Friday Recap (5/23/2025)

AU: $3356 ($3201- Last Week Spot)
AG: $33.45 (32.26)
HUI: 397 (365)
DXY: 99.0 (100.9)
S&P: 5802 (5958)
10-Yr: 4.52% (4.4%)
Oil: $60 (62)

I keep saying that shock#2 is coming via tariffs (shock #1 was Liberation Day) and that Trump is not going to back down on using tariffs to accomplish his economic objectives. Today, he declared a trade war with Europe, and the S&P was only down 20 points. The pundits all said it was just another bluff, and they are calling this another TACO threat (Trump Always Chickens Out).

What Wall St has wrong is that Trump only wants one-way deals, whereby the US gets lower tariffs because it has the best market. Europe is not likely to agree to a one-way deal. I expect this trade war with Europe to linger until the recession begins.

The Big Beautiful Bill (BBB) passed the House this week and is now in the Senate. It caused long-term rates to rise this week and the S&P to fall. The dead-cat bounce that I expected is now showing its face. I expect to see 4800 before 6000. The BBB also implied that Trump has no intention of lowering the budget deficit for 2026 (I remain puzzled why he thinks he can balance the budget). This caused gold to rise this week, along with silver and the miners. The HUI had a strong week and almost reversed to 400, closing at 397 today.

The higher interest rates are supposed to help the dollar and attract investors into USTs, but alas, the opposite happened and the dollar dropped. Foreign investors no longer want our long-term bonds (10-year or longer maturities). Some think that higher long-term rates will sink the stock market. My take is that longer-term rates are about to top out and are soon going lower as we head into a recession.

The last time the gold/silver miners had an extended run was from 2002 to 2011. For history to repeat, we need a fear trade, which has been absent as the S&P ripped from 666 to 6100 since 2009. This is why I continue to wait for the stock market to crash, which is essentially the same thing as waiting for the recession. I think we are close. Trump seems determined to create a recession with his tariff strategy.

My recession call implies that stocks are heading much lower. That means headwinds for gold, silver, and the miners. I expect one more leg down for everything in the near term, except for the dollar, which should hold or rise a bit. Rates will drop, which means bonds will have a short-term benefit until they turn on the money printer.