A quick disclaimer before anything else: this is just a record of my own views, not investment advice.
Gold
I’m very bullish on gold.
The first major leg of the rally, in my view, was driven by central-bank reserve buying. I think that phase runs roughly through September 2025. If you look at the historical chart, the first overbought wave is actually pretty easy to spot: after that frenzy, gold pulled back to around $4,100 per ounce. My guess is that this area could turn out to be the long-term floor for gold. Maybe I’ll be proven completely wrong, but that’s how I see it for now.
The second buying wave feels different. That one looks much more like a move fueled by retail traders and speculators, taking price from 4,100 all the way up to 5,600. Anyone who only started buying above 5,000 is probably at risk of becoming the exit liquidity for this round. Right now the drop looks like a falling knife, and nobody wants to be the one catching it. If you look only at the price chart, a fall back into the 3,000s is not impossible.
But for anyone who wants to keep increasing their gold position over time, that would not necessarily be bad news.
At its core, gold is really about confidence in currency. And in today’s world, confidence in currency is basically confidence in central banks. Several countries already seem to have embraced a kind of endgame mentality: if things are breaking anyway, maybe one last massive push will somehow produce a miracle. The Federal Reserve, under Powell, is still barely holding the line, which is why everyone is crowding into U.S. dollar cash for now. How long that can last is something I’m very curious to watch.
U.S. stocks
After China joined the WTO, globalization entered a phase that created a very clear financial loop. Consumption-heavy economies such as Europe and the United States were pushed toward deflation, while production-heavy economies such as China were pushed toward inflation.
My way of thinking about this is that money is ultimately just a unit of account. The real "currency" is labor. On the surface, it looked like the U.S., Europe, and Japan were the ones printing money aggressively. But if you think in terms of real economic substance, China was the one printing the "real money" at industrial scale. That "real money" effectively extended credit to the United States and helped drive up U.S. asset prices.
Now that deglobalization is interfering with the operation of China’s real printing press, that source of financing for the United States is being cut off.
If that logic holds, then the total value of U.S. assets priced in dollars should drift back toward something closer to genuine growth rates. In that world, the old pattern of the dollar moving opposite to U.S. equities probably returns. I don’t think U.S. stocks can keep repeating the miracle of the previous era. Without globalization, America’s ability to support endless asset inflation is nowhere near what it was a decade ago.
There is only one obvious exception I can think of that might break a long period of weakness in U.S. equities: AI.
Whether AI succeeds in making a real economic contribution will probably shape the broader direction of the U.S. stock market for a long time, simply because I don’t see any other growth engine that is comparably powerful. If I really wanted to stretch into speculation, then maybe quantum computing, fusion energy, or genetic engineering could eventually become the next big themes—but for now, AI is the only one that feels immediately relevant.
Japanese stocks
This is the asset class I’m most bearish on.
Japan feels like the country that has gone all-in on a desperate gamble, hoping that one wild bet might somehow change everything. It’s not just that ordinary people seem unable to see much hope ahead; even the government itself looks trapped in a kind of deep pessimism. Japan also appears to have missed the AI revolution entirely, so now it keeps talking about overtaking on the curve by pushing things like the "space economy."
That’s what makes the whole situation feel especially bleak. Four decades ago, this was a country at the height of its power, bold enough to talk as if it could buy the entire United States. Looking at where it stands now, it’s hard not to feel a sense of decline.
The huge bull run in Japanese equities not long ago looked, to me, like something bought at tremendous cost by the Japanese government. The world’s third-largest economy effectively devalued its own currency enough to flatten itself into fifth place. The yen, once globally recognized as a safe-haven currency, has increasingly been turned into a risk currency instead.
And under the current direction associated with Takashi, this approach seems set to continue. All I can really do is stay short and wish them luck.
I wrote all of the above last night, went to sleep, and woke up to find that it had gone full TACO again 🤣
Market opportunities really do disappear in an instant—gold being the obvious example—but at least the move gave me another chance to trim my U.S. stock exposure, so thanks, Trump.
I also want to keep writing about gold, because precious metals have become an unusually interesting asset class lately. At this rate I may as well turn this into the kind of finance blog where an idle middle-aged guy just rambles every day about futures positions and profit and loss.