Mid-Week Macro (6/4/2025)

Mid-Week Macro

The stock market continues to be resilient in the face of potential trade wars, a slowing economy, earnings headwinds, and a PE that is too high. It boggles the mind that the stock market has been this strong, closing today at 5970. There is no way earnings and tariffs support this level. This feels like a top to me, and a crash is coming soon. I expect to go sub 5500 in the next 60 days when Trump refuses to give in on tariffs. Once sub 5500, we will see how the market reacts. Will we stay in a trading range, or crash? I think we will crash.

Gold has done what I expected over the past few weeks. I thought if stocks rallied, which they have, then gold would follow. Gold spot closed today at $3370, and gold futures have been knocking on $3400. Conversely, this strength in gold has pulled up silver and the miners. Silver has been above $34 this week (currently at $34.50), pushing the HUI to 427 today. That is a lofty level, and many think both silver and the miners are breaking out. My take is that we need more confirmation for a breakout in both, and this could easily be another bull trap.

As I have said for months, to get an extended breakout in the HUI, you need gold to outperform the stock market. That means stocks have to go down and stay down. That means sub 5000 on the S&P. Guess what? We are at 5970. That is a long way away from a fear trade of sub 5000. Plus, you need silver to get above $35. Well, silver is clearly knocking on the door. It wouldn't be a shocker if silver rips through $35 and heads to $40, but I don't think the coast is clear yet. I still expect one more major correction in gold, silver, and the miners.

Am I on the sidelines waiting for this correction? Nope. I'm only 2% in cash. I'm fully invested in miners. But if you're waiting to deploy a lot of cash into gold/silver miners, then I would wait to see what happens with the Trump tariffs in June/July.

I do think gold is going to trend to $5,000 over the next 24-36 months, and nothing is going to stop that outcome. I also think the GSR (gold-silver ratio) will be somewhere between 50 ($100 silver) and 33 ($150 silver). Many are going to sell too early because their profits are going to be high. It's okay to sell to the top, but make sure you have something left to sell at $5000 gold and $100 silver, because the odds favor that we reach these levels.