This analysis argues that a significant shift is occurring in the macroeconomic landscape, marking the end of the dominance of 'paper' assets and the beginning of an era favoring real assets like gold and commodities. The author points to the breaking of the long-term trend in Treasury bond yields in 2022 as a key indicator of this shift, highlighting the unsustainability of debt-driven growth and the declining influence of monetary and fiscal policies that supported the previous 'paper' regime. The author foresees a period of inflation similar to the 1970s, where paper assets underperform, and real assets, especially gold, experience substantial gains.
These companies could benefit from a fall in U.S. tariffs in 2026, Jefferies saysI have harped upon the symbolic picture of the new macro since 2022. That was the year that the trend in long-term Treasury bond yields was broken in a fierce rebellion by a bond market that had enough of the previous decades of monetary and fiscal chicanery.
Since 2022, we have been refining the meanings and implications of the above-noted rupture in the Continuum. The effects will be many, from limiting the “print and spend ” gambits of the past to a mass exodus out of the paper that held so much of the public’s confidence from 1980 to 2022.“And contrary-wise, what is it wouldn’t be. And what it wouldn’t be it would, you see?” Whereas the Continuum chart above represents the trend, now broken, that had kept appearances well and good for decades as paper reigned supreme, that phase, thatbackdrop is now over. Done. I don’t don’t say so. The bond market has been saying so since breaking the long-term trend in yields in 2022. The old macro was structurally in favor of those who sold, bought, traded and owned claims on… paper.. You can argue that digital money like Bitcoin is real, and it is. It is a real technological development that is strictly a tool for transaction. For instance, transactions bilking old people out of their life savings at the hands of scammers. Of course, it can also transact legal exchanges as well. But it is not an asset. It is transactional. Gold is not money. Relatively few people in this world are conducting transactions in gold. They are holding it, trading its futures or wishing they owned it. That is because gold is a counter-measure; a defensive means of dealing with the debt-choked modern world symbolized by the excesses routinely injected into the system over the course of the last several decades .I have shown the picture above many times in an effort to most profoundly depict the end of the “paper” macro. Functionally, this picture of the S&P 500 measured in gold units defines what the new macro will look like if the history of the inflationary 1970s repeats. In the 1970s, the stock market did not go overtly bearish. It did however, enter a terrible bear market in real terms, as adjusted by monetary stability, gold. We should present evidence to the assertion that the multi-decade rally in all things paper was fueled by the ability, theVery simply, a new and widespread bull market in all things paper was manufactured by the ability to continue raising debt levels and leveraging that debt into asset market appreciation. U.S.has risen consistently since 1980… and the associated debt levels have risen much more. It is no coincidence that the 1980s stock market bull and U.S. Debt-to-GDP both began to rise in/around 1980.Considering the factors above that the 30yr Treasury yield “Continuum” has been broken , the SPX/Gold ratio is making a very bearish posture, and the whole edifice is and has been not only supported by, buton the ability to expand the national debt level you can see that the new macro is actually something very simple. While we remain in an age of speculation, with more and more of the populace treating the stock market like a casino, legally betting sports and making “coin” in crypto, the shear beauty and simplicity of it all is this;As we step into the new macro, gold in SPX units is not only not a bubble. It has barely taken out its long-term bottoming base. Over 4300/oz. nominally, gold has barely gotten started in the new macro, which has not yet fully revealed itself to the masses . A $10,000/oz. nominal gold price in the next few years not only possible, in my opinion, it is now probable as the macro backdrop develops.The monetary anchor will remain stable, but its assigned price is going to get a move on as the debt edifice unwinds, probably slowly and painfully. The Fed is up to its usual tricks, manipulating Treasury bonds and MBS out its rear orifice in service to yet another QE of some kind to come. But on the big picture, the debt-for-growth regime is falling apart. What was, no longer is. So at best we will have a 1970s style inflation problem where paper assets stagger forward with relatively poor returns while real assets, including many important commodities, as led by silver greatly out-perform. The age of paper is over. The solution is not digital . The solution is simplicity. Debt-free simplicity. It’s going to take many years to get to that simple state as a society. Hard years. The new macro is engaging now and it should have a long run. We will continue these themes in order to be ready at all times for the opportunities ahead.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks. 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