Having little to no effect on inflation, the Federal Reserve will be seen as incompetent and President Trump will move to abolish it. That would require action by congress, which could become a reality after the midterms of 2026. In the meantime, Trump may issue some executive order or orders and direct the Treasury to issue U.S. currency redeemable in gold and/or silver.
The price of gold in such an instance could be as high as $20,000 per ounce, some economists target it even higher. No matter what, it's going to be higher than it is currently. There seems to be no argument about that.
Timing and price levels are the two main points of argument at this late stage. There's also the possibility that Trump does nothing about the Fed or the dollar vis-a-vis the constitution, which pegs a U.S. dollar as equal to 371.25 grains of silver, meaning that a U.S. dollar is defined as containing 0.7734375 troy ounces of silver.
Well, if silver is around its current level of $32 an ounce, a constitutional dollar would be worth $24.75 in Federal Reserve Notes, making it, by far, the preferred currency. Some people, such as Alasdair Macleod and James Turk, both of goldmoney.com, suggest that the two currencies could circulate simultaneously, until, one or the other is eliminated.
Gresham's Law states that "bad money drives out good" and is often misunderstood. The principal takeaway is that people will spend the bad money and hoard the good money. Thus, it's entirely possible that the U.S. dollar, represented by the Fed's Federal Reserve Notes, will continue to be the currency of choice, while savers put away the constitutional money until such a time that it becomes officially the U.S. currency. Those constitutional dollars, redeemable in part or in whole for gold and/or silver, may be used as a vehicle for settling international trade balances.
That there could be two competing currencies is entirely plausible. As is currently the case, there already exists a school of thought that considers gold and silver currency, and further, the only true form of "money." So, gold, silver, and Federal Reserve Notes are already circulating through the U.S. economy, along with bitcoin and thousands of other alt-coins in the cryptoverse. It wouldn't be surprising to witness further decimation in the value of the Fed's currency by competition, which is ultimately a good thing.
Getting to market conditions this Friday morning, stock futures are tumbling in the pre-market, though not to any egregious level. Dow futures are down $122, and S&P futures off about $10 at 8:00 am ET.
It wouldn't be a shock if stocks sold off to end the week. It's been a persistent pattern. The Dow, NASDAQ, and S&P each sold off the past three Fridays, January 24, 31, and February 7. Maybe it's just herd behavior or a function of stock option expiration. Gone are the days of options expiry on the thrid Friday of each month. The current market structure accommodates not only options expiring on every Friday, but also every day, as in 0DTE (Zero Days to Expiration) options. In more ways than anyone dares to admit, derivatives (options, futures, swaps, repos, etc.) drive the actual market.
Gold came close to making another all-time high this morning on the COMEX. The continuous contract topped out at $2,963.20, precisely three dollar short of the high made Monday night. Silver made a big move in the quiet hours, hitting $34.16 earlier this morning. That's a three-month high, but anybody with skin in the game thinks $35 is a mortal lock, probably within weeks, and $40 will follow as day follow night. It would be stunning if silver doesn't exceed $40 an ounce this year. That would be about a 36% gain off the December 31, 2024 price of $29.24, pretty much par for the course these days.
It's noted with some irony that Draft Kings (DKNG) reported fourth quarter and full year results after the bell Thursday, missing its earnings target of -0.15 cents by losing 0.28, or, almost $138 million. The irony is that DraftKings purports to make money off gamblers, but hasn't made a single dime. In fact, the company has accumulated losses of $6,441,228,000. That's SIX BILLION, or, in other words, there needs to be a lot more losers using their platform. "Nice business model ya got there. Shame if anything would happen to it." Shares are up five percent in the pre-market. Go figure.
With the opening bell to close out the week in less than an hour, unless the bottom falls out today, the majors are looking at a winner for the week. Through Thursday's close, the Dow is up 408 points, the NASDAQ ahead by 422, and the S&P is up - after making a record close Thursday - 89 points.
At the Close, Thursday, February 13, 2025:
Dow: 44,711.43, +342.87 (+0.77%)
NASDAQ: 19,945.64, +295.69 (+1.50%)
S&P 500: 6,115.07, +63.10 (+1.04%)
NYSE Composite: 20,181.29, +118.98 (+0.59%)
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