Friday Recap (7/18/2025)

AU: $3347 ($3354 - Last Week Spot)

AG: $38.11 (38.23)

HUI: 421 (430)

DXY: 98.4 (97.8)

S&P: 6296 (6280)

10-Yr: 4.41% (4.36%)

Oil: $67 (67)

This was a spin-in-place week. The S&P 500, which has been setting the tone, was up 16 points. It did hit a new ATH, but 16 points isn't much of a move. Gold was down $7. Silver was down 12 cents. The miners (HUI) were down 9 points. The dollar (DXY) was up .6 points, and back above 98. The 10-Yr was up .05 points to 4.4%. It's the summer doldrums. Not much action.

We can try to get excited about silver maintaining $38, as well as staying above $35 for several weeks in a row. But can silver rip higher without a fear trade? My guess is no. The GSR is at 88, so as strong as silver appears, it remains extremely undervalued. It has been playing catch-up to gold. The good news is that the floor for silver has likely risen significantly. The next cycle low will likely be somewhere above $32. It wasn't too long ago when that floor was around $27.

With the obvious recent strength in gold and silver, I don't think we have to worry about a deep correction. Moreover, any correction that comes will likely be short-lived, with gold quickly rebounding (and silver following). I don't think it will be long now before the fear trade arrives and the HUI can finally be off to the races (above 450). Newmont and Barrick are undervalued by around 50% at current gold prices. They both have FCF margins of around $1200 per oz. Newmont is currently generating around $1.5B of FCF per Qtr. Once the HUI breaks out, I expect Newmont to double in price quickly and lead all other gold miners higher. We can expect Hecla to do the same for silver miners.

The key for the HUI to break out into an extended bull market, as I have been repeating for months and months, is a fear trade. That will only happen when the stock market stops rising. If Trump is Mr. Taco, and extends the August 1st deadline, then we may have to wait a while longer. However, if he throws another Tariff Tantrum, then August could be our month when the selling begins on Wall Street.

We are entering weak seasonality on Wall Street, where September/October are historically the two weakest months of the year. My expectation is that Trump will stand firm on his August 1st deadline and begin a trade war with Japan and Europe. Plus, the weak macro backdrop of high US government debt putting pressure on the bond market, tariff inflationary pressure, weak housing, weak autos, and weak retail could easily spark selling on Wall Street. I would call the next three months the gauntlet that Wall Street has to survive.