The Death Spiral Of Debt And Stagflation Have Created A Perfect Storm For Gold And The Gold Stocks

Wall Street investors are not fans of Trump’s tariffs which can clearly be seen in the drop in the Dow, S&P 500 and NASDAQ.

Folks on Main Street aren’t happy with them as can be seen in dwindling consumer confidence and their concerns about inflation. The honeymoon period for Trump with investors and consumers didn’t last very long and I would suspect that his approval ratings are in for a rough patch.

Making things more challenging for the economy are the mass deportations which have quickly seen migrants removed from the country and others leaving on their own volition.

Trump’s MAGA supporters may like this, they don’t seem to understand or care that plenty of companies rely on those workers and consumers enjoy what they produce for the price they produce them for. Plenty of folks are not showing up for work, and at stores to shop due to their fears of being met by ICE agents.

Mass deportations and tariffs have an immediate negative impact on the economy and in the jobs market. Which means that the economy is slowing quickly while inflation is growing.

Trump is trying to convince people that short-term pain is needed for long-term gain. Treasury Secretary Bessent is attempting to convince people that Biden’s spending is causing economic problems, while ignoring Trump’s spending during his first term.

Spending needs to be slashed, but the politicians aren’t listening as the GOP led House wants to increase the debt limit to $40 trillion and keep the spending at insane levels. Elon Musk is starting to realize that changing the spending habits of politicians is a tall task.

As predicted in past reports, more folks are starting to realize that stagflation is becoming a front page issue. It has been a brewing problem for several months, but didn’t get a lot of attention until recently because the economy was growing, although less than the phony numbers coming out from government statistics.

Voters knew the economic numbers were overstating growth and understating inflation and felt that Trump would change things. What they are getting instead are policies that are slowing the growth and causing higher inflation.

Which means that growth could slip into a recession as predicted by the Atlanta Fed while inflation is picking up. Folks on Wall Street and Main Street weren’t too worried about stagflation when growth was positive, but they won’t ignore it if the economy slows to no growth or slips into recession while inflation is troublingly persistent.

For the past few months, gold has been flying out of London to New York which was initially being blamed on tariffs. There is overwhelming demand for physical gold in New York and it is becoming clearer that it is probably not about worries of tariffs on gold, but instead big players positioning themselves for stagflation.

Demand for physical gold in New York is pulling it out of London and other places and bringing to light that the supply is very tight. The reason for that is central bankers have been loading up on gold for the past few years at record levels. They have tightened the supply of above ground gold to create an extremely bullish scenario for gold.

High-cost gold miners are making around $1000 per ounce for what they produce and the low-cost miners are producing gold for around half of what they are selling it for. Which is making gold miners free cash flow machines.

Generalist investors and institutions haven’t really got the memo yet about how profitable it is to be a gold miner these days. But, it won’t be long before they start figuring it out and when they do, it won’t take much enthusiasm from them to drive the stock prices of gold miners substantially higher. Gold miners are still being priced like gold is much cheaper, so they are coiled springs ready to head into attention grabbing rallies.

Bitcoin and other cryptocurrencies are going through a severe correction. This is testing the resolve of hot money investors that has gone into them over the past year. It wouldn’t surprise me at all to see some of them leave the Bitcoin and cryptocurrencies for good and look into gold, silver and the gold and silver stocks.

2024 was a fantastic year for gold as it went from the bottom left of the chart to the top right and set a series of record highs throughout the year. 2025 is shaping up to be even better and silver is the most coiled spring I have ever seen in the metals. I can see a clear path to gold and silver having tremendous rallies in 2025.

Demand for gold is exceptional and the same thing is coming into play for silver. Adding to the bullish scenario for both is that the supply chains are constrained. Which is creating a perfect storm for a long-term bull market for gold and silver.

Gold and silver miners are struggling to increase production and replace what they are mining with new mines.

The developers of new mines for these metals aren’t able to come to the rescue because there just aren’t enough new mines in the pipeline to help the miners increase production and replace the old mines with new mines.

Further down the food chain the explorers with important discoveries are in short supply. So there is no long-term relief coming from them.

When you look at the supply chain, from the miners to the developers and explorers, it is broken and is going to stay that way for the next decade or two. Meanwhile, the key reasons for investors to buy physical gold are tremendously compelling.

The Death Spiral of Debt is getting much worse as the cost of servicing the debt is unsustainable and politicians can’t get over their addiction to insane spending and debt growth.

It took 50 years since ending the Gold Standard for the politicians to break the fiat currency and debt system. Make no mistakes about it, they have broken it and fixing it will take decades and a return to the Gold Standard which is happening in real time.

Stagflation is an American and worldwide problem and it is picking up momentum that more investors will come to terms with. The last time America had a stagflationary problem was in the 1970s and it was extremely bullish for gold and silver.

Wall Street stocks and tech stocks, as well as Bitcoin, are in a rough patch and leaving generalist investors in America and worldwide with few options to park their money.

Gold is doing its job to protect wealth and fight against the constant destruction of purchasing power of fiat currencies. Which is why it is at record highs against every fiat currency, including the world reserve currency the US dollar.

There has never been a better time to be a bull on gold and gold stocks, as well as silver and silver stocks. All roads are leading to a bull market in precious metals and the miners, developers and explorers for gold and silver.

All the best,

Allan Barry Laboucan