The U.S. has experienced 50 years of continuous trade deficits, leading to de-industrialization as manufacturing moves abroad and capital returns as financial assets like Treasuries and stocks.
The dollar’s reserve status is intrinsically linked to the U.S. trade deficit, with global demand overvaluing it and making U.S. exports uncompetitive compared to countries like Japan or Germany.
A multipolar world with regional reserve currencies or neutral assets like gold or Bitcoin is proposed as the only solution big enough to make global finance run smoothly.
The U.S., representing 25% of global nominal GDP but only 15% of purchasing power parity GDP, has been industrially hollowed out with no other country large enough to be the sole global reserve currency.
The U.S. has the highest healthcare costs per capita, making American workers more expensive to hire than those in China, Vietnam, or even Japan, despite Japan’s 10-year older population and longer life expectancy.
The U.S. is facing a trade deficit standstill, with shipments down 30% at the Port of Los Angeles, potentially impacting retail shelves in the summer.
Taiwan’s $1.7T in FX reserves and overseas securities (over 200% of GDP) demonstrates mercantilist policies of purposely devaluing currency to remain competitive and build global assets.
China is building a quorum of countries to work against U.S. efforts to form a blockade, while U.S. tariffs aimed at China have had limited impact on their main target.
Retail investors aggressively buying dips while professional investors are spooked is considered a bearish sign by Lyn Alden.
Alden suggests caution, diversification beyond MAG 7, preferring Bitcoin over equities, gold over long bonds, and selling cash-secured puts in volatile markets.
Sustained, meaningful dollar devaluation to impact the trade deficit would require printing dollars and buying reserves on a trillion-dollar scale, risking inflation, bond market selloff, and higher yields.
80% of the time when the S&P 500 rises for nine consecutive days (a 1 in 400 event), it occurs in recessionary environments, as observed in data compiled by Dr. Robert Schiller dating back to 1880.
The Conference Board’s leading and lagging indicators have been extremely accurate in predicting recessions, with the current ratio suggesting an impending recession, supported by the US economy’s contraction in the first quarter.
Home prices are falling in various areas, including a 10% decrease in Florida and Texas, while Phoenix, Arizona has seen a 30% increase in active listings within just 2.5 months.
The subprime share of borrowers with debt-to-income ratios exceeding 43% has reached 65%, a level not seen since the 2008 financial crisis, indicating potential mortgage payment struggles.
The stock market shows signs of a crash, with the Dow Jones Industrial Average and NASDAQ forming quadruple tops and septuple tops respectively, creating strong resistance levels.
The Federal Reserve’s reactionary approach to monetary policy, known as the “Bernani bust,” may lead to a large crash due to delayed interest rate cuts.
Wall Street firms like Goldman Sachs have dramatically increased gold price forecasts to $3,700-$4,500 by year-end, signaling a major shift in institutional sentiment.
The Commitment of Traders (COT) report reveals banks covering short positions and hedge funds reducing long positions by half since early February, indicating a significant repositioning in the gold market.
A disconnect between retail investors and financial institutions exists due to PTSD from past market downturns, causing long-time investors to misread the market despite banks now accepting structurally higher gold prices.
Gold-backed ETFs are experiencing inflows, while gold stock ETFs see outflows, reflecting a sentiment driven by die-hard investors who buy gold but invest in underperforming smaller gold stocks.
Silver is lagging behind gold despite strong bullion prices, but is expected to catch up and break out when gold reaches a certain level, creating its own momentum and inertia.
Gold’s consistent upward trajectory since December 2022 and its break from tracking real interest rates in 2022 indicate a structural shift in market dynamics, possibly driven by central bank demand and Fed/Treasury actions.
Central bank demand for gold, with 3,500 metric tons purchased between 2022-2024, underpins current gold prices and prevents shallow pullbacks as banks struggle to cover shorts in declining prices.
Gold’s outperformance of the stock market, bond market, and other assets since December 2022 suggests a structural change in market behavior, driven by central bank demand and other factors not yet fully understood.
Cut through the clutter and mainstream media noise. Get free, concise dispatches on vital news, videos and opinions. Delivered to Your email inbox daily. You’ll never miss a critical story, guaranteed.