The BRICS summit has expanded to include oil-producing countries, making it a key event to watch as these nations develop portfolios in real assets beyond oil.
States like Florida, Texas, and Wyoming are passing laws to make gold and silver legal tender, even issuing gold and silver digital currency as a hedge against potential fiat currency crises.
The Trump administration supports Bitcoin and digital currencies, with plans to stockpile various forms, while the Fed lags behind China and Brazil in realizing digital currency.
Despite Fed rate cuts, the 10-year Treasury yield has increased from 3.6% to 4.4%, indicating stress and debt anxiety in the financial system.
Gold is expected to reach $4,000 in the next year, driven by sovereign demand, tier one liquid asset status, and central bank purchases.
The Basel 3 regulation will classify gold as a high quality liquid asset, leading to increased bank purchases to augment portfolios and reduce debt.
Trade wars and tariff battles between the US and China are pushing countries to develop economic autonomy, creating global stress felt by consumers and companies.
Silver, with its industrial uses, hasn’t experienced the same tailwinds as gold due to trade uncertainty and economic stagnation, but is expected to eventually reach $50.
The $7.2 trillion in money market funds, a $2 trillion increase in just 2 years, signals potential underlying economic issues and contrasts with the 20-year period for a similar increase between 1981-2001.
The index of leading economic indicators has been in freefall since 2021, coinciding with the rapid rise of interest rates from 0% to 5%, affecting key metrics like consumer goods orders and manufacturing.
The US small cap index has declined by 13% since 2021, affecting small businesses that are responsible for 43% of overall GDP and half of the jobs in the economy.
The price of a barrel of oil is one of the most influential financial variables of the last 150 years, capable of triggering a recession independently and putting immediate downward pressure on economic growth.
Rising interest rates on cash, controlled by the Federal Reserve, significantly impact economic growth by diverting capital from areas like research and development, infrastructure projects, and business expansion.
China employs a hybrid approach combining state-led planning with market forces, selectively pulling back to allow competition while harnessing advantages of the American system like avoiding monopolies.
Beijing’s industrial policy focuses on strategic industries like aerospace, AI, and next-gen information technology, as well as manufacturing, to drive economic development and elevate quality of life.
China’s trajectory emphasizes building national resilience by becoming a strong player in various industries, including robotics, AI, steel, and aluminum.
China’s industrial policy has evolved with different strategies used over time, such as joint ventures, targeted industry support, and protection of domestic industries through tariffs and non-tariff barriers.
The Chinese government has invested heavily in public spending on science and research in target areas like satellite technology, space, solar, and semiconductor technology.
China’s industrial policy has successfully driven growth in strategic industries, with domestic companies like Huawei and BYD emerging as global leaders in telecom equipment and electric vehicles.
The US has never been a true classical free market, with government regulatory agencies like FDA and EPA playing crucial roles in public safety and environmental protection.
US strengths include its universities and companies built on pillars of American power and innovation, such as government regulatory agencies and research at national labs.
China’s focus on manufacturing in the physical world, as opposed to a consumer-focused economy, is driving policies supporting robotics, autonomous vehicles, and industrial automation.
Factories worldwide may reorganize their supply chains with China at the center as it becomes the world’s preeminent technological and economic superpower.
The US potentially squanders its strengths, including its ability to attract international talent and capital, which are crucial pillars of American innovation.
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