The FED has raised rates to 5.5% without causing a recession, but may face challenges in the next 3 months due to near all-time low unemployment, high stock markets, and strong earnings.
FED’s rate cutting path may disappoint markets expecting 50 basis point cuts, potentially causing equity market volatility and downside leading into the election.
Gold serves as a “put option against the status quo”, driven primarily by demand from Asia as protection against local currency devaluation.
The “dollar milkshake theory” posits that crises lead to dollar strength through a self-reinforcing cycle, as the US receives liquidity first while other countries struggle.
The US dollar’s strength pressures countries with dollar-denominated debt (30% of world’s debt), causing deflationary pressures and potential crises due to difficulty in servicing debt.
Central banks are “backed into a corner” by massive debts, attempting to inflate them away through low interest rates and negative real rates.
Brent Johnson recommends a 10-20% allocation in gold for portfolios, considering it the “most important asset” and “cornerstone” for all investors.
Maintaining a 20-30% allocation in cash or T-bills provides liquidity for adverse scenarios, allowing investors to be “distressed buyers” rather than “distressed sellers”.
The “Fourth Turning” cycle occurs approximately every 80 years, leading to massive structural changes and violent, explosive crises as resources are mobilized by the national community.
Nullification crises, where states refuse to enforce federal laws, can escalate into secession and civil war, as demonstrated by the American Civil War.
The US is already at 100% GDP in public debt, limiting the ability for collective resource mobilization during a crisis, a new aspect of fourth turnings.
Inflation is a universal method to extract resources during a fourth turning, redistributing burden sharing, as seen during World War II with price controls and rationing.
The US Constitution hasn’t been amended in 50 years, with the last amendment (27th) passed in 1992, highlighting the difficulty of the amendment process.
The 14th Amendment reinforced federal supremacy by applying federal due process to all states, effectively ending states’ right to secede.
The Millennial generation is expected to take power in the 2030s, potentially leading to a period of prosperity due to their rationalism and desire for standardized solutions.
The US exhibits a “weird asymmetry” in its global perception, with Americans largely indifferent to international events despite the country’s significant global impact.
Commodity prices reached extreme undervaluation relative to equities in 1929, 1969, 1999, and 2020, with the current market being the most extreme in a 150-year data set.
The classic commodity cycle involves money flowing out, causing depletion and tightening, leading to deficits and massive price increases as capital returns, reflecting the cyclical nature of commodity markets.
Kazatprom’s reduced 2025 uranium production guidance from 78-79 million pounds to 66 million pounds will exacerbate the structural deficit in the uranium market, indicating supply issues in 2026.
The uranium market faces a structural deficit for 3+ years, with inventories expected to be exhausted between 2021-2023, and Kazakhstan experiencing bottlenecks and acid shortages at new deposits.
US natural gas production is declining sharply, down 5% in 2023, with major shale basins like Marcellus and Permanian expected to roll over in 2024, following the pattern of earlier peaks in Eagleford (2015) and Bachan (2020).
Gold stocks are at historically low valuations, with big producing companies cheap based on price to net asset value and discounted cash flow models, while exploration companies with promising projects are the most undervalued.
Silver typically lags behind gold in bull markets, eventually catching up with a 150-175% move, a pattern that has repeated throughout history.
Institutional investors, particularly hedge funds, are driving uranium investment, with performance pressure from allocators causing rapid changes in capital allocation, while retail investors’ emotional reactions and actual capital contribution remain unclear.
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