Mid-Week Macro (8/13/2025)

The S&P 500 continues to be the story, closing today at 6466, which is another ATH. It’s been on fire since mid-April. Gold has been strongly correlated to the S&P since early 2024, and has also been strong, closing today at $3355 (spot). The question is, who is the leader and who is the poser? My guess is that gold is the leader and the S&P is the poser.

Which one will blink? The S&P or gold? I don’t think gold is going anywhere, so you know my answer. I expect the S&P to crash and crash hard. That doesn’t seem likely unless you dig into the numbers (and know what you are looking for). The US economy is a Potemkin economy and a mirage of economic strength. You want proof? Why is gold so strong? There’s your flashing red light.

Here is your warning: we have been living off debt, and credit is about to dry up. Keep an eye on the labor market. That will be the tell. It’s weakening and close to the breaking point. Corporations always front-run a recession. The labor market always falls right before it begins. One month of mass layoff is all it will take, and the momo will have begun. The wrong type of momo.

Gold might have a small correction, but it’s not going to crash with the S&P. Once the S&P crashes, gold will bounce and decouple. At that point, the poser will be exposed. Anyone in the S&P right now is playing with fire. Once the crash comes, it will be fast and furious. Most investors will stay in thinking it is just another mild correction. They will get burned badly. At least, that is my expectation.