis. Who do you know that tracks the extreme overvaluation in equities, market cap to GDP in excess of 226%? Who do you know that acts in an anticipatory manner rather than reactively? These are folks who will buy gold at some price, probably between here and $10,000 an ounce, and it's going to be a reaction to something. They were not anticipating anything because they were just going about their lives as if everything was fine. And as long as they get a statement and they've made progress, if it's 5% or 15%, whatever the percentage gain is, they're happy. Kevin: Yeah. But these are the same people, Dave, that if you say, "Do you have a 401k?" They'll say, "Oh yeah. Yeah. Yeah." What's in it? David: I don't know. Kevin: I don't know, but I'm going to retire in 2032 and they told me— David: Yeah. They target date funds. It's perfectly matched and it's going to perform— I'll be able to retire in 2030, whatever it is. Who do you know that has already hit the Morgan Stanley CIO's recommendation of a 20% allocation to gold? Who in your world has 20% of their assets in gold already? Kevin: Well, okay, so pretend like you're in a cocktail party with a bunch of stockbrokers from Morgan Stanley. How many of those guys have 20% of their portfolio or their client's portfolio— David: One in a hundred, maybe one in a thousand. Kevin: Okay. But let's be clear, you are not saying put 100% of your money in gold. I mean, there is an allocation. We've always talked about the triangle, right? And preservation, growth, and then on the right side of the triangle, cash. And so what is the strategy right now as gold rises, yet we think it's going to rise more? David: Yeah. I mean, we got to watch two great games on Sunday. Well, one was reasonably great and the other one was absolutely pathetic. Sorry, I'm— Kevin: In the snow. David: I'm a recovering Broncos fan, particularly after the game. But you can see the importance of defense. And when we look at the perspective triangle, we categorize gold and silver not as a high growth asset, even though it was one of the best performing assets—and silver—last year. It's an insurance play. And the fact that it's moving, the fact that it's performing the way it is, it's the signal that matters. What is going on? The barometer is telling you the storm is here, and people are saying, "No, I'm fine." So let me digress for a moment to strategy. I think for early adopters to the precious metals market, you have the luxury of taking gains. There's a justification for someone that started with a healthy percentage allocation to precious metals to now take some money off the table as that percentage of your portfolio has swelled to very high allocations. Kevin: Right. David: So you started with a third, which is what we recommend in that perspective triangle. And it may be 50, 60, 70, it may be 80% of your assets today. Is it reasonable to trim that back? I think so. If you have followed our advice and structured a portfolio with a broad array of metals, you also have the option, not necessarily of trimming it back, but of swapping from one to the other. In this case, from silver to gold. Kevin: Well, and see, that's the thing. When you take money off the table, you don't necessarily want to put it back into fiat currency, which is the thing that's failing. You take money off the table to buy land for the kids. You take money off the table possibly to buy gold with your silver after this move. And vice versa, Dave, a lot of times we'll go from gold to silver when the time is right, but what are you taking it off the table into if you're reallocating, right? David: That's a great question. I mean, we're doing record volumes of business, not because of new clients storming the phone lines, but because at 50 to one, at 40 to one, at 35 to one, at 30 to one- Kevin: You're talking about the gold to silver ratio. David: Yeah. Our clients are compounding the ounces they own via trade from silver to gold, increasing portfolio horsepower by moving to relatively undervalued gold from silver. Kevin: Increasing ounces. Yeah. David: Which is more and more overvalued. Silver is more and more overvalued. I believe that trend will continue. I don't think it's over, but we have thousands of clients. We have billions of dollars that are positioned to not only capture nominal gains, but play the intramarket volatility between silver and gold and expand their ounces under ownership. Kevin: Yeah. Probably the theme, if somebody said, what is this company about? I would say legacy and I would say relationship. And that's what you've preached, Dave. There's relationship. There's personal relationship with our clients. A lot of our clients are well-trained. We've had these conversations for years. They listen to the Commentary. They listen to Golden Rule Radio. But also you have to look at relationships between assets. That's something that you've also talked about. Priced in gold. Priced in gold. What is an acre of land priced in gold? What's a stock priced in gold? A relationship. David: And even more basic, the relationships that we have with our clients. I had a phone call yesterday, and a client of ours, a retired California Senator, passed away about five years ago. And his daughter had received the ounces that he had put into his portfolio. And she was interested in buying some land for her kids to be able to move onto. And just the opportunity to speak with the next generation. And I mean, she said, "Look, I can just walk this down to a local coin shop." I said, "Fine, that's not a problem. Maybe I can give you some ideas about where we're at in this cycle. And if you're gradually liquidating, maybe we can add some value there." She's like, "You know, my dad always said you guys were the people to trust. And yeah, it'd be convenient for me just to go down the street and do that. I really want to work with you guys because he knew you for 30 years. The relationship he had with your father, he always spoke so highly of you." And I thought, okay, here's the intrinsic value part of what we do. Across generations, we get to serve people with wisdom and perspicacity. What should you do now? So I think our difference, our edge in this market, is strategy and relationship. Kevin: Yeah. David: The gold/silver ratio is now at a 15-year low, and we encourage an incremental approach to shifting from one side of the boat to the other. We don't know where or when it turns and goes the other way. So for those of you listening, those of you considering an exchange in ounces, now is the time for reallocations. Kevin: And incremental is the key word. David: Yeah. I'd recommend 10 to 15% of a silver position to be moved to gold. The higher your silver allocation, the more aggressive you should be. But the higher your starting point on the ratio, the more accretive the trade is and will become. And if you're doing it incrementally, you don't have to make a hero call about what is the perfect number? The higher your starting point, again, you've got more latitude to do something immediately, but whether it's 55 to one on the ratio, 50, 45, 40, 35, 30, increments of five to 10 points on that ratio are a clarion call to swap silver to gold. Incrementally. Incrementally. Don't shoot for perfection. Perfect is the enemy of the good, as they say. IRA assets obviously capture the most ounces because of tax deferral. So that might be a place where you leave what you have in your personal possession alone. You utilize your retirement account to effectively trade ounces on a tax deferred basis. Kevin: Well, wouldn't you say, though, even if this ratio continues to get down to, say, 30 to one, 20 to one, even in a taxed account, it really does make sense sometimes. David: We're at a 15-year low. Kevin: Yeah. David: Are you paying attention? Pick up the phone. Kevin: Yeah. David: This is the time. So 31 to one was the end of the silver outperformance in the last cycle, and we're likely to see even lower numbers in this cycle. Kevin: That was in 2011. Yeah. David: Yeah. But you don't know that. We don't know that. I have reason to believe that we'll see lower numbers in the cycle, that silver will continue to outperform, but we don't know that. It's not a certainty. So incrementally move and average the cost per ounce into gold. Remember that price is less relevant than the ratio. The reason I say that is because we're of the mindset to compound ounces. And so we're trading overvalued for undervalued on a disciplined basis, and that radically changes the total ounces that you have over time. One of the things we're trying to solve, as you think about gold and silver as a legacy asset, is we want to overcome the terminal math of moving wealth from one generation to the next. I have four kids. Whatever I accrue through my lifetime will be divided by four. And so this terminal math of division and subtraction, you have to include some way of multiplying. And that is a tool, that is a strategy that the next generation can employ as well. Kevin: Compounding ounces. David: We're not just waiting for a moonshot in gold and silver. There's a strategy involved. So I would not exit the metals today. I would allow the ratio to help add compounding capacity throughout this precious metal cycle. Our advisors are expert in guiding this process. We don't sell stuff. We guide a strategy. That's the McAlvany Precious Metals difference. Kevin: I had a conversation with a client of ours this morning and he said, "With everything that's going on, you've got a lot of the cost to hedge metals, that type of thing." He was hearing online that there may be a danger to some of the wholesalers out there. You talked about this in the Commentary a couple of months ago, and I said, "Yeah, there is." Prosperity sometimes can lead to destruction if you've got the wrong relationships and they can't be counted on. And counterparty risk, this is a good time to reassess relationships. And I just asked him, I said, "We've been around for 53, 54 years, actually since 1972. Do you trust us? Do you trust that we have those kinds of relationships?" And that was one of the things that we talked about. But then the second thing, Dave, with gold and silver, you don't have a counterparty risk. So for the person who walks out of the door today with some gold, they don't need the firm that they bought it from. David: Well, and that's what Bill King was getting at last week. He said there's risk if you're a trader. And what he's getting at is traders use the options market. Traders use the futures market. Traders are speculating on a bet, and there's borrowed money, essentially, in play. You have counterparty risk, and the rules can change. And there is manipulation that routinely happens in the paper universe of highly speculative traded gold. So will we see some wild things happen, changes of rules? Of course, we've already seen it happen and will continue to happen. Part of that is natural. On Comex they want speculators to continue to have adequate skin in the game, so they raise margin requirement. There's nothing wrong with that. But enough on strategy, I think a functional world order encourages trade and cooperation. A dysfunctional world encourages a reappraisal of relationships between parties and between those parties and their resources. And I think this is where past is somewhat prologue. Kevin: So from the 1870s, I remember when we had the German mark as a coin from the 1870s. So I went back and did a lot of study, history study. From the 1870s until 1914, we really did have globalization. We had cooperation. We had a gold standard. There was trust, relationships that had to be paid for because the gold didn't allow too much debt. David: Yeah. You couldn't create huge imbalances. There was a self-equalizing component to the bimetalist system, the gold standard. Kevin: But that broke. In World War I, that broke, 1914. David: Yeah, that was the first shock to globalization. Think of it as globalization 1.0. And by the late '20s, you had nationalism, you had protectionism, you had deglobalization which had emerged. You had Senators Hawly and Smoot that promoted a bill. In its final version, it had 21,000 tariffs attached to it. Kevin: Wow. So tariffs are nothing new. David: No. And frankly, neither is an interest in controlling Greenland, if you look at the history of that. Kevin: That's right. David: No, it's been— Kevin: That goes back, what? Almost 200 years. David: 150 years we've been looking at having that. In fact, the US Virgin Islands were— Was it the Danish or the Dutch? And we said, hey, we'll give you $25 million for them. They're like, no. They're like, well, then we'll just take them. And they say, okay, well you can pay us 25 million. Kevin: There you go. David: These are transactions that have history. Kevin: Deal done. David: Deals get done, and it feels weird because we haven't seen it lately, but it does happen. But the world was in depression by the time you get into the 1930s, with a collapse in free trade and the free flow of capital. Devaluation became a default monetary action to cover the cost of war and of course the rising costs of social safety nets. So the unwind of globalization 1.0 was certainly attributable to global conflict, but the penchant for guarding domestic economic interests was alive then, and it's very much alive now. And as we transition away from globalization 2.0, the uncertainty stirred by diminished free trade and an increase in tariffs is driving demand for, lo and behold, liquid and safe allocations into gold. One can argue that during periods of expansion gold is something of a dead weight. You don't need it. And that's like having health insurance, but not having health issues. You're not tapping the insurance policy, so to say. Kevin: Right. David: In these periods, gold seems to carry too high a cost. There's opportunity costs from having too large an allocation to metals. However, during periods of geopolitical strain and trade war stress, gold comes into focus as a valuable reserve asset. And sure enough, what have central banks been doing for several years now? Kevin: Well, actually since 2008, they've been buying more gold than they've been selling. And that was a huge reversal, speaking to what you're talking about, because the 20 years before that, central banks were selling more gold than they were buying. David: Because the opportunity cost was too great. Kevin: Exactly. But here's what you cannot do with gold—and this is what held the first global order together. Had we not have had World War I— I wish it would've continued, to be honest with you, the gold standard. What you cannot do is competitively devalue your currency if your currency is gold. Gold carries a value. Every one of these fiat currencies— All it is is a game of who's going to devalue the quickest. I mean, look at Japan this week, right? David: Yeah. Kevin: What they're facing based on competitive devaluation. David: Yeah. The threat of competitive currency devaluations among trade partners, as each of them is seeking an export advantage, it motivates allocating to gold as a superior reserve asset, as a stable currency alternative. So that dynamic is very much in play today. You've got layers of complexity within the global economy and implicit to the global financial system that are motivating a reappraisal of one of the most basic elements within those systems, the unit of account, money. Kevin: The unit of account, but see, with fiat, it's unlimited. People really don't understand just how tiny and thin the gold market is, or the silver market, or the platinum market. 17 times rarer than gold. David: Again, speed of movement. Volatility speaks to size. The metals are revealing in real time how scarce they are relative to debt, how scarce they are relative to fiat currencies, and relative to all financial assets. You should expect more of the same. Again, volatility, upside volatility, a good bit of it as the adoption cycle and the reappraisal of systemic risk continues to unfold. Kevin: Well, and I had mentioned Japan. I think that would be good to talk about right now because currency carry trade, basically, with Japan has been what's sustained an awful lot of the leverage that we see in the markets. David: Last week, a key dynamic driving gold and silver markets was the Japanese bond and currency market. So John Authers at Bloomberg summarizes it well. He says, "A run on Japanese government bonds that reached a crescendo last week is now beginning to cascade throughout the rest of the world. Its effects show up, arguably, in the continued spectacular trading in precious metals and in renewed weakness for the dollar. It hasn't yet had any more malign impacts on risk assets as stock markets opened the week positively." Kevin: Okay. But you've talked about the bond vigilante. A bond vigilante you can't fool. If you look at long rates either in the United States or in Japan, rates will rise if people start to think that there's inflation in the wind or default in the wind. David: Yeah. So now that the Japanese have a tricky situation to deal with, they're coming out of deflation. Their rates of inflation are basically on track with ours here in the US. Their debt to GDP close to 250% and they cannot afford higher interest rates. And so a part of the Liz Truss moment in Japan last week is Takaichi, the new prime minister, saying, "Well, we're ending austerity, and we're willing to spend more money." Okay. So if you're going to stimulate growth, if you're willing to stimulate growth, it's going to have a negative impact on the currency. And yet you've got bond yields rising as well. Bond yields rising, currency depreciating, yen intervention, and the Japanese government bond volatility; those are powerful signals. We talk about gold being a signal. You've got global debt and currency markets that are in a very precarious place. We know that. Kevin: Well, when I'm thinking signal, I listened to myself when I just now said "in the wind." And you remember, toward the end of World War II, when the divine wind, I think that's what Kamikaze means, is the divine wind. When Kamikaze actually started happening in World War II, that was a signal that that was the last ditch effort. You don't run a plane into a carrier purposely and kill the guy inside unless it's a last gasp. It sounds to me like getting rid of austerity, saying it openly, in a way is Kamikaze. That's a divine wind. David: Yeah. The Federal Reserve is asking questions about the yen. They were last week, and they may enter the markets to support the currency, sort of a bilateral currency intervention. It showed up. Whether they were taking actions or not, they were talking about it, and you saw it reflected in the dollar. Not a surprise to see the dollar hit by 1.8% last week. The yen carry trade dynamics continue to be pressured. Yen intervention, currency strengthening in yen, have negative effects on the dollar. That is still a plus in the gold column. It's still a plus in the silver column. These are really interesting dynamics to keep an eye on. We had global yields rising alongside JGBs—Japanese government bonds—last week, which is very consequential. You think $347 trillion in debt instruments, little moves equal big problems, big moves equal game-over dynamics. And again, you think, "Well, what is gold telling us right now?" Kevin: Well, and you were talking about how, globally, interest rates started rising based on the Japanese. Okay. So that's that competitive devaluation. The effect of competitive devaluation is it ultimately takes everyone down at the same time. So let's talk, though, about something that hasn't really been much reported, Dave. But last night I was on BBC, and I was reading about it. Bill King pointed it out earlier, and I think you were on Bloomberg. China, do we have a consolidation of power like we've not seen since Mao? David: Massive. Some have described it as a more significant purge in the upper ranks of the Chinese Communist Party than what we saw under Mao. Kevin: Wow. David: Yeah. So Bloomberg summarized it well, what to some looks like a quelling of a coup attempt. President Xi Jinping's probe into his top general sends an unmistakable message. No one can stand in the way of his total control of the Chinese military. Not even a longtime confidant who helped him consolidate power in the world's largest standing army. The corruption investigations against Zhang Youxia, the first ranking vice chair of the Central Military Commission, and another senior general have effectively hollowed out the high command of the People's Liberation Army. Kevin: Well, and this guy was very, very close to Xi, which in a way I think of a little bit of the line from Shakespeare, "Et tu, Brute?" David: Right. Well, I mean, it just is one more layer of uncertainty. We don't know what this means. We've got about as much information coming out of China on this as we have coming from Tehran. Kevin: It's scant. David: We don't know what's happening on the ground, but it's not good. It's not good. There's more. We could talk about so much more today. Got Rick Rieder's soaring odds to take over Jerome Powell's post, coming over from BlackRock. Market operator, not a trained economist, but— Kevin: Ready to print money? David: —somebody who knows how to cater to the financial markets. Does he become Trump's reluctant first choice because he can calm the nerves of the financial markets? I tell you what, the midterms, there's a lot at stake in the midterms. We have a selloff in equities and you're talking about a loss of the House and the Senate. He may not like Rick Rieder, but he sure likes what Rick Rieder can do for the markets. You've got endgame financing dynamics at OpenAI and that's now, that's 2026. They've got billions of dollars in commitments that they've made and not enough liquidity. They have to raise a tremendous amount of capital to remain viable. And they raised record amounts of capital last year. They have to raise even more than the records of 2025 to even exist. Kevin: Everybody's got to borrow these days. David: Yeah. Well, you've got the incestuous relationships between Nvidia and CoreWeave, dozens of other critical dynamics unfolding in the first month of 2026. Kevin: Wow. David: A lot more we still need to cover. Kevin: So you're not going to cover that this week? David: There's always next week.

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We've been listening to the McAlvany Weekly Commentary. I'm Kevin Orrick along with David McAlvany. You can find us at mcalvany.com and call us at 800-525-9556. This has been the McAlvany Weekly Commentary. The views expressed should not be considered to be a solicitation or a recommendation for your investment portfolio. You should consult a professional financial advisor to assess your suitability for risk and investment. Join us again next week for a new edition of the McAlvany Weekly Commentary.

• If You Own Metals Without Leverage, You Don't Care If The Paper Rules Change
• Bill King Advice: Stay Liquid & Hedge Liquidity With Gold
• Money Coming In Is Overwhelming The "Silver Rig"

"What was really going on here is this whole fight. It's been going on since the '80s, deflation and inflation. What's the fight? Back and forth here. Who's going to win? And that's what the markets are navigating right now. And we don't know. We don't know. The deflationary forces are to debt. We know that. And the government tries to inflate past it. And when they can, you get the economy going to stocks or whatever. But now, we don't know. We just don't know. So again, and that's what the gold and silver's telling you. We're in a highly uncertain time. Order's breaking down. Political order, but social order. We see it here in the United States. We got people hopefully saying it's okay to break the law. It's okay to storm churches. It's okay to terrorize people." —Bill King

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Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick along with David McAlvany. David, I always look forward to Bill King coming on, but before we do that, how's your dad right now? David: Parents are doing great. We're getting a couple of days with them. And once a year we get together for a few days and really enjoy the one-on-one time. Deep conversations, reminiscences, and of course some concerns about what's going on in the world. And some of the things that he's written about for decades in a future tense are now very, very much present tense. Kevin: Well, and I'm looking forward to talking to him soon too. But today, Bill King, returning guest, we always are looking forward to that.

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David: We spoke last in October. There are so many topics that seem to ratchet up in importance on a daily basis. It might as well have been six months or a year since the last time we spoke. Lots going on. Let's start with a wide lens on broader macro considerations and then focus in a bit on market minutia. First thing that comes to mind is geopolitics and policy risks. Could you sort of create a taxonomy of geopolitical risks for us? Where are the most interesting developments at present? Bill: I don't know what you could isolate to where, but you're hearing, and the people at World Economic Forum Conference in Davos began today. But you're seeing it in the stories and you're hearing the elites talk about Trump's blowing up the world order. That's what's going on here. And basically, what you're saying is the European elites are having trouble holding onto their positions of power and order. And so you're talking about we're going to sell US bonds. Danish [unclear] today came out. There was a big headline, "We're going to sell our US bonds to punish you for trying to take Greenland from us." Well, turns out they only have like $100 million in US Treasuries. You got locals on the floor in Chicago trade more than that in the bond pit. Come on. I'm just one individual. That's not much. It's a thousand contracts. Come on, stop it. And that's the problem. You've got people there, especially in Europe, and they've got their issues with the third world migration that's destroying them. They can't afford their socialism. And you can't blame the people for going there if they're going to give you free everything. And then you've got the situation here with China and Russia. You got, with the Ukraine on the door, and Europe can't decide what they're going to do about Ukraine except pout and scream and act important. You got China making deals with Canada, and Canada screaming at Trump, because it has designs on Canada and Greenland. And that's kind of what's breaking down here is you had the US and its allies against Russia kind of thing. And then China was in the background, and China got powerful. And now these things are all breaking down. And part of it is this America First concept. We did, for decades, going back to the— Well, let's go back to World War I. The US did things there that was a disadvantage to the US in the big picture, to help Europe, and we know why. The cultural ties, the story, blah, blah, blah, blah, blah. And also because the money people in the US wanted Europe as a place to sell products, and that's kind of blown up. You saw that with the trade. It's slowly, over the years, especially after the '80s— In '87 the US went from a net creditor country, meaning we put more money in other countries and got money out, as opposed to we turned to net debtor where we were giving more money and exports and direct foreign investment to other countries. So that's almost 40 years ago, and that changed it. And Trump came and said, "No, we're not going to do this anymore. We're not going to be the patsy here. We're not going to defend you guys. Then you guys take— You sell us stuff and you won't buy our stuff, and blah, blah, blah, blah, blah." So all this stuff is coming apart. And against that backdrop, you've got the Western socialism is crumbling, including the US. We're a socialist country. I chuckle if you know you're capitalists. Really? Go look at our social programs. We're about to hit 39 trillion in debt, and that doesn't include the off balance sheet stuff, Medicare, Medicaid. So on and on and on. These entitlements, there's no telling how big those are. And you see it in Japan. If Japan made their deal with the people after World War II, we're going to be an industrial power and you guys will get meager wages, but we'll take care of you. Jobs for life, all this stuff. And now all of a sudden, you've watched over the years how Japan's debt is, per GDP, is even higher in the US. You see China same way. The debt's just exploding for these people to keep control of their populations, to keep the socialist game going where we give you benefits and pensions and on and on and on, and none of us can afford it. That's what the gold and silver are telling you. And you could look historically. Gold is an okay hedge against inflation. It's better over the long term than when you see the pockets in history, financial history. Stocks tend to go crazy when there's a little bit of inflation. You've heard that. All the companies can pass on inflation. In fact, the company can only pass on a multiple of inflation, that's always been the game in here. But when inflation starts getting out of control and the company can't do it, then you see gold and silver. That's why gold and silver have typically been late market cycle plays where you have your normal three, four year economic cycle. At the end where everything is having trouble, the companies are having a little trouble, the Fed starts pumping money to keep the cycle going and people will say, "Well, no, you're better off being in gold and silver." Now, gold really sparkles—and you guys know—when you have a political problem. That's like, "Okay, we don't want to hold money. Forget the stock, everything. We got real trouble here." And that's what gold is telling you. Silver also, as you know, silver was delayed, but also there's a more industrial component to silver than gold. That's why when inflation gets very virulent, the silver starts outperforming because of the industrial component. Now, of course, with all this AI data centers and on and on and on, they're talking about the deficit and silver and how that's one of the problems going on here. So things are just breaking down in the international order. And part of it is people are recognizing you can't keep going. You can't keep doing what you're doing. And that's what gold and silver— Now, Trump's hitting the beehive with the big stick and trying to create change here, and there's resistance. There's resistance here in the US. There's resistance within the Republican Party. I mean, there's a reason why Trump can't get anything to the Senate and these guys won't unload the filibuster because this is their way to stop Trump, is to let the Democrats say, "Oh no, he can't get 60 votes." And the Republican goes, "Yes, the Democrats won't let us vote. We'll get rid of the filibuster." "Oh, no, no, no. The Senate, it's sacrosanct." But that's a backdoor way to say, "Nope, sorry, we're stopping Trump here." But as we all know, it can't continue. And that's what gold and silver are telling you. This order can't continue. And Europe is degenerating in front— Canada's got all kind of problems. Carney is running his mouth like crazy today at Trump up at Davos. He's a bully, he's this, he's that. Macron is the same way in France. And these countries are failing countries. You see what's going on in their countries, not just the political order, but with the immigration, with their economies, it's just a mess, just like the UK. I'd say this is probably at least 50 years the biggest international mess that I can remember, maybe even further back than that. Maybe you got to go back to the post World War [II] when you put together Bretton Woods. And that's what people claim it's breaking up. That whole post World War II order, 80 years now, is just breaking up. The system cannot continue this free ride that you're giving everybody. Can't keep giving everybody the freebies. You can't keep doing this government spending. You can't keep going to your debt markets. People are forgetting that after the COVID, you had the biggest bond market decline, some say in history, some say since the Revolutionary War when all that, the bonds, blew up and whatever. But you killed all these guys, that 38 year bull market in bonds, made a lot of bond kings out there. Everybody's on TV. They're smart, making all this money in bonds, and they got their brains beat in for what, two and a half, three years. So what we've done now is we've traded sideways in the bond market for about two years or so, consolidating that horrible record historic bear market in bonds. But now all of a sudden, oh, the Fed's going to cut rates and whatever. Gold and silver are going crazy. And now, what's going on in the market, the Japanese bond market has been revolting very hard for the last few months. And today, it's spilled over into global bonds. So now, the US bond yields are breaking out. You got the 30 year up to 4.95, 10 year's with 4.28. And they're all breaking out. You look at the chart, you can see you had this big sideways consolidation and now the yields are breaking back up. This is against the backdrop of the Fed easing. So you got to ask yourself, what's going to stop bond yields from rising? It's not the Fed easing. The Fed eases, they are going to go up. It's going to go up even— Yields are going even higher. It basically comes down, you better start running a sane fiscal policy and that isn't going to happen anytime until it gets worse. There's nobody out in— And we talked this last time about Trump, but Trump's always bragged, "I'm the king of debt." He's not about to rain— He's trying to run the economy hot and everybody knows it. And that's the other problem you got. There's nobody fiscally responsible. Everybody wants to run their economies hot here to keep this game going. And again, that's what gold and silver are telling you. There's a real problem in the global system. And that's the bond markets are telling you that also. Gold and silver went first. The bond guys have been holding in for a while because you have a lot of bond traders still think, "Oh, central banks are going to ease. They're going to rig the market." And they've been. They're going to rig the currencies on and on and on. And that's why I think you saw the money going into silver and gold because the guys didn't want to fool with bonds and currencies because their rigged game started going there. Now, we know gold and silver is a rigged game, but the money coming in would just overwhelm the rig. And of course, that's led to all these rumors about some big banks are in trouble on silver. So we'll see how that plays out. When you have these kind of moves, as you guys know, whether it's silver, gold, soybeans, bonds, stocks, whatever, you get those kind of dramatic moves. Somebody's in trouble. The laws of probability tell you there's big people are on the wrong end of the trade, and they're creating huge losses in the system. We'll see how this plays out. David: We've got yield curve steepening, not just in the US, but globally. Maybe that's good for some banks with steepening yield curves, but there's broader implications for higher long-term rates. Talk to us about the bond market, the stock market, private equity, private credit, and the implications of borrowing costs rising at the long end of the curve. Bill: Well, the thing is, we've just financialized the economy. Everything is financial. What is it? The top 10% in the United States is over 50% of consumption. Where's that 10% coming from? It's coming from central bank pumping money and it goes to the hedge funds, it goes into the tech billionaires, whatever you want to call it. So you get these hot tech stocks and that's where the money's going. And for all Trump's talk about the tariffs, look at the manufacturing employment. Is it going anywhere in this country? Are you creating? How many more plants and equipment are showing up here? If you just work your way through this stuff, as you can see, it just doesn't add up anymore. When the bonds start rebelling, when you financialize, everybody's cost to carry, cost to finance, cost to borrow money, goes up. And you could go back and look. They used to talk about the economy. People quit talking about it 20, 30 years ago because it just got too frightening, but it used to be very important. How much debt per unit of GDP. And people got alarmed when it went through like 120, 140 to 150. Now nobody wants to talk about how much debt you need to generate a unit of GDP. It's obscene. So when you start raising those costs, you got a problem. Now, everybody's trying to push their rates down on the short end, but the back-end's rebelling, and that's where you got a problem. Your hedge fund, your private equity, you can keep going in and financing on the short end and buying assets and stuff like that. But if you're an industrialist, you're building plant and equipment and you're talking a much longer horizon, you're talking 5 to 10 years where you're trying to borrow money, that's different. That's a whole different problem. And as most people understand, is what Biden did and Bessent's doing for Trump, they're trying to borrow in the short end. I forget how many trillions of dollars are coming due. It's in T-Bill because the governments, with the rates steepening, everybody's trying to borrow on the short end. Well, we know how that ends up, is that they eventually can't roll the debt because people say, "Okay, I'm not taking T-Bill rates where they are here. That's it. I'm done." And then that's when it hits the fan. And that's where the end game starts, is Buffett's got almost $400 billion in T-bill. And he goes, "No, I'm not doing this anymore." Or whoever's taking over for him. "No, I'm not going to sit in T-bills that— I'm just not getting paid for this. I got to do something else. I'm getting killed here." And basically that's when your rate of inflation goes above your T-bill rates. You don't want to just sit in there because you said basically a negative real interest rate on you. And that's part of what's going on with the gold and silver here. Right now, we're sitting with the four-week T-bill at 365, but that's about where the two-year note is. That's very close to that also, in here. You can see the systems being stressed. Trump wants to run it hot. He's out there trying. "I'm going to do this for housing. I'm going to do that." Now, all of a sudden, he's telling people, "Give them a moratorium on student debt again." It's just every day coming out and throw something at the wall to keep the game going. And part of it was the stock market and the wealth effect that the top 10% keeps spending. Everybody's talking about the K-economy. The top 10% are doing great. The bottom whatever percent are struggling. And then the middle class, they're treading water, and they're swimming as fast as they can just to try to stay in place here and keep from drowning. That's why I think you're seeing the political clashes you're seeing in here too. So, it's a mess. And the markets are telling you that. It's crystal clear in gold and silver. Gold and silver do not do this, do not have this kind of move, unless there's serious problems. Because the [unclear] investment-grade money going in there. Over the years when we've talked, all the way back to 2008, the big important people that we talked to, including people that ran big five brokerage firms and industrialist CEOs, I asked them, "What are you doing with your money?" All of them said, "I'm putting some portion in gold, and then I'm putting money with this, or hedge funds, or whatever." But it all came back to, "I'm putting 10"—and most people were talking, at that time, 10 to 20% is a reasonable amount, depending on how much you have. If you've got 100,000 and you got a billion, there's a big difference, what you can put into your portfolio as far as gold and precious metals. And those are patient buyers. They go back and look at the gold chart. Get a little panic there in Europe, and gold runs up in 2010 and '11. Same with the bitcoin. Then, it comes down. You could see it, but you could just see that steady, steady. Since we hit the lows under $300 almost 30 years ago, low in gold, there's just been steady, progressive buying. And that's investment-grade buying. They're taking their time, they're patient, and they just keep accumulating gold. All of a sudden, now you're getting more of the public in the last couple of years. You get the momentum buyers in the hedge funds and whatever. But for a long time, there's just been a steady buying of gold. And now of course, Bank of England and who was it?, Belgium, who made the lows there in the late 1900s selling their gold out. Now, they're all buying it back. It's 10, 15-fold higher because they know. They see Poland's been a big buyer, China's been a big buyer. India has always been a buyer, has a special relationship with silver in India. Goes back to dowries for the women back there, and that goes back centuries. But it's there. It's there. You can see it. We don't know how it plays out because you don't know how these people react. Politics always has them make decisions that are not always in the best interest, especially in the long term. And eventually the markets force people to make the right decision. So, that's what we're waiting for now. That's what we're going through in [unclear] when the markets force people to make the right decisions here. David: Coming back to the K-shaped economy and the wealth effect, if the top 10% in the US asset holders are responsible for 50% of consumption, obviously it's important where the bond market goes and where the stock market goes. If they're feeling blue and not spending, what's the prop for the US economy, if not the wealth effect? Bill: That's what they're all trying to figure out. Trump, "I'll do the tariffs, I'll do this. We'll replay the '50s. We'll start manufacturing and we'll start getting all this stuff going again." But I don't know if that's possible. That's the experiment here. How do we get the middle class going? What industry is out there? And people [unclear] for tech, but everybody can't go work for Microsoft. This was what happened in the '90s and 2000. "We'll just go be an engineer." Engineers like crazy. And then of course, then when the cost started going up for the engineers, then we started importing them from H1B these guys in from India and even Russia, and people started outsourcing. I know plenty of people on Wall Street first went to India, and then they went to Russia, because Russia was cheaper for computer scientists and on and on and on. And then, it was to learn code. And now you're saying, "No, we don't need that because we have AI." So everywhere you're turning where there was going to be some industry that was big enough, broad enough, and deep enough to create huge employment gains for big countries like the US or the EU or whatever, they're not there. There's nothing there. We did this in the '80s and '90s. We had this whole new tech industry appeared. The personal computer. Everything that we want, that mouse, mouse pads, modems, printers. And then you got the internet. And everybody's going to design websites and so we can buy. Now, you don't need that because there's too many people. Before, be an engineer, go into STEM. Now, no, the jobs aren't there. Sorry. Look at all these big tech guys, the job creators, are now laying people off. Seriously. You can blame AI, you can blame other things, but you're just in that point of the cycle where you don't need it. Just like you didn't need any more manufacturing workers in the '60s. You needed them for 50 years, and all of a sudden, "No, we don't need them." And that same thing's happening in tech now. "Don't need them, sorry. Don't need this anymore." And the other thing, too, happened, as you know, in the '80s. It's pretty easy to see the tech. People were creating tech giants in their garages and basements, and we know all the stories. But the other thing was happening was with the financialization economy, you blew up the financial industry. I remember when I started in '74 here, it was horrible. Nobody wanted to be in the stock market. There was very few opportunities. And then next thing I'm in New York because every market started booming there in the '80s. They were trying to hire anybody who had any experience because they didn't have people, because the market was so dead for almost two decades. So then all of a sudden, hedge fund. And then in the '80s, hedge funds and mortgage trading and derivatives exploded, and on and on and on. This created an enormous number of jobs—and then it didn't. Then, it's rolling over again. So you had financialization and tech industry really drove jobs here. And now, what you're saying, "I thought it was going to be biotechnology." And you are getting healthcare gains, but it's on the low end. It's the healthcare workers. It's not so much on the top end where you're going to have medical technology. I mean, it's there and it's happening, but it just can't produce enough jobs for the people that are getting laid off or don't have the prospects anymore. You're seeing now with the colleges, how many people say college degrees aren't worth it. You want to go into debt for 250-300,000? And we're not even talking to top schools where you got to pay 100 grand a year now. For what? What's your prospects coming out? And the politicians know this. They know this. How do they keep the game going? "Well, we're going to give you more freebies, and we're going to import voters to vote for us and give them freebies to vote for us." "Well, who's going to pay for the freebies?" "The wealthy." "Who is the wealthy?" "Anybody that has money." I mean, this is clear what's going on. The problem is how does it get resolved? Normally, when it doesn't make sense mathematically, you're going to have some kind of implosion. And that's what gold and silver are telling you, is that the big private money is preparing for an end game that nobody knows what it's going to look like, but it's going to be real ugly for people's currencies and bond markets. The last time the gold went berserk, right, and silver in the '79 and '80, and why the Hunt Brothers were— And I thought it was the end of the world for the United States because what Jimmy Carter was doing, that's what that was. Yeah, there was inflation and it was virulent, but it was the political side that really pushed the Hunts and those people, and his group, to just go crazy on the silver and the gold. And then Reagan came in and got the US up off its behind again. Because that's what people thought. That the people thought with Carter that that whole post-World War II order was just collapsing, and Carter let it. He let Iran go down. Russians walked into Afghanistan, just on and on and on. Everywhere you looked, there was American weakness in there. Well, now you got Trump's trying to go the other way, and that's not helping because it's just too big. I mean, this is just— He's acting like the little boy with the fingers in the dike. And the problem, there's just too many holes in that dike for this stuff to hold back. Every day you turn around, there's a different crisis somewhere. David: So thinking of the US markets, FAANG leadership and narrowing market breadth have been a feature over the last 12 to 24 months. What issues do you see confounding the AI narrative, and what has been the primary market prop in recent quarters? Bill: As far as the AI market, it's been all sizzle no steak so far. And if you talk to anybody that used this in the early stage, especially attorneys, people that have to do a lot of research, and you end up paying a lot of money for associates. You have big cases in law, you got to go do your research, you got to have to do all of this stuff. The AI came back was just absurd. I mean, you've seen this where people have gone into court with, "Here, in this case and whatever," it was made up. It didn't exist. People remember the WarGames 1983 movie. Oh, we're going to have computers that can think so we don't need to have humans. They can make decisions. Well, they're acting like this is new AI. That's been going on for, at least four dec— Even longer, about machines will think. That was Terminator, the movie. Machines take over because they can start thinking and become sentient. Same thing like solar energy. I mean, it's been around for a long time. It just hasn't been harnessed. The problem is all you can do with AI is what's programmed. So if you go in there, and you put in Trump and it comes out, "He's Hitler. He's evil. He's a horrible human being," and that's because that's what whoever programmed it put in it. The problem you have now is— And Trump made that bet. "We're going to have all these jobs from AI." But it tells you you're not going to get jobs from AI. It takes jobs away. If AI is [unclear], you don't need accountants, lawyers, researchers, writers, et cetera. You don't need it. It's like you have the Oracle of Delphi. You just go there and get the wisdom, and that's it. But it can't. It can't think and it's not producing. It's very expensive. The other problem is it's energy intensive. And now you got all-time high electric prices. So, that's why Trump came out last week. "Okay, we're going to make these guys pay for their own data centers." Because finally he figured out that this ridiculous amount of energy demands for this and you're not getting the payoff yet. Everybody's trying to find that big industry that's going to be big enough to give meaningful employment to the masses and justify the system you created, where, "Okay, you want to get ahead? You go to college and spend a gazillion dollars now." And it's not worth it. Someone said, "Harvard? You don't get an education at Harvard, you get connections." That's why you pay that money. You can pay that money and get connections to go to the Ivy League. People have known that, really, for decades, but now it's out in the open, more so. When everybody got onto this because of the tech boom, and rightly so, from the '80s, '90s into 2000, especially with the internet, wow. You saw where the tech billionaires came from, a lot of these guys, whether it's Bezos or Musk or these guys, and the guys who created Google, that's where you make your fund. They did. People made tons of money, but that's over. Now, what do you do with all of these people you put in the STEM? The job, they're cutting— All these guys were the guys that were taking all these guys. That's why there's this resistance now to the H-1B because the jobs aren't there. If you're creating jobs in tech so much that you can't get qualified computer scientists and engineers, that's understandable. Now you got a surplus of them. What do you do now? And this is not just the United, this is going country to country. And you can see it in the poll. The masses are restless because again, this whole post-World War II thing is falling apart. And it was socialism. They could talk about capitalism, and there was some elements, but this was largely the government's going to take care of you. And the only thing you get somebody now that would come and go, "No, this socialism's going too far. I'm going to move back the other way," like Reagan. Reagan, "I'm— Can't do that anymore, guys. We're blowing up here." Because of the turbulence in the '70s, they said, "Okay, we'll do that." But then as soon as you get Bush in it, you're going back to socialism in here. What did the kinder, gentler nation mean? What did that mean? Bush I ran on in '88. "Oh, we're going to be kinder and gentler." "What does that mean? That we were harsh? What was harsh?" "We didn't give you enough freebies, basically." I mean, what does that mean? Clinton was a new way. Remember him, Tony Blair? They didn't want to come out and say "socialism, right?" That's a new way, a new way of thinking. And they said, "Oh, it's like Japan where government works together with industry and we do things." Well, what the hell is that? That's basically happy-face fascism. Governments working with industry tell you what to do, and what to produce, and how we're going to work together, just like Japan did. And of course, they were holding Japan up as a model just as it was crashing and burning. They [unclear] the early '90s, and by '95, their stock market lost 80-some percent of their value. And that's their running to a model that had collapsed. "Oh yeah, that's what we're going to do." And the only reason they did that because you put government control in. That's what the climate— Everything is to put government control so we can do something and help people out here. So I'm sitting here in Chicago, we're seeing it firsthand. They're bankrupt. It's falling apart. And the solution is always, "We got to tax the rich more." They're fleeing like crazy. "And we got to give you more. We got to give more. And we got to get more immigrants in here and give them more stuff." That's what's going on. And that's why this fight is so vicious in here is people understand this system is breaking down. That's why you get a communist come in and take over New York. The young people are frustrated, and you got a huge foreign population there, migrant and legal and illegal there. And they're just, "Yeah, we want this guy. He's going to give us everything for free." That's where we're at. David: So liquidity dynamics, I see Dow, S&P, Nasdaq, we're not that many points off of all-time highs. Markets seem to be amply liquefied. In your experience, what are we looking for to discern a shift in market liquidity dynamics? Bill: They just keep throwing liquidity. I mean, everybody's going to run the economy hot because these guys are all out of jobs. Put it this way. If you do a dissolution of the Soviet Union type in Eastern Europe, "Oh, we can't pay your freebies anymore." What is Democratic Party going to run on? David: Right. Bill: And you got a lot of Republicans that are the same way. When Musk came in, the Republicans wanted to get rid of him just as bad because they couldn't pay off the donor class, and all the people that eat at the government trough. Now, people went, "Now how come the Republicans are being this way?" Because they have a donor class and they've got friends and family that have government contracts. You see, they're throwing aid back to all these countries and you say, "How could the Republicans do it?" Because it's a skim. Because they're getting money out of it somehow or other. They either get it directly from donors or they've got families or friends that do business with the government. Everybody thinks it's just a donation. It's not, it's government contracts. When you start pulling apart this, look at what's going on in Minnesota. You got people here that are running fake daycare, fake firms, and now they're finding it in Maine, all over. Fake, totally fake enterprises that are taking hundreds of billions of dollars of government money in. And now if the people are right, who's running the operation? And it's nationwide. And the government doesn't want to stop it. Why? Because there's a school of thought here that with this thing showing up in Minnesota, it's massive fraud. The people are going, "Why would Kamala Harris take Tim Walz?" And then they ask him, "Why did Kamala take you?" "Well, because I can speak to white men," and people are laughing at him. Come on. Well, the school of thought now is that he was controlling all this illicit money that was floating around. And when you see that these guys taking the money into contracts are all donating to Democrats, it's a big laundry machine. Fake enterprises, like the COVID stuff, it's unfathomable how much fraud was in that. And the money is just going everywhere. It's going all over the globe. I don't know if you're in China or Russia, Eastern Europe, Africa. This came in here, created fake enterprise. You just got on the computer, put in a fake Social Security, and the money just got zippety-doo-dah over to you overseas. And you'll never get it back, and it goes on daily. And of course, people in Washington understand that, but they're getting their cut. But it's blowing up. That's what gold and silver is telling you. And the people on the inside know that. So for a long time you say, I can't be in cash. I got to be in the means of production—to go real Marxist. You got to be in stocks. This is where we're going to be. And of course then you had the FAANG stocks. The tech stocks, this is where we're going to be. And of course, that's not going anywhere. So the market broadened out, people are running other places, but what do you do? If you got a billion dollars, what are you doing with your money right now? Where do you put it? David: I like gold and silver. Bill: Probably some combination right now. You have your gold and your silver. You have probably your real estate, but it's select real estate. Probably short term government debt. And so you can move and you have some liquidity in there, and wherever else. But that's why the gold and silver are doing what they're doing because you're running out of places to put your money. Safe places. David: Yeah. Last time we spoke, we'd covered hard assets and a theme that really stood out as an opportunity. October, it's played out well. How would you differentiate the risks and opportunities between CapEx commodities, energy, and precious metals? Bill: Right now, it's hard to quantify the risk because when you look at a stock, you could look at a value. This is historical, what they could do, earnings. You start thinking of prospects, and you can just— Other industries. And that's how stock markets made bottoms in the past is the value investors, whether it was Buffett or mutual funds and whoever came in and they bought because the stocks were at a good value. How do you put a value on silver and gold? On my first job on LaSalle St. in 1975, we did a gold bug in that. And the things they used to do, you look at it against money supply, global money supply, US money, against debt, global debt, whatever. That's about the only way you can come up with some measures. And if you look at those numbers now, global debt, it's astronomical. There's no telling. That's the problem here. There's no fundamental value, like in a stock. Because as you know, gold and silver don't give you a return. A stock, you put money in a stock and it's an enterprise. It goes out there and it creates income, an income stream. Well, there's a discount model. The earning discount model, the sales discount model. That's what drives value—it used to—for stocks. And of course, you tweak that by what your interest rates are for your return. It's safer putting your money and getting a return in government bonds or the dividend discount model. You know the whole routine. You don't have that in gold and silver. There's no return. It's a pure store -of-value play. There's no fundamental return on it. Now, you could look at it a little bit and you can see like we talk about silver have industrial components. There's gold and electronics and whatever. And there's a factor in there, but again, in and of itself, it can't be compared to a stock or even a bond. It's a straight store of value, and it's just pure emotion. It'll go wherever big private money takes it. David: When we look at stocks, and let's say we do use the discounted cash flow model, and we assume pressure on whatever interest rate you're going to use, you're arguing for lower prices, not higher prices. Even if Trump wants to run things hot, even if he wants to keep plenty of liquidity in the system, it would appear that you've got some bigger issues. He's trying to control the short end of the curve, but the long end of the curve may end up undermining his best efforts. Bill: Yep. The problem becomes for equities. See, the market doesn't know if you're going to get inflation or deflation right now, but that's what gold and silver are telling you. There's going to be chaos. And that's why you're looking for a store of value. And of course, certain real estate. Obviously, not big city real estate, but certain real estate, you're just hiding out. The problem with the stocks becomes— There's two problems. Going back to basic economics, Economics 101, or Money and Banking 101, I guess—maybe both. It was the old adage that a central bank can try to stimulate the economy by pumping money. But, as they said, this was the adage. Remember this. You can lead a horse to water, but you can't make him drink. That's what has happened. And that's how our economy worked. If the Fed put too much money in there, the big manufacturers, the IBM, the big industrial companies were like, "I don't care. I'm not expanding my plant equipment. I'm not hiring people. You can't make me drink." Now, when you financialize the economy, that's different because when you throw that money in there, it goes into JP Morgan and Citi and Bank of America, Wells Fargo, whatever, Goldman Sachs, they take that money and they go on, they buy stuff with it. Financial assets. Or they're buying commodities. You get the kick right away in a financialized economy because you've got to do something with that money because it's depreciating. It's like it's on fire. If you don't get rid of it, you're losing value, some amount of money is going to burn up every day. So that's why this game is being played this way. You just talk about the lags, and you remember all these, oh, so our monetary policy had a six month to 18 month lag. Well, why is that? Because as soon as they started, how long was— Business executives say, "Okay, I'm going to go out. I'm going to build new plant equipment or I'm going to modernize. I'm going to retool. I'm going to hire more people." There was a lag. That's almost instantaneous in financial markets. If anybody understands, money comes into the banks and it's sitting there. They have to do something with it. They have to put it in something. Otherwise, they get fired. So that starts this whole, "What are we going to buy? We can buy soybeans, can buy gold, and we're going to do—"0 And they're all hedge funds now because they can put it anywhere. Give it to private equity, we'll lend it out to the street. So when they lend it out to the street, then the street's got the same problem. What do I do with this? Because people don't understand how these big brokers work. Money comes in and the money just sits there, and then they try to do something with it. They look, are we creating cash today or do we need cash today? If you need cash, they're out there borrowing it. If you got too much cash, they're out there spreading it around other places to try to get rid of it. Again, that's what's happening with a financialized economy. Now, where am I going with this? That's why stocks keep going up. And why bonds for a while kept going up, but the Fed's going to cut. But now, the bonds are rebelling. We don't want to hold that money in our bonds. So stocks kept going up. They talk about that reductio ad absurdum. Take the most outlandish, absurd example of something to see where it might go when you're doing some logical exercise. So if we look at the stocks, if we look at— Again, the market's trying to figure out, are we going to get— By running this hot, are we going to get inflation or is this economy just going to tumble into some kind of collapse? If you're going to look for a big inflation surge, you look at Weimar Germany, that's the best example we have. A hundred years ago, almost exactly, 2024, 1923-24 in there. If you were in the stock market, you kept up. Whatever the Reich went to, somewhere, how many trillions to— I mean, it was just absurd. You can go look at the numbers. You survived if you were in the stock market. However, you had to sell the stock market right around its high because then it just collapsed. David: Right. Bill: That's the problem with the equity game when you're playing this debasement trade. And again, you heard that. That was the big vogue term for a while, right? The debasement trade. Dollar's going down, buy gold, silver, buy stocks, buy the nifty—, buy bitcoin, whatever. Just buy something. Cash is trash. Again, the most absurd example is Weimar. And you did okay. You kept afloat until if you didn't get out right around the top. And I can't remember how many days or points went in there, and then it just totaled. It just collapsed. So that's the tricky part is you're navigating a bubble and you got to— When do you get out? And then what do you go into? And that's what's been going on for stocks for a long time. Even some of the private equity guys addressed that. They were talking about— There was a KKR guys were saying, "The thing we didn't understand, what Buffet understands, how you capitalize your gains." And they were basically saying, "Well, we buy a company, we dress it up, it does real good for a few years, then we sell it off." Where Buffett would get a company, just hold it forever as long as it was generating cash, and then just keep reinvesting in cash. But as you know, over the last, 15, 20 years, he did not perform so well. And that's because he missed out on the big tech boom that was carrying the market. He's a consumer stock guy. David: Yeah. 1919 to probably mid 1923, equities kept you afloat. And then the rate of inflation moved ahead of you and you couldn't do anything about it. So late '23, early '24, if you didn't exit, and you're right, what do you go into next? Where do you go after riding the equity market? Bill: Nobody knows how this is going to play. I remember this a good 20 years ago, maybe, sitting down with one of the most famous private equity guys in New York, and we're talking. What was really going on here is this whole fight. It's been going on since the '80s, deflation and inflation. What's the fight? Back and forth here. Who's going to win? And that's what the markets are navigating right now. And we don't know. We don't know. The deflationary forces are to debt. We know that. And the government tries to inflate past it. And when they can, you get the economy going to stocks or whatever, but now we don't know. We just don't know. So again, and that's what the gold and silver is telling you. We're in a highly uncertain time. Order's breaking down, political order, but social order. We see it here in the United States. We got people openly saying it's okay to break the law. It's okay to storm churches. It's okay to terrorize people. And it's breaking down along political lines. And it's like, "What is this?" And we're not arguing tax policy. We're not arguing how much the tax rate should be or how much fiscal spending or even global warming. We're talking basic law and order that, no, it's okay. As long as you're doing it for our cause, you can do this stuff. Yeah, okay, fine. And they tell you how scared they are. And we see these guys going along with some of this stuff, which is absurd. You know they're scared and that's where we're at, and that's where price of gold and silver where they're at. David: Yeah. I mean, how close are we to civil unrest becoming civil war? Bill: Oh, you got it. You got it in sectors. I mean, remember they had the riots in Paris? And that's over a decade ago. They came out and said there's certain areas police cannot go there. Look at Portland. Look at these cities in the United States. You get the mayors and governors going, "That's fine. No, no." There's federal law. It would be as if you said, "I'm not paying my taxes." Greenwich, Connecticut, "We're not paying taxes anymore." And the state of Connecticut, "Yeah, and we're a tax sanctuary. We're not going to let the revenuers in here. They're not going to come here and take our stills. That's it." And okay, that's fine. That's what people don't understand. Once you say it's okay to disobey and break certain laws, who gets to say what laws shouldn't be sacrosanct? Which ones are okay to break? Which ones must we adhere to? It's already here. It's already here. And the cold civil war here in the US has gone hot. It's just there. Just look at the big cities, it's there. Again, that's what gold and silver tell you. This stuff's all falling apart. Because you've reached the limits of decency, or the politicians broke. Again, I can't believe the stuff these guys are trying to say it's okay. I mean, you got the guys in Minnesota there, the govern— It's okay to storm churches. And then the guys twist, "Oh no, the FACE Act doesn't—" It specifically says you can't do it, but no, no, that's okay. You got judges the same way. Look at the Supreme Court judges, some of the stupid stuff they're saying. That's what's going on. I mean, people got scared in the '60s with the unrest of that, and that was because we had such a nice orderly world after World War II. This is far beyond what was going on in the '60s. Now, we had bombings and stuff going on with the radical students and that, there was a little bit more of that violence showing up. But as far as the crime— But the political, that's the problem. With these politicians openly inciting violence and the stuff they're saying it's okay to do, and it's okay to ignore laws and we're going to ignore the laws. And we don't care if it's a federal law. We're going to put you in jail. You get the Jefferies there saying, "When we're in power, we're going to put all these people in jail that enforce the federal law." Just think of that. These things warn. "All you ICE guys, we're going to put you in jail for doing your job and doing what the law said to do." Think about that. That'd be like the IRS attorney, every IRS agent, I'm putting you in jail because you took people's tax returns. No difference. That's where we're at. And you see what's going with New York with this guy, that's again the big private wealth is, they can talk and they can whistle Dixie and they can act whatever, but they're scared. And that's what gold and silver is telling you. David: How do you navigate the gold silver market when the rules, at least in the futures, can be changed instantaneously? Bill: Well, it depends on your perspective. Are you a trader? You worry about it. If you're levered, you worried about it. That's why Buffett was never levered with his stuff. And maybe some little here and there, but by and large, that's with the big private wealth. You buy it, you either have it or you've got it stored somewhere, and you don't care because you're playing a different game. That's the problem, is you got hedge funds, you got the big banks, they're in here playing, gold and silver, and then you got the speculators in here. I mean, that's why I think what I did with my stuff is my stuff, we're with speculation, some of the paper stuff or whatever, I got rid of and I'm just holding the physicals now. And, you know, just hold it because I want silver and gold and see how this thing plays out. But you're right. The paper stuff on that can just, as you saw when they did the rates on it, when they changed the margin, it could get vicious. And they will do it. You know that. You see it in the currencies, you see it when they rig the markets. It's vicious because they're trying to scare you out. They're trying to get out. They did it with the silver and you saw how fast it bounced back and went to new highs, because this isn't just the Hunt Brothers where it was all speculation. David: No. No, it's bigger than that. Bill: This is different. David: It's much bigger. Bill: If you had a little group, there's some foreigners involved and they were rigging the market. This is far broader. This is far different in here. So, you could see they tried to shake out the gold, silver a few times now. And it's just keep plodding, because, for reasons we've been talking about this morning. And you're right. You can shake the speculators up here and there, but this is different. This is the world order is breaking down. And it's breaking down in China. It's breaking down. Russia's got problems now. And that's what makes everybody very dangerous situations. Europe's gone. I mean, forget Europe, and so I'm watching these people comments from Davos, they're all beating their chest. It's like this Danish [unclear] about, "Oh yeah, you want that market? We'll show you. We're going to sell our Treasuries." "How many do you have?" "100 million." You mean, 1,000 bond contracts? Come on. You have locals down there that trade multiples of that by themselves every day. Stop it. And people sense that. People sense that this thing's falling apart. That's why you say, "Okay, we're not going to obey no law. Hell with you." You're breaking into, like, the Civil War thing. "We're not going to obey the law." You can outlaw slavery, "We don't care." And you say, "We don't care what your federal law is. In fact, we're going to go out there and go after ICE agents and break the law." At least that's the same thing if you start saying, "We're going to go after Treasury agents. We're going to go after IRS agents. We're going to go after," you know, whatever. "I don't want to do this." David: Yeah. I think the global nature of the changes, I mean, we're talking about geopolitics, we're talking about political issues, fiscal issues, not just with a country, but it creates a demand dynamic for gold and silver, which is far beyond what the CME can manage. Bill: But it is the politics. Gold is more sensitive than politics. And so that's the problem you've got here, especially in the United States. I mean, you can go on the internet and find that before Trump, you got Obama, you got Clintons, you got Biden all screaming, "You cannot have immigration—" You got Obama bragging, "I deported three million people." What changed? What changed? Not only to the fact that they changed 180, but now they're going lawless to do this. Why? Because they're scared. Something scared them. Yeah, it might be it's Trump coming in. "Holy smokes. If people would elect a guy like that, what do we do? We got to ensure our political position." That's all it is. It's the Democrats trying to ensure their political position. And with all this stuff going on, yeah, obviously Trump sucks the oxygen out of every place he goes. But think right now, what Republican leaders are up there speaking out and giving some guidance what to do? Thune, the leader of the Senate, is he saying anything? These guys are scared to death. They don't know what to say. That's like Schumer. Leader of the Democratic Party. He said, "I'm the protector of Israel." Now he's groveling to the people that are antisemitic. And everybody knows it. They say, "Okay, you're afraid of getting a primary challenge." That's what's going on. The politicians are scared to death here because it's such a volatile situation. And the wackos are out there. And the wackos got a big megaphone now. You're seeing it with all these demonstrations. And everybody knows it's organized. Everybody knows— I mean, it's like all this stuff going to Minneapolis. The people in Minnesota are going nuts. They're saying this is basically Minneapolis and it's something like 60% of the protesters are not from that area. This woman got shot here was recently moved there, but these people were being imported. It was no different here in Wisconsin where they had the riots with the Floyd riots in there. These people are, a lot of them are professional paid protesters, and a lot of the money is coming from China and Russia and Iran, whatever. Since the Bolsheviks came in over 100 years ago, they were clear that they were going to use race to divide America. Now what they're doing is they're using the women. That's if you go look and see these out there and people say, "Why aren't you working?" "Well, this is my job. I'm paid to protest." "You can see that you've got elderly out there protesting, you see them going to the different homes and that paying these people to come out and protest. Who's funding it? David: That's a good question. Bill: Again, that's why. I'm sitting here, I'm looking at February gold, it's up $171 right now. Silver's up almost 7%. So it's up over six bucks today. And there's reasons for that. It doesn't happen by accident. And you can get spikes and you've seen that. You get a little run that goes for a month or two or whatever, but you're getting a little bit of the blow-off phase now. But you go back and look at the charts over the last decade, it's a steady, steady, steady buy. And I do think that 2008 was a seminal event. It was gone. The Western financial system was gone. And they cobbled together and whatever. And then to get rid of Trump, maybe, they did the COVID in 2020 and they shut down economies, which was even worse than what happened in 2008 to some degree, because you put people out of work and businesses out that could never come back. And you had people just quit. How many restaurants and small businesses in our area alone where the people say, "That's it. I'm done. I made my money. My kids don't want to run the business anymore, so I'm closing the restaurant. I'm closing the shop. I'm closing the printing." Just boom. And that's when you see, of course, you see the mall problems now, the strip malls. They're gone. Where are we going to get the businesses for gainful employment for people? That's what's going on. There's something has to be done here. And Trump's throwing everything at the wall, but I don't think he's came up with the right mix yet, nor does the market. David: What do you see developing between here and the midterms? Bill: We see the chaos everywhere. And usually when you have chaotic systems, you have to say, "What's going to simmer them down? How do you turn the temperature down to stop the chaos?" And normally it goes until it blows up somehow, and that creates the new equilibrium. And Trump's doing too many things. That's his problem. And the people are getting upset. They see all this foreign stuff and whatever and they don't see, how does this benefit me domestically? There's no telling. Again, the population is crazy in some sectors. It's become cultish. Let's face it. There's cults developing out here and it's totally irrational. And you don't know how that's going to play. But what it looks like to me is you're trying to read the tea leaves here. With all the crime and stuff going on, and we know all the conspiracies and the unconstitutional acts that were done over the last, whatever, four to eight years. And you have people screaming, "Fire Bondi, she's not..." I mean, Biden had arrested, you got a list of people that Biden prosecuted, and you're doing nothing. But when you listen to John Solomon, who's been very right for 10 years and very connected, he's saying what's going on and the reason it's so quiet is they're building a massive case, massive conspiracy case against the deep state. You go all the back to the Russian— All that, all that stuff, Clintons, Obamas, about that whole thing. Those are very complex, hard things to put together. Anybody who's a prosecutor will tell you that. Very difficult to put together and you've got to be very, very careful how you put them together. And that might be, if you're looking for the midterm surprise, Trump thought you could get the economy going. I don't think he can do it because there's nothing organic developing. It's all, "I'll do this, I'll do that." Well, you're basically a socialist, Donnie. You're either a socialist or you're fascist. "I'll buy Intel. No more, you don't have to pay your student debt. I'll cut rates." They should be negative. When stocks go up, we should cut rates more. That's just stupid, saying stuff like that. That's counterproductive and destructive. So the only thing I think that the Republicans are counting on is they're going to spring this massive conspiracy case against the elements in the Democratic Party, what had gone down. The other thing is when the violence, when they went into the churches in Minnesota and started disrupting, that crosses a threshold, especially with the women. The women are the ones that are going to be determining the election. That's their swing voters are the women. The single women vote for Democrats. The men vote for Republicans. It's the married women, the suburbanite women are the swing voters in elections. And if you get too extreme, don't know. Again, but this is just such a highly toxic and chaotic brew right now, you can't tell. David: Well, like I said, there's been a lot happening since we talked in October, and we'll reach out and touch base in terms of market dynamics, liquidity dynamics, again before too long. Bill: Well, they're pumping like crazy. And you see that all these guys are in the same soup. They don't want to stop the game because they don't know what else to do. David: As we see some changes within the financial markets, bonds and currencies seem to be more sensitive. Gold is sending a very clear signal. What's your advice if you're sitting down with your kids and grandkids? What would you say today? Bill: You need to be careful. You've just got to be careful. You got to be liquid here and you got to have your hedges against that liquidity. And I think I said that the last time. Short term, like Buffett, he's liquid, but you got to hedge that liquidity. And you do that with gold and silver. Again, that's what the market's telling us. That's what the big private money's doing. They want to be liquid and they need to hedge against the chaos and possible currency destruction. Everything's overvalued. Everything is overvalued because there's so much liquidity in the system, and you got to go somewhere with it. So that's kind of the bet here. Short-term instruments, so you can move quick when you have to as you get new information and events unfold, and then you need to hedge against that. Gold, silver, platinum, copper, whatever. Like you said, a real asset. A real asset in there to hedge the liquidity. David: Well, Bill, we appreciate your time. Appreciate your insight. Bill: Sure, sure. Anytime. David: You bring a real-time trader's perspective and layer in a lot of historical context, and we're always appreciative. Bill: Anytime. Anytime, guys.

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Well, you've been listening to the McAlvany Weekly Commentary. I'm Kevin Orrick, along with David McAlvany and our guest today, Bill King. You can find us at mcalvany.com and you can call us at 800-525-9556. This has been the McAlvany Weekly Commentary. The views expressed should not be considered to be a solicitation or a recommendation for your investment portfolio. You should consult a professional financial advisor to assess your suitability for risk and investment. Join us again next week for a new edition of the McAlvany Weekly Commentary.

• Gold & Silver Set Up Could Lead To Much Higher Prices From Here
• Is Trump Overplaying His Hand With Powell?
• Will Loss Of "FED Independence" Scare Off The Foreign Investors?

The McAlvany Weekly Commentary January 14, 2026 "We're missing upside. That's what they're thinking. Cash is trash. We're missing upside. And yet missing upside— There's no recognition that a critical financial market signal—which I take the price of gold to be, a critical market financial signal—it's howling for attention. Central banks and institutions are front-running 2026 headlines, which will, in the fullness of time, flip the retail investor script." —David McAlvany

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Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick along with David McAlvany. David, we just came out of our meeting and we were talking about what you were looking for last year to confirm that we were in a bull market in precious metals. I'd like you to review that with our listeners, if you would. David: Yeah. As the fundamentals were developing, early 2025, we were looking for a couple signals, things that would offer confirmation of a very bullish trend. We had talked at the time about the gold/silver ratio getting away from triple digits and shrinking towards levels that we have today. That was one thing that had not changed in the early stages of 2025. The precious metals miners remained very undervalued relative to gold— Kevin: Right. David: —and relative to the S&P 500, very little movement in the miners. A little bit in 2024, but as we began 2025, we wanted to see an increase in interest there, and then a return to ETF demand where investors allocating to gold and silver as an asset allocation choice, not necessarily with a preference for product or for delivery, but just looking at their allocation pie and picking up a few more percentage points allocation to the metals. They generally do that in products like GLD and SLV. Kevin: And that was— I mean, one year ago we were saying, "it still doesn't really look or feel like a precious metals bull market," but now it does. Even over the last few weeks, we're starting to see quite a difference. But what an incredible year. What are you still looking for? David: Confirmation from the gold/silver ratio really only took place in the fourth quarter. Kevin: Okay. David: So, if you're looking at the maturity of the trend, that confirmation came in the fourth quarter. The miners, they were chugging along pretty healthily all year long. And ETF demand, while it was there and certainly substantive, has yet to exceed the 2020 levels in terms of tonnage. We're, on a global basis, down by 10% in terms of where we were in 2020 versus now. Of course, in nominal terms, it's higher dollars invested but less ounces consumed. We haven't taken out those numbers from 2020. The precious metals miners, if you look at GDX, GDXJ, the ETFs that capture those exposures, they actually have seen a 20% reduction in shares outstanding— Kevin: Isn't that amazing? David: —in 2025. So— Kevin: As much as they rose, you've got a reduction in the ETFs that hold the mining shares. David: Correct. In the futures market, where people tend to be more short-term speculative in their positioning, we have yet to— We could see another 50 to 100% increase in gold, silver, platinum exposures to take out the highs from a few years ago. Kevin: I think you've mentioned that we really have not seen what Bill King calls the army ants. We don't have the generalized investor in this market yet. David: That's right. I got to spend some time with an investment committee that I'm on this week, and everyone was heralding the double-digit returns of the S&P and the Nasdaq and the Dow. And there was not a single mention of the metals, not a single mention of any commodity, and at least some mention of emerging market and international stocks, which did outperform, as we mentioned last week, Kospi being north of 70%, Bovespa, DAX, CAC, all outperforming last year the S&P, Dow, and Nasdaq. So, there was a nod towards that outperformance, but it's pedal to the metal. Time to get more fully invested. We're missing upside, and even with my concerns expressed about valuation metrics, cash building on the sidelines at Berkshire Hathaway, Marc Rowan at Apollo raising cash in advance of market turmoil, as he noted in an article in Financial Times, December 21st, so it's been a few weeks, but no concerns, no concerns. And Kevin, frankly, when there's no concerns in the market, there's no reason to migrate or shift dynamics within a portfolio structure. So 60/40 still reigns. Even though the model is dead, the memo was not read. Kevin: Yeah, but you were talking about 60/20/20, and brought that up to the group, and you had some critical questions for them. David: It's just irrelevant. Nobody cares about gold. They care about yields that you can predicate off of an increase in products sold and current income from fixed income. It's all wonderful. It's all beautiful. It just all requires a normal, functioning market— Kevin: Yeah. David: —to carry forward. And at this point, to extend the trend requires even more liquidity, which we may well get, but that doesn't guarantee that it's sustainable. Kevin: So, you don't see in the normal portfolio, the larger portfolios, gold really included at this point. But let's talk about the volatility in the markets because there seems to be a move toward resources in a pretty dramatic way. David: Yeah. I think volatility continues to be a defining feature of the precious metals, of the industrial metals, of course, with a strong upward bias. Daily price swings now 4 to 7% are becoming a routine dance. Last week, nickel traded up over 10% in a day. Copper, aluminum also volatile, but with the upward bias. In energy, natural gas last week was lower by 12.4%. Volatility is what I'm getting at, sizable moves in different directions. With Dr. Copper at recent all-time highs and continuing to run hot, is it a surprise? Is it a surprise that the Atlanta GDPNow forecast, on its most recent posting, January 9th, sits at 5.1% annual growth rates expected for this year? That's the rate that it's running. Of course, the GDPNow, it shifts rapidly, but as an indicator of where things and how things are running hot, it's impressive. Kevin: I'm thinking liquidity here, Dave. You often watch what liquidity is doing. Manipulation of interest rates can sometimes increase liquidity in the market, but there's no lack of liquidity right now. David: No, we've got QE5 or 6, I've lost count, adding 40 billion in liquidity on a monthly basis. Kevin: Why count? Why count? David: Yeah. Kevin: Yeah. David: I mean, we could have called it QE1, because it never really went away. Kevin: Right. David: Mortgage-backed securities, the proceeds from those that are coming due, are, with that 40 billion, being recycled back into short-term Treasuries to buy down the interest rate. They want to stimulate growth, and they're doing that. You can see it in the GDPNow figure, you can see it in Dr. Copper trading as hot as it is. 30-year fixed rate mortgage sits at 6.16%. Kevin: Making things very unaffordable for people trying to start. David: It's more affordable than it was when it was peeling off towards 7%. And with Fannie and Freddie likely to get 200 billion in stimulus dollars to increase lending, maybe you see those rates come down. CPI headline number this week, 2.7%, which barely slipped. And then you've got 2.6 if you're talking about core. We're still closer to 3% than we are 2. Kevin: Right. And the Fed's goal is a stated 2%, yet they're still talking about trying to lower rates. But housing affordability, with rates rising from almost zero four or five years ago to where we are right now, people can't afford houses even at 6.6%. David: Housing affordability is being tackled via Fannie and Freddie and the suggested policy shifts to limit institutional ownership of single-family homes. It felt like a trial balloon, the 50-year mortgage proposal. I think it was more a soft suggestion than a proposal. But we'll see. If things like that ultimately get more people in housing, it doesn't mean that housing is more affordable— Kevin: Right. David: —it just means that you're structuring your payments in such a way that, from a cashflow standpoint, you're okay. I'd be very cautious on a 50-year mortgage if that ever comes into play. Do the time value of money and figure out how much money you're actually paying for the house. I was shocked when I was 16 years old. We were in the process of moving to Durango, and it was my first lesson in mortgage math. We looked at what the family was paying for our house in Parker, just south of Denver, Colorado— Kevin: Right. David: —10 acres. It was a beautiful place, off of Democrat Road. You'd belong there, really. But we sold the house, we're the last in the company to sell. And I looked at the mortgage documents, the disclosures, and I couldn't believe the estimated disclosed total price after paying interest at a modest number over 30 years. It was more than twice the asking price. And I thought, do people know what they're doing? You do the time value of money on a 50-year— Kevin: Oh, what is that? Triple, quadruple? David: Three to four times. Kevin: Yeah. David: So, $500,000 home might be $2 million, all in. Is that how you want to spend your savings? The affordability issue—And I think this is the reality. Trump knows that he can use Fannie and Freddie as something of a subsidy piggy bank. He can share the wealth and will do so. Kevin: Do you think he's doing that also thinking about November? David: Of course. Kevin: Coming up? David: Of course. Kevin: Elections? David: Yeah. It's not clear what he's going to do with the institutional ownership of single-family homes. Best estimates are that they own 1/2 of 1% of the total in the US. 106 million homes, I think is the estimate. Kevin: It's still a pretty good block that's off the market for the— David: 530,000 homes. Kevin: Yeah. David: Is it going to be a disgorgement of those homes where they hit the market and depress prices in the regions that they're in? Or is it just a cap? You own what you own, you can't own anymore. That's not clear yet. We got Fed chair Jerome Powell facing criminal charges— Kevin: Right. David: —for what Trump sees as an egregious cost overrun on a refurbishment of the Marriner Eccles building. Kevin: And Trump says it's not political, but boy, timing-wise, it sure feels like he'd like to have lower interest rates from somebody. David: Of course it's political. We saw the game played last year as he's in the press, raising the temperature, saying, "You got to lower rates, you got to lower rates, you got to lower rates." And oh, by the way, what's this project? I estimate that you're going to spend 4.1 billion and the price tag was supposed to be 2.5. Well, we're dealing with the president's estimates of what he thinks the cost will be and what he thinks the cost overruns will be. Nothing's been settled. So, always for us, less of a political judgment and more of a, what are the ramifications in the market? Kevin: Right. David: And at least the stock market could care less. The stock market responds blithely to the news, trading higher. Where you did see some sensitivity was with bonds and the dollar, and of course precious metals, reflecting a more contrarian concern— Kevin: Well— David: —because your equity investor just says, "Look, there's enough liquidity." Kevin: Well, let's look at that because the equity investor thinks short, the bond investor is usually thinking long. So long term, they're seeing the inflation built into this, don't you think? David: I think when you watch the precious metals in the bond market and the dollar market all responding in sympathy, it suggests that Fed independence is the key issue at stake. Trump may have overplayed his hand on this one. The markets are watching to see if one of the two Kevins, that is Warsh or Hassett, comes into the chairman role early to influence fed funds to the levels that Trump prefers, again, closer to 1%. The extraordinary notion that rates should be or need to be near zero with Dr. Copper at all-time highs, with the CPI remaining untamed, with GDP statistics crossing over and above 5% suggests that the Oval Office bias for growth is midterm-focused. This is about the election. Kevin: But Trump is used to managing things, sometimes by force, we saw that with Venezuela, so yield curve control. Does he think that they can possibly just manage that yield curve and control the bonds? David: Yeah. If you get past November and you get to paint the tape to the degree that you can, you're addressing policy initiatives—that gives you the latitude to address policy initiatives in the back half of your term. Of course, there's nobody in the equity markets that's going to be upset by rates coming lower. It just doesn't matter. It doesn't matter that you're getting market signals that things are already hot: GDP, Dr. Copper. These things are saying, not a good time to be lowering rates. Ordinarily, you could take the current valuations in the equity market as a signal of negative future returns in your general market equity indices. Ray Dalio suggested as much. Not negative returns per se, but low single digit returns, and that's before factoring in inflation, so in real terms probably negative returns. But these markets, Kevin, they remain amply liquefied, artificially stimulated, and solidly in the political rubric for GOP success in November. Liquidity remains a critical element. That's really the question as far as the equity market's performance in 2026 is concerned. Will markets remain liquid until the fall? Kevin: Well, and will everybody still be on the AI narrative, right? David: Yeah. Kevin: Artificial intelligence— David: Absolutely. Kevin: —it seems to be the catchphrase. David: Will the AI narrative continue to keep a rose-colored lens in place for investors to perceive unlimited upside in tech? And we'll see. Q4 2025 and Q1 of this year, reporting from the big AI names, I think that's a risk factor for the narrative. You've got bond market moves, a steepening yield curve, fiscal concerns priced into long-dated debt instruments. That could also upend the November political aspirations. So there's a number of things which may have already run their course, or may, in fact, with ample liquidity, continue in terms of momentum. Kevin: Well, you brought out that Trump may have overplayed his hand. Is it the bond market that's going to show that with the Powell thing? David: Two things. Once the case is in court, I think we'll see, what is the evidence and what are the claims? We do have this innocent until proven guilty. Where's the proof of malfeasance or of criminal activity? I think to myself, gracious, I've done a number of renovations on our house, and I'm glad I'm not being accused of criminal activity because I went over budget. Everybody assumes that there's a 10% to 20% fudge factor in there. You have to factor it in because stuff happens. There's delays. There's time that goes by, and because of that, prices can go up. Or you made mid-course corrections and you decided you wanted something different, and you had to take it out and put it back in, and there's cost overruns. Kevin: You know what I'm picturing right now, Dave, is you and Trump walking in hard hats, white hard hats in your renovation, and you being judged by Trump, and he says, "This is going to be criminal if you overrun." David: Now, the reality is, this was a project with oversight from Congress, so if you were doing something recklessly without permission, that's one thing. But with congressional oversight— I think that's one of the ways in which he may have overplayed his hand. The other is this issue of, to what degree is he pressuring the global view of our central bank into the grave, where, if we lose credibility, if that notion of independence in central banks is called into question— Kevin: It's an illusion, but if we lose the illusion. David: The illusion is very important. It's very important. So if you lose it, what are the knock-on effects for the dollar? What are the knock-on effects for the bond market? Kevin: You had mentioned the Kevins. Are both of those guys, whichever one is put into place instead of Powell, possibly they're going to be loose on monetary policy for Trump? You think they'll run it hot? David: They only made the shortlist because they've basically said, "We'll do your bidding." They've already— Kevin: Which is politicizing— David: —made every indication, which is one of the reasons why it's not a question of if, it's a question of when you begin to see more pressure on the long end of the curve. This is confusing to me because Trump's push to go after Powell, particularly as it relates to the bond market— If you assume the Kevins either get started in May—again, either Hassett or Warsh—if they get started before May or they get started in May, if legal proceedings spook Powell out of the chairman role, the debasement of the dollar is likely. So capital flows out of bonds are likely to exaggerate a steepening yield curve, and that financial tightening would most likely put a damper on equity performance. Kevin: Unless yield curve control works. David: Think about the relationship between the asset classes. Policy choice on the fed funds rate, negative impact to the dollar, that creates some pressure, some pressure within the fixed income markets. That pressure reveals itself at higher rates. Higher rates ultimately have an impact in equity performance. So this is where it would seem that Trump's assumption of yield curve control— Kevin: High inflation. David: —Treasury purchases, and influencing the fed funds rate by edict, subsidizing mortgages with an added $200 billion, it ignores how the bond market actually works, and it further ignores how influential those financing costs are to stock market performance. Kevin: So a lot depends on the illusion of Fed independence, is what you're saying. David: Absolutely. They are independent. They're just conveniently political. So if you called them and said, "Hey, Jerome, move rates," he's going to say, "Not my job to take your call and do your bidding." On the other hand, and we've seen this not just with Powell, but with previous Fed chairman— Kevin: Virtually all of them except Volcker, maybe. David: —there's political bias expressed. This is a human nature issue. At this point, if I were on the Fed committee and I was watching Trump pressure Jerome Powell, I probably would not vote to lower interest rates because the human nature side of me is like, "No, the hell with you. Are you kidding me?" Kevin: "You don't tell me what to do." David: "You don't tell me what to do." Maybe this is like a return to my 14-year-old self, but, "You can't tell me what to do. It's not your job to tell me what to do." So he's actually creating a setup where human nature is going to be defiant. Kevin: This is why you're not on the short list for Fed chairman, Dave. I know you were looking forward to that. David: It's so funny just to see what the expectations of the president are. He loves sycophants. Absolutely eats them up. He had the oil executives in to talk about who's going to spend what on Venezuela. The gentleman from ExxonMobil is like, "At this point, it's uninvestible." Trump's response is, "Well, then fine, I'll get 25 other people to put their money there, and I'm not going to even give you this offer. You don't get to play in my sandbox," and his sandbox is Venezuela. So it's just fascinating. If you don't, "Oh, sir, how can I serve you today?" Kiss the ring, kiss the ring, kiss the ring. It's surprisingly infantile. I love the fact that he can get business deals done and he does it in sometimes a very brusque manner. In some respects, he's one of our most successful presidents, having pushed policy initiatives well past what most people in DC would consider a normal timeline. It's not diplomatic, it's not well polished— Kevin: It's happened quick. David: —and yet it's done. On the other hand, it is this, "You're going to do what I tell you to do, and you're going to like it." Kevin: Ask a Venezuelan bodyguard. Go ahead and ask if that works. David: Right. So if the bond market becomes convinced that Fed independence is at jeopardy and institutional credibility wanes, a primary reason to buy US assets or hold what you already own, that becomes dubious. I think this is where he's got to be careful. I am confused because he wants to control rates, and he thinks that that is meaningful on the short end of the curve, not realizing that by controlling those rates, he may set a daisy chain of things in motion within the financial markets that are absolutely the opposite of what he wants. Again, I don't know that he understands the interrelationships. Kevin: Well, do you think he needs to be aware more of keeping the foreign investor in? With this devaluation of the dollar, it's not pretty for the foreign investor. David: It's particularly sensitive there. We have, as of last week— The third quarter Z.1 report came out last week. It shows the inflows of $345 billion foreign capital into our debt securities. This is the rest-of-world assets coming into US debt securities, $345 billion for the quarter to a record $15.7 trillion total. Treasuries increased by 142. Corporate debt, purchases from overseas investors, jumped by $150 billion. Again, this is for the quarter. Equities and mutual funds gathered the largest overseas audience, playing for growth, looking at the AI trend, knowing that we dominate that space outside of China, $1.597 trillion in inflows for the quarter. Kevin: In equities? David: Equities and mutual funds combined, but still equity exposure in one form or the other, taking the one year growth in equity inflows to $3.53 trillion, $3.5 trillion. New record, foreign exposure, US equities, $21.23 trillion. Appreciate our friend Doug Noland, who always goes through these numbers and distills them. How do you keep investors happy? Positive returns. Kevin: Right, which they've been getting. David: How do you keep overseas investors happy? Kevin: They're less positive returns, but they're still getting them, with more currency value. David: Well, positive returns post-currency conversion. Kevin: Exactly. David: Right? So preferably more positive than other geographies. So not only do you need to come home after you do the currency exchange back to your own currency, now you've got to look around and say, "Okay, what I've got on a net basis, how am I doing?" If the dollar's up, well, it's a double benefit. If you've got positive equity returns plus the dollar has appreciated, you're bringing home the money. Kevin: Right. David: But if you have a decline in the dollar, then that mutes your equity returns, and your net number, how does it compare with how you could have done elsewhere? Now, all of a sudden it starts to advertise poorly for the next year's allocations. Kevin: Do you think the rule of law is a draw for international investors coming to the United States? David: Of course. Yeah, for sure. Because I don't think all geographies are created equal. If you said, "Well, you could invest here and get 20% here and get 40% here and get 120%." Well, if you could get 120%, but the government could also take 100% of your assets because there is no appreciation for the rule of law— Of course, the rule of law remains an anchor for overseas investors in the United States. Like we said, not all risk profiles are the same, but those overseas investors have to remain convinced that we are practitioners of the rule of law. And that's again where: don't overplay your hand because institutional viability and reputation have a lot to do with how people perceive the rule of law. And if the law, like Frédéric Bastiat describes in his book The Law, becomes a cudgel, becomes a baton, a weapon, then the reputation for the practitioner of the law is in question. Kevin: So the institution of the Fed, we talked about it being somewhat of an illusion, but you could spook the international investor if it loses credibility. David: Yeah. Again, I'm going to take the hard line that they do have— Kevin: Independence? David: —independence. Kevin: Yeah. David: But again, political independence is different than having political bias expressed. Kevin: Right. David: And it's really, do you take the call and do you do what you're told? We saw that under the Nixon administration where you took the call and you did what you were told. Arthur Burns was one of the worst Fed chiefs ever because he had no backbone. Kevin: He was a tool of the President. David: Yeah. Didn't mean that he didn't have political bias in different ways, but he was also malleable, manipulable, and controllable, and that's the independence piece. So I expect Democrats to vote Democrat, and to be influenced in their thinking. I expect Republicans to vote Republican, and to be influenced in their thinking. Their biases will be expressed in their policy preferences, but that independence piece is really a different issue. So compromise institutional credibility. If you do compromise institutional credibility, you are challenging certain assumptions about investing in the US. If you compromise dollar stability and you raise a key question for these holders of US denominated assets, then the question becomes, is the juice worth a squeeze? Within the fixed income markets, if you look at this last year, as an overseas investor, you didn't know this at the front end of the year, but by the end of the year you had signed on for negative returns. Kevin: Yeah, because the dollar lost close to 10%. David: Virtually no fixed income instrument cleared the hurdle created by the 9.6% drop in the dollar. So what'd you get paid? 3%, 4%, 5% if you were in high yield, 7%, 8%. And so you took extra risk for extra yield and what'd you get for it? A negative real number. So you had to speculate in tech for the performance numbers to be compelling. And they were compelling last year. Off the April lows, AI provided a compelling growth opportunity for overseas capital. And this is my point. Combine a weaker dollar with subpar equity returns, and you're more likely to have a tsunami of capital exiting US dollar denominated assets. So the rest of world assets currently deployed in US markets, if you're looking at fixed income, all debt instruments, and equity, 64.12 trillion. Kevin: So you need a very large door if you're going to exit. How wide are the exits? David: That's a lot. How wide are the exits? Is there sufficient domestic capital to invest and replace an overseas investor who has a currency exchange hurdle to overcome to get a net positive return for the year? What I'm getting at is that dollar debasement through QE and compromised institutional legitimacy at the Fed runs the risk of triggering capital outflows. I don't think equities or bonds are prepared for what we're going to call the repatriation trade. Back of the napkin estimates of total stock market capitalization added to US bonds is around 105 trillion. So let's be generous, round up to 110; 64.12 divided by 110, 58% of US publicly traded assets, both fixed income and debt, are held by foreign capital. So 58%, if you give them a motivation, again, we come back to why. Kevin: Six in 10 investors—if you just want to make it a number—six in 10 are foreigners. So if they leave— David: Dollar debasement through QE becomes consequential. Compromising institutional legitimacy and the confidence that people place in the rule of law becomes consequential. 2025 brought US dollar currency risk into focus for eight billion people. 350 million people living in the United States wouldn't know that their currency traded lower by 9.6%, but every overseas investor knows it. Your life revolves around sterling or euros or yen or RMB. The currency math is second nature. So you ask how wide are the exits. In stocks and bonds, I don't mean to neglect domestic outflows. I just want to frame how much capital is potentially more skittish and why there's an extra motivation. You get a little market downside, that's one thing. But to illustrate, a 5% loss in equities or in a bond portfolio is nothing to be concerned with for a domestic audience. But if you combine a 10% currency loss with a 5% market loss, 15% is something more people pay attention to. Kevin: Well, and oftentimes we say, "Okay, well, let's say they do go. You've got to figure out who's going to buy those stocks." We've talked before about how markets sometimes can have this vacuum that occurs, where you have people exiting but there's really no bid on the stocks for hundreds, maybe thousands of points on the Dow. So who would be the buyers? David: Yeah, the bid is provided by the willing buyer. There has to be enough willing buyers to match the willing sellers or the bid begins to drop. In any bull market, you want to identify likely buyers. We saw this with the growing argument for cryptocurrencies. Well, but as soon as the institutions step in, then we're going to have another run. Well, as soon as we have central bank adoption— And it's a prognostication about how large the burgeoning crowd of demand is going to be, and then beginning to predicate what the price is going to be to accommodate that demand. In any bull market, you want to identify likely buyers. In any bear market, to appraise risk, you should also identify the likely sellers. Kevin: Yeah. And you said 2026 could be a major repatriation trade. So we have to have likely buyers or we're going to have a pretty substantial downturn. David: So that's what I'm getting at. If bull dynamics stay in place, then foreign capital will continue to flow in. Introduce bear market dynamics and the majority of capital invested in US assets—we've already just stated—is not domestic capital. 58% is foreign capital. 2026 could well see a major repatriation trade, intensifying outperformance of international equities versus US. The AI trade needs to hold. If it doesn't, one of your primary draws to the US markets in 2025 could reverse. Kevin: Okay. But the money that's been coming in, you were talking about trillions coming in. It's mainly toward AI tech? David: Yeah. I mean, the majority came into equities, and I think it skewed—at least in terms of the index allocations—toward five to seven names. So if you're looking at global capital flows into the US, it was not done on a proportional basis. There was a higher percentage that went to the success story. So momentum feeds momentum. You just have to be mindful of what could put it into reverse. That's why I'm saying these policy decisions are consequential for the dollar and may very well be highly consequential for both the bond market and stock market because of the concentration of foreign capital in US markets. Kevin: So with the dollar losing almost 10%, you would think that all these trillions coming into the equity market, that's the demand for dollar-denominated assets, Dave. Why wouldn't the dollar actually strengthen during that period of time? David: Yeah, this is a fascinating setup. It's one of the reasons why I've got some currency concerns in 2026. The inflows through the end of the third quarter: just shy of $2 trillion for the quarter; smaller number relative to the full year. Did the dollar recover in the third quarter with a $2 trillion influx of foreign capital? Kevin: And it did not. David: No. And multiples of that two trillion for the full year, was it enough to boost the dollar? With a massive amount of foreign capital coming in, there's still dynamics afoot that pressured the dollar lower by 9.6%. Isn't it reasonable to assume that if domestic policy choices drive the dollar lower this year, that repatriated capital would exaggerate that decline? Kevin: Isn't this interesting, Dave? This is hitting me, because dollar recycling has been the way we have supported the dollar after we went off the gold standard, especially through petro dollar recycling. And right now, what we're saying is we've got dollar recycling going on in the means of coming into equities. It's not working. The dollar is still declining, so you wonder what's going to catch this. David: Not enough capital came in in 2025 to fix the currency problem. Kevin: So do you think gold and silver are signaling that there's not a net beneath the dollar right now? David: Yeah. I mean, we don't know how the dollar will trade this year, but I think gold and silver, other hard assets in 2025— So last year may be a harbinger for what 2026 holds. Kevin: And those are central banks, mainly, buying. David: Central banks, Asian investors, dominated demand for the metals up until the fourth quarter when US institutions and individual investors finally started coming into the market. It's truly amazing that we have reached these price levels, 4,600 for gold, $89 for silver, with so little US investor activity. Kevin: Yeah. It's almost like you have crickets in the general investor market right now? David: Yeah. Few investors understand this dynamic, where futures markets are nowhere near peak activity. Global ETF holdings remain 10% below peak holdings dating back to 2020. GLD remains 21% below peak holdings in ounces. Precious metals miners, the ETFs, have close to 20% shrinkage in shares outstanding. Not a sign of record demand or of market exhaustion. Precious metals miners are looking at margins of $2,600 an ounce in the fourth quarter. Kevin: Yeah, huge profits. David: And as Fred Hickey points out, 2,660 was the price of gold in Q4 2024. One year later— Kevin: Right. So the margins right now are, yeah. David: —the margins are now equal to— Kevin: The price that it was. David: —the previous price. If you can let that sink in. Now, that number is profit. So demand for GDX, GDXJ, reflected in shrinking shares outstanding, down by 20%. This is not an overowned market. It is an expensive market. It is not an overowned market. Kevin: I love the way you say that because so often right now we're being asked, do we take our gold and silver and cash that in and just enjoy the ride? But this setup is amazing, Dave. The people who have been buying don't really have anything to do with the markets. David: I think there are reasonable things to do with your gold ounces. If you've always dreamed of owning a Steinway, then take a couple ounces and buy your Steinway because this is probably the best exchange rate, Steinways to gold ounces, that you're going to see in your life. Well, maybe it'll improve, but it's pretty darn good. Kevin: Yeah. I did that with some silver and Anderson windows, Dave. They're pretty darned expensive, but— David: The Anderson to silver ratio. Kevin: Yeah. That's right. David: This is a setup you rarely see as an investor. The fundamentals are favorable. Price moves already in play, confirming a significant trend. The confirmation signals that we were looking for in 2025, we have. Some of them came just at the tail end of 2025. It's a young bull market from that standpoint, in terms of getting confirmation. A bull market adage, climbing the wall of worry, it's now in play. Kevin: Am I too late? Should I be selling? All these questions that we have to ask, we have to wrestle with. David: Should I wait for a pullback? Is the trend already over? I can't answer any of those questions definitively, but the fact that our business only picked up to rather impressive levels—our metals brokerage business—mid-November to the present— Prices were moving, but nobody was participating. Most of the price moves came from, again, Asian investors, certainly. Central bank investors, certainly. But we're looking for the audience of buyers and sellers. Are the last buyers in or is the majority of potential buyers still on the sidelines? And I'd say we've got a lot of people who have little to no allocation of the metals in any form or fashion. That provides me with an interesting anecdote based on 2025 traffic. And again, it's not something that everyone would be privy to, but having been in the metals business for 53 years, we know what volumes feel like. We know when we're at capacity in terms of processing trades, the number of trades a day. Kevin: We know what fear buying feels like, and that has not happened. David: And interestingly enough, traffic has picked up because interest has picked up, but I think it's of a performative nature, where investors are saying, "Give me some of that." Kevin: "I want to make some money." David: "I want to make some money." Kevin: It's not, "I want to save what I've got." David: No, and that is really the uncontrolled dynamic where prices move to places that you have a hard time imagining, at a pace that is breathless. So we've made it this far in price without the generalist investor seeking a safe haven. Bonds are fine. Stocks are fine. Everything is fine. So long as traditional asset allocations are working, this is the state of play. The vast majority of investors are not making allocation shifts. They're still dealing with FOMO attached to AI, stuck in tech, stuck in crypto. They're basically still locked in the casino. And I don't know if you've ever been in a casino or have been in one in recent years. I know the answer to that. But you get in and you can't get out. Everybody's trapped in the casino, the market casino. Kevin: Well, and they're trapped in a way of thinking, "Okay, let's go back to the markets." Because I asked you last night, I said, "Dave, is it worth your time to be on some of these committees that don't actually see the way you see?" And you told me, "Yeah, Kevin, even if it's just for the educational experience of what people are thinking." David: Yeah, for sure. Yeah, I finished a call yesterday, pension manager, no mention of gold and silver, no mention of miners, no mention of hard assets, a mention of shifting more assets to stocks and bonds to maximize returns, and a recognition that you can never time the market, so you might as well be in for the long run and just let it ride. We're missing upside. That's what they're— Kevin: They're thinking. David: They're thinking. "Cash is trash, we're missing upside." And yet, missing upside, there's no recognition that a critical financial market signal, which I take the price of gold to be, a critical market financial signal, it's howling for attention. Central banks and institutions are front-running 2026 headlines, which will, in the fullness of time, flip the retail investor script, and the repatriation trade, which is global hot money— Kevin: Which can run in a second, yeah. David: Global hot money seeking the best possible return, that is now a risk to US equity and bond holders. Debt market concerns, currency market vulnerability, an invasive US foreign policy, all of these are being addressed by global asset allocators in the gold market, to some degree in the silver market. And by the time the script is flipped on US investors, the wall of worry will be even steeper and harder to climb. We're talking about $100 silver, $5,000 gold. And this is months away. Unique to this backdrop is the traditional safe haven, Treasuries and fixed income, which are already impaired. Kevin: So— David: So, as we see any course correction, concern, fear, panic, do you, on a knee-jerk basis, go to Treasuries? Kevin: I'm just going to ask you a final question, Dave. Do you sell your ounces now? David: Again, it's an amazing setup. No. Not by a long shot. Not by a long shot. Sit on your hands and compound returns. The reduction in ounces comes when gold fever is like a plague. When everyone has it, can't shake it. And I'm telling you, the fever hasn't spread at this point beyond central banks and gold bugs—yet.

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You've been listening to the McAlvany Weekly Commentary. I'm Kevin Orrick along with David McAlvany. You can find us at mcalvany.com, and call us at 800-525-9556. This has been the McAlvany Weekly Commentary the views expressed should not be considered to be a solicitation or a recommendation for your investment portfolio. You should consult a professional financial advisor to assess your suitability for risk and investment. Join us again next week for a new edition of the McAlvany Weekly Commentary.

Gold and silver investors just watched one of the wildest starts to a year in recent memory. We’re at the beginning of a whole new era for physical gold. In this week’s Golden Rule Radio, we break down the recent price movements in gold and silver and explore the broader market dynamics driving these shifts. We take a closer look at what’s been impacting silver over the past few weeks, the volatility we’ve seen, and why the bigger-picture momentum remains intact. We also discuss how current economic conditions and market sentiment are shaping opportunities in the precious metals space. Let’s take a look at where prices stand as of Wednesday, February 11: The price of gold is up 4% since our recording last Wednesday, currently sitting at $5,086. It is inching its way back up to the top end of its trading range. The price of silver is up 9.5% from our last recording, sitting at $84.30. And while it has taken a dramatic tumble from its recent all-time high, the price was only $30 one year ago. Platinum is up 4.5%, sitting at $2,110 and showing a little bit of recovery. Platinum is up about 2% at $1,713. Looking over at the paper markets… The S&P 500 is up about 0.5% from a week earlier. It had two moves up and down 3% intraweek. The US Dollar Index is down 1%, currently sitting at 96.9 as of this recording.

Silver’s Engineered Crash vs. Real Demand

Silver just went from a parabolic surge to what feels like a “ball bouncing down the stairs,” with a massive drawdown driven less by organic selling and more by policy and margin mechanics. From early November, silver ran from roughly the high $40s to just over $121 before China abruptly halted trading to “kill the speculators,” followed immediately by New York–open margin calls and yet another CME margin hike. The technical result was a very deep 78.6% Fibonacci retracement from that November low to the January 29th high, with price slicing through the 20‑day and 50‑day moving averages and tagging the 100‑day in short order.​ The key takeaway is that this was a forced shakeout in a market that was running too hot, not a collapse in underlying demand for silver itself. If you own physical silver outright, this kind of washout is painful on the screen but structurally bullish: it tends to clear out weak hands, reset positioning, and eventually create better entry points for long‑term buyers who care about ounces, not daily ticks.​

China’s Backwardation vs. US Contango: why location matters

In China, silver inventories have collapsed from around 5,000 tons in the mid‑2020s to well under 200–300 tons today, taking stocks to multi‑decade lows. The result is classic backwardation: spot (immediate delivery) trades above futures, and buyers are paying an extra 9.5%–10% on top of the “official” price to get metal in hand.​ But in the US, inventories are flush. Dealers report ample Silver Eagles, 90% junk bags, and bars, and the futures curve sits in contango, with futures above spot. That tells you two critical things:​

• Tightness is real, but it is regional: China and other strategic buyers are scrambling for deliverable metal, while US retail shelves are still relatively well stocked.​
• The three “markets” for silver—spot benchmarks, futures contracts, and actual deliverable product—can and do decouple under stress.​

The current comfort in US inventory is a grace period, not a guarantee. If global supply tightens further or a small additional slice of US investors rushes into silver, that apparent abundance can turn into scarcity very quickly.​

Gold’s Quiet Strength Remains the Anchor

While silver has been the drama queen, gold is behaving exactly how you want your core monetary asset to behave: steady, resilient, and structurally bid. Gold is only about 9% off its recent high, having climbed from roughly $3,900 in November to around $5,086 before a modest correction to a 61.8% retracement and a quick bounce off the 50‑day moving average. Positioning data backs this up. In the Commitment of Traders report, the two main investment categories—managed money and other reportables such as family offices and private investors—are still roughly 4‑to‑1 long gold, a strong vote of confidence from professional capital. Silver, by contrast, has seen speculative longs collapse from 10–12‑to‑1 long down to about 1.5‑to‑1 in managed money, confirming that the big washout has indeed flushed the hot money from that market.​ For portfolio construction, you should treat gold as your foundation and silver as your torque. Gold preserves purchasing power across regime changes and monetary experiments; silver tactically adds volatility and creates opportunities for ratio trades that ultimately grow your gold stack over time.​

The East–West Monetary Shift and the Coming “Digital Gold” Era

We are early in a generational transition in the global monetary order, and gold sits at the center of it. China and other BRICS‑aligned nations have spent the last decade deliberately diversifying away from the US dollar, building out gold depositories, and encouraging companies and sovereigns to use gold as high‑quality collateral in cross‑border trade. The goal is straightforward: challenge US dollar dominance by backing trade with a neutral asset that cannot be printed or sanctioned at will.​ What’s emerging is an architecture where countries can warehouse metal in Chinese (or other) depositories and tokenize it into a form of “crypto‑like” settlement: you don’t sell your gold, you pledge it and transact against it in a digital system. In effect, this is an attempt to reinvent a gold settlement layer on top of a digital payments stack—a cycle the West has run before: gold, to paper claims on gold, to pure fiat, and now likely back toward some version of digitized gold backing.​ For US‑based investors, this shift has two major implications:

• Gold is increasingly the neutral reserve asset of choice in a fragmented, distrustful world; that supports a structural bid under the price regardless of short‑term Fed or CPI headlines.​
• Your decision to hold physical metal today is not just about domestic inflation or Fed policy; it is about aligning your savings with the asset that adversarial states themselves choose when trust breaks down.​

In that environment, owning liquid, easily verifiable physical gold in a mix of personal custody and vaulted/IRA structures is a way of putting your balance sheet on the same side of the trade as central banks, not just as local speculators.​

Claim Your Complimentary Consult

Not sure what your next move should be in precious metals? The team at McAlvany is happy to discuss your personal situation and develop a strategy based on your goals. Our team has a collective 75 years experience investing in the precious metals market. We are happy to speak with you about your goals on a no-obligation, complimentary consultation. Reach out to us at 800-525-9556.

Gold’s violent late‑January selloff looks scary on a price chart, but the bull market is intact. Smart money is still accumulating, and this pullback is a rare chance to upgrade and add ounces on sale.​ Let’s take a look at where precious metals stand as of Wednesday, February 4: The price of gold is down 11%, sitting at $4,960.  The price of silver is down 25%, currently sitting at $87.90. Platinum is down 20%, sitting at $2,190. And palladium is down 17% and sitting at $1,758. Looking over at the paper markets… The S&P 500 is down about 1.5%, currently sitting at 6,882. And the US dollar index rose up 1.6% to 97.67 on the dollar index.

A “Crash” Inside a Massive Uptrend

Gold hit a new all‑time high around $5,600 on January 29, then dropped roughly $1,200 in two trading days before bouncing sharply.​ From peak to trough, gold fell about 21–22%, but as of the podcast date it had already rallied back roughly 16% off the low, leaving it “only” about 11% down on the week.​ Silver’s move was even more dramatic: from about 47 in early November to roughly 121 in three months (a near tripling), then down ~25% on the week, yet still sitting in the high‑80s to low‑90s and remaining the best‑performing major asset in the U.S. for 2026 year‑to‑date.​ In other words, this was not gold or silver “going to zero”; it was a sharp correction after an extraordinary melt‑up layered on top of an already huge multi‑year bull market in metals.​

What Actually Triggered The Selloff?

We see two key catalysts that kicked off a classic “snowball” move:

• China halted trading in five silver and commodity funds “to limit risk amid volatility” and “maintain the stability of the capital markets,” effectively stomping on the market at the peak.​
• The next day, the CME Group raised silver margin requirements for the fourth time, forcing out leveraged longs and triggering margin calls and stop‑loss cascades.​

This combination delivered a waterfall move: once forced selling begins, each layer of margin calls begets more selling, and the market overshoots on the downside before stabilizing.​ The key takeaway is that the crash was mechanically driven by leverage and policy moves, not by a fundamental collapse in monetary demand for metals.​

Where The Charts Say We Are Now

Even if you don’t trade off charts, it helps to know what we’re watching:

• Silver’s three‑month run from $47 to $121 was followed by a textbook corrective drop right into a major support cluster: the 50‑day/100‑day moving average zone and a 61.8% Fibonacci retracement area around the mid‑70s.​
• From there, silver bounced and now appears to be settling into a trading range roughly between the 61.8% and 38.2% retracement levels, which we peg around about 75–93.​
• On a larger timeframe, even an extreme washout into the low‑60s would still leave silver investors with very large gains from the 40s; the “damage” is mainly to recent late‑entry speculators.​
• Gold’s medium‑term retracement has been far tamer than silver’s: from an August low near $3,300 up to $5,600 (about +70%), with the pullback only briefly touching roughly the 50% retracement level before stabilizing near shorter‑term moving averages.​

Practically speaking, this looks like a deep, healthy correction after a euphoric spike, not the end of the bull market. If you’re looking for good entry points, we see the current band (roughly $75–$85 on silver and mid‑$4,000s on gold) as an attractive buy‑the‑dip zone.​

Where We Are in The Bull Market Cycle

Over the last decade, most of the marginal demand has come from “gold people buying gold”: central banks (notably China), institutions, and long‑term allocators quietly accumulating, not the general public flooding in. You can see this major bull market breaking down into three phases:

• Consolidation — From 2015–2018 bear bottom and basing
• Growth — our current phase, where gold has effectively gone 5x from its 2015 lows and silver even more
• Mania — a future phase where mainstream investors, pushed by stress elsewhere—equities, bonds, rates, geopolitics—finally chase metals.

We are essential at “the end of the beginning,” not the end of the cycle. Most buyers are still the early, informed crowd, and the event that forces the public into metals en masse has not yet occurred.​ What this means for you: volatility like this is part of the growth phase, and it tends to precede—not follow—the eventual public stampede.

Your Next Move

So how should you react to this move? As we always recommend, stay on course. Keep accumulating on a schedule, treating it as disciplined savings rather than a trading game (a form of dollar‑cost averaging). View pullbacks as inventory opportunities, not existential threats. Many of us have added to our own positions into the decline, including upgrading into semi‑numismatics (e.g., $5 Indians, Morgan dollars) while spot is discounted. Let ratios and structure guide swaps. The gold–silver ratio fell to about 46:1 before snapping back above the mid‑50s after silver’s harder fall, temporarily taking some accounts out of “ideal” ratio‑trade territory and reminding investors to “take some wins” instead of holding out for a perfect 15:1 fantasy print.​

Here to Help

The team at McAlvany Precious Metals has a collective 75 years experience investing in the precious metals market. We are happy to speak with you about your goals on a no-obligation, complimentary consultation. Reach out to us at 800-525-9556.

Precious metals show no signs of stopping this week as gold climbs nearly 12% and silver shoots up a staggering 25%. Platinum and palladium both see around 10% increases, with platinum nearing the $3,000 mark. Over in equities we saw the S&P approaching its previous highs. The U.S. dollar weakens even further and drives more capital into the metals markets. Let’s take a look at where precious metals prices stand as of Wednesday, January 28: The price of gold is up 11.75% at $5,390 as of recording. The price of silver is up 25%, sitting at $116.20 in the last week, which is crazy to me. Platinum is up 10.5%, sitting at $2,666 as of recording. However, platinum was up 20% at one point this week, almost breaking that $3,000 mark. It wasn't too long ago that platinum was $900 per ounce. Palladium up about 11%, currently sitting at $2,075. Looking over at the paper markets… The S&P 500 is up 1.5% to 6,980. It did break through 7,000 to a new all-time high intraweek. And the US dollar index is down 2.5%, currently sitting at 96.36.

Japan’s financial stress lit the fuse

The U.S. quietly intervened in the foreign exchange market to bail out Japan — injecting dollars to prevent Tokyo from dumping Treasurys. That support propped up Japan but weakened the U.S. dollar, and when the dollar drops, gold and silver pop. This event wasn’t just a currency story; it was a signal to global investors that sovereign stress is spreading. It was a bailout — and the world noticed. In effect, Washington chose to bail out a key ally rather than let the market force a painful liquidation of U.S. debt.​ For consumers, the cost shows up as a weaker dollar and higher prices for anything real — especially gold. The dollar index dropped roughly 2.5%—3% on the week. Gold responded with one of its largest single‑day and single‑month dollar gains on record, up more than $200 in a day and over $1,000 on the month.

The “weaker dollar playbook” is back

President Trump openly supports a softer U.S. dollar — calling it “great” because it encourages exports, boosts GDP growth, inflates asset values, and increases tax revenue. It also makes it easier to service an enormous and growing debt load — especially with roughly a quarter of U.S. debt rolling over this year. But there’s no free lunch. The same process that makes the government’s problems “easier” makes your cost of living structurally higher. The Fed, for its part, just paused on rate cuts — a 10‑to‑2 vote to hold, the first time since late 2025 that they’ve resisted easing. They’re talking about getting inflation back to 2%, but the money supply (M2) is still growing around 4.6% annually. In other words, policy is now openly biased toward a currency that buys you less over time, and the metals are simply repricing that reality.

Western investors are finally buying

For years, you’ve heard about central banks, Asian buyers, and sovereigns quietly accumulating gold while the Western retail investor mostly stayed on the sidelines. That’s changing — fast. One of the clearest signs is the massive spike in trading volume in silver ETFs. SLV, the largest silver‑backed ETF, just saw about $40 billion in turnover in a single day, roughly triple its previous record from 2011. That is not “tourist” money; that’s a wall of capital rediscovering silver.​ Silver has moved from roughly $30 an ounce a little over a year ago to challenging the $120 level in this latest surge. A four‑fold move in that time frame is what late‑cycle adoption looks like as mainstream investors finally react to damage that has already been done to the currency. Once the crowd engages, volatility goes up while good entry points become harder to come by. If you’re trying to build or rebalance a core physical position, you’re better served acting while you still have some pricing and product availability rather than waiting for the next panic headline.

The dollar’s decline is policy, not accident

Roughly a quarter of U.S. debt is rolling over this year, which means massive refinancing ahead — and likely more Fed balance sheet expansion. M2 money supply in the U.S. exploded from about $15 trillion to over $21 trillion during the COVID era, then flattened out and now sits near $22.4 trillion — not the same runaway growth, but still pushing higher. More important is that the velocity of money (how often a dollar circulates) has climbed from near 1.1 up to about 1.4. That increase in velocity is part of why you’re seeing equity markets hitting new highs and metals sprinting; more of the existing money stock is actually moving through the system. The Fed has been shrinking its balance sheet for several years, but that trend has already started to tilt back upward as it deals with refinancing needs and market stress. In practice, that means more support for financial assets and a steady bleed on savers who sit in cash.

Geopolitics and energy could amplify the trend

Beyond currencies and rates, geopolitical risk keeps gold’s bid alive. Tensions with Iran are escalating again, with U.S. rhetoric around armadas, nuclear sites, and “time running out” back in the headlines. At the same time, you’ve got ongoing instability in places like Venezuela and a still‑fragile situation in Eastern Europe and Asia. Interestingly, energy prices have eased, which does help you at the pump and in the grocery store — at least temporarily. But lower energy doesn’t fix the core problem of an over‑leveraged financial system and a currency being managed for political goals rather than long‑term stability. Historically, periods when governments lean on the currency and bond markets to manage unserviceable debt loads end up being very friendly to gold owners and very punishing to anyone who assumes “normal” will return in time.​

Use a Precious Metals IRA for tax‑efficient ounces

If a meaningful part of your net worth is in retirement accounts, you can hold physical gold, silver, platinum, and palladium inside an IRA structure (Traditional, Roth, SEP, SIMPLE, and even 401(k) rollovers). This lets you shelter gains from current taxation while building a pool of hard assets you can draw on later to offset rising living costs. McAlvany has been doing metals IRAs since the option became available in the 1980s, and we pair that with ratio‑trading strategies inside the account to compound ounces over time. If you’re ready to open a precious metals IRA, the team at McAlvany can help. Call us at for a free, no obligation consultation at 800-525-9556.

Gold continued its steady climb this week and crept up to $4,825. After silver’s explosive rise, this week saw a 5% increase as it cools down in the mid $90s. Platinum and palladium continued their push as well, with platinum gaining 8%. Let’s take a look at where prices stand as of Wednesday, January 21: The price of gold is up 5% sitting at $4,825 at the moment and still looking very strong. The price of silver is up about 5.6%, currently at $92.50. The white metal may have gone up about 12% at one point, closing at $94.95 the previous day. Platinum is up 8%, sitting at $2,440. It is the big winner this week, but still below some of the previous highs. Palladium is up 5% at $1,855. Platinum is now about 30 some percent above its sister metal palladium. Looking over at the paper markets… The S&P is down about 1.5% at the moment, sitting at 6,875. Most of that decline happened in the last day or so. It was down a little over 2%. The US dollar index is down about 0.3% sitting at 98.8.

Physical market is finally wagging the dog

For decades, futures markets and large banks could manipulate silver with contract games and margin hikes. Recently, repeated margin increases have had almost no effect on price, which tells you the physical market now has the upper hand.​ That matters for you because:

• Price is increasingly set by real bars and coins changing hands, not by leveraged paper players rolling contracts.​
• Structural deficits in silver – where industrial and investor demand outstripped mine supply – are finally being reflected in price, instead of endlessly papered over.​

In practice, this is why attempts at “pullbacks” in silver keep failing quickly; you might get a day or even half an hour, and then it grinds higher again.

Gold–silver ratio and active ratio trading

Over the last week the gold–silver ratio has essentially locked between about 49 and 52 to 1, after collapsing from around 105 to 1 last April – an enormous move in a very short time.​ As a result, we have been actively swapping our clients’ silver into gold – especially in IRAs – as the ratio has tightened into the low 50s. This lets us harvest the outsized silver gains from 2025 and early 2026 and compound total gold ounces without adding fresh capital.​ You should expect this ratio to be cyclical. Over time, the odds still strongly favor another trip back toward 75 to 1, and possibly tighter spikes into the low 40s on the way.​

Fed politics, rates, and the case for gold

The DOJ investigation into Fed Chair Powell is unprecedented and adds political risk directly into the central bank itself, which gold markets interpret as a geopolitical and institutional stress event.​ The late-January FOMC meeting is expected by every surveyed economist to hold rates steady; no cuts and no hikes, leaving policy around the mid‑3% range for now and likely through the first part of the year.​ With Washington still running roughly a 2 trillion‑dollar annual deficit and debt continuing to climb, the money supply must expand to finance that shortfall – a classic long‑term positive for gold as political money is diluted and real money responds.

Tariffs, courts, and geopolitical odds

We’re trading in a world where policy is increasingly driven by “tail‑risk politics” – tariffs, courts, and conflict probabilities – and those odds matter for metals. There is a material chance the Supreme Court rules on Trump’s tariffs within weeks, with low odds of fully endorsing them but equally low odds of forcing repayment of what has already been collected. The market implication is ongoing uncertainty around trade costs, which tends to be supportive for gold.​ Odds-based analysis suggests non‑trivial probabilities of U.S. or Israeli strikes on Iran by mid‑year, and even a non‑zero chance of regime change talk around the Supreme Leader. Gold is already reflecting those risks; silver adds volatility on top.​ Davos and “end of the world” narratives: Markets are pricing aggressive tail‑risk scenarios with relatively low modeled odds, which can exaggerate short‑term moves. But over time, these still resolve into the same basic conclusion: you want to own real assets, not promises, through the noise.​ Your takeaway: do not trade headlines; let the ratio and long‑term probability structure guide your swaps. We stick to the process, not the drama.

Premiums, product selection, and the next swap

Finally, it’s important to not just track spot prices, but also product premiums – that’s where you might find your next “free ounces.” For example, Silver Eagle and junk‑silver premiums remain relatively low, and in fact Eagle premiums have ticked down recently, which tells you retail availability is still healthy.​ Meanwhile, there is a very real scramble for thousand‑ounce bars and larger wholesale silver, especially for ETFs, futures backing, and sovereign needs – but that tightness has not fully hit Main Street premiums yet.​ When premiums on items like Silver Eagles eventually spike – as they did in 2011 and during COVID – you will likely have another premium‑swap window: selling high‑premium coins into lower‑premium bars, or swapping inflated silver products into additional gold ounces.

Here to Help

Wondering what your next move in precious metals should be? The team at McAlvany Precious Metals is happy to speak with you about your goals on a no-obligation, complimentary consultation. We have a collective 75 years experience investing in the precious metals market. Reach out to us at 800-525-9556.

Gold and silver just had a blockbuster week, and if you own metals (or are thinking about adding more), you’re in one of those rare windows where smart moves now can compound your ounces for years to come. Let’s take a look at where prices stand as of Wednesday, January 14: The price of gold is up about 4.5%, sitting at $4,640. Gold has been flirting all day with new all- time highs as gold is pushing well into the 4,600 range. The price of silver is up a whopping 22% just since last Wednesday, sitting at $92.60. Platinum is up 9% to $2,390. Palladium is up 8% on the last week, sitting just at $1,900 an ounce. Looking over at the paper markets… The S&P 500 is down about 0.10% to 6,905. However, the index did put in an all- time high on Monday at around 6,990. So the S&P did break into new territory also. With everything basically up this week, you'd assume the dollar is down. Well, it's not. The US Dollar Index is up 0.5%, sitting at 99.1.

Silver’s Surge and The $100 “Psych” Level

Silver is up roughly 22% just since last Wednesday, trading around the mid‑$90s with intraday moves of 6–7% in a single day, while gold is up about 4.5% and flirting with new all‑time highs around the mid‑$4,600s. The gold/silver ratio has broken down through the 50s and into the high‑40s, a dramatic shift from the 100‑to‑1 levels you saw earlier in 2025. That puts the “roundest of round numbers” – $100 silver – squarely on the radar as the next emotional line in the sand. Realistically, $100 is just another tick on the chart, but human behavior turns big, clean numbers into temporary ceilings where profit‑taking and hesitation tend to cluster.

Physical‑Driven Demand, Not Speculative Mania

One of the biggest takeaways for you as an investor is that this silver move does not look like a classic Comex‑speculator blow‑off. Margin requirements on silver futures have been raised multiple times in just a few weeks, and yet the market has largely shrugged it off instead of seeing the usual forced liquidations and waterfall declines. What we’re seeing instead is “big kid” demand: major institutions, corporations, and central banks prioritizing physical control over paper exposure, while China simultaneously restricts exports of silver and other strategic minerals and large Western players reportedly curb silver flows to China. Retail is only now starting to show up “in droves,” but the move was already well underway before that, which tells you this is about strategic positioning, not just small‑investor excitement.

Why the gold–silver ratio is your real opportunity

Earlier this year, when the ratio moved over 100‑to‑1, the strategy was to go heavy into silver – not because gold was “bad,” but because silver was historically cheap in gold terms.​ Now, with the ratio around 49‑to‑1, many of those trades are sitting on 60–80% or more ounce gains when measured in gold:

• One client who swapped out of 22 one‑ounce gold bars into Silver Eagles around 100‑to‑1 can now trade that silver back into 36.3 ounces of gold – more than 14 “free” ounces – inside an IRA, with no tax drag.
• Another investor, even after factoring in roughly $95,000 in capital‑gains tax on a large taxable silver position, effectively reset his gold cost basis to the equivalent of about $2,840 per ounce because of what silver’s purchasing power did for him.

The key takeaway: the point of owning silver is ultimately to own more gold. And with the ratio already having moved so far, you don’t have to “nail” the exact bottom in the ratio to take smart, partial profits on silver and compound your gold ounces.

Take Emotion Out of Buying

Emotion is the enemy of good ratio trading, so here’s how we suggest you think about it:

• Start with a fraction, not the whole stack. If you bought silver at 80–100‑to‑1 and the ratio is now in the high‑40s, you’ve already harvested a very large percentage of the available move.
• Prioritize IRA and other tax‑advantaged accounts. Inside an IRA, ratio trades are “low‑hanging fruit” because you can move from silver to gold without triggering immediate capital‑gains tax.
• Think like a poker player. Take your original chips – your initial silver gains – off the table and lock them into gold, then let a smaller portion of your silver ride if you truly want to see whether the ratio pushes toward 40‑to‑1.​

If your purpose in owning metals is wealth preservation first and profit second, this approach lets you “win” both ways: you’ve increased ounces and improved quality by moving into gold, while still keeping meaningful precious‑metals exposure.

Don’t Let Silver Cloud Your View of Gold

With silver stealing the headlines, gold’s quiet strength is being overlooked – even as it trades at all‑time highs. The combination of a strong dollar, strong stocks, and record‑high gold underscores that gold is the reliable, non‑counterparty store of value.​ In other words, enjoy the fireworks in silver, but let the excitement work for you by converting a portion of that outperformance into more gold ounces while the math, not the emotion, is still on your side.

Reach Out Today

The team at McAlvany Precious Metals has a collective 75 years experience investing in the precious metals market. We are happy to speak with you about your goals on a no-obligation, complimentary consultation. Reach out to us at 800-525-9556.