The US economy faces potential crisis due to record debt levels, struggling commercial real estate, and geopolitical tensions, with the yield curve inversion and leading economic indicators signaling an impending recession.
Central banks are cutting interest rates despite bubble conditions in stocks and housing, potentially leading to a loss of faith if their strategy to preempt an economic downturn fails.
The 2020 COVID-19 crisis led to a 40-60% increase in US money supply, causing 10-15% inflation, with concerns that a war could trigger similar inflationary pressures.
The Federal Reserve’s pivot from fighting inflation to focusing on the labor market suggests they perceive greater danger in weakening demand than in inflation.
In a crisis, gold is initially the best asset, but dollar-cost averaging into high-quality mining stocks is recommended to navigate potential market volatility.
Silver is becoming more industrial than monetary, with solar panels and solid-state batteries increasing demand, potentially leading to shortages and price spikes.
The biggest concern is the risk of nuclear war, with the US potentially blundering into conflicts with major powers, alongside trends towards authoritarianism and restrictions on free speech.
Globalization may be ending, with nationalism potentially shaping the future, raising concerns about the impact on financial markets and the potential for a high-tech dictatorship.
The total number of employed workers in America decreased by 66,000 from August 2023 to August 2024, marking the first negative year-over-year change since the 2020 COVID recession.
While the establishment survey shows a gain of over 2 million jobs in the past year, most are part-time positions, suggesting an economy where many are taking multiple part-time jobs to make ends meet.
The year-over-year measure of full-time jobs has been in recession territory for five consecutive months, with full-time jobs declining every month since February 2024.
Both the Philadelphia Fed’s Manufacturing Index and the Leading Economic Indicators Index are in recession territory, with net saving negative for six quarters in a row, a level not seen since the 2008 global financial crisis.
The Federal Reserve faces a choice between rising price inflation or recession, as the economy’s “easy money addiction” will lead to a bust phase if liquidity is reduced, potentially triggering a new surge in price inflation.
Gold is gaining market share over Western debt as a neutral reserve asset, with the premium in Shanghai vs London/New York shrinking to zero, indicating potential price stability for the next 6 months.
The BRICS nations are developing a new system of international trade that de-emphasizes the dollar’s power and US sanctions risks, while re-emphasizing gold’s role as a neutral reserve asset.
A generational arbitrage between natural gas and oil is driving engine switching in China, with US and Canadian natural gas prices often trading at or below $0, creating an enormous opportunity for oil prices to decline.
The current oil market is pricing in very little war risk between Israel and Iran, with crack spreads on the floor and calendar spreads signaling weakness, indicating a lack of demand for oil.
Silver is becoming less monetary and more industrial, driven by gold’s reemergence as a reserve asset, with the marginal ounce directed towards solar panels (20g/m²), making it a speculation on the solar industry.
The gold-to-silver ratio serves as a strong indicator that the green revolution is dissipating, as market behavior doesn’t suggest that solar-related materials are cheap or at a tipping point.
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