Friday Recap (1/10/2025)

AU: $2692 ($2639 - Last Week Spot)
AG: $30.32 (29.58)
HUI: 292 (284)
DXY: 109 (109)
S&P: 5826 (5942) (down 4.5% from ATH)
10-Yr: 4.7% (4.6%)

Oil: $76 (73)Last Friday the dollar rocketed to 109 and the 10-Yr bond to 4.6%. We wondered if that would hold this week, and it did. Subsequently, the S&P closed down over 100 points this week to 5826, and is now down 4.5% from its ATH at 6099. Is this the correction we are waiting for? Stay tuned. My guess is no, and that we will have one more rally above 6099.

What's driving the DXY and 10-Yr? It is clearly higher inflation expectations, also revealed by oil rising to $76 this week (with a strong dollar). The prices paid for services PMIs this week was a shocker (up 6% on an annualized basis). That seemed to put a floor under the 10-Yr bond and the expectation for more aggressive rate cuts.

Trump held a press conference this week and said interest rates are too high. Thus, he wants rates lower to help the economy and the stock market. But how does Powell pull that off without aggressively cutting rates and igniting inflation? A catch-22 situation.

Since Powell began raising rates over two years ago (March 2022), he has never been in this big of a pickle. He now has no easy choices. All he can do is pray that he can land the plane with a soft landing without crashing into a recession. Meanwhile, the black swans are getting closer and closer to appearing. What's going to come out of left field and smack this economy in the face? The CNBC Halftime show was overjoyed with the jobs numbers today, saying the economy was strong (and that you are an idiot for not owning stocks), ignoring the fact that Powell is up to his eyeballs with problems. I'll name the top three, but I could easily name a plethora: DXY, 10-Yr, and inflation.

Many PM investors are excited that gold is nearing $2700, and silver appears ready to rip higher after being pushed back below $30. As I have said repeatedly, you can forget about the HUI breaking out to a new cycle high (354) or silver ($34.70) until the bull market on Wall St ends. Gold might be leading, but that's not enough. The miners are telling the real story. Just look at the HUI today. It was flat, while gold was up $15. The HUI is at least 10% below where it should be, as is silver. What are they telling us? The cycle lows for 2025 are not in.