Thanks to all of you who tuned in to the webinar last Friday, by far the biggest turnout we have enjoyed. Myself and the team appreciate all of your kind feedback, and if you raised questions you should have had a reply by now.
I love the quotation from Jay Powell. This might give pause for thought to those still inclined to drive at 100mph with no brake on a very busy road. The pile up is inevitable.
The really big news this week was hidden. For a few weeks now (including the webinar) I talked about how events might unfold if Trump is serious about advancing US isolationism, global tariffs, and tearing down the post-Second World War global infrastructure which was designed to keep the world a bit safer, healthier, and financially stable. Among other things, equivalent periods over the last 500 years have resulted in capital controls-cum-wealth confiscations by the protagonist, as set out in Ray Dalio’s 2021 book.
This possibility has concerned China for years as one of the largest holders of US government bonds, and in 2025 the rest of the world also began to have similar worries, with dollar assets being sold off.
The big news is hidden away in the Big Beautiful bill, which you will recall involves a reverse Robin Hood strategy by Trump, robbing the poor to give tax cuts to the rich, and which is central to the overnight playground spat between Musk and Trump. This bill is over a thousand pages long, and buried deep inside is section 899 which will allow Congress to apply punitive taxes to people, investors, and companies from countries which Trump/Congress don’t like. Revenge taxes.
The taxes will be applied to US assets which they own, and, in the words of The Economist, “would render America all-but-uninvestable for many foreigners”. This at a time when the US is desperate for foreign money to buy the government bonds issued to fill the huge hole in the finances of the US administration.
The bill has already narrowly passed in the US House Of Representatives, by just one miserly vote, and still has to pass the Senate. The latest hissy fit from Elon Musk gives a sense of the opposition, and it is unlikely it will pass, at least not in this form. But even if it doesn’t, the writing is on the wall for global investors, who are stealthily selling US assets, even as retail investors still appear to be committed buyers.
The bill as a whole makes little sense, and section 899 alone risks triggering an era of hostility worse than that which the tariffs might cause. Though Musk is typically excited by space, it does not include the one between Trump’s two ears.
This serves to turn the spotlight back on the attractions of gold, and silver.
On 14th March I said:
“We’ve not had cause to mention silver in many years, but this month it has sent an interesting signal. Silver is the volatile younger brother of gold. From prior decades, my sense was that a gold bull market had never really caught the imagination of investors until silver started moving up sharply too… Silver has turned a significant corner, and there appears to be some way to go for both gold and silver, the metal and the miners… positive gold headlines have certainly proliferated since the New Year, but there are no signs of manic buying, nor the parabolic spike higher which typically lights up the final crazy phase of a commodity bull market.”
Gold subsequently had another good run, peaking on 22nd April with a giddy rise to 3500. A breather was overdue, and it was under 3200 by mid-May. On 23rd May I noted that the correction could be complete (a classic ABC shape), in which case it would break higher.
Gold has indeed bounced, though not yet to new highs. What is more interesting is the outperformance not just of gold miners, but also silver and silver miners too. Gold miners had been lagging for some time, as central banks, the main buyers of gold in the last couple of years, were not interested in the miners. It needed new investors (both retail and institutions) to move the miners, which remained very cheap. That now appears to be happening…
…Since the peak on 22nd April, the gold price is still down nearly 2%, but gold miners are up 2%. The big difference is with silver, with physical silver up 10% and miners up 17%.
Looking at the last week alone, physical gold is up 2% and miners 5%, physical silver 9% and miners 15%. Looking further afield, Hong Kong leads the pack, ahead by 2%, US/UK/Europe up around 0.5%, with Japan and Brazil at the base, off by 2%.
The US market remains pivotal and fascinating. As you know, the S&P 500 dropped like a stone in early April, then bounced sharply with investors enthused by the TACO trade, Trump Always Chickens Out. Many analysts are trying to figure the impossible (what Trump might do next) and the mercurial (a recession). I find it easier to look at a chart of the S&P 500 low from September 2022, which now looks like an almost complete 5 wave move.
The sharp move down which finished in April appears to be a wave 4 within the uptrend from Autumn 2022, which means that the index is on its final leg up, which will also be a new all time high. For a straightforward recap on wave analysis, do look at this prior blog.
How much higher? Some textbook calculations imply 6285-6774, upside of 6%-14% from today for the S&P 500. That is the framework within which we can monitor this key market in the weeks ahead. This possibility can be torn up if the S&P falls through 5400 in the near turn, in which case you’ll need to grab your tin hat.
With the clock ticking on the 90 day tariff pause, section 899 coming under greater scrutiny, and the entertainment value of the Trump/Musk tiff, June will not be dull.