Selling Into Euphoria
When sentiment goes off the charts bullish, I sell. That is exactly what I did with gold and silver. The signal was unmistakable: every two minutes someone on the internet was "launching a rocket," and my inbox filled with emails explaining why gold was going to $10,000 and silver to $300. Sentiment has always been the central input in how I decide to buy or sell anything, and it had reached an emotional extreme. So I sold, and I told my clients — who could act on it if they wished — that I was doing the same.
It is worth being clear about why I own these metals in the first place. Unlike the people I hesitate to call "gold bugs" — those who live and breathe the metal and never sell — I do not buy gold and silver as insurance against the end of the world, or because I expect to spend them as money when conventional currency fails. My primary reason has always been, and will remain, capital appreciation versus any other asset. I buy because I think they'll go up, and I sell because they go down. Nothing more mystical than that.
From around $1,200 all the way up into this past January and February, I was a gold bull. Over that climb I migrated from holding physical metal into mining shares, and then into the junior miners. But when gold went completely parabolic — and silver even more so — I concluded we had simply gone too far, too fast.
Nothing Technically Wrong With the Correction
A few weeks later, sentiment had made almost a complete 180-degree reversal in a very short span of time. And here is the key point that gets lost in the panic: technically, there was nothing wrong with this correction. Gold rose more than 100% in a single year, and was up nearly 250% over a span of two to three years. After a run like that, the metal was entitled to a corrective phase — it needed one.
In fact, if you want to believe those high price targets, which I still think are possible, it is far healthier that gold corrected now than if it had run straight up to those levels without pause. A price reached by a vertical, unconsolidated move never holds. A pullback like this builds a more durable base for the next leg.
Central Banks Are the Number One Factor
The single most important factor for gold is central-bank behavior. For many years I watched central banks act as big sellers, and between that official-sector selling and the manipulation of the paper traders, it was genuinely difficult for gold to mount and sustain any meaningful move.
Most of that old-style manipulation is now gone, because the physical markets have migrated to Asia, where buyers care about the metal itself rather than the paper contracts. Meanwhile, central banks have flipped from sellers to buyers. This is the same dynamic that made me so bullish a couple of years ago about the BRICS nations and the idea that gold would eventually be used to help rescue the world from the horrible fiat-currency crisis we face — not only here, but in many countries. Yes, one or two central banks had to sell gold during wartime, and thank God they were smart enough to have bought it in the first place so they had something to sell. But underneath the price, the official sector remains a net buyer. The correction mattered far less than the question of who kept buying through it — and that buyer is institutional, not emotional.
The Miners' Bullish Index Hit Zero
I knew I had caught the turn when, two days before this conversation, the gold miners bullish index hit zero. I cannot remember that ever happening — and the index can only go to zero, so perhaps it tied a prior low at some point in history. When the gold-mining sector cannot register a single bullish indication, sentiment is telling us we are far closer to the end of the decline than the beginning. Even some of the sharpest people I know had suddenly turned bearish, which is precisely when I believe in doing the opposite.
Those signals were enough to get me back in, and I now have parameters set to become fully invested depending on what gold does to the upside or the downside. I will say this plainly: I would far rather hold a gold-related portfolio starting today — whatever the five top gold stocks happen to be — than the five top semiconductor stocks, the five top AI stocks, or even SpaceX. The fundamentals feel much better to me, especially once you add base metals and critical minerals, which are more bullish now than they were six months ago when everyone was excited about them. We need these materials more now than ever. Mining companies are quite happy to earn profits with gold at $4,500 when their cost of production is around $2,000 or less, and with copper approaching $7. That combination simply demands involvement in the mining end as an investment.
Underappreciated Sectors: Water and Uranium
Asked what else has low sentiment and is being overlooked, I'll admit there are very few clean sectors left. But if I were a younger man with the next 10 to 15 years ahead of me, two of the clearest long-term issues are water and uranium.
The uranium argument is, in my view, even stronger than the copper argument. Wind power is effectively done — people have now seen what actually happens with all those windmills. Even solar is far more limited than the public believed. The only way the next generation gets all the electricity it wants, without chronic brownouts, is to build nuclear plants, smaller nuclear reactors, or some similar technology. China has already recognized this, and as a result it will be in much better shape to supply electricity than the United States, which runs on four separate, antiquated grid systems — I like to joke that Thomas Edison built part of it.
That said, uranium carries one real negative: you can count on both hands, at best, the number of publicly held companies that actually produce or handle the physical material. Everything else is exploration, hoping to find deposits. Some of those explorers will succeed, but by the time they find it and bring it into production, the uranium play may already be over. So I would want prices more in line with their longer-run economics before committing. Uranium shares got caught up in the broader stock-market move and have already come off a lot. If I'm right about the overall market peaking, they will likely be dragged down with it — and if they fall another 20% from here, I would look at them seriously again.
The deeper lesson is that the next resource crisis may not begin with scarcity at all. It may begin with electricity demand that nobody planned for. Investors keep staring at commodity charts while ignoring infrastructure timelines measured in decades. The energy transition sounds smooth in policy speeches but becomes brutally physical in execution. Wealth preservation means owning assets tied to necessity rather than popularity.
The Fed Under New Leadership
On the Federal Reserve, the newly prominent figure (Kevin Warsh) came out of his first major meeting far more hawkish than many expected. A lot of people assumed he would be a puppet of the president; that clearly does not appear to be the case. I know people hate the Fed, but I thought he handled himself quite well.
By contrast, I always felt Powell was timid, and that his real wish was not to be there at all. Over the last year or so, the pressure from the president seemed to beat him to a pulp. I suspect Powell has stayed on partly to throw something back — and if he comes to believe his successor is not the puppet he assumed, he may resign that position, or at least wait until the current president is gone before doing so.
We have now watched almost six years of the Fed failing to hit its so-called target. From this single press conference, my read is that the new leadership will not spend every waking moment talking about what the Fed is going to do. He clearly sees the other governors — and remember, even back at the March meeting, several of them had already moved away from cutting rates and started talking about raising them. The biggest risk to portfolios may be assuming central banks still control expectations the way they once did. What matters is when policy language starts diverging from actual actions and voting patterns.
Inflation Is No Longer Just Energy
This shift is not solely about the Middle East. The inflation numbers we've seen are broader than energy alone — they're more widespread. Before the latest Middle East flare-up, there were people talking about oil falling back to $20, $25, or $30. I no longer think we will ever have that same peace of mind on oil, especially oil from the Middle East, now that we have seen what can transpire — and now that we sense it could happen again, faster than before.
There is another structural change. The Gulf nations must be telling themselves that the current occupant of the White House is not Bush. When Iraq invaded Kuwait, the United States showed up, and many others joined. The Gulf states now feel a sense of being let down — particularly given that the president was over there just a year ago, talking about trillions of dollars in deals. That opens the door for a country like China to become the more attractive partner, with the Gulf less oriented toward the United States. Because of all this, I don't expect oil or gasoline prices to fall back to where they were before the crisis.
This creates a direct challenge for the Fed. My best guess is that if we get another couple of months of higher inflation for any reason, the Fed will quietly abandon its 2% target, because that number will be deemed simply unrealistic. Savers face the greatest damage precisely when official targets shift after their capital is already positioned.
What the Bond Market Already Knows
The bond market is offering a tell. When we spoke, the two-year yield was up 10 basis points, but the 30-year was actually down. To me that is a signal that this group may be more interested in getting ahead of the inflation problem. The last two Fed governors were widely viewed as behind the curve. The new leadership at least appears determined to get the committee out from behind it. Will they get far ahead? I doubt it — but they're not going to be too far behind, either. Bond markets typically react before public messaging changes, which is exactly why moves at the short end of the curve deserve more attention than headlines.
Global Markets and the Yen Carry Trade
In our planning group, my guidance to clients and prospective clients is that I do not want to own any US equities here other than those tied to metals and mining. I am, however, far from averse to certain regions abroad. I'm comfortable with Asia as a group, and with China and Singapore individually, given where their economies stand and the strengths that can flow from them.
The crucial backdrop is that the worldwide bond market has been the canary in the coal mine. Let's not forget that most major bond markets — including our own — have been in a bear market for three or four years now. Japan is the key wrinkle. For many years the Japanese yen carry trade was a primary source of liquidity that fueled markets everywhere, including US equities. Now the yen is showing more strength, and Japan has just seen its first rise in interest rates.
That could end the cheap fuel our equity markets have relied on. So watch this carefully: if Japanese rates keep climbing alongside stronger economic results, that is actually a net negative for world markets, and particularly for ours — because I would argue the US market benefited the most from the yen carry trade. As that dynamic reverses, liquidity may start shifting back toward Japan rather than staying here. Markets can rally for months while the bond market quietly withdraws permission, and when carry trades unwind, yesterday's market leaders become unexpectedly fragile.
Corruption, Incentives, and Capital Flight
There is a governance dimension to all of this. Governments and states are deeply inefficient. People may genuinely need more money, but it could be allocated far better — instead it flows through layers of contracting, scams, and outright fraud. We had a young, previously unknown figure go out and identify all sorts of wasteful and fraudulent spending — and yet, what was the follow-up? It simply faded away.
Here is the bigger problem. The very people we elect to fix these issues are themselves compromised. Setting aside the president and his family, where estimates of money made in the administration now run into the billions, we have numerous members of Congress — men and women, Democrats and Republicans alike — making tens of millions, if not hundreds of millions, in the stock market, largely from information learned through their official work. And they are not charged the way the rest of us would be. A couple of weeks ago the House Speaker said, in effect, that members only earn $175,000 and are merely trying to supplement their income. That is the wolf guarding the henhouse. The real problem lies in the political spectrum and in morals that are completely gone — and it is not confined to the federal level. The corruption I see in New Jersey and other states is getting worse, not better. Watchdogs like the attorney general turn up findings that suddenly vanish and are never heard of again, and the honest few who recognize the futility simply leave rather than fight.
One genuine advantage of the United States is its federal structure: different states have different regulators, so if you dislike one, you can move to another. In much of Europe, the regions and counties hold little real control, so you cannot truly escape your governance without leaving the country entirely.
But watch where capital is actually going. In high-tax states like California and New York, taxation has grown so heavy that even billionaires are leaving — relocating to Florida or Texas, with Florida especially attractive because it has no state income tax. The twist is that many of those leaving do not come from the party that currently controls their destination states, and they bring their political beliefs with them. That is why states like Texas — which no one ever imagined could turn Democrat — are starting to shift, including at the governor and Senate level. As a result, politics in the coming months is going to become far more influential in our markets than it has been in recent times.
The Common Thread
Across metals, energy, the Fed, global liquidity, and politics, one principle ties everything together: capital moves before narratives confirm. Liquidity leaves long before confidence does. Capital migrates before ballots are cast. Bond markets react before central banks rewrite their targets. The investors who get hurt are the ones watching headlines and index levels while the structural changes happen quietly underneath. Wealth preservation means recognizing incentives and following the flows — not reacting to the speeches.
