Since December 2023, 25% of silver has flowed from London to New York in anticipation of potential Trump tariffs, with only 30% of London silver now available for delivery.
The 1970s saw 3 inflation waves, each higher than the last, with silver up 28x in 10 years vs 14x for gold, as the S&P lost 70% in real terms.
Gold and silver are nearing all-time highs, with gold currently at $2,774, just $25 away from its intraday all-time high of $2,800.
The bond market disagrees with the Fed’s rate cuts, as the 10-year yield rose 100bps despite the Fed cutting rates by 100bps since September 2023.
The U.S. debt burden is at record levels, with interest payments becoming the biggest cost for the Treasury, necessitating money printing.
China has been paying 10% premiums over US silver prices, with solar panel manufacturing consuming 20% of global silver supply.
Military applications are a strategic silver demand source, with 500 grams of silver used per Tomahawk missile.
Charts show that when the Fed cuts rates, silver gains an average of 32% in the first 24 months, with potential 300-332% returns from bottom to peak over 2-4 years.
Quality silver stocks, a small market, can deliver exponential returns (e.g., largest silver companies saw 16-17x returns in the last cycle).
Silver is irreplaceable in critical applications like batteries, communications equipment, and missiles, with one-time industrial consumption often ending in landfills.
Silver’s position as both a monetary and industrial metal (approximately 50% each) drives higher prices, historically outpacing gold in bull markets.
The race to accumulate metals and commodities is intensifying, with prices likely to surprise everyone due to radical policy changes in the US, driven by rising debt and a weakened dollar.
The US is spending an unprecedented 4-5% of GDP to service debt, potentially leading to debt restructuring or interest rate suppression to maintain economic stability.
The AI revolution and need to rebuild US grid infrastructure will drive demand for materials like copper, creating a bullish outlook for commodity markets.
Central banks are accumulating gold off-radar, causing a disparity between gold price movements and reported buying activity, potentially signaling a shift in global financial strategies.
Authoritarian regimes, especially China, are paying above market prices for mining projects to secure strategic metals, raising concerns due to China’s dominance in global metal refining capacity.
Geopolitical tensions and supply chain disruptions are prompting countries to secure metals directly from mining companies, bypassing exchanges to avoid price fluctuations.
The combination of strong tightening monetary policy and aggressive fiscal spending is creating a favorable environment for the US dollar, particularly relative to Europe, Japan, Canada, and Australia.
Latin America, with its abundant resources and neutral geopolitical relationships, is positioned to benefit from global changes in the coming decade, with potential growth in equity and housing markets.
Trump proposes replacing income tax with tariffs on foreigners, claiming it would raise economic growth, lower inflation, and increase average household income by $30,000 annually (40%).
The plan suggests eliminating income tax would make America the most attractive country for production, potentially drawing businesses from every country when combined with tariffs and regulatory cuts.
Replacing income tax with tariffs would result in a $1.5 trillion net decline in federal taxes, necessitating massive spending cuts.
The proposal argues that higher economic growth from not taxing work or entrepreneurship would lower inflation, as a larger economy leads to lower prices, offsetting tariff-induced increases.
The plan claims average households would see a $30,000 rise in annual income, with half from income tax elimination and half from higher economic growth.
The establishment, deeply entrenched in public and private institutions, poses a formidable challenge to Trump’s agenda, controlling legislation and regulations through the Israel lobby, military-security complex, and big pharma.
Corrupt judges and prosecutors within the judiciary system are poised to use lawfare against Trump, potentially tying his administration up in courts for four years without accomplishing policy goals.
The establishment’s strategy involves offering temptation to join and become rich to opponents, and if refused, subjecting them to relentless media attacks and smear campaigns.
The introduction of income tax in 1913 effectively re-enslaved the productive population, with rates reaching up to 50%, comparable to 19th-century plantation slaves.
Offshoring to countries like China and Mexico for cheap labor, driven by Wall Street, decimated American manufacturing cities, with Detroit losing 25% of its population between 2000-2010.
Regulatory agencies like the FDA, NIH, and CDC prioritize Big Pharma profits over public health, contributing to 60% of kids being permanently ill and the rise of turbo cancers.
Previous presidents like Nixon and Reagan faced significant establishment resistance, with Nixon’s arms reduction and China opening threatening the CIA budget.
Trump’s proposals include eliminating income tax, substituting with tariffs, and promoting a merit-based society, but face risks from the Israel lobby and establishment resistance.
The establishment uses lies to control narratives, exemplified by portraying the Civil War as primarily about slavery.
The Deep State and financial markets pose significant threats to Trump’s agenda, while the Israel lobby risks war with Iran, potentially distracting from crucial domestic issues.
This period represents a last chance for change, with MAGA Americans urged to demand harsher treatment of political enemies rather than complacency.
A potential Bretton Woods 2.0 agreement in H1 2025 could involve a weaker dollar, stronger yuan, and revaluing oil to 100 barrels per ounce of gold to rebalance global trade.
Repricing US Federal Reserve gold from $42/oz to $2,800-20,000/oz could create $600B-7T in new money for Treasury spending, effectively using gold to print money without increasing debt.
Negative real interest rates of 10-20% for 2-3 years are necessary to inflate away debt, achievable through yield curve control, gold revaluation, and transitioning to a neutral reserve asset like gold or Bitcoin.
China’s Deep Seek AI breakthrough, potentially scraping OpenAI data, challenges US tech dominance narratives and reduces US leverage, as China produces 434M smartphones vs US 140M, and 30M cars vs US 10M.
Trump’s ambitious economic goals of high tariffs, low taxes, and 3% deficit reduction by term end require a weaker dollar to rebalance US-China trade, according to Scott Bessent.
Europe’s strategic decisions, such as relying on American military bases for economic stimulus and pursuing green energy policies without cheap baseload power, have undermined their autonomy and competitiveness against China.
Bitcoin-backed lending and stablecoin Treasury requirements exemplify private markets adapting to impending financial system changes, with Bitcoin becoming a collateral asset in the new monetary landscape.
The private sector is naturally recapitalizing with Bitcoin, as seen in dual-collateralized commercial real estate products using Bitcoin and property, and MicroStrategy using Bitcoin as collateral for convertible debt.
Defaulting on sovereign debt is not possible as it’s the banking system’s collateral, and a productivity miracle is unlikely to arrive at the right time to avoid economic collapse.
Negative real rates are a national security issue for Russia and China, as they can’t afford to store dollars in inflating U.S. debt, leading to potential de-dollarization and a shift to gold or Bitcoin as neutral reserve assets.
Financial repression through negative real rates is a tax on Americans, shrinking disposable income and slowing the economy, while China and Russia buy real assets to avoid holding U.S. debt.
US true interest expense is 111% of federal tax receipts, necessitating a big print to inject dollar liquidity, with the Fed potentially cutting rates despite rising inflation and growth.
US net interest is 60-70% larger than defense spending, with negative real interest rates of 10-15% above inflation needed for 2-3 years to rebalance, as historically, hegemonic powers stop when interest exceeds defense spending.
Trump’s $500B AI investment vs Deep Seek’s $6M cost highlights potential misallocation of US capital and questions US tech superiority, potentially reducing US leverage in global negotiations.
Gold price reached record highs against the dollar despite a strong USD, driven by geopolitical shifts, US administration change, and massive central bank gold buying exceeding 1,000 tons annually.
BRICS nations are accumulating gold to settle trade imbalances, contributing to increased global demand and price surge.
US debt-to-GDP ratio projected to surpass 200% in 20-30 years, reaching levels similar to Japan and Greece, signaling potential economic instability.
Rising rates and embedded inflation are reversing the decades-long bond bull market, impacting traditional investment strategies.
Silver trading at historic low ratio to gold (90:1), entering 5th year of structural supply deficits, suggesting potential for explosive price movement.
Gold stocks lagging behind gold price increase, trading at historic low ratio to gold, presenting undervalued opportunities as gold miners benefit from rising prices.
Silver is poised for a vertical price rise to $50+ in 2025, potentially reaching $100 in the next bull market leg, triggered by a stock market breakdown.
The silver-to-gold ratio at a multi-decade low of 5% suggests potential for triple performance of silver miners if it breaks out of the current range.
Central banks are expected to engage in aggressive monetary expansion upon a stock market crash, leading to a commodity boom.
Focus on larger silver miners like Pan American Silver, as majors may acquire juniors when public interest grows in this overlooked sector.
Consider a market neutral strategy by buying Emerging Markets and shorting S&P to profit from the ratio difference between these categories.
Gold miners could surge relative to S&P if the XAU/S&P ratio breaks out of its 9-year base, potentially reaching 18% of S&P price.
Uranium is in a major corrective pullback, likely finding support around the low $70s; focus on miners when uranium futures stabilize in the low $30s.
Copper is basing around $4.20 after last year’s high above $5, and tends to move with the Bloomberg Commodity Index.
Crude oil is attempting to break out on quarterly momentum after a multi-year range, but may be less of a leader compared to grains this time.
India and Japan, key economies, are breaking technical levels and could cause rapid market shifts coincident with a US market decline.
Free money and zero interest rates for 10-15 years have created the biggest stock market bubble in US history, which rate cuts won’t remedy when it bursts.
Replacing the $2.5 trillion income tax with tariffs would require a 65% tariff rate on the $3.8 trillion import base, up from the current 2%, assuming no reduction in import volume.
Historically, tariffs raised only 2-3% of GDP, while income tax currently raises 10% and payroll tax 5-6%, necessitating drastic federal spending cuts to replace income tax with tariffs.
High tariff rates create a conflict of goals for supporters, as they can reduce tariff revenue by shifting consumption from imports to domestic goods, contradicting the desire for both high revenue and reduced reliance on foreign goods.
The Smoot-Hawley Tariff of 1930, the highest tariff rate in US history up to that point, coexisted with enormous marginal income tax rates, illustrating the potential for a “worst of both worlds” scenario.
Tariffs have a built-in “escape valve” where excessively high rates cause people to switch to domestic goods, while income tax has fewer alternatives to avoid taxation, making tariffs a safer way to raise revenue.
Economists generally favor consumption taxes like tariffs over income taxes, as they lessen the tax burden on saving and capital formation, but tariffs’ narrower base requires higher rates to raise equivalent revenue.
Historically, economists focused on discrediting tariffs due to their potential to make countries poorer, countering the persistent narrative since the mercantilist era that tariffs create jobs and benefit workers.
To implement a tariff-based tax system, drastic spending cuts would be necessary to avoid skyrocketing federal debt or excessive money printing, which would lead to inflation and higher prices for goods.
Gold prices are rising due to 25% tariffs on imported gold from Canada and Mexico, potentially causing shortages and increased demand for domestic gold.
The US national debt is concerning, with an estimated deficit of $2.2 trillion, potentially exacerbated by Trump’s proposed tax cuts.
The US government is now 10 times larger as a percentage of GDP compared to the 1880s, with current spending at 25% of GDP.
Replacing income tax with a national sales tax would require an impractical 65% average tariff, leading to importing inflation.
Social Security operates on a pay-as-you-go model, with $1.7 trillion coming in and $1.5 trillion going out, primarily funded by payroll taxes.
Drastic spending cuts and entitlement reforms are needed to address the national debt, particularly for programs like Social Security, Medicaid, and Medicare.
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