Mid-Week Macro (2/19/2025)

Mid-Week Macro.

1) The numbers this week are interesting. The S&P is at an ATH at 6144. The 10-Yr bond is at 4.5%. The DXY is at 107. So, stocks are ignoring high rates, a high dollar, and last week's sticky inflation numbers. But how long can that last? I think the S&P is getting close to a top. My target is around 6300 in the next few weeks.

2) Gold has been following the S&P for about a year now and is also at ATH levels. Currently at $2937 spot. Silver (under $33) and the HUI (at 330) continue to lag. I think silver and the HUI are signaling that a top in the S&P is coming.

3) My expectation is that the Trump honeymoon is going to end in March. He said that he will increase tariffs in April. That will likely be the trigger. The question is, how much does gold correct? I doubt it drops 15%, but 5% or 10% is in play. If that is all we can expect from gold on the downside, then the miners will not crash and should quickly rebound.

4) I have raised my gold target to $5K. I’ve had it at $4K for a long time, but Trump and Basel III seem to have shifted the importance of gold. Plus, the BRICS seems to be leaning toward gold as part of their SWIFT replacement system. I can’t imagine how high the gold and silver miners could go if gold goes above $4K, but it will be epic. I haven’t even tried to value them above $4K. It gets too wonky.