Markets at all-time highs
Nearly every stock market in the world has recently hit all-time highs at the same time. That almost never happens. In a long lifetime of watching markets, this kind of worldwide, all-at-once record is something I don't recall seeing. History shows that when it does happen, it's a time to ask questions and worry, not celebrate. The whole world cannot be perfect at the same moment. It never has been, and it never will be.
I've sold nearly everything I own around the world for this reason. I sold too soon, and I'm clearly early, but I'm watching and worrying. I'm bad at market timing, so I won't tell you exactly when it turns. I just know synchronized highs have always ended, and ended badly.
The biggest disconnect between market prices and economic reality sits in these stock markets making all-time highs. Whether that's truly a disconnect, you can ask me in two or three years.
The AI question
Everyone is excited about AI, and AI is changing the world the way electricity did. Will it last forever? None of these booms ever have. Electricity itself lasted forever, but not as a stock market boom. We've seen this pattern before with electricity, automobiles, and computers. Each got the market extremely excited. Each boom ended.
Even the real, lasting inventions didn't make people rich for years unless they picked one good company and held it a long time. Ford Motor Company is still alive, but Ford wasn't a great stock forever. So you have to get your timing right. AI enthusiasm looks like earlier manias, more than most people realize.
Where opportunity might hide
Beyond gold and silver, there aren't many places I favor right now, because most markets are stretched. Most commodities are already doing well. Agriculture stands out as a place to look, because it isn't booming. Almost nobody is rushing to become a farmer. University students are all begging to be stockbrokers, not farmers. That neglect is exactly why depressed farm sectors could outperform the celebrated leaders.
Gold and silver as insurance
I own gold and I own silver, and have for many years. Everyone should own some of each. Throughout history, gold and silver have held value and offered protection. Jesus Christ was sold for 30 pieces of silver more than hundreds of years ago. The metals have always been useful, practical, and protective, and they will be again.
Keep some gold in the closet and some silver under the bed. You need it, and by the time you clearly need it, it's too late to buy. Buy it when nobody cares.
For me, I just own the stuff. If it rises, I don't sell. If it falls, I hope I'm smart enough to buy more. I don't trade it or try to time it. Plenty of traders are excellent at timing gold and silver and make fortunes doing it. I am not one of those people, and I don't even try.
Is silver suppressed? Is the market manipulated?
Some investors argue silver prices are artificially held down through the paper futures market. Is there merit to that? No. But governments have, at times, tried to push the price of gold and silver down, and sometimes they succeeded temporarily. History shows that in the end markets are smarter than governments. No government in history has ever been smarter than the market. Governments dislike that fact, but it holds.
In the end, prices reflect supply and demand. Nobody has changed the laws of supply and demand, and nobody ever will.
Could silver behave very differently from gold if confidence in paper markets broke down? Yes and no. There's an old theory, possibly from the Bible, that gold should trade at 16 times the price of silver, and that ratio has often shown up. But the only rule that has always held is buy low, sell high. Gold and silver get very cheap sometimes and very expensive other times.
Forced sovereign gold sales
If a major holder like Russia, or any country under severe fiscal pressure, were forced to dump a large part of its gold reserves, it would cause dislocations in the market. If clever and knowledgeable, you'd find an opportunity in that. But it doesn't happen overnight. It usually takes a long time. When everyone decides at once that they must liquidate, that pressure creates the openings. Just be careful, because the first month won't be fun.
US debt and the dollar
The United States is the largest debtor nation in the history of the world. No nation has ever been so deep in debt, and the debt keeps growing. Every time this has happened in the past, it led to problems. It will again. I don't know when.
Treasury Secretary Scott Bessent says all US gold is present and accounted for, over 1 trillion dollars worth, confirming the Fort Knox holdings. Bessent is a smart person. But smart people who work for the government have to hold different views. His saying "don't worry" doesn't mean everything in Washington is fine. I still worry.
I own US dollars, partly because I'm American, but I'd own them anyway, since the dollar is the world's main currency. That will change. I don't know what comes next or when. Throughout history we've had different currencies and different dominant countries, and it always shifts. As an American, I don't like it, but I know it's happening.
Is talk of dedollarization premature? The change is coming, driven by that record debt, even if the timing is unknown.
Governments keep borrowing at record levels while markets stay relaxed, pricing debt as if fiscal limits no longer exist. Do investors understand something I don't? Probably not. The market is most likely just ignoring the risk. This kind of thing has happened several times before in many countries. Human beings love easy answers, want everything to be easy and right, and make many mistakes.
Cash and patience
Right now I'm holding a lot of cash, because I expect buying opportunities like a correction or crash to come again. When they do, cash lets you act. I'm bad at market timing, but keeping liquidity while everyone else is optimistic leaves room to move when prices reconnect with fundamentals.
Will inflation return to pre-pandemic levels?
Can inflation return to pre-COVID levels? Of course it can. I've read enough market history to know both low and high inflation have happened before and will happen again. If you ask whether it can happen ever, the answer is yes. Will it happen today? Probably not. But eventually, yes.
Has the landscape permanently changed?
We've moved from a decade of near-zero interest rates to persistent inflation and much higher borrowing costs. Is that a permanent shift for the next decade? I doubt it. Very few things in world or investing history have marked a true decade-long fundamental change. Some did, like electricity and automobiles, but even those didn't last forever. The biggest mistakes start when investors believe this cycle is different from every one before it. Inflation, rates, and market leadership keep reversing, even when everyone is sure conditions have permanently changed.
