Why is the price of gold skyrocketing? Let history be your guide!

The average person looking at the #riots in #France may think, "Oh, these are just disaffected youth. The government will throw some money at them and everything will go back to normal." Financial analysts who are also aware of France’s fiscal situation cannot afford to be so optimistic. As the rising French 10-year government bond yield indicates, the public is losing faith in the French government’s ability to manage its debt. Borrowing money to fund benefits, or to rebuild the schools that were just burned to the ground, is becoming much more expensive. If this continues, the French government will face a tough choice: either cut its spending or default on its debt. Since it has imported such a large population of foreigners who rely on welfare and have little allegiance to the state, both choices will lead to the same result - more riots and more chaos. The ECB may come to its aid with a generous bailout. But that means inflation will flare up again. The benefits the French government is handing out will lose their purchasing power, and the result will again be the same. This is the fate of every government that attempts to bribe its citizens with benefits. It eventually runs out of money and has to face their wrath with nothing left in its coffers.

“You are free to say what we allow you to say”, that’s the meaning of freedom of speech in the eyes of the pampered and despotic European elite. When the foreign thugs they themselves imported storm their palaces and burn them down, you won’t see me shedding a tear.

The #gold to #silver ratio, which for months was technically ambiguous, is starting to show a familiar pattern. It looks like a rising wedge, and that's good news, because after a steep decline, rising wedges tend to break down. However, it also suggests that it needs more time to coil up and consolidate. This doesn't necessarily happen as the prices of precious metals are treading water. This could also indicate a period of time in which gold is outperforming silver. The ratio will only break down when the metals enter a manic phase, and silver takes the lead. Another optimistic point is that there is now a smaller chance of the ratio retesting its broken long term trend line since the 2011 top (the upper blue line on the chart). This means that although a GSR of 75 is quite possible, a GSR of 80 or more is not. To sum things up, I do think both metals have already bottomed, but it's going to take a while longer before they begin to accelerate higher. I'm not expecting anything spectacular before the end of the year.

The U.S. national debt just crossed the $40T mark, and continues to soar at an exponential rate. Until recently, it didn't seem to have any negative consequences on the economy, and politicians were under the impression that it could continue to grow forever. But there are now indications that the public is losing faith in the ability of the federal government to manage its debt, and that this is going to hurt us very seriously. Watch my new video: youtu.be/SbTHz-G9UNs

Check out this new short video by @MountainBullion , listing all the areas of concern in the US economy right now. youtu.be/_m4UWHbux90?si=SItV…

Human beings are not interchangeable units. This is a lesson that European elites are now learning the hard way. When your own people are not having enough kids, you can't just replace them with random people from the third world. They don't share the same values and the same culture as the locals. Even their children, who were born in Europe, will feel alienated. They will riot and they will burn down your cities, because they have no real connection to the place. These immigrants were supposedly imported to stimulate the economy. But as the broken window fallacy teaches us, they won't help it at all. The welfare they consume and the damage they cause will greatly outweigh any work that they do. Europe will sink into economic stagnation, and its immense wealth will be drained, until there is nothing left but an empty husk with some pretty buildings. And you can trace it all back to the disdain that the elite felt towards their own people, to their treachery, and to the thought that human beings are interchangeable units. #France #riots

Never thought I'd see the day in which U.S. bonds will be pumped and dumped like a freaking meme coin.

You have been given a gift. In the past month, rising government bond yields have been an excuse to hammer down the prices of #gold and #silver. They tell you that higher rates make zero-yielding gold less attractive in comparison. This is of course nonsense, because bond yields are rising due to persistent inflation and a loss of faith in the ability of governments across the world to deal with their debts. In such an environment, gold and silver are the natural alternative to government bonds. Furthermore, notice how both the stock market and bitcoin were immune to this narrative. Bitcoin is zero-yielding just like precious metals, but for some reason no one seems to care. In the case of tech stocks the hypocrisy is even more blatant. In order to construct AI data centers, these companies are taking on record amounts of debt, which is growing more and more difficult to service. Tech stocks should have been hammered, but for some reason they weren't. Precious metals are therefore on sale. It is only a matter of time before the market realizes its mistake and their prices move higher. In my opinion, if you have any spare cash, you should take advantage of this opportunity.

Marketwatch is practically begging its readers to buy the long bond. The 10-year yield has just recently broken out of a 3-year long consolidation, which suggests that it's headed much higher, and yet retail investors are asked to catch the falling knife. Why is it that retail investors always have to be the fall guy for Wall Street? $TLT

Can someone please explain to me what kind of a "household accident" can cause you explode on the street in Rotherham, with "body parts seen spewed across the road"? I would really like to avoid such a "household accident". #UK

Earlier today I argued that nothing can stop the train of rising bond yields, except a Federal Reserve intervention. Well, there is one caveat to that. Investment managers need to periodically rebalance their clients' 60/40 portfolios, and it is usually done quarterly or annually. Since the bond market has taken a hit this quarter while the stock market is still near its all time high, they may be required to shift capital from stocks to bonds, and this may give the bond market some reprieve. Today is the last day of the 3rd quarter, so this may happen today or tomorrow. But even if it does happen, don't expect this to have a lasting effect. This is an automatic adjustment, and it doesn't mean that they are suddenly bullish on US Treasuries.

When you take a step back, you realize that the US 10-Year Treasury Yield is not just rising, it's accelerating. Mainstream economists think of the bond market as seeking equilibrium. Rising yields make these bonds more lucrative, which should attract more buyers, increase the demand and cap these yields. But a market panic has rules of its own. When yields are rising rapidly, investors are reluctant to catch the falling knife. They would rather wait on the sidelines until things stabilize, and that only exacerbates the selling. This is how we can get a bond market collapse. Right now, nothing is stopping this train. The Treasury is attempting to provide liquidity through its bond buyback program, but that is obviously not working. Converting long term debt to short term debt shortens the average maturity of the entire US debt and makes it more sensitive to inflation. It may end up scaring investors away more than attracting them. The only thing that can stop the train is the brute force of the Federal Reserve and its money printer. This is the final destination of every attempt to manipulate interest rates. Yields will be capped at a certain level, and the Fed will buy whatever the market is unable to absorb. Since this is extremely inflationary, the real yield will quickly become negative, private investors will disappear entirely and the Fed will become the only buyer. Inflation will spin out of control and the Fed won't even try to stop it, because any attempt to do so would collapse the bond market.

We are sitting in a theater, waiting for the show to begin. The curtain is closed, and most people are minding their own business, eating popcorn, or chatting with their neighbors. But a few of us are closely observing the curtain. It seems as though something is moving behind it. And if you look closely, you can occasionally get a glimpse of something sinister lurking in the shadows. We try to describe it as best we can. Some of us see an old gentleman in a top hat. Others think it is a strange looking lady. Others still think it is a beast of some sort, like a bear or a hound. To the rest of the crowd it sounds as though we are hallucinating. But our eyes are not deceiving us. although we cannot see clearly, we know that there is SOMETHING there. The rest of the crowd calls us "conspiracy theorists". Perhaps we would be better off doing as they do, munching on a cookie, or staring at our toes. But we can't. Something compels us to look at the curtain, and try to piece together an image of what is out there. Some of us have been doing it since COVID. Some have been doing it a lot longer than that. Some poor blokes have already died in their seats and will never find out the truth. But there is something unsavory lurking behind the curtain. Of that I am sure.

So there's this narrative out there, that surging government bond yields are not a sign of a crisis, and that they are in fact the result of a booming economy and robust growth. They argue that the construction of AI data centers demands so much capital, that it's crowding out the demand for government bonds. This is a "tail wagging the dog" kind of argument. To put things into proportion, AI related investment across the world is estimated to reach about $800 billion in 2026. During the same period, the US Treasury is expected to roll over close to $10 trillion in maturing marketable debt. The government bond market is way bigger than the corporate bond market, and it is unlikely that government bond yields are dictated by corporate bond issuance. Now, I will admit that the spread between IG corporate bond yields and government bond yields is at a multi-decade low, suggesting that the public is still eager to invest in tech companies. That is understandable given all the hype around this sector. But this spread can never fall to zero, because no one will ever lend to the hyperscalers at a lower rate than they do to the US government. So please don't bury your head in the sand like an ostrich. The collapse in the government bond market will make it harder and harder for tech companies to fund the construction of AI infrastructure. No matter how bullish you are on this technology, there is some 10-year yield at which the AI bubble will pop and these companies will go bust. We just don't know yet what that yield is. Alternatively, the Federal Reserve could step in and cap interest rates by restarting QE. After all the hawkish talk from Fed Chair Kevin Warsh, that would be a major blow to their credibility. But I can still imagine the Fed going down this path, if the bond market forces its hand. That would be equally destructive to the economy, if not more so. The abandonment of any monetary restraint will lead to higher inflation, and ultimately to the collapse of the dollar. Ladies and gentlemen, get your physical #gold and #silver. I really can't see how you can put a happy spin on this situation.

The most annoying thing about today's route in #gold and #silver, is that the inevitable collapse of the bond market was one of the major reasons I bought them in the first place. Three years ago I made a video called "bondmageddon", predicting this exact scenario, of a panic in the bond market. My assumption was that rapidly rising bond yields would be an incentive for the public to seek refuge in bullion. But what we're seeing right now is the exact opposite. Even though precious metals already had a major correction this year, they are getting hurt the most. This reminds me of that scene in "The Big Short", in which all their predictions about the housing market are coming true, and yet their credit default swaps are losing value. Two plus two equals fish. The assumption on Wall Street is that higher yields mean that bonds are more attractive compared to bullion. That may be correct in a healthy market, when yields are rising because there's so much growth. This is of course not the case today. Bond yields are rising because the public is losing faith in the ability of governments to manage their debts. In this situation you want to own gold and silver, because central banks will eventually come to the rescue with more QE and inflation. Just like in the movie, I guess we'll have to wait a while longer for the market to realize its mistake.

Technically speaking, #gold broke down today, both from the falling trend line since its all time high in January, and the short term falling trend line since the August high. This could send it to retest its July low at $4,000 an ounce or so. But this doesn't make any sense to me. The rising 10-year Treasury yield (above 5.2% right now, and probably headed much higher) is supposed to be bad to highly levered tech stocks and to fanciful assets such as bitcoin, not to precious metals, which historically served as the alternative to dysfunctional government bonds. The bears can poke fun at me. I will endure their scorn with stoic peace as I always do. I know that logic is on my side, and I am confident that at some point the market will realize that as well. If government bond yields will continue rising, the Fed will have no choice but to intervene and renew QE, and that will be extremely inflationary and beneficial to gold and #silver. So how come the market isn't pricing that in already?