Friday Recap (12/12/2025)
AU: $4289 ($4203 - Last Week) - - (Jan 1st $2623 = +63% YTD) (ATH $4381 Oct)
AG: $61.34 (58.31) - - (Jan 1st $28.97 = +111% YTD) (ATH $64.66 Dec)
HUI: 700 (661) - - (Jan 1st 289 = +142% YTD) (ATH 722 Dec)
DXY: 98.3 (98.9)
S&P: 6827 (6866) - - (Jan 1st 5881 = +16% YTD) (ATH 6919 Oct)
10-Yr: 4.18% (4.14%)
Oil: 57 (60)
The Fed lowered the Fed Funds rate this week to 3.5%. There is now dissent on the Fed, with two dissenting votes who did not want to cut, with concerns about inflation. It’s a messy situation, with Powell claiming inflation is under control because tariffs only have a one-time impact. In other words, he is claiming (once again) that tariff inflation is transitory. The Fed is also pivoting quickly away from QT and immediately into QE, with $40B monthly US Treasury purchases. The Fed said this $40B will likely be reduced after a few months, but let’s see if that turns out to be true.
Many believe the Fed Put is back in place, thereby supporting the stock market. But this is a dangerous game if inflation comes back. Ironically, the Fed is claiming that this new money printing will not be inflationary (they also claimed it wasn’t QE). Good luck with that! This renewed money printing will help support gold and could raise its floor well above $3500. I don’t see a path where gold does not trend higher in 2026 and 2027.
The Fed and US Government are faced with a very difficult situation. They have a $2T budget deficit and $1T in interest payments. As debt increases (approaching $40T), it becomes almost impossible to decrease our interest expense. The higher the debt goes, the more difficult it becomes to lower interest rates. It’s a doom loop, and we have already entered it. Why would you hold a long-term bond for a government that has a debt problem and continues to print money at a torrid pace? Those long-term bonds are becoming riskier as each day passes.
The solution is to cut spending and reduce the $2T budget deficit. However, that is not politically feasible because politicians believe that kicking the can (adding debt) is the best choice. We have been living off debt for so long that it has become the new normal. This is the slippery path of any addiction. It seems controllable at the beginning, but in the end, you lose control. America has lost control and is currently in denial. It won’t be long now before that addiction begins to have ramifications. It’s easy to see if you are paying attention.
There are a myriad of triggers ready to bring down the US stock market. A stock market crash is likely where the recession begins. Some think the stock market is stable, or will continue to have V-shaped recoveries for any corrections that arise. Perhaps we will get through 2026 without a stock market crash leading to a recession, but that is not my expectation. I’m expecting a crash and a recession. I’m waiting for it. With my expected outcome, the winner will be gold (and silver as its proxy). I don’t see a path where gold does not rise in 2026 and 2027. The only questions are the next gold cycle low (around $3700) and the 2026 and 2027 highs (around $4800 and $6000 is my guess). So, we wait for the stock market crash and the next gold cycle low, and then ride gold to $6000+.
I suppose I need to mention silver, since it had an ATH this week at $64.66, pushing the HUI to an ATH at 722. But this is always about gold. Silver is just along for the ride. Focus on gold. That is the big dog. Sure, silver will outperform gold, but it will also be much more volatile. Today was a good example, with silver dropping $3. We will see many trading days with silver down or up $5. But remember, this is about gold. If gold trends higher (it likely will), then silver will outperform gold. My target is $120 to $180 in 24 to 36 months, but only if gold leads the way.
