Several of the McAlvany Financial Group’s analysts take time to put the precious metals pullback in perspective this week, while Doug does the same thing with respect to current market euphoria. In short, perspective is the order of the day.
And perspective is crucial. Denizens of this world might be many things these days, but “bored” is not likely to be one of them. “Thrilled,” “horrified,” or “concerned” are more likely candidates given the many opinions expressed online and in the traditional media. These attitudes often give way to either hope or fear, both of which are forward-looking and emotional attitudes. And emotions are not the best things to base forward-looking actions on.
In that light, being able to put things in perspective is crucial. It gives people some idea of what’s coming up next without claiming to be clairvoyant or infallible. It can put future possibilities into “likely,” “unlikely,” or “uncertain” categories. And that organization can help a person make productive decisions that maximize gain and minimize loss. As the saying goes, forewarned is forearmed.
Key Takeaways:
- A pullback doth not a trend reversal make
- The Dutch boy is running out of fingers
- A “new world order” without that name
- The reasons for the pullback, and what to do about it
The McAlvany Weekly Commentary: Finally! Gold Takes A Breath
David and Kevin dive into the recent correction in gold and silver markets with a sense of measured optimism, calling it a “gift” for investors. After months of relentless price gains, they welcome the 10-15% dip as a healthy pause rather than the end of the bull market. David underscores a long-term monetary regime shift, comparing it to seismic changes like Bretton Woods in 1944, with central banks likely to become buyers again post-correction. The duo highlights silver’s outperformance relative to gold and discusses how mining stocks, ETF flows, and a narrowing gold-silver ratio signal a robust bull trend. They also explore broader economic themes, including liquidity risks in shadow banking, fiscal strains in advanced economies, and the rising prominence of stablecoins, which could destabilize Treasury markets. Shifting gears to geopolitics, they touch on China’s economic challenges and Japan’s inflationary pivot under new leadership. Throughout, David and Kevin emphasize gold’s role as real money and wealth insurance, standing firm amid fiat currency volatility. Their advice? Take a breath, seize opportunities during corrections, and focus on scarce, enduring assets like gold.
Credit Bubble Bulletin: Foreshocks
Doug dives into the precarious undercurrents of today’s financial landscape, where liquidity abundance masks deepening cracks in credit markets. He warns of a growing dichotomy between speculative excess—propelling stocks to record highs—and a deteriorating credit environment riddled with fragile fault lines. The week’s bond rally, driven by incipient credit concerns, highlights global over-liquefaction, with short squeezes in U.S., French, and UK bonds and a weaker yen fueling carry trade speculation. Meanwhile, hedge funds reached $5 trillion in assets, driven by inflows and leveraged speculation, even as rising delinquency rates in subprime loans and high-profile bankruptcies like First Brands spotlight systemic fragilities. Inflation concerns persist, with Americans grappling with surging insurance premiums and rising prices for essentials like food and energy. Doug also notes parallels to 2008, as private credit markets balloon to $1.7 trillion amid weak underwriting and opaque structures. Despite these tremors, exuberance reigns in AI-related financing and global equities, but for Doug, the warning signs are unmistakable: the market’s resilience may be a thin veneer over mounting instability.
Hard Asset Insights: What Gold’s Telling You
Morgan explores the ongoing gold bull market, emphasizing that while recent price volatility signals a potential correction, it’s far from a market top. Morgan highlights the clash between overbought technicals and the strongest bullish fundamentals since gold began trading freely, urging long-term investors to “sit tight and be right,” while advising caution for short-term traders. Key drivers of gold’s rise include persistent inflation—CPI inflation hit 3%—and a Federal Reserve increasingly trapped by its shift from prioritizing price stability to embracing ultra-low real rates, a move Morgan calls “perhaps the biggest macro event in decades.” This structural shift, combined with U.S. sanctions on Russian oil firms and a global push to replace the petrodollar system, is accelerating demand for gold as a neutral reserve asset. Echoing analysts like Michael Hartnett and BCA Research, Morgan points to forecasts of $6,000 gold amid inflation and debt crises, while noting Wall Street’s growing acceptance of gold in portfolios. Despite this week’s declines in gold (3.28%) and silver (6.46%), Morgan sees these as temporary dips in a fundamentally strong market, likening gold’s message to a symphony of factors harmonizing toward a new financial reality.
Golden Rule Radio: Precious Metals Pullback
Miles, Robert, and Tory delve into the first significant pullback in precious metals markets in many months of steady gains. Gold dropped 3% to $4,100, while silver took a sharper 8.5% hit, now at $48.50, with both metals experiencing wider intraweek swings. Platinum and palladium also saw declines of 7% and 5%, respectively. The hosts attribute the dip not to weakening fundamentals but to profit-taking and higher CME margin requirements, emphasizing that technical indicators like Fibonacci retracement levels and moving averages suggest a healthy correction within a broader bull market. They discuss the gold-silver ratio, now hovering around 84, as a key metric for ratio trading, highlighting silver’s potential for outperformance. Shifting to supply dynamics, they note tightening conditions in silver due to refinery bottlenecks and delivery delays, which could bolster prices long-term. The trio stresses the difference between physical and paper metals, urging a disciplined, long-term strategy for investors holding coins and bars. While acknowledging the volatility, they frame the pullback as a buying opportunity, encouraging listeners to stay patient and stick to their plans. As always, they invite viewers to reach out for personalized guidance in navigating the dynamic world of precious metals investing.
