In this episode, I had another fascinating discussion with Paul Kiker from Kiker Wealth Management about the current financial landscape and the potential market-moving impacts of recent political events. We delved into the economic and market implications of Trump’s recent speech to Congress, the Democrats’ lack of a clear plan, and recent market volatility that seems to signal that the long-overdue correction has arrived. One of the most striking observations was the dramatic drop in the Atlanta Fed’s GDP Now estimate, which fell from a positive 2.3% to a negative 2.8%, a true cliff dive that I’ve never seen before in this series.
Market Volatility and Turning Points
The current market volatility is reminiscent of the tops and bottoms I’ve seen in the past. Wild swings often indicate turning points, and this excess volatility seems to be a sign of a market top. Bull markets die hard, and the current environment feels like a topping process similar to the year 2000. This means that now is the time to be on defense watch, ready to act if necessary. Indeed, Paul and his team have adjusted their alert level from ‘warning’ to ‘watch’, similar to the distinction between a tornado warning (meaning one is possible) to a tornado watch (meaning one is in the area).
Balanced Budget and Economic Impacts
Trump’s announcement of a balanced budget was astonishing, and it could have huge impacts. A balanced budget at this point could lead to a ripper of a recession unless taxes go way up. The government has been plugging holes with fiscal stimulus, keeping many companies afloat. If we move to a balanced budget, it could be deflationary, leading to bankruptcies for companies that can’t service their debt.
Gold and Silver Movements
The movement in gold and silver markets is unprecedented. Massive quantities of gold are coming into the United States, and it’s not retail driving this. It’s big money, and this is a sign that something significant is happening. Gold has outperformed Nvidia over the past year, and its performance against various currencies is impressive. The demand for physical silver is also notable, with 60 million ounces being delivered in March alone.
Key Data
The Atlanta Fed’s GDP Now estimate fell from +2.3% to -2.8%.
Massive quantities of gold are being imported into the U.S., with 200,000 kilo bars coming from Switzerland.
60 million ounces of silver have been delivered in March, a significant chunk of the available supply.
32,000 ounces in a ton means 60 million ounces is nearly 1,900 tons. An typical dump truck can hold around 14 tons means around 150 dump truck loads. Moving that would be a logistical nightmare. Just the degree of security required would give it away. So, I one really needs to know more. Sure, it may also be the total of several locations, but still…
By the amount, surely the most likely reason is some sort of balancing/counterbalancing activity. Electronic bookkeeping records are balanced in cycles. You send money between banks and find that your total available funds drops for one or two days of fund transit. If this applies to the COMEX, then we will see some other number counterbalancing the loss of registered ounces. Maybe, the registered ones are being lent out and thus appearing as eligible. Maybe an unknown audit is being planned and the bookkeeping has to be rebalanced. OR, someone wants to use these numbers to manipulate the market and get away with it by calling it book balancing. All in all, the amount is just too big to be a physical movement.
My top bet is that the COMEX is using its bookkeeping (maybe to manipulate the price) and it would be entirely legal.
My second-best bet would be that it was rebalancing of arbitrage - also legal.
Martin Armstrong had a whole different take on Gold flooding to US. He realized that when currency starts to move it usually means War is about to start, hence currency moves to Safe Jurisdictions
I really don’t know what President Trump means by a “balanced budget.” We have not had a budget since 2000. It has been one Continuing Resolution (CR) after another since 2000. With spending based upon debt and the printing press, I don’t even think it is possible to pass a budget anymore. You would have to crash the whole thing and then pass a budget as a way of starting all over from scratch. That, or a budget would crash everything because so much of everything is already broke (Social Security), busted (the government), and bankrupt (which is the sovereign debt default that awaits use if this thing collapses).
I don’t know about that. I’ve heard that the US military moves nuclear weapons and components around the country in normal tractor trailers with just two plainclothes armed contractors in the cab.
I took it (Martin Armstrong), after someone commented, as hyperbole. In nuclear age wars are more than deadly. Sure we could see semi proxy war vietnam region style where practically everyone nearby and some take part in it.
Best analog I could think and cold war history was, 2 heavyweight boxers take long match… but are so even and exhausted it is technical points result, so they want rematches. This can then go on for 20-30 years until situation externally changes. If either one would get KO’d, that would require nukes, which is MAD.
For years PM people have been doomsdayers to push fomo.
Sure bad politicians and whatnot mistakes can push things very ugly. But what’s to win if there is mooncraters only left… it’s not a win if you cant keep populace support after it.
We live in digital (financial) age now. It is what they decide. Markets will react, new equilibrium had. Reset is possibly but will anger a lot of people. But there are couple modern examples already just in US: 2008, 2021. Huge “great reset” events, or great takings as Chris says. It would be version of that. I would be surprised if it is very new playbook.
US for one needs to do this before their military is made as joke. The sooner nobody tests it, the better.
80s was mix of hard and soft power. Im hesitant to say that would work now. If people are patriotic for their country, they can sustain economic hardship and inferior to some degree. It also helped germany rebuild after WW2. Chinese, russians, iranian are patriotic. Even worst immigrants nowadays seem to be patriotic beyond any logic.
Not sure what everyone is waiting now. Something. Some kind of “sign”. Symbol. Like 9/11. Economics is clear but it must have some visible milestone.
At least in Michigan, these definitions are reversed . A tornado watch means conditions are favorable for the development of a potential tornado .pay attention.
A tornado warning is more severe, and means the potential for a tornado is imminent and one should seek shelter.
I don’t know if you’ve been following Goehring and Rozencwajg’s Range Resources investment thesis. The catalyst would be an increase in natural gas export capacity in the US with a converging of prices between US and Europe.
If Henry Hub is at $4 as of today and the Dutch TTF gas is at $13/MMBtu and liquefaction and shipping to Europe is at a cost of $5/MMBtu at the lower end and 10 at the higher end (from what I can gather), there doesn’t seem to be much room for higher US prices. The US price would double in the best case. They usually mention the word “converge” but the cost of liquefaction seems to be really high.
