Friday Recap (5/16/2025)

AU: $3201 ($3323- Last Week Spot)

AG: $32.26 (32.69)

HUI: 365 (400)

DXY: 100.9 (100)

S&P: 5958 (5664)

10-Yr: 4.4% (4.3%)

Oil: $62 (61)

Stocks ripped and gold corrected this week. The S&P 500 has been on a tear, up 300 points this week. Gold was down $100, at one point down 9% from its recent high. The HUI went back into its channel from hell, but closed today at the upper end of the range (365). I doubt it will remain above this level. My expectation is that the economy is slowing and heading into a recession. If I'm right, then the stock market is going to crash. That will push gold lower, and the HUI will once again go back into the channel from hell.

The question is, where does gold find its next cycle low? Will it be $3100, $3000, $2900, or $2800? We can only guess. I think silver is the tell. By refusing to break out above $35, silver is telling us that a leg down is coming. I think we can expect the HUI to reach sub 350. My target is 300 to 330. Silver likely won't hold $30. My target has been $27 to $28. All we can do is wait for the bullishness on Wall St to end, and the fear trade to begin. Until then, silver and the HUI are both trapped.

What is shocking to me regarding the stock market's recent run is that Trump crashed the market on April 2nd (Shock #1) with his tariff announcement, then his two trade deals with the UK and China have been accepted as a victory by Wall St. They are not a victory. They are a tax. Since when are taxes good for the economy? My guess is that shock #2 is coming when Wall St finds out that Trump is not backing down on tariffs. Hasn't anyone figured out yet that he can set tariff rates with a stroke of the pen?

The US economy is not in good shape. Here are some facts. If you exclude Amazon, companies that provide consumer discretionary goods had net negative earnings in Q1. Housing is in a slump. Most auto dealers are not happy with the coming tariffs. If you lose a high-paying job, it will take you many months to replace it. Most families' budgets are under stress from the 25% cost-of-living increase since 2020. How many people got a 25% raise during that period? This is why bankruptcies and credit card delinquencies are on the rise. There are no green shoots, and Trump just taxed the consumer about 10% on their goods purchases.

This feels like the calm before the storm. Wall St is having a party and laughing at the University of Michigan consumer confidence report, which is near an all-time low. The hubris on Wall St is about to get a smack in the face. America is in trouble, and everyone is in denial on Wall Street. Trump says the tariffs are to help Main Street. In actuality, Main Street is getting taxed so that the top 1% can maintain their standard of living. What's the saying? Same as it ever was. Someone has to pay the piper to keep the bond market intact. The question is, will these tariffs buy us any more time? Probably not.