Gold At Triple-Triple Zero

McAlvany Weekly Commentary

US Dollar Down 27.4% VS Gold Over 12 Months Hard Asset Stocks Clearly Outperforming Bond Index How To Multiply Stock Holdings With DOW/Gold Ratio "I think we are entering a new phase in the metals market. Many investors who up to this point have never owned the metals, they're the ones who are looking and saying, "I think we have an allocation gap. I think we don't own any and we should own some." So going from not a dollar's worth, not a single gram of gold in their portfolio, new allocators are entering the fray with a fresh set of eyes and a motivation to own gold that didn't exist for them before 2025." --David McAlvany * * * Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick along with David McAlvany. Well, Monday, Dave, I remembered something back from the mid-1990s. I was asked to be a guest at the New York Mercantile Exchange. This was in the World Trade Center at the time, the original World Trade Centers. And I remember standing outside the gold pit. You know, the pits there. Most of the oil was traded in the various pits at the New York Mercantile Exchange, gold, silver, platinum, palladium. I was standing right outside of the gold pit when gold happened to be 399 that day, $399 an ounce. And these guys, you can imagine the pits, these guys stand in a circle, they get a phone call. Somebody says, "Go ahead and sell a contract." One of the traders came by and he offered his hand. They put their palm forward when they're trying to sell something. And he put his hand forward and he was saying, "Augie at aught. Augie at aught." And I was like, what does that mean, Augie at aught? Well, he was trying to sell an August contract for gold at $400. These traders who were standing there, they were like, "Yeah, no, I'm not going to be the guy who buys Augie at aught. I'm not going to be the guy who breaks 400." But Monday, we see triple, triple aught. $3,000 gold, Dave. This is the first time in anybody's lifetime. David: Yeah, a close above 3,000 is pretty significant, and it appears we'll get a multi-day close above 3,000. And so there's some interesting dynamics within the gold market. Of course, very interesting dynamics across the broader financial landscape. And budget numbers are in, February budget deficit numbers are in, and we added another $307 billion to the debt dumpster fire. Kevin: Wow. David: But it was under expectations. They expected 308, so 307, I mean, it seems like a huge win. That brings us to 1.15 trillion for the first five months of the fiscal year. Kevin: Wow. David: While we may not continue at that average annual rate of 230 billion monthly, we are on that theoretical course for 2.76 trillion for the full fiscal year. And of course, that's if the last seven months look like the first five. Bessent has his work cut out for him. If we land a recession in 2025, okay, 2.5, $3 trillion deficit, I think that's a given. A nasty recession would tilt the number towards 4 trillion. That's not politics. This is math. So the current trend for yields in the bond market, US Treasuries in particular, are lower, and that's in large part because of the stress in the equities markets, people looking for safe havens. But that could reverse by year-end should the fixed-income vigilantes get excitable. Kevin: So the question always is, how long can we continue to do this? How long can we continue to borrow this kind of money? David: Yeah. Big questions remain. We are at the end of the major credit cycle. Government finance has come to dominate the credit system. What do the markets—particularly the bond markets—look like when air leaks from the granddaddy of all bubbles, the government debt bubble? Kevin: Yeah, and I'm wondering if even the American doesn't ask that question, if it's not the Chinese right now asking that question. David: Yeah. Well, speaking of exciting, for the month of February, the People's Bank of China added a modest five...