Gold and Silver Targets
Gold reached $5,000 at the start of this year after a huge runup through the last quarter of 2025 into January. The move was parabolic - "up on stilts." A correction was warned at the time: gold could fall 20-25%, silver 35%. It corrected 50% fast, then spent months consolidating that runup.
The forecast path for silver: a Q4 2025 target of $75, raised to $125 going into January (silver hit $122 in January), then $180, then $200 at the end of May. Gold's Q4 2025 target was around $5,500, raised to $6,800 in January or February, then $7,000. Current targets: silver $200, gold $7,000 for this cycle. The rising forecasts came after pullbacks, not only during euphoria.
Lows came in July, when gold fell under $4,000 and silver hit about $56. Many expect lower prices from here; I do not. Another sharp runup should come soon.
The $7,000 gold target is for this cycle and need not line up with the stock market's timing. Equities are making a secular peak that will stand for decades. Gold and silver will make higher highs in the next cycle. By the early 2030s, around 2032 or 2033, gold could reach $20,000 and silver $1,000.
The Fed and Bonds
In 2024 I called for at least one rate cut; the Fed cut on September 18, 2024. The Fed then started raising rates this year. I disagree that we are in a hiking cycle. This could be one-and-done, or two-and-done. The last hike was reasonable - 90% of the market was calling for it at the last Fed meeting.
The bond market sits near one of its biggest inflection points, close to one of the largest bull markets it has ever had. This runs against nearly every investor; sentiment is extreme. The 10-year traded at 5.30-5.34% this morning, and consensus expects 5.40%, 5.50%, maybe 6%. I disagree completely. We are retracing the 2007 highs in rates and lows in bonds, and should reverse from here.
In 2021 the 10-year fell to 40 basis points, and the assumption was yields would never return there. I think there may be one more leg to a higher high in the secular bond bull market that began in 1981, when the long bond was over 15% and T-bills hit 21% - the top in rates. We have been in a disinflationary, falling-rate environment ever since, with upswings along the way.
In a global bust, the 10-year could reach 0%. Over the next 6 months, rates could fall below 4%, maybe toward 3%, as the economy slows and oil prices drop. The biggest part of the move comes during the bust, carrying yields to zero. A 0% 10-year would be a new higher high in bonds and likely the peak for the next decade and a half. For the next year to 18 months, I would rather buy bonds than sell them.
Money Printing and Deflation
If a financial crisis hits bigger than 2008-09, it will take far more QE than 2008-09 or 2020-21. Given the leverage in the system, the Fed could create as much as $20 trillion in new money, with proportionally similar amounts from every central bank - roughly $50 trillion worldwide. At $20 trillion, the Fed would buy up every Treasury in sight. This happens when the bust hits, not immediately.
Deflation is more likely than inflation over the next 18 months. Oil weakness could pull CPI to 2% next year, then into deflation during a broad bust. Markets are forward-looking and discount ahead, which many forget when they watch day-to-day news. Yet bond investors act as if inflation is about to run away. All that money printing would eventually trigger an inflation cycle after the bust.
Fiscal Fears and Media
A CNBC article from October 1 said government borrowing costs kept rising worldwide, a months-long trend, with investors fleeing over weak political will to fix fiscal deficits while inflation stays above target. That reads as piling on. Markets follow charts and momentum - the tape. With rates up and bonds down, the bearish rationale and rhetoric follow the tape. The same deficit warning could have been made three or four years ago.
The media favors Democrats taking the House and Senate in November and will push a bearish-bond, bullish-inflation view. The bond narrative gets loudest after prices have already moved, which makes it less predictive than investors assume.
The 10-year and 30-year have both risen since 2021, a five-year bond bear market where yields climbed even as the Fed cut - 100 basis points of cuts, then another 75 in 2025, with the fed funds rate falling while the long end rose. I do not attribute this to manipulation; markets in aggregate predict better than any of us. I expected rates to roll over earlier. Two years ago the 10-year was at 5%, then fell to just below 4%. The rise may be a bet against the "big beautiful bill" or against Trump; this year it was mostly driven by Iran. Rates were doing fine until about February. Current bond sentiment has gotten crazy - everyone assumes rates and inflation are going up. I think the opposite.
The Dollar and Other Currencies
I am a dollar bear. The DXY has spent the last 15 months consolidating its prior decline. It fell in 2022-23 from 115 to just below 100, then consolidated about 18 months, then dropped from 110 to 96, and has consolidated again for 15 months. These counter-trend rallies run long, and people lose perspective - they see the dollar rising and ask why I am bearish.
The DXY should break out of this consolidation to the downside, with a target in the low-to-mid 80s, around 82-84. It could pause at 90. There is some support there, but I think it falls through. The next decline runs over roughly the next nine months, then a bottom.
The dollar drop is not timed with the start of the bust; it could keep falling through the first several months. In the second half of the bust, the dollar finds support as foreign investors run to it for safety, as always happens in a crisis - buying US Treasuries as the safest asset in the world, trusting the US, the printing press, and a stable government. That could be a year or more out. In the last six months of the bust, some of the biggest bond moves happen alongside a rising dollar, since US rates will sit below those of other countries. The dollar will rise with the bond market, while rates drop toward 0% on the 10-year.
Against almost all currencies, expect dollar strength during the bust, with the possible exception of the Swiss Franc, which could move the same direction as the dollar. Most currencies get hit hard when the dollar rises and gain when it falls - a pair trade. As the dollar heads toward 82-84, the euro could reach 1.30, likely 1.35. The British pound could hit 1.50, probably too low an estimate. These have good upside still ahead while the dollar falls. A few years ago gold sat around $2,000.
