Seldom in America’s history has the spectrum of possible economic outcomes been so incredibly large. America’s debt problem is immense. Donald Trump’s solutions to it are proportionately ambitious. No one can accuse him of not taking the matter seriously enough. But opinions as to what the outcome will be are virtually as varied as the options available. Financial and economic “experts” tend to be some of the most skeptical—along with Trump’s political opponents. Of course, these experts are some of the same people who never saw the crash coming in 2008, and some of them helped cause it, so take that for what it’s worth.
The McAlvany analysts tend to be from Missouri these days—when the economy shows them what it’s going to do, they’ll have the answers they seek. Till then, humility and tons of research are the order of the day. They will not purport to tell you what will transpire. They will, however, give you some advice that will help you weather whatever comes. And a heads-you-win, tails-you-win option might just be the very best way to approach things right now.
Key Takeaways:
- Summer can be hot and sticky, but money is either/or
- News rather than commentary for the Credit Bubble Weekly
- The Fed’s loss is gold’s gain
- Platinum conveys a crucial message
The McAlvany Weekly Commentary: What Type Of War, Banks or Bunker Busters?
Central banks are making gold the star of their reserves, surpassing the euro at 20% of holdings while showing no signs of slowing down. David and Kevin explore this shift, noting the geopolitical and economic motivations driving central banks to hedge against volatility and sanctions. With 95% of surveyed central bankers expecting gold reserves to rise in the next year, the “price-insensitive” demand is reshaping markets. On the geopolitical front, David analyzes the fragile ceasefires and tensions in the Middle East, where bunker busters and bold rhetoric drive headlines but leave long-term peace uncertain. Meanwhile, private credit and cryptocurrency emerge as late-cycle darling investments, raising eyebrows about risk-taking in search of returns. David highlights the “sticky” nature of central bank gold buying compared to the “hot money” chasing trends like bitcoin, which he likens to a modern Cabbage Patch doll craze. Amid these shifts, silver is breaking out, and mining shares are drawing fresh attention, adding spark to the discussion.
Credit Bubble Bulletin: Just the Facts
Doug foregoes commentary this week in favor of a news wrap-up. Winners for the week included equities, banks, broker/dealers, and bonds. Losers included transports, small caps, and gold. Doug also provides media excerpts summarizing developments in currencies, commodities, the Middle East war, market instability, the Trump administration, credit and financial bubble watch, China trade, the broader trade war, the national budget, and much more.
Hard Asset Insights: The New Fed Mandate
In this week’s commentary, Morgan discusses the Federal Reserve’s precarious position amid rising inflation and escalating government deficits. The Fed’s inability to raise rates without exacerbating the deficit, or to cut them without igniting inflation, creates a challenging quagmire, as highlighted by Jamie Dimon’s skepticism about the Fed’s management abilities. Recent pressure from the Trump administration, including sharp criticisms from President Trump and other officials regarding Fed Chair Jerome Powell, emphasizes the urgency for rate cuts, despite inflation remaining persistently above the target. This political pressure suggests a potential shift away from traditional Fed independence, with a new mandate focusing on government solvency over price stability. Morgan notes that while this could harm the dollar’s purchasing power, it may drive gold prices higher as market dynamics evolve. The week saw mixed performance across assets, with the S&P 500 up, gold down, and significant volatility in energy commodities. Ultimately, the commentary underscores a transformative period in monetary policy, where the old rules are giving way to new pressures and priorities.
Golden Rule Radio: White Metals Show Strength
This week on GRR, the hosts dive into the modest volatility seen in the metals markets, with gold slipping just over 1% and silver dropping 1.4%. The real standout, however, was platinum, breaking through to an 11-year high at $1,363, while palladium posted modest gains. Miles and Rob highlight the long-term bullish trends in industrial metals, particularly platinum and silver, pointing to their growing importance in industrial applications. The team notes that even with minor dips in precious metals, recent market dynamics underscore their resilience amid broader economic uncertainties. Rob reflects on how platinum’s rally signals a favorable shift in industrial demand, while Miles draws attention to silver’s potential as a key player in the ongoing industrial metals story. Though the week saw minor declines for gold and silver, the broader outlook remains optimistic, with the hosts emphasizing the role of precious metals as anchors of stability in portfolios.
