Written by Bryan Lutz, Editor at Dollarcollapse.com:
It’s Sunday.
Alright, here’s what we do.
Every Sunday I share a few thoughts with you and other subscribers at Dollar Collapse.
Sometimes we’ll talk about economics, sometimes recent events, and other times, life.
Here are three thoughts for this morning:
1. The Strong Dollar Is Putting Gold and Silver on Sale
This week, the dollar index broke above its June high, its best level since March 2025.
Three things pushed it there…
The Fed hiked in September and more hikes are priced. The euro slid on French and Spanish political stress, and the Iran war keeps oil and inflation elevated.
Gold sits near $4,200 while silver is sitting around $61.
Now, here’s why gold and silver are on discount.
The term premium, what investors demand to hold long bonds, recently hit its highest since 2010.
And the 30-year yield is above 5.6%, a 24-year high.
The dollar rises on rate hikes.
Higher rates pay investors more to hold dollars, so money flows in and gold, which pays nothing in the short-term, gets pushed down. But the bond market is telling a different story.
It’s demanding the most pay since 2010 to lend for 30 years, because inflation and government debt aren’t going away.
Gold is a hedge against exactly that worry, yet its price only reflects the dollar story. So there’s a bit of mixed messaging. In any event, the market continues to price the value of the dollar against gold instead of the bond markets, the bigger the discount gets.
2. Latin America’s Populist revolt is more about our opinion of democracy’s results than Left Versus Right even though the world may not be expressing it.
When you look at the map below. It says Latin America has swung right.
I’d say voters are answering a different question. They’re electing populist candidates campaigning on dissatisfaction with the system.
Now you may recognize the name Hans-Hermann Hoppe. Some of his critiques, such as about Democracy have stood out to em over the past several years. He identifies the the elected ruler as “a temporary and interchangeable caretaker.”
He says caretakers rent. While owners keep…
So democracy is full of temporary political renters that see their place in the system as temporary as well as their responsibility. They just don’t take ownership like a King does.
Let’s take a look at El Salvador. Bukele scrapped term limits in 2025 and is running for a third term in February 2027, after taking about 85% of the vote in 2024. Homicides fell from 106 per 100,000 in 2015 to 1.3 last year. And, he’s completely turned around the countries economic position in the world from a struggling national consumer to producer (where he can).
You see, in El Salvador, voters didn’t choose a side. They chose a ruler who acts like he owns the place.
A government, like a king, only plays the long game when the ruler owns the outcome, which is something the democratic process (even socialism) can never truly claim.
3. Speaking of Latin America: Brazil’s Bolsonaro Is Very Close to Winning the Presidency
Flávio Bolsonaro led Brazil’s first round on October 4, about 47% to Lula’s 45%.
The runoff is October 25 when the winner of Brazil’s Presidency will be decided.
Now, here’s what the market is saying…
Brazilian stocks, the white bars, broke above a downtrend that has held since 2008.
Commodities, the yellow line, already sit near highs.
A Bolsonaro win could push Brazil back into runnings with commodities, since Brazil sells the things that yellow line measures…
If Lula holds on, watch whether that breakout holds.
Either way, real assets are already leading.
Here are three ways to play itL
iShares MSCI Brazil ETF (NYSE: EWZ)
- The same fund as the white bars on the chart
- One ticker for the whole Brazil move, not a single-company bet
- About $11.5B in assets, 0.59% expense ratio
- Top 10 holdings are about 60% of the fund, led by Nu Holdings, Itaú, Vale and Petrobras
- Priced in US dollars, but carries real currency risk
Vale S.A. (VALE) | Trades on NYSE as an ADR; home listing on B3 in São Paulo
- The commodity leg: iron ore and metals
- About 8% of EWZ
- Tied more to global commodity prices and China demand than to the runoff
- Gives exposure to the yellow line on the chart
Petrobras (PBR) | Trades on NYSE as an ADR; home listing on B3 in São Paulo
- The oil leg
- About 14.6% of EWZ across its two share classes
- State-controlled, so the election outcome directly affects pricing and dividend policy
- Swings with oil prices
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Have a great Sunday!
Not financial advice. The Oct 25 runoff is a binary event, the breakout may already be priced in, and currency and commodity swings add risk.