The Government Shuts Down, Jobs Crater, but Stocks Go… Up?

Originally published at: https://peakprosperity.com/the-government-shuts-down-jobs-crater-but-stocks-go-up/

Look, my only real fear around the government shutdown is that it will start back up again. I am a huge fan of smaller government, fewer government workers, fewer regulations, and more individual responsibility and freedom.

That said, the shutdown is likely to cause some market perturbations, which Paul Kiker and I discuss in this podcast.

But mainly, we’re in ‘wait and see’ mode, the same as everyone else. Probably this will play out like it has in the past; nothing much actually happens, except for hyperbolic MSM headlines and a few sob stories about hardships for furloughed workers unable to pay their utility bills and US citizens who had their National Park vacation plans disrupted.

However, and far more importantly, gold is telegraphing a ridiculously important signal. While the actual drivers are mysterious, the larger fact is that big money is buying gold and doing it in droves.

We can speculate as to the true “whys” behind this, but it has to be some version of “we currently trust gold more than we trust paper wealth.”

Pick your reason(s), and there are plenty, but gold’s 48% rise YTD is screaming loudly for those who know how to listen.

Markets

Meanwhile, the equity ““markets”” in the US and Europe are trundling along merrily up and to the right as if there were no concerns in the world.

Certainly, the idea of a “jobless recovery” we discussed a few weeks back seems to be in play:

Okay…so, as long as stock are rising, all is well? Is that the idea we’re supposed to subscribe to here?

If so, I’ll take a pass.

Confirming this idea that the so-called “jobless recovery” isn’t really ‘a thing’ and benefiting everyone, Consumer Sentiment is in the dumps and has been better than it currently is for 99% of all the time between 1955 and 2025:

In a further confirmation of the vast societal vandalism performed by the Federal Reserve as they endeavored to keep “financial assets” expanding even to the expense of everyone else, is this data:

Conclusion

Look, the current power brokers are locked into a pattern; higher stock and bond prices, the middle and under classes be damned.

This means we can fully expect ’them’ to continue to print and inflate. This brings us back to gold. Whether the initiating cause is a war in Europe with Russia, or a breakdown in trade relations with China, or the impact of AI destroying jobs and “necessitating” Universal Basic Income (UBI), the story is the same.

More printing.

More counterparty risk.

Gold happens to be the ONLY monetary asset that is not somebody else’s liability. The only one. Assuming you hold it in your hot little hands. Otherwise, it’s still locked in an asset-liability standoff.

As always, you deserve to get ahead of the looming difficulties, and that begins with a comprehensive, no-holds-barred review of your portfolio, needs, and strategies by Paul Kiker’s amazing team. To begin the no obligation process, click here, fill out the short and simple form, and within 48 business hours, Paul’s team will reach out to schedule your first personal and personalized meeting.


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Is it possible that the reason stocks are going up is the same reason gold & silver are rising… People rather have a hard asset than a fiat dollar? Consider that most people know how to buy stocks but not gold, so for the average person, the solution to disposing of dollars is to buy stocks. Regardless of price?

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Most people buy stawks because that’s what’s available in 401k options.

They also think stocks are a hedge against inflation (one quick search of stock performance over the 1970s should dissuade them of that idea).

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A bit surprised that Paul isn’t hearing any demand for gold due to huge run it’s on, even with retail brokerage/MSM pushing crypto as hedge. I hear about move to gold and other hard assets more widely than just here.

Don’t remember your exacting phrasing Chris, but something about signaling a loss in trust in system beyond just the dollar. Neither Chris nor Paul mentioned anything about gold as a transactional currency in a post CBDC world that seems imminent - UK digital IDs mentioned. Might be interesting to hear more in future about the fractional oz gold printed that could potentially act as alt currency to CBDC.

Good discussion. Thanks

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We bought some 100g gold back in early July from our only bullion dealer in Toowoomba, Australia (think big country town were all the wealthy regional farmers generally spend their big money at nice private schools and boutique rentals), it was a 2 week wait till they got stocks in from the mint after i paid the invoice.

Meanwhile, earlier in the year we walked into the same shop about April, we bought several 1kg silver bars as walk in first time buyers no issues…

I’ve noticed on some websites there is now a note about there being lead times for certain stock.

The only retail purchasers I know in my network would be under the banner of ‘preppers’… :thinking:

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Oil crashing to -40$/barrel during the Plandamic proves the concept of price setting brilliantly.

Last time I added some metal was in March in Germany, where they have some nice shops of the Swiss refiners where you can buy. A friend came along , it was her first time and she was amazed by the coming and going of people in an otherwise lazy morning in the city centre.
Most came to sell gold, a few to buy, I was the only one of those present buying AG.
The lady at the counter even misunderstood what I was asking for, presenting me with one gold coin and going about how much the price went up!

Walked away with a tube of silver coins instead :slight_smile:

In Italy the scenario is more like Chris describes for the US, with exception that you can try at the bank or in a jewelry as well (I don’t know if those are options in the US as well? ), either way, nothing like in China where I saw videos of machines where you can cash out directly!!

My two cents: The stock market is actually showing a lot of weakness if you look for it. Meta, Netflix, Costco to mention a few. Booming Semiconductors (Nvidia , VanEck, Broadcom) are just keeping it all afloat.

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I really appreciate your insights as always!
When you talk about the top small percentage that holds the majority of the wealth that has doubled…If the overvalued stock market would return to lower levels, a lot of ‘normal’ people would lose a lot of their retirement etc. too, right? Even though it seems small compared to the huge amounts of wealth amassed by a few, a drop in retirement portfolio from a million to 600 thousand would be devastating for the average person. So I can see from that point why *they do want the markets to stay propped up, because a lot of little people would be hurt as well in a big market decline. Or am I understanding it wrong?

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True about the 70s. If you look at some more extreme cases, such as Weimer Germany, Argentina, and Venezuela, you find the stock market did go up many fold in nominal terms. Of course, you are right, in real terms they actually went down significantly. Still, better than holding worthless fiat currency. I agree with Chris and I am “irresponsibly long” precious metals.

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The gold dealers in the US are still well stocked, though demand seems to be picking up.

Speaking of Australia. I heard that there was a nationally broadcast story about what was happening with precious metals and suddenly awake, there were long lines and inventory shortages. It shows just how quickly gold and silver can go from plentiful to “unobtanium”.

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I wonder what happens to those AI boosted companies and stocks if world goes more kinetic conflict. AI has less to do there, it is more who has more ammo to blow up. Then in 5 years like all previous IT/tech booms I expect it to fade out.
As Meta, costco are consumer places, recession should hit them. Why pay more to advertising if people refuse to buy as much products. That would hurt Meta.
West method is not to value engineers(you can train them all you want but companies dont want to hire but minimal amount), but to build walled garden block of trade, where companies like Nvidia can roam free as oligopoly. China has their own garden they’d prefer to expand but aggressive western territory keeping makes it hard.

If China were to compete in same region, most companies would test products and see “oh this is 70-80% of value and less than 50% of price, we’d take that one”. Combined with hardware + software developments tied to those products.
Kinetic conflict would likely benefit Nvidia as they would be even more dominant and can say “hey sorry Chyna bad, you gotta wait now 2 years instead of 6mo-1year to get this fancy product”. They already do this. Nvidia can then shift production orders to different location and push it on consumers/customers. But if there is no conflict, over time everyone has faded… it happened to australian cars, japanese electronics… Dont know how long this can be expanded artificially. It reduces consumers and companies’ purchase power by allowing nvidia to bump prices every year 20% or more as solo biggest provider. That will stagnate market. This is more common western “structure” of favoring techno oligopoly.
Can it cause stock market crash… possibly… but bailouts could happen… causing more printing and inflation to prop up selected companies.

Smaller companies want to make special AI products customized for that. Remains to be seen how that goes.
Change can also come from structural issues, eg Hegseth speech as symbol for need of change in military. But businesses have that too… cannot keep boomer companies with same model afloat. Maybe inflation could mean at some point hiring bunch of lowskill eager people for 2k a month in middle of nowhere would compete with hundreds of billions hardware investment that gets old(replaced by newer models) in less than 2 years. Broadcom makes more “boring” chips so this has less effect on them.

Some NAND maker (SSD disks) said they expect now 10 year shortages in that industry due to demand from datacenter building. 10 years in unprecedented long cycle in semiconductor products.
Phison CEO claims NAND shortage could last a staggering 10 years — says memory ‘supercycle’ imminent and ‘severe’ 2026 shortages are at hand | Tom’s Hardware

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I missed the math on this one. YTD looks like gold is up around 40.8%. Is this an Office Space decimal problem ??

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Fixed! An extra zero snuck in…it’s 48%

More on Asian gold excitement:

https://x.com/DarioCpx/status/1974020267497423307?t=GaIdt4yqSIn3GTXs59qbkw&s=19

https://x.com/Silver47samurai/status/1974029524603199540?t=1Lupe2Lu9HMCL1klOjWsJg&s=19

https://x.com/DavidLe76335983/status/1973840888695828574?t=xNLtbkoL3OkMhxjLnOD8FQ&s=19

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If you’re not an essential government employee when the government is shut down, why are you essential when the government’s not shut down?

Asking for a friend.

BTW, yesterday I was able to buy gas for five 5 gallon cans, buy diesel, work the mustangs, buy 5/32 creep, get flat steamed oats, get a handle for my hoof rasps, brush hog two acres. I don’t know how I skirted so much danger without Uncle Sugar.

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IMO, the government shutdown was part of President Trump’s plan. When the country is getting ready to go to war it always cuts away as much of the old government as possible, both to take that money in government salaries and apply those funds to preparations for war.

Like how the Department of Defense is now the Department of War.

In this case, the government shutdown is DOGE by other means. And the Democrats played right into President Trump’s hands. This government shutdown could very well go on for a while.

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https://x.com/ArmstrongEcon/status/1974149466421953022

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The “Great Taking” will include gold, and silver.

Reports have been coming in about how the Mom and Pop coin shops are having trouble getting supplies of gold and silver. This is happening on purpose, so that those wishing to buy gold and silver are having to go to places like APmex and JM Bullion, who record these purchases and make records of them, which the government can demand access to.

Worse is how some of these sellers are requiring you accept cookies which also tracks your purchases. Cookies spy on you. “To improve you buying experience.” You are being spied on. I don’t know why people don’t know this. The government knows everything about you.

When push comes to shove (and it will), the government will come to you and say: “Look, Pal. You possess so much gold and silver. Hand it over.”

Or, if you decide to sell your gold or silver the only buyer will be the government, and they will have set the price so they make a hefty profit.

The government will be in complete control of the gold and silver market. Soon.

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More:

https://x.com/MakeGoldGreat/status/1974071513843445761?t=zm-qaCs6zmK58HveHpPC3Q&s=19

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Im not convinced that it will unfold that way. If it does then we have bigger things to worry about and they’d still have to find it.

OK, lock me up for non compliance, are they going to lock my wife and kids up too for my non compliance? Pretty soon they’d run out of space and agents to carry that out.

If it devolves to that point there will be bigger problems afoot; not just for us but them.

I’m pretty sure that I’d take PM’s in exchange for produce or meat, maybe other things like timber, skills and labor that I may have an excess of. Particularily amongs neighbors and locals.

Selling doesn’t have to occur over government mandated and approved exchanges. Figuring out the value of everything would likely be highly localized and highly dependent or scarcity and true need in any significant crisis.

Black market economies have existed forever and will continue until (pick your world ending catastrophe) the meteor, nuclear anniliation or Jesus.

Short of that level, people will barter, trade and get by. I also dont think the next confiscation would go as smoothly as the last.

In places where the populace never had a 2A or ended up giving whatever semblance of one up, it will be much easier.

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Shiny Propganda: NY is going to distribute $12,000 USDC stable coin to each of a few hundred “poor” families. Fiscal slavery has begun. However, I believe in the fractal universe so here I see the difference between stables and barns:

Barns are large structures primarily used for storing hay, grain, and farm equipment, as well as housing various livestock. In contrast, stables are specifically designed to house horses, featuring individual stalls and amenities focused on their comfort and care."
So when you hear someone promoting stable coins they are moving you into their “digital” barn and if you are lucky into a lux stable. Hide and secure your hard ass-its or loose them (PM, BTC, …???).

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