Gold at $5,000 Signals MASSIVE Changes to the World Order

Gold at practically $5,000 an ounce, silver crosses above $100, mayhem in the Japanese bond market, reactions from Davos, and of course, Bitcoin. Let's get into a massive global macro update.

Welcome back to the Bitcoin Layer. I'm Nick Batia. I could get through at least a hundred charts today if I can squeeze them in. So, let's dive right into it.

Let's start with the Bitcoin to gold ratio. Now, here we're looking at the Bitcoin price in terms of gold. And that's why at 18, what we're measuring is the Bitcoin price around $90,000 divided by the gold price at about $5,000. So that ratio at 18, you can see that it is reaching higher lows over the course of the last 5 years, but over the last 1 year, a big down move in this ratio. Of course, gold on an absolute tear. It continues that tear. I'm remembering back to when we flagged a breakout above around 2300. We forecasted a quick move to 3,000, close to 3,000. It was close that the move wasn't even close to being exhausted. We made a video about gold to 4,000. Then of course, gold just continues to march. So, we will talk about gold today, the implications, some of my big picture thoughts on gold.

But looking at the Bitcoin market, thinking about Bitcoin relative to gold, I am feeling that there is a big bearish sentiment in the Bitcoin market due to the gold price hitting $5,000, or just hit $4,988. A few dollars shy as of this recording here, Friday, January 23rd, around midday here in Southern California. Now, the Bitcoin price relative to gold falling from 40, this ratio falling from 40 to 18. And how does it fall from 40? Well, well, you can think about Bitcoin priced at around 120K when gold was around 3K. That's how you get that ratio of 40. Now, it's collapsed to 18. But what's next? Is Bitcoin suffering a major down move relative to gold? Meaning, is it breaking down? Well, that's why I drew this trend line here for you guys so that you can see it's not breaking down relative to the last 5 years. It is, however, breaking down relative to the last 3 years. And so, Bitcoin right now at 18, I would say that it is, of course, in a big move down versus gold. But where is the support? Well, it's in this 10 area, uh, somewhere between 10 and 15. We want to see Bitcoin bounce relative to gold here, or else it could spell something much darker for Bitcoin relative to gold on a much longer time horizon. So, we will eagerly watch this chart.

Now, am I watching Bitcoin versus gold or Bitcoin versus the dollar more closely? Definitely Bitcoin versus the dollar, in that that's how it's traded. Bitcoin to gold can give us some signal. We won't be ignoring this chart, but it's not where we're looking for Bitcoin to bounce. In fact, Bitcoin's price right now in the 90,000 area, it has a much more important support line in the mid-80s. And that is a much more critical support that Bitcoin needs to hold in order to continue its bull market. Now, why is gold making this move? We will unpack that a little bit as we go, but I wanted to start with this chart here requested by one of our TBL pros.

We might as well start in Davos, but not with President Donald Trump and his address. Rather, the Secretary of Commerce Lutnik's comments and comments made by Mark Carney, currently Prime Minister of Canada, former bank, head of Bank of England, and a long track record within the international monetary order. My thoughts from Davos are fairly basic. They can be captured by both sides, Lutnik and Carney. Lutnik flat out came and said, "Your system of globalization has failed and we're moving on." I'll quote Carney's speech to start today. "I will talk about a rupture in the world order, the end of a pleasant fiction and the beginning of a harsh reality where geopolitics is submitted to no limits, no constraints." But we're here, we have the truth of the day, which is that the old ways are passed. They're gone. And this comes down to the consequentiality of this administration and the decisions that were made in 2025 to move on. Now, whether you agree with the strategy or not can no longer be the center of the conversation. The administration has moved on from the old order and in that reordering, this reordering that we've been writing about and talking about here on this channel essentially since the day of the inauguration last year. These changes that we are seeing, they are unfolding in the financial markets. The gold price and the silver price are indicative of these changes. And so, instead of thinking about whether the changes are right or not, the changes are here. And that's what Carney is saying.

Now, I don't believe that Mark Carney is waving a white flag or declaring war. It's an admission, an understanding that new rules must be obeyed. And I think about Mark Carney making speeches as far back as 2004. And I'll read you the headline here. "The new international monetary order," a speech that he gave to the Toronto Society of Financial Analysts back in 2004. This is now 22 years ago. And he said, "I would like to focus on an issue central to the prospects for the global economy and to the investment outlook, the state of the international monetary system." So, Carney has been thinking about changes to the international monetary order for many, many years, two decades or more. And so, he is uniquely positioned to speak for the middle powers. And this is a term that I am starting to hear more and more now, the middle powers. Countries that are not named the United States and China are finding themselves having to deal with the new international order if it is not centered at the United Nations, the World Trade Organization, the Bank for International Settlements, Davos. If the consensus is not built at these organizations and instead power politics need to be played on a bilateral basis, that means that these middle powers, not the United States, not China, but Canada, the United Kingdom, and Europe, now a middle power, that these powers have to find their way in the new system.

Now, what is my main takeaway from the Carney speech? It's simply that Carney himself has become the voice for these middle powers for the European contingent because the European leaders themselves, they don't have any credibility with the United States today. And for that reason, Carney has understood himself that he is the sole voice of the old order and he has to figure out a way to play ball in the new order.

We're all familiar that governments around the world are debasing their currencies. This means that they print their way out of their problems. In his new report, "The Debasement Trade," James Lavish goes through this dynamic. And importantly, he points out why portfolios have to react to the debasement trade. Gold moves first. We'll see if Bitcoin can follow. On January 28th, join James Lavish and the Unchained team for another fantastic free online event. You guys can go to unchained.com/tbl to sign up for that free event. Again, unchained.com/tbl and join James for a great Q&A to answer your questions on how this can impact your portfolio.

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As we shift our conversation away from Davos to the big chart pack that I have for you guys today, let's first look at the prediction market we are watching closely, most closely. Now, I'm actually watching about four markets right now on Poly Market. I'm watching, of course, the midterm odds. That's something that we've discussed before. I'm also watching with one eye, only one eye though, the race between Vance and Rubio because I think that that is interesting in terms of how the middle of the country and the right of the country is thinking about its leadership going forward. Is it going to be internationally focused or domestically focused? I think that is something that we will have to watch closely. I am, of course, watching the prediction market for the next Fed chair. That's a market that I haven't watched too closely because frankly, when there's six candidates or four candidates, it's too noisy. There's not enough signal there. But now I'm watching Rick Reer skyrocket. He now is the odds-on favorite at about 50% in the market. It looks like Reer is going to get the job. And the reason, the clinching reason I believe, is that Reer is not a member of the Fed. He's an outsider, and so he's not going to have some of the same baggage that other participants might have, uh, for example, Kevin Worsh. So, I'm not going to try to get into the mind of the president, but right now I'm getting the sense that it's going to be Reer. Whether or not that's a good pick and what that means for the markets, we'll have to let that all play out and do analysis instead of doing analysis on too many people before they actually get the job.

So, which market am I watching most closely? That is the market for the Supreme Court's decision on tariffs. Now, in our last week's update, I gave my take on the Supreme Court ruling on tariffs, the delay that they seem to be engaged in, and that the delay, each day, each week that goes by that they don't rule on tariffs, it's it's two things. One, it's inching toward allowing it or not reversing it, but two, it's letting the tariff arguments play out. So, the White House argued that tariffs are a tool for leverage for national security, not just an economic tool that should be sitting with the, uh, congressional powers. It's an executive branch power. That's what they're trying to argue, that it's an emergency. It's an economic emergency that has to do with national security. Well, each day that Trump is able to let that narrative play out, it makes it more, it makes it easier for the Supreme Court to go along with their argument, even if they might not agree with it, because the executive is engaged in this type of negotiation.

You look at what happened with Greenland. And here's, I want to say one thing too, as well. If you haven't read "Art of the Deal," it becomes a little bit funny to then apply analysis to Trump's negotiating tactics without even literally reading the book. He announces what he wants. It's going to be more than what he actually wants. That's a negotiation tactic. And so, and then he makes threats that he won't, that he won't carry through on, such as invading Greenland. Now, to think that he wanted the entire landmass of Greenland and that if he didn't get it, he was going to invade Greenland, it is, it's actually not based in any legitimate analysis of the past Trump negotiation tactics. The saying goes, "Trump always chickens out." Taco. But what about the Art of the Deal? What about his tactics? Is he chickening out, or is that just the method to his madness? Now, going back to Greenland, he announces that he wants all of Greenland. If he doesn't get it, he's going to impose tariffs on Europe. Europe comes to the table and they negotiate that certain parts of the landmass will be US sovereign territory, so they can expand their bases, they can monitor trade routes. And then he says, "Okay, we won't do tariffs." So, was he planning on doing the tariffs, or were the tariffs just a negotiation tactic? The Supreme Court now, between last week's no ruling and this week's no ruling, they got to see an entire life cycle of tariffs as a negotiation tactic. We're going to put 10% tariffs extra on Europe. If they don't give us Greenland, okay, they say, we're going to give you these parts of Greenland, and then I'll say no tariffs. So, a threat of tariffs and tariffs not used, and the United States is able to secure some part of the territory.

Now, I do want to mention the agreement was with NATO, not Greenland. The agreement was with NATO, not Denmark. So, we have to take all announcements of an agreement or framework, uh, for a deal with a grain of salt. My point here is about the Supreme Court, not Greenland, and the specifics of the deal. Whether or not the deal is going to go through, what the deal will look like, whether the US will get land or not, whether they'll get mining rights or not. This is about the tariff decision in the Supreme Court and whether the executive branch can use it as a tactic to achieve national security measures. And at 32% right now, I believe this market is underpriced. This is not investment advice. This is my feeling based off of analysis I'm reading about the Supreme Court letting this continue on.

Why did the Supreme Court hear the tariff case when it did? It's because it's important. It was more important than other cases. So, it went where? To the bottom of the stack or the top of the stack? It went to the top of the stack. They heard the case, but we didn't get any announcement. What is the ruling? They're waiting. They're waiting. Why are they waiting? Because they're watching the life cycle play out. So, at 32%, I believe it's underpriced because I believe that every day that goes by means they can't reverse it. The United States' entire fiscal picture going forward 5 to 10 years might not, but might depend on this Supreme Court decision. If that is the case, can the Supreme Court just reverse it like that? That is what I see difficult. Uh, and we will continue to watch this market. But this is the prediction market that I'm going to first. And it, it, to be very frank, it was the midterms balance of power and who is likely to win the House. Those were the markets I was watching first a few weeks ago. It's not that anymore. It's the Supreme Court decision. And again, the Supreme Court fails to deliver a decision here on Friday the 23rd or earlier this week before they took a break. And so, we will watch this chart and we'll watch to see if the prediction markets have any movement here. It's been stuck at around 32% for the last couple weeks.

In the spirit of maximum signal, I'm going to go through our TBL master chart pack with you guys today. Going to hit as many of the charts as I can so that you guys get a picture of all of Global Macro, what we watch on a daily basis, what our TBL pros have access to. Remember, you can go to thebitcoinlayer.com/subscribe, become a TBL pro, gain access to all of our research, and gain access to our new research dashboard, which is a full interactive experience. You guys get to look at the charts yourselves on your own time. Our TBL liquidity framework, what our buy and sell indicators are saying, and we believe it's an incredible place to get all of your analysis both on the Bitcoin and global macro front in one place. Truly a one-of-a-kind experience right now on the financial research internet.

We'll start here with relative returns. This is a look back period of 5 years, everything indexed to 100. And you can see in orange here, Bitcoin 271. It means 170% gains over the last 5 years in Bitcoin, just beating out gold at 160% gain. So, you can see these two are converging over a 5-year time horizon. Stocks up about 80% over that time horizon. And treasuries, a big bear market down about 26% trailing 5 years. And of course, that is because treasuries experienced an enormous bear move over the course of 2020 to 2022 as inflation reared its head. Highest inflation rate since the 1970s.

Now, in this next chart, we're looking at Bitcoin's market with a couple of shorter-term metrics here. In red, you have the 200-day moving average. In blue, the short-term holder realized price. This is looking about, uh, 155 days back and striking the realized price, which is the on-chain cost basis of coins that are actually moved, coins that are taken on and off the exchange. For example, when ETFs buy new coins and those coins are moved, that is calculated or that is included in the calculation of short-term holder realized price. Both of these numbers are above Bitcoin's price, which is around 90,000. That means there's pressure above Bitcoin. Bitcoin doesn't have the momentum, and in that way, Bitcoin's price feels challenged. The sentiment feels very bearish, and it, it, these two metrics don't lie. It's telling you that Bitcoin is below its 200-day. Its 200-day is declining itself, and it's below its short-term holder realized price, which means there is a decent amount of active unrealized loss in the market.

This next chart here is looking at Bitcoin's realized price and its Z-score. So, no longer the short-term holder realized price, but the entire history of Bitcoin. This doesn't strip out any dormant coins or old coins. This is looking at everything. And now Bitcoin on a Z-score, it's at only 1.1 here. It, this is basically saying that Bitcoin is absolutely at a minimal standard deviation away from its mean when it comes to its realized price and its market price. This ratio right now is in a very subdued state, especially looking on a Z-score basis. You can see in the past, Bitcoin's MVRV Z-score reached almost 10 here, almost 10 here, seven here in this huge overvalued move. And that was just a few years ago when Bitcoin was at $70,000. But now you can see it didn't even reach four, and now back down closer to one. It means that Bitcoin historically is much more closer to the undervalued side than the overvalued side. That doesn't mean that it's cheap here. Bitcoin is cheap when it is genuinely at the, these green bar areas here, as you can see, where it was in 2022. But the sentiment to me feels like what it did when we were down here in a post-FTX move.

Now, Bitcoin, this is taking out the Z-score aspect here. That realized price is at around $56,000 and, uh, the raw ratio at about 1.59. So, really, Bitcoin trading between one and a half and two times its realized price historically is cheap, especially closer to one and a half. It's cheap. There is, remember when we said that there wasn't a lot of froth in the Bitcoin market when it was around here at around two and a half? It's because it wasn't close to these previous peaks in market value to realize value.

Another way of thinking about that suppressed volatility, dampened volatility, a structural decline in volatility. If that is the case, then the large moves to the upside and the large moves to the downside that we saw in previous years might never happen again. It feels dangerous to say, but the, the days of Bitcoin going down 80% might be over forever. And I think that that is an important framework that we have continued to think about here at the Bitcoin Layer. And it works both ways. It means that the days of Bitcoin going up 5 to 10x in the span of just a year's time might also be in the past.

Let's look at that decline in structural volatility. These are 30-day rolling returns for Bitcoin. So, instead of implied volatility, this is realized volatility, the actual moves that Bitcoin has over a 30-day period. You could see that 15% moves in 30 days were extremely common. And now in this era, in the early part of the 2020s, 5% moves, extremely common. Now, 1% moves, 2% moves. And yes, we had a little bit of a move up in volatility. I'll show you that here on this next chart. A little bit of a move up in volatility. Sorry, that's right here, but knocked right back down again. And, and again, this move up in volatility that we had toward the end of the year in 2025, not even close to the volatility from 2024. So, Bitcoin really is shrinking its volatility as it matures. Is this a setup for some really large move, or is this just what Bitcoin does now? It has muted volatility, higher than the stock market still, but lower than Bitcoin of yesterday.

If you want to stay ahead of the markets, you have to understand TBL liquidity. This is what our TBL pros are enjoying so much. Our liquidity analysis and then getting access to that analysis every day on the dashboard. Now they no longer have to wait for us to make a video or write a piece about TBL liquidity. They get to see it every day, what it's changing, and the indicator, which is the derivative analysis we've applied to our index. It is giving us a sense, an advanced sense of where the market is going to go. You can see here we put a red dot on Bitcoin's market just a couple weeks ago to precede what was another down move. Now we are doing the analysis looking at each and every green dot and red dot, how the return analysis is shaping out. We do have positive results on both an active basis and a look-back basis, but that doesn't stop us from wanting to do more work, more analysis, and try to get you guys signal and hopefully an opportunity to outperform your previous strategies as global macroeconomic investors. And remember, the Bitcoin Layer is an independent research service. We do not offer investment advice. Our analysis is for your benefit and your research purposes only.

All right, let's get to US Treasury yields. We'll look across the entire curve. Here we have 2-year yields. Of course, the move higher during the inflation wave, the topping out and this rounding top that we flagged for a couple years, the move back down which preceded rate cuts, which started here, and then rate cuts, rate cuts, rate cuts. Now, might rate cuts be over? We are starting to get a sense that the market is equalizing a little bit. 3 and a half percent is where policy rates are finding a home. The policy rate might be on pause until we get a next Fed chair. And so, we'll look for twos to flatline here around three and a half percent, maybe even march higher as the economic data has been absolutely on fire in the United States. Imagine calling for a recession during 2025. Thank goodness that we were not doing that here at the Bitcoin Layer. The economy is hot, and that should suggest that rate cutting right now, aggressive rate cutting, does not need to be the play.

If we look at 5-year yields, you can see this move starting to inch higher, a little bit more pronounced than in twos. Fives at 385. They're starting to price in perhaps that another hiking cycle might be underway over the next 5 years. That's not any imminent hiking cycle, and it does, it definitely doesn't forecast any imminent inflation. But that twos-fives curve being positively sloped, that's a sign that there's some health back into the US economy. There's some upside bias to growth in inflation and an upside bias to the future policy rate.

Looking at tens, tens are going to be a different story because they're going to have a much bigger impact from US fiscal health and future growth expectations. But even then, tens at about four and a quarter, below their range from the last couple years, which was in the 4 and a half to 5% range, now finding a home somewhere between four and four and a half percent. Here's the 10-year yield over a longer time horizon. This is now looking back about 25 years. You can see that now drawing where this was at a previous era in the mid-2000s. That's when 10-year yields were between four and 5%, of course, below the era of QE and zero interest rate policy, uh, and then the recent inflation wave. So, are tens fairly priced around 4%? We believe that they are, and that there isn't an impetus to get tens to 5% or above. Nor is there much of an impetus to send them below 4%. That would be the recession watch. That's really where we were here, middle of 2004, recession watch, but we lifted it toward the end of 2024.

Here's 10-year break evens. Now, this is the difference between the nominal treasury yield, which as I, as I showed you, is around four and a quarter, and the TIPS yield, which is around 2%. If you subtract that 2% TIPS yield from the four and a quarter nominal yield, that TIPS yield is the real yield. You get that inflation break-even. Now, what is TIPS? What does that market do? It pays you the TIPS yield, which is 2%, plus a CPI look-back. So, it's a real yield in that you get that yield plus inflation. The break-even is the difference between these two yields. It's what the market is assuming, that the investor is assuming, that inflation will be going forward. Right now, 2 and a quarter percent inflation break-even, and this is the flatlining of inflation expectations that I believe is the dominant force to support the Treasury market broadly. Remember that the fear of inflation is a boogeyman when you look at this chart because the actual inflation break-even has not gone above 2.5% for the better part of 3 years. That means the market, when it looks at treasury yields at four and a quarter, inflation breaky, uh, sorry, real yields, the TIPS yield, inflation protected securities at 2%, it is judging that inflation in the market going forward is somewhere between two and a half, two and 2 1/2%. Not 2 and a half to three, not three plus, not five percent. Inflation expectations in the United States are muted. It supports the Treasury market.

Here is that real yield at 1.95%. And this is where you can see that the orange plus the green equals the purple line. And that you can see the green line completely flatlining. Inflation expectations in the market are not present.

Here's the 30-year yield. You can see that 30s closer to 5%. And that rolling over or flatlining, it's not really there in 10, uh, sorry, in 30s. 30s much more of a pressure toward the higher end of the range, which is just above 5%, which is where 30-year yields reached at the end of 2023. We remember the Liz Truss moment in the United Kingdom and the Bank of England coming in to support that market.

Here's that twos Fed funds curve, which we tell you when it's negative, that's pricing in cuts. When it's positive, it's pricing in hikes. Now it's back to zero. It means it's pricing in neither. The twos-fives curve, as we mentioned previously, a little bit of that positive bias. And this move here in 2025, with this spread going above zero and starting to get a little bit of positive slope, that's the positive growth in the economy starting to get baked in. Uh, some pressure on forward rates being lifted. That means that the expectation of rate cuts as far as the eye can see to support an economy that has a little bit of weak internals, that is being lifted.

On this next chart, we have bond volatility, the MOVE index, a collapse, an absolute collapse. And we have Treasury Secretary Scott Besson even talking about the MOVE index on national television, citing low bond volatility as a result from a more stable economy, a more robust economy, healthier fiscal picture. Remember that the Treasury, the Treasury securities, they are priced by compensation for inflation and United States fiscal health. They both matter, especially in the long end of the curve, and especially for Treasury volatility. Fiscal health matters, and the United States right now showing that fiscal health is, is popping back up in terms of declining bond volatility. Look at the spiking volatility during 2022 and 2023. This is a disaster in inflation and in fiscal health. And the opposite can be said for the MOVE since late 2023, as inflation started to decline, and now into 2025, with not a rosy fiscal picture, but an improving fiscal picture. People were commenting that it's very difficult to see the actual decline in spending and the increases in revenues, but the tides are turning there. And I do believe that when the next few quarters' economic data comes out, you will continue to see the, uh, United States fiscal deficit shrink on the margin.

This is a zoomed-in picture of volatility. You can see that all of 2025, just a move lower, and that move continues here into the end of January.

Options-adjusted credit spreads. These are corporate bond spreads. Look at where they are. This is bullish. Corporate issuing at 74 basis points above treasuries is bullish. It means that they can borrow, spend, invest, buy back shares, re-leverage, apply leverage to the corporate sector. And what does the leverage get us? Share buybacks or investment? Well, if we're thinking about a capex boom, it's going to be investment. And is that investment going to lead to productivity gains today and in the future? Potentially, yes. And are those productivity gains being assumed in the future impacting treasury volatility in a positive way? Possibly, yes. And so, we have to look at all markets to give us an idea. Should we be bullish on risk? Should we be bullish on the treasury asset class, which would make us be bullish on treasury volatility, meaning low volatility, which is bullish for TBL liquidity because it's at the center of our framework and setting up conditions, positive conditions for Bitcoin going forward.

So, when I think about, should I be fearful that Bitcoin is toying with these mid-80s levels and potentially breaking down a bull trend that it's had in place for 2 to 3 years? Well, the fear is there, but the analysis then comes in, and you look at liquidity, you look at bond volatility, you look at the Treasury fiscal picture forward 12 months. Is the department looking for fraud and looking to cut spending? Is the economy growing and our tax receipts going up? Is the Supreme Court going to let the tariff policy stand and therefore allow tariff revenue to come in to the US fiscal picture and improve the fiscal health? I believe the answer to all of these is yes. Then you layer in, are corporates borrowing freely from the market, going to be issuing corporate bonds and using those issuance proceeds to build new factories, invest, and hire, at least at the margin, the productive part of the labor force? Yes, I believe that too. Should this negatively impact Bitcoin because we're going to get an inflation wave? No, that's not what I believe. And therefore, I remain bullish Bitcoin. I can't look at all of these things and just be like, well, I'm really scared Bitcoin's going to break down below $85,000 on the chart and just enter a full bear market. If the price goes there, I have to read the price and let the price dictate my analysis. But if the price is in between where it is right now, if it's above support or it's dancing around support, then it's not prudent for me to give up on my bull case, especially when it's backed by liquidity analysis and multi-asset class analysis.

Here's a zoomed-in view of that, uh, corporate bond spreads. Here you can see that 74 basis points on corporate investment-grade issuers in the United States. This is very cheap for them to borrow, especially with return on equity at 10%. If the cost of debt is five, that's just a positive carry for them, just at the margin, to buy back their shares. We don't believe that share buybacks from corporates, as they were doing in the early part of this decade, are a path forward to higher productivity. And so, we want to see them invest that, not just buy back shares.

Here's the international 10-year yield picture. You can see here in orange, Japan, a huge bear move in the Japanese bond market. Why is it happening? Because Japan does not have zero inflation anymore. So, investors must be compensated for that inflation. This does one thing that is very interesting. It takes away the ability for the Eurodollar system to fund itself very cheaply via the yen currency because the negative carry portion of the trade, which is what you pay on your borrow, is no longer zero. I find that very, very interesting to think about when we're thinking about the United States putting pressure on its global counterparts in the realm of trade negotiations. I'm looking at you, Europe.

All right, let's get into some economics. We'll look at the labor force participation rate, now at around 62%. It's flatlined here for the last few years. It's down from this higher plateau from the 2010s and of course, the drop during the pandemic and a recovery. So, this is going to tell us how the US economy is doing. If it's doing really well and becoming more productive, more people should come back into the labor force to try to secure positive real wages, which means wages that are going up at a rate faster than inflation. So, we'll watch this. Right now, no movement in labor force participation, but this number going up could be a sign of health for the economy.

What about the US labor picture? Well, it hasn't been great over the last couple years. Inflation, the unemployment rate going up, but now we're starting to see that initial jobless claims are trending lower, as well as continuing claims, which hit about 2 million and are now down a little bit, but these initial claims are starting to fall. So, are less people getting fired? Is the weakness in the labor market coming to an end? I think that's something that we haven't really seen coming yet, and we will continue to watch this. This is another one that I want to see, and I'm going to be watching. Are quits going back up? If quits are going up, that means that people are more confident because if you quit your job, you're confident that you'll get another one. So, will we see quits trend up? If they do, that is a sign of a healthy labor market.

Here's CPI. Now, you guys see these orange bars. This is the housing contributor to CPI. These orange bars should continue to shrink. That should continue to put lower pressure on inflation. Right now, inflation at 2.7%. And this is that chart that we were waiting for. The, uh, the housing component of CPI at 3.4%. We compare that with 2.09% Zillow's rent index, and that number continues to fall. Can that continue to drag down housing inflation, which will drag down overall inflation, which will be good for the United States affordability metrics? That can, if affordability goes up, that can have a knock-on effect on consumption.

The US economy is running hot. 4.4%, 4% growth in Q3. These are really, really strong numbers. And if we look at Atlanta Fed, 5.4% projected growth. This is a Q4, Q1 estimate, a rolling estimate from the Atlanta Fed. These numbers are a couple years ago unthinkable and are truly a representation of a shift in domestic spending. There is an investment component to this GDP growth and a net export effect to this GDP growth. Remember, net exports are a contributor to GDP. Exports and imports contribute to the net number. Imports going down and exports going up will increase net exports and increase GDP. Tariffs directly contribute to lower imports. And then they have a knock-on effect of higher exports as the United States ramps up its competitiveness. It doesn't mean it's all of a sudden re-industrializing everything, but it ramps up its competitiveness relative to other nations after the tariffs.

What is going on with ISM? This is our favorite metric for the US economy. 54.4, expansion. You can see that going back between some expansion and some flatlining for the last few years, now picking up steam. The United States economy is hot. New orders in red, 57.9, hot. The United States Treasury Department, the United States White House has communicated to us it wants to run the economy hot, and we, that is what we are seeing. United States ISM manufacturing still in contraction. If this number goes above 50, you can look out. That is when you are going to get official GDP numbers 5% or higher. Is that something that we are going to see? I don't know. We're going to have to watch for that. But we will watch US manufacturing from the ISM side to see if the manufacturing can actually pick up and get some positivity back into the market.

This is another one. Existing home sales starting to spike again. Lower mortgage rates. So, our lo, lower mortgage rates, the driver is a clear up of inventory over the last couple years. A driver is the recent announcement to buy mortgage-backed securities by Fanny and Freddy, a marginal driver. Well, not for this data because this data is backwards looking. Might it have an effect on data looking forward? We'll have to watch that.

Speaking of that trade deficit, here are the raw numbers. Exports in green, imports in red, and the balance. This black line here, you can see the trade deficit is collapsing back to levels that we haven't seen for over a decade. This is a direct contributor to GDP in that our net export number was negative and is going away. The administration has promised that this number will go positive in 2026. Do I believe that? I have no idea what to believe now. The United States is on a completely different economic footing than when it, where it was 12 months ago. We talk about the consequentiality of the policies, whether you like them or not. Treasury Secretary Scott Besson has the most influence over economic policy of any Treasury Secretary of my lifetime. And in that way, we are getting clear communication for what the government wants to do on the fiscal side. Remember that it's Congress that drafts the bills on what to spend. The president and the Treasury Department do not get to decide what the government spends its money on. That is the job of Congress. And so, we, that's why also we haven't heard the Treasury Department or even the White House really care about what the government is doing on a spending front until Bessant. So, watch everything that Bessant does and says because it's giving you lead. It's giving you signal on this.

This is zoomed in a little bit, and you can see these bars. The import bars are shrinking. I can see this with my own eyes. Now, the export bars are increasing, but that's not a new trend. The export bars, we can go back, have increased over the last 25 years with, of course, these blips. They're going up, but so have imports. But now imports are going down. And that is what's helping this equation. Now, can this number go up at a higher pace to close this gap and send it positive? I'm starting to believe yes. And we'll watch the numbers. We get them every month. So, we don't have to keep guessing.

Commodities. I mean, this number, and it's already stale because this number was struck, uh, several hours ago. Now, gold trading basically at $5,000. An insane move. And if we're being honest with each other, we've been all over this gold move. It's, it's not that we know exactly the driver, but we do know that there is a reordering taking place. We are able to read a candlestick chart and can tell that a multi-year breakout is probably going to spell a move several thousand dollars higher. All of that we've been all over. The reasons behind it and what, what the United States is doing, the amount of gold that moved from European bank vaults into United States bank vaults during 2025. What were the drivers there? Was it just tariffs? Was it geopolitical? These are questions that I, I do more reading on than coming here and telling you my theories on them. I do know how to read a price chart. And Mark Carney also knows how to read a price chart. So that when he says the old order is dead, he all he has to do is look over here. It's very easy to see it. You don't need, you don't need a scientist to be able to tell you that the monetary science is not the same thing that it was one year ago. The world has changed. It has changed in front of our eyes. I even wrote here, December 3rd, 2024, days after the election, "The world is changing," reflecting on the year ahead, and I'm expecting massive changes. I didn't know what changes, but if you read the charts, if you look at the price action, the prices changing tell you that the order is shifting. And I'm looking at 2026 with a similar degree of uncertainty on how these changes are going to play out. But if you put your head in the sand and you don't look at the prices changing and you read the official policy speeches from the administration, you're going to miss it because right now it is very clear, no longer just to us and people that read the Steven Myron speeches and the Secretary Besson speeches, but now to the entire world. The middle powers in Davos. The middle powers are writing speeches. It's over. Guess what? The signal has been delivered. It turns out they can read a chart, too. They don't have to, they don't have to guess whether it's changed. They don't. And perhaps what Carney is saying, we don't have to fear that it's changed. We just have to figure it out now. And so, this is the type of, this is the type of analysis that I'm applying when I think about the move in gold.

And when we think about Bitcoin, like, why hasn't Bitcoin gone up when gold has gone up? That's what everybody is asking, and it's leading to really poor sentiment. What, what, what does it matter what the Bitcoin price does as the world starts to reorder and figure out what it's doing? Bitcoin has been basically flat. It was down about 6% during 2025, during the, the largest reordering in my lifetime, and since the 1971 fall of the gold standard, or sorry, closure of the gold window, the fall of the gold standard, 1930s. So, you're getting a once in a 50-year, the largest reordering since China, uh, joining the World Trade Organization. So, once in a 25-year event, once in a 50-year event during 2025, and Bitcoin is flat, down 6%, and that's concerning to you? That's insane. It's actually a miraculous performance for an asset class that really has no place in the same conversation as gold, which is now a 30 to 40 trillion asset class, larger than the US Treasury market now by many metrics. So, what does it matter if Bitcoin didn't keep up with gold during 2025? Focus on the reordering. Then the United States will introduce this and that policy once we're in this new order to say, "Hey, Bitcoin is a good neutral reserve asset for this new order." It doesn't become that during 2025. Actually, gold becomes that. We should be celebrating the increase in the price of gold as the arrival of the new order. And that new order swiftly rejects globalism. Whether or not you think the World Health Organization is a good body and the US should be a part of it, the UN is a good body and whether the US should be a part of it, whether you agree with the new Board of Peace framework and whether the United States should get its allies into it, it doesn't matter what you think. It's all happening. Is the gold price going up because the United States left the World Health Organization? It is. It is related. Carney's speech relates the two. Even if it doesn't say it, you have to be able to read between the lines. Is the gold price doing what it did because Lutnik said it failed, "We're moving on"? Yes, it is. They're all related.

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