Mid-Week Macro (7/23/2025)

Mid-Week Macro

The S&P has continued its strength, closing today at an ATH above 6300. The PE is up to 22, which is historically very high, and now we head into weak seasonality until mid-October. I do not expect the stock market to remain above 6000 for much longer. It is overdue for a correction. When that correction comes, gold and silver are likely to get whacked with it. The question is, how much? At least 5% is my guess. Stay tuned.

What should make Wall Street nervous is that the Russell 2000, which encompasses the small caps, remains 10% from its 2466 ATH. If the stock market is in a bull market, then why is the Russell 2000 lagging? Plus, the MAG7 continues to dominate the earnings of the S&P 500. If you remove the MAG7 earnings for last Qtr, the remaining companies grew earnings at a cumulative 3%. So, 493 of the largest companies in America are either struggling or not happy with their growth.

The economy is not likely to improve this Qtr or next. In fact, the economy is slowing and Trump has added tariffs that will average around 15% from August forward. He just did a deal with Japan, where they will pay a 15% tariff on all goods imported into the US, whereas US goods imported into Japan will only average a 2% tariff. Trump continues to do one-way deals. He also signed a trade deal with Indonesia this week, whereby their exports into the US will have a 19% tariff, and ours will be zero! What is relevant is that Trump is demanding one-way deals where our trading partners pay high tariffs. These are essentially taxes on the US consumer, who ultimately pays for them.

Silver has been very strong this week, with the spot price closing above $39 today. The HUI is at 445. Sadly, it is underperforming. Now that the silver miners could receive 30% FCF margins ($12 per oz), you would expect the silver miners to be ripping higher. Unfortunately, Hecla is at $6.28 and is lagging. I’m surprised at the poor performance. At some point, the gold and silver miners are going to rise 50% in a 1-2 week period. I am waiting for a big silver candle that gets Wall Street’s attention. Newmont is also lagging, at $61. It should be at $80, with its large 36% FCF margins ($1230 per oz).

Whenever I see weak PA (price action) in the miners, it tends to foreshadow a coming correction. I’m expecting a significant correction sometime in the next 10 weeks, between now and mid-October. Conversely, I don’t expect silver to keep trending to $45 in the near term. However, if I am wrong about the stock market, and it trends to 6400 or 6500, then gold and silver will likely follow. Moreover, I do not expect a deep correction in gold this year, and any dips should be short-lived (4–6 weeks). Gold is the leader right now, regardless of what the stock market is doing. The gold miners are up 60% the first half of the year. The stock market is only up 6%. Gold is the signal. The stock market is the poser.