The bond market is signaling that rates must go higher to compensate for poor currency performance and inflation, overriding central planners’ intentions.
Short positions on SLV ETF are at a 14-year high of 54 million ounces, while the exchange for physical on silver spread is at a 14-year high of $114, indicating potential physical shortages or financial stress.
Sovereign wealth funds, central banks, and nations like India and Saudi Arabia are quietly accumulating silver and gold as strategic assets.
The manipulation of precious metals markets by central planners and big money is expected to end badly, potentially triggering systemic consequences.
Gold and silver have broken out to new highs, with gold above $3,500 and silver past $41, signaling a global loss of confidence in currencies and bonds.
Despite record demand, gold and silver remain heavily manipulated through outsized short positions on COMEX and ETFs like SLV, masking shortages and keeping prices artificially low.
The current bull market in gold and silver is characterized by shallow corrections that don’t last long, indicating strong underlying physical demand.
The public remains oblivious to the quiet accumulation of gold and silver by big money, creating a potential for significant price movements when awareness spreads.
The bond market suggests that interest rate cuts would be a short-term debt relief tool but at the cost of massive money printing and more inflation.
Precious metals are breaking out of a multimonth consolidation, with prices expected to continue rising as shortages become apparent and big money accumulation is recognized.
The current market represents a “once-in-400-year event” where people are losing trust in paper money and turning to gold and silver as safe-haven assets due to growing global debt.
Silver is expected to outperform gold, with a potential gold-silver ratio of 32:1, as it breaks out of its 40-handle resistance level and builds a solid base.
The HUI gold mining index has been rocketing in the past year, showing strong momentum with green candlesticks, but needs consolidation before continuing its upward trend.
Family offices, hedge funds, and pension funds are anticipated to start buying gold and silver as a hedge against dollar collapse, questioning the safety of US debt.
Saudi Arabia and the Russian central bank have begun purchasing silver for their strategic reserves, while the US Department of Interior has declared silver and platinum as critical minerals.
The silver price is expected to break through the $50 mark and close above it, triggering a new paradigm in the market and leading to a massive buying frenzy.
Platinum is predicted to overcome its current discount to gold due to South Africa’s multiple problems, including electrical power issues and the need to extract from deeper mines.
Central bankers are expected to start buying precious metals as they realize the bond market is on fire in Japan, the UK, Germany, and France.
The signal-to-noise ratio for precious metals is still in the noise phase, but when mainstream media starts discussing gold ownership, it will indicate the market top.
The rise in precious metals is attributed to a lack of confidence in paper currency, with the trend expected to continue and accelerate in the coming months.
Gold’s recent breakout from a 13-year cup and handle pattern in March 2024 was the second biggest in its history, signaling potential for significant future growth.
The gold-to-60/40 portfolio ratio broke out of a 10-year base in March 2024, historically indicating the start of a new bull market in precious metals.
Technical analysis suggests the gold secular bull market will last until the mid-2030s, with a possible peak in 2037 and a cyclical bear market around 2029-2030.
The silver market is poised for the second biggest breakout of all time, with potential to reach $100 within 12-15 months after breaking out of its 45-year long base.
Based on historical ratios, silver can reach four digits in the future, with major peaks in the gold-silver ratio all under 20.
The current economic environment more closely resembles the 1960s and 1970s than the 2008 financial crisis, with a secular bear market in bonds as a key factor.
Jordan Roy-Byrne expects the stock market to roll over into a secular bear, causing capital rotation from stocks to gold, similar to the early 1970s and 2000s.
Gold and silver mining stocks are in a sweet spot for outperforming metals, with their performance tied to real price (metal price divided by CPI inflation rate).
Silver exploration companies with less than 50 million ounces of silver and potential to grow above 100 million ounces are likely to be huge winners.
The key to success in the current bull market is buying and holding the best companies at good values, rather than attempting to trade based on macro predictions or market timing.
Jordan Roy-Byrne’s Daily Gold service focuses on in-depth analysis of gold and silver stocks, including a top 10 list, model portfolio, and detailed company notes.
The Federal Reserve’s nominal independence is a myth, as it has always been dependent on the executive branch and works closely with the Treasury to finance government debt and implement policy goals.
The revolving door between the executive branch and the Federal Reserve undermines its independence, with many Fed chairs and governors having previously held positions in the Treasury or as chairs of the Council of Economic Advisers.
The Fed’s independence rhetoric is misleading, as its dependence on the executive branch compromises its ability to make autonomous monetary policy decisions.
Current job market data is weak, with only 30,000 average job creation over the last three months, revised down employment numbers, and decreased labor force participation.
The unemployment rate for recent college graduates is higher than the median worker rate, potentially leading to a “college bubble” if the trend continues.
The number of job openings is now less than the number of unemployed persons, a trend not seen since 2019, suggesting an increase in the unemployment rate.
The economic situation is concerning from a 50-year perspective, potentially leading to declining productivity due to young people’s inability to secure jobs, afford housing, and start families.
The stock market is driven by expectations of increased liquidity rather than fundamentals, as evidenced by rising stock prices following negative labor market news.
The current economic situation mirrors the Great Recession of 2009-2010, with millennials experiencing soft job markets and declining home ownership rates in their 30s and 40s.
Austrian economists argue that GDP is a flawed measure of economic growth and standard of living, as it only accounts for market production and ignores household production and leisure.
Leisure is considered a valuable consumer good by Austrian economists, who believe people choose to obtain it through work, despite its exclusion from GDP calculations.
The Fed’s policy of lowering interest rates to stimulate the economy is counterproductive, leading to stagflation and continued price inflation.
The Fed’s decision to cut interest rates is influenced by the media cycle and the president’s attempts to take credit, with the Fed likely to price in a rate cut to avoid surprising the market.
The jobs market is weakening, with August payrolls at a weak 22k (vs expectations of 75k) and June payrolls revised to a loss of -13k jobs, signaling potential recession risk.
JOLTS data reveals fewer job openings than applicants, a situation not seen since early COVID, suggesting a significant economic slowdown.
The unemployment rate has risen to 4.3%, historically signaling the start of a recession when it bottoms and starts increasing.
Boomer retirements have removed substantial workforce experience, with many early retirees benefiting from stock portfolios boosted by trillions in stimulus.
The AI-driven economy is exacerbating job displacement, potentially replacing roles in legal, dental, and real estate sectors.
Taking a year off work in today’s fast-moving AI-driven economy creates a significant skill gap, making it challenging to re-enter the workforce.
Consumer stress is evident through surges in delinquency rates on student loans, credit cards, and mortgages, impacting the broader economy.
The maturity wall of corporate debt, with more companies’ debt re-rating monthly, adds pressure to corporate America’s margins.
The S&P 500 could correct by 8-8.5% if it falls to its 200-day moving average, potentially creating a healthy correction and buying opportunity.
Hedge risk by selling 20% of overbought assets, locking gains, and buying back cheaper when corrected, allowing for continuous accumulation while managing portfolio exposure.
Bullish oil bets at 17-year lows serve as a strong contrarian indicator for a potential reversal in oil prices.
The Fed should have cut rates earlier due to slowing employment data, but economists often focus on numbers rather than trends.
Fed rate cuts have an 88.2% chance of a 25bps cut on September 17th, potentially signaling a recession if the Fed is behind the curve.
Develop a framework for buying, selling, and trimming assets, or outsource to professionals, as most people struggle with selling and rebuying.
The housing market shows signs of trouble, but Warren Buffett’s Berkshire Hathaway is investing in fundamentally cheap homebuilders like Lenar and Dr. Horton.
Build multiple income streams and a savings bucket of 6 months’ salary to survive potential job loss during a recession.
Invest in personal skills and education to remain competitive in the rapidly evolving job market, especially in AI-driven sectors.
Focus on strengthening earning, saving, and investing “muscles,” prioritizing earning potential during economic downturns.
The Federal Reserve faces an impossible balancing act between jobs and prices, as lowering rates to stimulate growth could raise inflation, while raising rates to combat inflation could worsen unemployment.
US debt service is already at $1.2 trillion annually, and if treasury yields don’t reflect the risk of debt and deficits, it could rise further, crowding out private entities.
The US trade deficit isn’t a loss, as it reflects other countries’ desire to access the $18-20 trillion consumer economy, with US dollars and treasuries still viewed as the gold standard in global finance.
Inflation indices fail to accurately capture individual experiences due to shrinkflation, hidden costs, junk fees, and dynamic pricing, leading to a disconnect between official figures and consumer reality.
AI-driven dynamic pricing will analyze patterns, customer behavior, and product combinations to determine prices in real-time, removing business owners from the equation and making it harder for consumers to track price changes.
Personalized pricing through AI will make it difficult for consumers to know if prices are rising, as they’ll only see their own version of pricing based on individual behavior.
Trump administration tariffs of 30-50% on various nations have been astronomical, with their full effect yet to be seen as businesses withdraw investments and small businesses panic.
Tariffs can lead to a slow squeeze on small businesses and consumers, causing products to disappear from shelves and companies to reduce production, inventory, and product sizes.
The Fed’s dual mandate of maximum employment and price stability contributes to inflationary pressures, and limiting it to a single mandate of price stability could help stabilize the dollar.
The Fed’s ability to quickly change the economy through monetary policy is why politicians want to keep it independent, but this also makes it difficult to reform or limit its mandate.
The impact of Fed actions is already visible in the decline in private domestic investment in the last GDP report, with the economy expected to be heavily influenced by China tariffs and the Fed’s response to job market softness.
Dollarization of the global economy is occurring slowly but is reversible if the US government adopts fiscal sobriety and stops using the dollar as a weapon against other countries.
Inflation expectations among the public have increased, with consumers expecting inflation over the next 1-5 years to be over 3%, potentially leading to a crackup boom if people start panic buying.
The US is transitioning from complacency to active flight from cash, driven by sanctions policy, BRICS efforts to bypass SWIFT with gold-based systems, and foreign central banks rotating from Treasuries to gold.
America is on the “on-ramp to hyperinflation” due to central banks reducing US dollar holdings, arbitrary tariffs, and increased US borrowing, resulting in skyrocketing interest on debt and unbalanced budgets.
Americans are overinvested in real estate as a hedge against inflation, while older savers turn to precious metals and younger investors to cryptocurrencies like Bitcoin to protect against a falling US dollar.
The gold-silver ratio has dropped significantly from 104 to 87, indicating a substantial increase in silver’s relative value and volatility.
The US is experiencing “stage two inflation” where people stop adding to cash balances and prices start rising, driven by continued government printing and inflation.
Mises’ three stages of inflation: 1) people absorb new money without diminishing demand, 2) prices rise and cash balance additions stop, 3) active decrease in money demand.
Corporate farms now produce nearly 2/3 of America’s food, up from just 4% in 1980, while 89% of dairies and 91% of pig farms have disappeared.
Small farms face 3x higher regulatory compliance costs per unit output and are 10x more likely to be penalized by environmental regulations, while corporate farms enjoy 30% lower cost of capital.
The FSMA produce rule can cost small farms 1/3 of their entire revenue, with water permits for farm ditches costing up to $250,000.
Farmers are now losing $81 per acre of soybeans and $118 per acre of corn, according to the University of Illinois.
Investment groups have acquired 30 million acres of farmland (equivalent to Iowa’s size), while total agricultural area has decreased by 300 million acres (9x Iowa’s size).
Gold’s breakout after a 5-month consolidation, coupled with a risk-off mix of falling bonds and rising gold, signals potential for continued upward movement in the precious metals bull market.
Gold stocks have outperformed the broader market, with higher quality stocks leading, yet ounces in the ground are still not valued at their historical levels, indicating potential for further growth.
M&A activity is expected to focus on mid-tier and smaller companies, as majors remain underinvested and concentrate on large copper-gold projects with significant execution risks.
Dana Lyons’ relative strength model selects dividend stocks with price momentum over income yield, focusing on ETFs like SDVY and TDIV for their strong price movements and breakout potential.
International markets, particularly China, are showing bullish signs, with recent breakouts to new rally highs after years of underperformance.
Uranium and platinum markets demonstrate strong performance, with uranium potentially setting up for another upleg after consolidating since its June breakout to new highs.
Silver, as a hybrid metal with industrial applications, offers a more volatile but potentially fascinating investment opportunity compared to gold.
Explorers are currently undervalued compared to developers in the mining sector, but success heavily depends on the quality of management teams.
Potential top signals in the gold market include overpaying deals, loosening discipline, and valuation models chasing higher gold assumptions.
The Sept-early Oct window is seasonally weak, suggesting investors should consider taking profits into strength and redeploying on support.
The current financing environment for junior companies is described as disciplined, with significant capital raises occurring without reaching speculative frenzy levels.
US bond yields are expected to rise significantly over the long term, but the short-term outlook remains uncertain, offering no compelling reason to be long or short in the bond market currently.
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