Friday Recap (12/13/2024)
AU: $2649 ($2632 - Last Week Spot)
AG: $30.54 (30.93)
HUI: 297 (296)
DXY: 106.9 (105.9)
S&P: 6051 (6090)
10-Yr: 4.4% (4.1%)
Oil: $71 (67)
The S&P 500 continues to remain above 6000, and is close to ending the year up around 29%, which is stunning when you consider that last year, the S&P was up 24%. With those kinds of returns, Wall Street thinks they are masters of the universe and the US economy is an unsinkable ship. It's no surprise, with that backdrop, that the gold/silver miners can't get a bid. Wall Street only buys gold/silver miners when regular stocks: technology, financials, healthcare, etc are struggling.
I was surprised when gold and silver were up on Monday and Tuesday. I could not understand why they were ripping higher. Gold was up almost $100, and silver around $1.50 (my guess was that it was from China buying). However, then they gave it all back, and both finished down for the week. But this is all noise. Gold and silver are not going to break out to $3000 and $35 until the fear trade arrives. That could be next week, or could take several months. I'm leaning toward the several-month scenario because of the current bullishness on Wall Street that Trump can keep the train rolling.
I feel certain that the debt bubble will burst, and my guess is that it will begin in 2025. All we need is for Wall Street to get nervous of that outcome, and it won't take much downward momentum. Once the S&P 500 gets below 5500, it's probably Katy-Bar-The-Door time. The Fed and US Treasury are trapped. They have to get the budget under control, but that requires a lower dollar. And to lower the dollar, they have to lower rates. But if they lower rates too fast, that will cause inflation. The Fed wants to be proactive, but the time has arrived when they must be reactive. It's just a matter of time now before they drop one of the balls. The clock's ticking, and Wall Street is in denial.
The big problem isn't the budget deficit, but the US Treasury bond market. However, the budget deficit is the US Treasury bond market's Achilles heel. If they don't get it under control, then the bond market begins to break. The Catch-22 is that to get the budget deficit under control (cutting spending) will require a serious economic downturn, one that nobody wants. It's basically a Hobson choice, and we know what they will choose: instead of cutting spending, they will likely blow up the bond market.
