Central banks worldwide are reducing short-term interest rates while long-dated bond yields rise to decade-highs, posing risks to economies with high debt-to-GDP ratios, particularly Japan at 300% with a 3% 30-year bond yield.
In May 2025, gold deliveries are 700% higher than May 2024, with large quantities of 100 oz bars disappearing into physical vaults, suggesting significant demand and potential market impact.
Gold mining stocks like GDX and GDXJ are undervalued compared to gold price, with P/E ratios as low as 6-9, presenting a buying opportunity as earnings grow faster than analyst predictions.
In 1933, US President Roosevelt closed banks for two weeks, causing a 100% stock market increase in the following months as people feared losing access to gold.
BRICS nations, led by China, could hypothetically create a new gold-backed currency, allowing electronic conversion to gold to address trade imbalances.
The US government could potentially announce a new gold-backed dollar overnight, with temporary restrictions on converting old dollars, benefiting those holding gold.
Artificial Intelligence will dramatically change the labor market, making certain individuals 10x more productive, with those mastering prompt engineering gaining a significant advantage.
AI enables one-person businesses to thrive by handling tasks like tax returns, websites, and sales inquiries, reducing the need for large teams.
Investors should identify companies achieving the largest cost savings and productivity increases from AI adoption, particularly those with large workforces or databases.
From 2000-2011/12, gold saw 300-400% returns while the S&P 500 had negative returns, demonstrating gold’s potential as an alternative investment during stock market stagnation.
If large cap stocks like Microsoft, Nvidia, Intel, Google, and Facebook pause rising, investment managers may shift to gold mining stocks for momentum, cheap valuations, and growing earnings.
The US trade deficit, tied to the dollar’s status as the world’s reserve currency, has persisted for decades due to overconsumption, unlike India’s structural deficit funding long-term development.
The dollar’s excess demand from being a reserve asset, unit of account, and involved in 90% of currency trading pairs creates a perpetually overvalued dollar, contributing to US deindustrialization.
The US can run 7% of GDP deficits and decades of trade deficits due to a structural bid for US assets, allowing deindustrialization that would be difficult for other countries.
The fiat currency system, with fractional reserve lending, requires perpetual dollar growth, leading to a 20:1 dollar-debt ratio and potential liquidity issues if defaults occur.
The US dollar’s network effect as the primary reserve currency, combined with historical forceful measures against competitors, has allowed large deficits but risks a severe reckoning.
US trade deficits create excess dollar demand, making manufacturing uncompetitive and hollowing out the industrial base, with decades needed to change supply chains and facilities.
Trump’s tariffs tax US consumers and businesses like Walmart with 4% margins, as suppliers face 10-30% tax, passing costs to consumers and requiring years to relocate supply chains.
Fiscal dominance means fiscal policies matter more than monetary policies; running a 7% of GDP fiscal deficit is more impactful than Fed rate cuts.
Neutral reserve assets like gold and Bitcoin could tie together a multipolar currency world (US, China, Europe), absorbing excess currency without imbalancing trade.
Central banks are gradually buying more gold than treasuries, a trend that started in 2009, with the US potentially adding trillions in reserve assets to reach 5-10% of GDP.
Fiscal issues matter more than monetary changes for investors; watch for changes in US fiscal deficits and China stimulus, with the latter less significant than half a trillion dollar consumer spending.
Japan’s 250% debt-to-GDP limits central bank action, as raising rates would increase the deficit more than reducing inflation, stemming from fiscal dominance.
The ASEAN+3 (China, Japan, South Korea) recommits to free trade and a mini-IMF, showing unity among sometimes unfriendly nations and potential financial warfare risk.
The Skyscraper Curse is an uncanny correlation between constructing the world’s tallest buildings and subsequent global economic crises, supported by Austrian Business Cycle Theory (ABCT).
The Skyscraper Index serves as a unique and deadly serious indicator of economic downturns, consistently vindicated throughout history for major crises like the Great Depression, 1970s stagflation, and 2008 financial crisis.
Artificially low interest rates induce economic booms, particularly in real estate, automatically translating into higher asset and land prices in central business districts.
The curse is not caused by skyscrapers themselves, but by the preceding low interest rates that stimulate long-term investments in these projects.
The Empire State Building exemplified the curse, averaging less than 50% occupancy from 1931 to 1941 and earning the nickname “empty state building” in New York City.
Dr. Mark Thornton’s book explains how the Austrian theory of business cycles provides a more accurate explanation than mainstream macroeconomic theories by integrating real shocks and psychology within a microeconomic framework.
Richard Cantillon, an 18th-century economist, first explained the impact of increasing money supply on interest rates, foreign exchange ratios, and asset prices.
The resurrection of Saudi Arabia’s Jeddah Tower project, set to become the world’s tallest building around 2027, raises concerns about another potential global economic crisis.
The injection of new money into the economy can have distribution effects, leading entrepreneurs to make investments that later go bust and cause a general economic slump.
The Austrian Business Cycle Theory (ABCT) demonstrates how economic shocks and psychological shifts are brought about endogenously, not exogenously, within the economic system.
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