Gold and macro environment, page-911

Lots of media attention being given to a possible recession - Trump and Bessen have not ruled out a recession and in fact their comments suggest hardship ahead. We may be seeing the start of the bursting of a few bubbles - the first is the stock market tech/AI bubble with the MAG 7 down a lot over 15% and heading to 20% down, a bear market, while NASDAQ down close to 15%, while BTC is down 27% and other crypto is down double that, the other 2 bubbles yet to show signs of bursting are the US housing market and sub-prime interest rate spreads above treasuries while Commercial real estate has been having a bad time in the last 18 months and more to come. If those other bubbles start to show signs of bursting then the down turn could be very bad. In addition hedge funds have been borrowing a lot of cash from major banks and if the stock market continues to fall the hedge funds will be forced to sell making the fall in the stock market a lot worse. We may even see a few hedge funds go belly up - the big US banks have a lot of exposure to hedge funds lending them trillions - so the big banks are exposed.

If we end up with NASDAQ falling more than 20% (and take crypto down even more than it is down now maybe to 40% down) it has a big wealth impact which almost certainly will result in a US recession with markets falling a lot more than they have - no idea how fare they will fall but they could fall more than the 25% in 2022. It sort of snow balls.

If a recession does happen it will have the following economic impact:

1. All those investors that made great money in tech/AI and crypto over the past few years will see big losses and they will cut back spending potentially a lot making the recession worse (ie the wealth effect) - it is the top 10% that has been keeping the US out of recession as they have made lots of money on share market and have been spending it while the bottom 50%-60% have been doing it very tough

2. A recession will see the US government deficit balloon from $2tr in 2024 to double or triple that depending how bad the recession is. It comes from lower tax receipts due to lower company profits, lower investment profits and low personal tax from higher unemployment and lower investment profits. Costs increase due to more people being unemployed, etc. The bond market will not like to fund more US debt

3. Company profits will fall.

4. Potential contagion risks will emerge.

Gold and silver will end up being winners as will precious metal stocks but not after both fall.

I could not help put in the following image about Bitcoin - it paints a poor for BTC (and all crypto) if the price keeps falling ie we may see a 2022 type decline where it went down from 68k to 16k but this time it could be worse.