The McAlvany analysts continue their unenviable role, which is the grown-up equivalent of getting kids to eat their vegetables. “Gold is good for you. It helps build strong financial bones. Open wide. Don’t spit it out.”
Since being pried away from its natural connection to the dollar in 1971, gold has been subjected to the vagaries of public opinion that sometimes is positive but far more often is not. That deeply affects gold’s dollar price and keeps it changing. However, like vegetables, gold might not always be liked, but it’s always good for you.
Some people prefer steak (bonds or the stocks of well-run companies) or candy (non-critical consumer goods from China), but all these folks are agreed on their antipathy for artichokes.
There’s no condescension here. The folks at McAlvany also like steak and Snickers bars. They just know that broccoli and cauliflower build strong portfolios that can withstand rigorous workouts and even the rare but pivotal run-for-your-life scenario.
So bear with these admonishing, cajoling, imploring remembrancers of cyclical markets and parties that end. This might be the hundredth time they have begged you not to spit out your peas, but it’s only because they care about your health.
Key Takeaways:
- The garden party continues, but the wind is picking up
- Changing captains (to Kevin Warsh) doesn’t do away with Scylla or Charybdis
- Gold can be held long-term only by strong hands; don’t lose your grip
The McAlvany Weekly Commentary: Sovereign Debt Stress Points To Higher Gold
David and Kevin set the stage by arguing that the bond market is moving from “yellow” toward “red,” not in corporate credit (yet), but in sovereign debt—and that this is the strongest support for gold going forward. They highlight a global fiscal crunch: large-scale refinancing needs for U.S. Treasuries, rising global yields, and debt-to-GDP concerns in the UK and Japan, while inflation that’s “not transitory” keeps pressure on interest rates “higher for longer.” They connect the dots between energy-driven inflation, currency stress for energy importers, and knock-on costs across supply chains (from construction materials to transportation and food). Despite liquidity still keeping systemic fear muted—spreads and many risk gauges don’t reflect panic—they warn the stress could broaden if conditions tighten, particularly via private credit exposure. From there they pivot to precious metals: central banks are buying gold, silver remains thin and volatile, and they expect a midyear “correction” followed by a stronger push into year-end. They also discuss trading the gold/silver ratio in stepwise “five-point” increments.
Hard Asset Insights: Welcome Kevin Warsh
Morgan kicks off his latest letter with a welcome to Kevin Warsh as the new Federal Reserve Chairman—then, in a decidedly less honeymoon-y tone, suggests the Fed’s walls are closing in. The core argument is that Warsh inherits a lose/lose policy dilemma: whether the Fed hikes rates or cuts them, long-end Treasury yields could spike, straining Western sovereigns and potentially triggering a debt crisis. Morgan contrasts this with earlier moments under Fed Chair Powell, notably 2022 (inflation pressure met with aggressive hikes) and 2024 (rate cuts aimed at easing Treasury market stress, yet still followed by rising 10-year yields). With inflation and fiscal realities both demanding attention, Morgan implies Warsh may end up overseeing the Fed’s unofficial third mandate—helping keep insolvent government financing afloat—marking, in his view, the end of the Fed’s ability to stand “between U.S. citizens and inflation.” He closes, as usual, with a market performance recap: S&P 500 slightly up, gold and silver modestly down, and a generally mixed commodity week amid energy volatility.
Golden Rule Radio: Precious Metals Face Headwinds
Tory and Rob frame precious metals as treading water while markets provide a little turbulence. The message is that sentiment is being shaped by volatility in equities, the U.S. dollar, and oil, and that cocktail can make even a solid long-term thesis feel bumpy in the near term. Gold dipped to the mid-$4,500s, while silver fell about 13%—a reminder that metals don’t move in straight lines. Still, the hosts urge listeners not to drop the long-term thread: their longer-run outlook sees gold continuing higher as it remains a hedge against inflation and broader instability. In other words, this is more of a pullback than a thesis break—pressure builds, headlines vary, but the underlying role of gold (and the hedge it represents) will remain firm as the environment stays uncertain.
