I added more to some of my holdings today for a quick turn around hopefully. But it's okay if it's not that quick. It's easy to get carried away by the gold price and forget that we are buying into those near-future cash flows, which still look incredible.
I agree markets may recover a bit from this tariff shock. And probably quickly since it's very tiring for market participants to sell down 5% a day. As you said, there's still doesn't seem anything systemically and catastrophically broken yet that can't be undone.
But weakening growth in America is likely to show up something that everybody missed. The global economy, especially America's has become so financialized in the past 20 years I no longer believe plain vanilla recessions can happen anymore. I believe any sort of break in economic momentum, any falling off the financial treadmill will result in some event that threatens to break everything else.
15-20 years of indiscriminate borrowing, where private credit happily lends money to private equity to pay out the owners because these owners cannot get anyone to buy their businesses, or list them. And private credit is happy to pretend to have issued a safe and secure loan because they can put in all sorts of covenants they want because nobody cares about their enforceability. This is but one example of what Howard Marks call's the worst of loans being made in the best of times.
Keep the music going, extend and pretend. Whatever equilibrium is found now is in my view the calm before the real storm.
I don't know exactly what lower spending, corporate earnings, lower wages and employment will break, but my guess is that it will have something to do with credit. It's always credit.
And of course, the US fiscal situation still looks... terrible. As long as America continues to be an irresponsible debtor, I am not too worried about gold taking a deep and prolonged downturn.
I truly believe the day is coming where US treasury secretary says 'f* it, we can't get the debt down. Alright, every foreign 10-30 year bond will now be converted into 100-year zero coupon bonds, so no more interest payments to any of you, and see you in a hundred years!'
SPR Price at posting:
$1.82 Sentiment: Hold Disclosure: Held
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