🔴 Trump Hits Americans With More Tariffs - Ep 1043

The precious metals market, particularly gold and silver, has experienced a spectacular week, with gold reaching an all-time record high and silver making new highs daily. This strong performance is attributed to inflation expectations, with investors moving away from dollars and into these inflation hedges. In contrast, Bitcoin and Ethereum are significantly underperforming physical precious metals, with Bitcoin in an official bear market relative to gold.

Major financial institutions are now recommending gold as an inflation hedge, with one firm tweaking its traditional 60/40 portfolio to include 20% gold. This shift signals a potential sell-off in bonds and a massive inflow into gold, suggesting a significant bull run is anticipated for precious metals and mining stocks. The speaker critiques the government's economic policies and the Federal Reserve's actions, arguing that current inflation figures are higher than reported and that the Fed's rate cuts are misguided.

Furthermore, proposed tariffs on pharmaceuticals, kitchen cabinets, and furniture are discussed as potentially harmful to the economy, leading to higher prices and workarounds. The speaker also touches on the impact of government spending and the dollar's weakening status, predicting accelerating inflation and a significant drop in the dollar's value.

• Precious metals, especially gold and silver, have seen significant gains, reaching record highs, indicating strong investor confidence as an inflation hedge.
• Major financial institutions are now recommending gold, shifting away from traditional bond allocations in portfolios.
• Bitcoin and Ethereum are underperforming physical precious metals, with Bitcoin entering a bear market relative to gold.
• The speaker criticizes current economic policies and Federal Reserve actions, arguing that inflation is underestimated and interest rate cuts are inappropriate.
• Proposed tariffs on various goods, along with increased government spending and money printing, are predicted to lead to higher inflation and a weaker dollar.

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Precious Metals Performance [1:04]

• Precious metals had a spectacular week, with gold reaching an all-time record high and silver making new highs daily.
• Gold closed around $3,760, having hit a record high of nearly $3,800 earlier in the week.
• Silver closed above $46, trading intraday at $46.50, a new high for approximately 14 years.
• Gold is up approximately 0.5% on the day, 2.2% on the week, 9% in September, and 43% year-to-date (2025).
• Silver is up about 2% on the day, 8% on the week, 17% in September, and 59% year-to-date.
• Platinum is up 3.3% on the day, 12% this week, 19% on the month, and 74% year-to-date.
• Palladium is up 44% on the year.
• These gains are considered not normal and are occurring from record highs for gold, indicating underlying economic issues.

These metals are performing exceptionally well, driven by market forces that suggest underlying economic instability and inflationary pressures. Their strong performance is a direct market indicator of these concerns.

These are not normal gains. And it's not like these gains are happening, at least for gold, at depressed levels because we started the year at record highs and now we're just adding to those record highs.

Inflation as a Driver [5:16]

• The strong performance of precious metals would not be happening if inflation were well-contained or if the economy were returning to 2% inflation as claimed by some.
• Precious metals are sensitive to inflation expectations; as people anticipate more inflation, they buy more gold and silver.
• This behavior is described as people "voting with their feet," walking away from dollars and buying gold and silver.
• It suggests that claims of inflation being beaten and the economy being the hottest in the world are not accurate.

The speaker argues that the robust performance of precious metals is a direct consequence of persistent inflation, contradicting official claims of economic stability.

These are real world market indicators that there's a problem here, right? And that is inflation. These are inflation hedges. These precious metals are very sensitive to inflation expectations.

Cryptocurrency Performance vs. Precious Metals [6:39]

• Bitcoin continues to drift lower, barely holding above $109,000, and is down on the week.
• While Bitcoin is still up 16% on the year, this is significantly less than gold (43%) and silver (59%).
• Ethereum is up 20% on the year, also underperforming physical precious metals.
• Bitcoin is 22% below its August high when priced in gold, indicating a bear market relative to gold.
• Since its peak in November 2021, Bitcoin is 20% lower.
• Despite Wall Street's promotion of Bitcoin (ETFs, treasury companies, etc.), it's in a "stealth bare market" against gold.
• The speaker predicts Bitcoin could drop below $100,000 by year-end, while gold could surpass $4,000.

Cryptocurrencies, particularly Bitcoin, are dramatically underperforming physical precious metals, signaling a potential shift in investor preference and a breakdown in the narrative of Bitcoin as a digital gold alternative.

And if Bitcoin is holding itself out as a digital version of gold, why is it in a bare market versus gold?

Morgan Stanley's Portfolio Tweak [9:04]

• Morgan Stanley has adjusted the traditional 60/40 portfolio (60% stocks, 40% bonds).
• Their new recommendation is a 60/20/20 portfolio: 60% stocks, 20% bonds, and 20% gold.
• This change is driven by the acknowledgement of high inflation and the need for an inflation hedge.
• Bonds are identified as major victims of inflation, with no effective hedge.
• Morgan Stanley anticipates high inflation, stating that the 2% target is unrealistic.
• This recommendation acts as a sell signal for bonds, as clients will likely reduce their bond holdings.
• A significant amount of money is expected to flow from bonds into gold.
• This is noted as the first time major firms are recommending gold, a long-standing recommendation of the speaker.

This significant shift by a major financial institution highlights a growing recognition of gold's value as an inflation hedge, potentially signaling a major trend reversal for the precious metals market.

Unbelievable. Now it's about time. And the reason that Morgan Stanley is doing this is they're saying that we need an inflation hedge.

The Stock Market and its Valuation [22:46]

• Jerome Powell acknowledged that the stock market is "fairly highly valued."
• It is unusual for the FOMC to comment on stock market valuations, as they typically avoid such statements.
• The speaker questions the exact meaning of "fairly highly valued," whether it implies justification or a moderate overvaluation.
• The current situation is described as a bubble, not just overvaluation.
• An example is given of Nvidia investing $100 billion in Chat GPT, with Chat GPT agreeing to buy $100 billion worth of Nvidia's GPUs.
• This is seen as Nvidia essentially financing its own sales at a high valuation multiple (around 40 times earnings).
• This practice is compared to the dot-com bubble with Cisco Systems, where the company loaned money to startups to buy its equipment, creating artificial revenue.
• The speaker emphasizes that real sales require collection of money, and if companies go bankrupt, those sales are not truly realized.
• The potential for similar issues exists with AI companies and their equipment purchases.
• While AI itself is real and has potential, the current market surrounding it is described as a bubble, similar to the internet bubble where many companies failed despite the technology's success.

The speaker identifies the stock market as a bubble, using the Nvidia/Chat GPT deal as a prime example of inflated valuations and self-serving financial maneuvers reminiscent of past market crashes.

But look, it is a bubble. It's not just overvalued.

Economic Policies and Their Impact [34:06]

• Proposed policies include charging companies $100,000 for H1B visas to hire foreign workers.
• This is seen as a bad idea that infringes on employer rights to hire whomever they choose based on economic rationale.
• The speaker argues that preventing companies from hiring foreign workers will lead to them hiring remotely, thus not bringing tax revenue or economic activity into the U.S.
• New tariffs have been unveiled: 100% on pharmaceuticals (with exceptions for companies with US facilities) and 50% on kitchen cabinets, 30% on upholstered furniture.
• These tariffs are justified by claims of national security, which the speaker finds absurd for items like kitchen cabinets and furniture.
• The tariffs are expected to increase prices for American consumers, particularly the poor and middle class, who buy imported goods.
• The argument that Americans should "just buy American" is dismissed, as imported goods are often cheaper and offer better value.
• The speaker contends that the inability to manufacture competitively in the US is due to excessive government intervention and lack of savings/investment, not a lack of tariffs.
• Tariffs will lead to higher prices, reduced sales, job losses, and a decrease in the American standard of living.

The speaker criticizes proposed policies, including H1B visa fee hikes and various tariffs, arguing they are economically unsound, based on illogical justifications, and will ultimately harm consumers and the economy.

Look, the best way to have a prosperous economy is to have a free economy, right? Let employers give them the freedom to hire who they want to hire and let them negotiate the terms of these employment agreements without the government interfering.

Dollar's Decline and Future Inflation [52:32]

• The speaker expresses uncertainty about what is currently supporting the dollar, as it continues to sink against gold.
• Other major currencies like the Euro and Pound are also declining in purchasing power.
• A significant drop in the dollar is predicted for the fourth quarter of 2025.
• This decline is expected to accelerate domestic inflation, which will be significant in 2026.
• The speaker dismisses arguments that inflation will be transitory, believing the market will see through such claims.
• Inflation is predicted to run out of control.
• The introduction of gold and platinum cards offering tax exemptions or fast-tracked citizenship is discussed as a questionable strategy to attract capital, with a focus on Puerto Rico for tax benefits.

The speaker foresees a substantial devaluation of the dollar, leading to runaway inflation in the coming years, and questions the efficacy of government initiatives aimed at attracting wealth through tax incentives.

And I don't know what's holding the dollar up. You know, obviously against gold, nothing because the dollar keeps sinking just about every day in terms of gold.