Another year is ending, which means it’s time to look back in order to better look forward.For 2025, I see no other realistic option or scenario ahead other than a weaker dollar and rising gold.This is not “selling my book”, it’s just a common-sense approach to the realities of history, debt markets and the signals of my often-repeated mantra that can’t be repeated enough, namely: “The bond market is the thing.”Below, we see why.To some, of course, the bond market is boring, but let’s keep it simple, because if you understand government debt, you see things with an almost eerie clarity.So, let’s start with a brief, debt-based look back.
Looking BackIn my year-end report for 2023, we saw the coming events of 2024 fairly clearly. This was not the result of genius or tarot cards, but just a blunt understanding of debt.
Predictable Rate CutsI said Powell would cut rates in 2024. He did precisely that. How did I know? Did Powell tell me so?No, the bond market did.
Predictably Failed War on InflationPowell cut rates in 2024 because Uncle Sam (then at $34T in debt) would not and could not afford his failed yet admittedly dis-inflationary “higher for longer” rate policy to “beat” inflation—which I said he would never beat, and he never did.Period.Instead, Powell just took the CPI down in 2023 by gutting the middle class with a rate-hike-driven and hence demand-killing (dis-inflationary) recession that he then refused to call a recession.
Predictable Recession ForcesBut I said the US would not be entering a recession in 2024, because it was ALREADY in a recession—and gave every proof of the same—from the blunt math of the Conference Board of Leading Indicators to the Oliver Anthony Indicator.
Predictable Bond DumpingAs for US government bonds, I said the world would dump rather than buy them, which is precisely what they’ve been doing all year—with its traditional best buyers (China and Japan) leading the way.Again, was this psychic genius?Hardly.It was just accepting the fact that the rest of the world no longer loves a weaponized IOU from an indebted issuer of bonds with a finite duration yet infinite supply.
Predictable Gold SpikeInstead, I said the smart investors, nations and central banks of 2024 would choose gold (a finite asset of infinite duration) as a far superior reserve asset than the UST (in infinite asset of finite duration).
This, I said, would send gold (“the brightest star on the tree”) much higher.
And that’s precisely what gold did in 2024—hitting record nominal highs in all currencies, including the USD.
Predictable Stock BubbleI also said the unavoidable rate cuts to come would take the already grossly over-valued S&P higher in 2024, which is, again precisely what followed.I saw this not because of “insider knowledge” or brilliant market instincts, but sadly (and simply) because I knew that today’s pathetically centralized markets are as predictable as Pavlov’s dogs: They go up when the Fed is dovish (2024) and down when the Fed is hawkish (2022).In short, in that year-end article as well as subsequent early-year interviews, I had to plug my nose while simultaneously announcing “Risk on!”So, there we/you have it, when looking ahead into 2024 at the end of 2023, we could see with a common-sense understanding of debt and bond market forces that: 1) the Fed would cut rates, 2) the inflation war would be lost, 3) a recession was in hand, 4) nations would dump unloved USTs, and 5) gold would rise on central bank buying and 6) the stock bubble would fatten.Again, see this date-stamped “psychic power” year-end report for 2023.
Looking ForwardWhich brings us now to the year ahead. 2025.Once again, we need no crystal balls, direct lines to Wall Street insiders or romantic dinners with Jerome Powell to see the direction of market forces, economic realities or gold’s now secular direction.Instead, we only need to understand the debt market, because, and I’ll say it again: The bond market is the thing.
Debt Rising, As Predicted…When I wrote last year’s “year-ahead” report, US public debt was $34T.As of now (and as expected), this appalling number is comfortably racing past $37T as Uncle Sam continues its fantasy (debt addiction) of spending far more than it takes in via tax receipts or GDP.Such debt numbers, in the backdrop of an embarrassingly fat $130T global bond market, makes things, well, predictable…
History Rhymes—Weaker Dollar Predictable…History, I say over and over, is far more instructive and honest than politicos, pundits, bankers and market makers.And history confirms, without exception, that all debt-soaked nations (and power-hungry leaders) inevitably face a moment of reckoning when the only way to “solve” its self-created debt crisis (usually by excessive spending and grotesque military over-reach) is via the frog-boil debasement of the currency by which its citizens otherwise measure their wealth.This, of course, is bad for long-term bond holders, paper currency savers and those who misunderstand the difference between nominal and real (inflation-adjusted) returns—i.e., those who refuse to see what history makes clear, namely: Debt Destroys Nations.On the other hand, history is very kind to gold, and regardless of whether its spot price goes up or down in a period of months or quarters, it’s longer-term direction will go higher, much, much higher.Why?Let’s dig in…
The Fed’s Real Mandate: The Bond MarketWhen an unconstitutional central bank (created by a cabal of global bankers with a penchant for just embarrassing self-interest) becomes the unofficial fourth branch of government, you can be sure its real motives are not “employment and inflation” efficiency.The Fed’s real motive is banks, bankers, power and credit management.Or stated even more simply, the Fed’s real mandate is making sure the bond market, the rotten debt wind beneath our economic wings, does not die.
The Fed’s Real Poison: Currency DebasementBut how does a central bank keep its sovereign bond market alive, if less and less nations and investors trust or want those bonds, given the nation’s embarrassing bar tab?Well, it’s simple: The central bank can mouse-click its own inflationary money out of thin air to pay for its debt sins.It does this by magically printing trillions to buy its own unwanted bonds in order to keep bond yields down, because rising bond yields are the actual rates by which Uncle Sam must otherwise pay his criminally negligent debt.If you understand this, you understand more than most.And at current (fatal and unsustainable) debt levels, it is literally a matter of national survival to keep those yields compressed, which means it’s literally a matter of national survival to expand (i.e. debase) the M2 money supply to “inflate away” a now undeniable debt crisis.In other words, the bond market is “saved” at the expense of the purchasing power of the currency.Or even more to the point, those in power stay in power at the expense of their citizens’ wealth, as inflation is nothing more than an invisible tax.In short, and regardless of the DXY’s “relative strength,” 2025 will see a weaker dollar in order to monetize its debts and make a slow but needed dent in its 125% debt/GDP ratio.It’s just that, well predictable…And since gold is nature’s physical money rather than Powell’s paper money, its natural direction north is equally predictable.
Trump: Making the Dollar Weak AgainTrump wants a weaker dollar. Jake Sullivan wants a weaker dollar. Heck, Yellen has been wanting a weaker dollar even while Powell was taking it higher during his failed 2022-23 “higher for longer” ruse-war against inflation
.Yet the DXY has been climbing since his election.Can the dollar be saved? Is the dollar stronger than the Fed, the US Treasury Department or the White House?Well, yes and no.
Realpolitik & Who’s Really in Charge in DC?If one starts with what I believe is the correct premise that a currency will always be sacrificed to save the politically essential debt market, then its fairly safe to assume the USD will be no exception.The only question today is who really has the power in DC to sacrifice the greenback?Even the most true-blue democrat has to at least wonder out loud if Biden was ever really in charge of any policy or decision in the last four years.The fatal decision, for example, to weaponize the UST/USD during the Putin sanctions (love or hate him) was undoubtedly a decision directed by the Department of Defense and the ever more powerful, bloated and centralized (but not so intelligent) intel circles of the “swamp.”As Eisenhower so wisely warned in hisfarewell address, the military industrial complex has become more powerful than the democratic principles of our founding fathers, and thus it’s hard to imagine any significant cuts in military spending or military “freedom spreading.”But as I recently wrote at some length, when a nation’s interest expense exceeds its military budget, that nation is ipso facto in open decline.Given that debt levels and deficit spending are skyrocketing at the same time war drums and military spending is doing the same, it doesn’t require psychic powers to predict more war spending ahead, and hence more currency debasement to pay for it.
What About DOGE?Whatever one thinks about Vivek, Trump or Musk, they are quite unlikely to ignore their promise to pink-slip large swaths of government jobs and bureaucratic over-spending in DC, ushering in possibly as much as $2T in otherwise needed spending cuts in the next 2 years.Ok, fine. Spending cuts help reduce the deficit to GDP cancer.But let’s not forget that 25% of US GDP comes from the Federal government.If DOGE starts killing jobs in DC, that’s a bullet to the head of GDP and a lot of unemployed workers with mortgages and car loans sliding into an over-levered nation.
The Only Option is a Weaker DollarIn other words, spending cuts are gonna be expensive.They’re also gonna be inflationary. And more to the point, they’re gonna kill GDP, which means deficits will go up rather than down if DOGE gets into full gear with too strong a dollar.Stated more simply: The risks and costs associated, ironically, with cutting spending, will only succeed if the USD is weaker rather than stronger when the pink slips start flying.And what better way to weaken the USD then stapling interest rates to zero while simultaneously printing money to the moon?That, as I see it today, is the only card DOGE and the new administration has to play going forward.Anything less than a weaker dollar will kill any chance of Trump avoiding a lame duck status within his first 2 years, and Trump hates to be, well lame…But regardless of who is in the White House, the Fed, the Department of Treasury or the dark halls of the Department of Defense, the realities of math and history tell us all we need to know.
Tragic Lessons, Tragic PredictionsAgain, and without exception, EVERY debt-soaked nation, empire and regime throughout history has been forced to debase its money and gut-punch its people in order to save its crown.Oh, and
go to war…
And that is where the USA and USD stands today: Out of options other than a debased currency.DC can cut spending, yes, but it can’t cut enough to put a dent that matters without expanding its money supply and debasing its purchasing power. 
It’s as tragically simple now as “inflate or die,” and sadly, gold therefore has nowhere to go but up simply because paper money has no choice but to go down.More By This Author:The Evil Cycles Of War And Economic Destruction
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