Friday Recap (8/22/2025)
AU: $3370 ($3336 - One Week Ago)
AG: $38.86 (37.91)
HUI: 489 (476)
DXY: 97.5 (97.7)
S&P: 6466 (6449)
10-Yr: 4.25% (4.32%)
Oil: $63 (66)
The news this week happened today. Powell gave his Jackson Hole speech today and pivoted away from fighting inflation to focusing on full employment, which is the Fed's other mandate. The 2% inflation target has now become a secondary priority. It always has been, but today he said the obvious out loud. The Fed's new focus is to prevent a recession, with a side priority of making sure the US Treasury bond market remains stable. Plus, there is the elephant in the room, which is the massive interest payments, which are up to $100B a month. Ouch.
The Fed will now head down the path of rate cuts and pray that inflation doesn't get out of control. Wall Street loved the pivot, sending the S&P 500 up 1.5% to close near an ATH. Gold and silver also liked it, with investors recognizing that inflation is no longer a priority, plus the likelihood of a lower dollar. Is this enough for silver to break out above $40? Stay tuned. My guess is that Wall Street is going to face some serious headwinds, and a few rate cuts won't be able to overcome our economic problems. I remain bearish on the economy. Where are the green shoots? AI? Data Centers? The economy is not strong. If you lose your job, you won't have an easy time replacing it.
I continue to expect the S&P 500 to crash. I remain in the Jeremy Grantham camp: this is the most vulnerable market I've ever experienced. We are living on fiscal dominance (government debt) and foreign money (about 20% of $63T). As Steph Pomboy likes to say, the economy is being supported by air. I call it a Potemkin economy. It won't be long now. When this thing begins to fall, nothing will hold it up. The good news is that gold has never had this much demand. The run to gold is going to be fierce. There is $250T in stocks and bonds that will need a place to hide. Hiding in USDs or USTs won't be the favorite spot like it was in 2008. This crisis will be much different. This is a paradigm shift and an end-of-era crisis. This is when it all flips.
The HUI is at 489. It looks like I am going to get my wish. I was hoping that when the crash in the S&P 500 comes, the HUI would not be at a low level that could get crunched. If we correct from this level, it won't hurt. Even if it is a 20% correction in the HUI, which I don't expect, that would take the HUI to around 390. I was expecting something much lower. It looks like the bull market in the gold/silver miners has started, and we no longer have to worry about a deep correction. Any correction will likely be short-lived and relatively painless. I would put the new floor at $3100 gold, $34 silver, and 400 HUI. Hopefully, these levels will not be retested.
