Metals and Mining Stocks Lead
Gold and silver rose this week and sit right near support. Gold finished up about 2.75%, stopping trading near $4,070 an ounce. Silver closed at $51.82, up about 2%. Gold is barely above $4,000; silver barely above $50. In the prior podcast gold was around $3,900, and the call then was that gold would be back above $4,000 by the next one. It was right - gold traded above $4,100 before pulling back. The rally came after the midterms, as expected.
Mining stocks did far better than the metals. The GDX rose 9.6% on the week; the GDXJ rose about 9%. This big move in miners is a signal of what is coming, and it is very bullish for gold and silver.
Why Gold and Silver Will Keep Rising
Nothing is better for gold and silver than Democrats controlling the government. With the White House, Senate, and House, they will push the most socialist big-government programs, the most money printing, and the most inflation. Markets will price this in over the next two years.
Budget deficits will rise over the next two years, and so will inflation - even without a Democratic president. Deficits are going through the roof and inflation is going through the roof. The advice: load up on gold and silver, buy now before it goes up.
The metals will boom not just over the next two years as investors expect Democrats to win the White House in 2028, but will keep rising after those forecasts come true. The problem is not only that Democrats have Congress; they are obviously going to take the White House in 2028, and who that Democrat will be is scary.
Metals stayed cheap, so there is a double win in selling Bitcoin to buy gold and silver: getting out of an asset about to collapse and into assets set to rise sharply.
The Inflation Trap for 2028
When Biden was president, the highest CPI year was his first, 2021. Every year after fell - 2022 lower, 2023 lower still, 2024 the lowest. Democrats still lost; affordability was the big issue even though yearly CPI increases dropped for four years.
The pattern now reverses. Each year the CPI should rise by more than the year before: 2026 higher than 2025, 2027 higher than 2026, 2028 higher still - and 2028 is the election year. Whoever is the Republican nominee, whether Donald Trump, JD Vance, or someone else, carries that baggage. Republicans will try to blame the Democratic Congress, but voters blame the person at the top. Republicans will own the economy and the inflation, giving Democrats the edge to win.
Bonds, the Debt Ceiling, and the Dollar
Bond yields fell. The 30-year slipped to 5.26% and the 10-year to 4.86%. They should be moving the other way. People think gridlock means smaller deficits. It does not.
One likely move within the next year: abolishing the debt ceiling completely, something Trump wanted. With Trump now working with Democrats instead of Republicans, repeal is possible. The debt ceiling was the only tool forcing some spending reduction, because stuff got held hostage to it. Remove it and that leverage is gone; the sky becomes the limit on debt. Democrats want this, but Republicans blocked it before.
Another likely move: capping credit card interest rates - price fixing Trump wants. Republicans refused, but Elizabeth Warren and Bernie Sanders want it, so Trump could work with them. The worst of both worlds could get agreed to.
Bonds are going lower. A weaker economy will not bring lower inflation and lower yields; it will produce higher inflation because it means bigger deficits and more money printing.
The dollar rose on the week, though not because of the elections. Until the last day the dollar was down, which is the proper direction - down. The dollar index rallied that day and finished positive at 102.30 because of the jobs report.
Oil and the War
Oil dropped about 13%, from roughly $104 a barrel the prior Friday to barely above $90. Traders hope Democrats in Congress can force an earlier end to the war. Even many Republicans, including the vice president, now admit the war was a big problem, cost the election, and was a mistake. Democrats would likely have won the midterms even without the war, but it made things much worse and left the war even less popular with Republicans.
Trump's Weakening Grip
The key question: will Republicans drop their support of Trump in time to try to save the party? The party is probably not savable for 2028, but Trump will start losing support from other Republicans. Before the midterms, Republicans feared crossing Trump - they stayed silent even on big-government socialism they would have opposed from any Democrat, because they feared being called a traitor or an idiot and getting a primary challenger. That kept them in line but angered voters.
Now they may fear the general election instead of the primary, after seeing how many fellow Republicans lost in 2026. To save themselves in 2028, they may stop backing him and even join efforts to impeach him, digging up dirt once congressional investigations start - investigations Republicans refused to run, even though there was probably material worth investigating. Democrats are eager to open these investigations.
The Jobs Report
The October jobs report was a beat. It got less media attention given everything else in the market, but it is being called very strong because it more than doubled the 62,000 estimate. Actual gain: 165,000. That is not a big number for an economy this size, and by old standards it is mediocre, but against the weak labor market during Trump's term it looks strong.
The prior two months were revised up - a change, since revisions normally go down. Last month's figure went from 29,000 to 60,000. Unemployment fell to 4.1%. Average hourly earnings rose 0.4%, more than expected, and the prior month was revised from 0.1% to 0.3%. Markets read this as inflationary, so the dollar rose on the idea the Fed will hike.
Some traders had started marking down the odds of a December rate hike; a bad number would have dropped those odds sharply. Instead the odds ticked up. But the real number is unknown - the opening figure always gets revised. The chance it stays unrevised is zero; it will be revised next month, the month after, and maybe a year later. It takes a year or more to know the actual figure, so reacting to it makes no sense. For all anyone knows the number is negative, and that may only surface a year later.
Labor force participation went up. Manufacturing added 19,000 jobs, up from 13,000 the prior month - probably tied to data centers. If data centers slow, manufacturing losses will return.
The AI Bubble and Recession Risk
If the air comes out of the AI bubble and Democrats clamp down on the AI buildout, the capex spending that has been powering GDP could collapse and bring a recession quickly. The moment that happens, the Fed stops caring about inflation, or at least stops admitting it, and shifts to stimulus and propping up the economy.
The Fed may or may not deliver a December quarter-point hike - maybe one and done. Either way, serious trouble is coming.
Consumer Credit Stress
Consumer credit skyrocketed by almost $28 billion. The prior month was $8.3 billion and consensus was just $11.5 billion. Credit is exploding because people are broke. Borrowing on credit cards is the only way many can pay bills and put food on the table.
This may be why the government moves toward a socialist price control capping credit card rates, since Americans carry so much card debt and want relief. The problem: once rates are capped, card companies cut people off, because if they cannot charge a high enough rate to lend profitably, they stop lending. Cap the rate at 10% and they simply make no new loans - losing money on loans is worse than making none. The policy backfires. Politicians promise cheaper credit while cutting off access to it, and the most financially vulnerable Americans lose borrowing entirely.
Struggling Americans are why Democrats did so well. There is no Trump boom, despite Fox News insisting the economy is booming. If it were booming, Republicans would have gotten credit and won. Fox News covering for Trump and spreading his claims infuriated the public. Some frustrated Republicans, tired of the lies and hypocrisy - the same way the left covered for Biden - voted Democrat.
Republicans now have no credibility to go after corruption in the Democratic party or to oppose deficit spending. Both parties accept deficits, which makes borrowing politically easy and monetary restraint hard.
Bitcoin Versus Gold
Bitcoin did not act like gold. It dropped about 3% on the week, trading more like the NASDAQ, where it is positively correlated. It sat a little below $76,000, around $75,900 - right near where MicroStrategy (now Strategy, ticker MSTR) has its cost basis.
Strategy (MSTR) has bought Bitcoin for over six years, with an average cost around $75,500-$75,600, leaving it a tiny paper profit. If it tried to sell all its Bitcoin, it would take a massive loss; even on paper it can only pretend to a tiny profit. As the biggest Bitcoin buyer in the world, Strategy (MSTR) would be far better off had it bought gold each time instead - probably doubling its money. Same with the S&P 500 index (SPY). Even leaving the money in a money market would have at least earned interest.
Bitcoin is marketed as digital gold, but its behavior shows it still trades with risk assets. Its reported cost basis near $75,500 leaves little room for error after years of buying.
Bitcoin can be used through BitPay to buy physical gold and silver.
Bottom Line
Preserving wealth means looking past election promises and reassuring market headlines. Falling yields do not protect purchasing power when deficits keep accelerating. Debt, inflation, and monetary policy matter no matter who controls Congress. Borrowing to survive is not prosperity, and a headline jobs number means little when the real figure stays unknown for months. The direction of inflation before the next election may be the most important warning of all.
