Feb 15, 2025

 

The S&P 500 rose 1.5% this week. Meanwhile, the Bloomberg Aggregate Bond Index gained 0.2%, gold rose 0.9%, and Bitcoin rallied 1.6%. 

The Consumer Price Index (CPI) for January came in hotter than expected at 3.0%. The shelter index increased 0.4%. Inflation has surged a lot recently in certain commodities. For example, egg prices rose 15% last month, and coffee futures have already surged over 30% year-to-date. Producer prices (PPI), which tracks prices paid by businesses, also increased more than expected. The NFIB Small Business Optimism Index ticked down 2.3 points in January, with many business owners expressing uncertainty about the future policy outlook. 

If any readers are going to be in Las Vegas next week, come see Michael's presentation at The MoneyShow. 

 

 

 

A New Gold Exchange Standard Could Revolutionize the Global Economy

 

 

Recent discussions suggest the Trump administration is considering a big shift in US monetary policy by revaluing the nation's gold reserves. Currently, these reserves are accounted for at $42 per ounce, a figure established decades ago. However, with market prices now around $2,800 per ounce, revaluation could inject approximately $800 billion into the US Treasury. There is precedent for such a move, because FDR revalued gold from $20 per ounce to $35 in 1933. 
 
Treasury Secretary Scott Bessent recently hinted that changes might be coming by saying the administration intends to announce a plan to "monetize the asset side of the US balance sheet for the American people." With a revaluation higher, the Treasury would need to issue less debt and the Treasury General Account could be run down to finance public spending. This would ultimately increase liquidity in US markets, because it would mean less liquidity is absorbed by debt issuance. According to liquidity specialist Michael Howell, "Revaluation would allow the US government to spend a near $1 trillion nest-egg by monetizing the hidden gains in bullion." 

Mr. Bessent is a savvy Wall Street veteran whom many consider a 'sound money man'. If the US returns to some form of gold standard, it would make the world less reliant on the US dollar, shrink the deficit, lead to a sharp increase in gold prices, and possibly a drop in Bitcoin. This is one reason virtually all Silverlight managed portfolios own both gold and Bitcoin. The other takeaway for investors relates to liquidity. Anything that promotes higher liquidity typically boosts asset prices, which may explain why US stocks ignored a hot inflation report this week and rallied despite negative headline news. We will report more on this story as it develops. 

 

 

 

Trade Wars: Inefficient and Harmful for Both Sides

 

 

The ongoing US-Canada trade war highlights how such conflicts create unintended consequences and economic inefficiencies. One early victim of the spat is the National Hockey League (NHL). 

Tariffs have already weakened the Canadian dollar, impacting businesses and sports alike. The NHL, with seven Canadian franchises, faces severe challenges since these teams earn revenue in Canadian dollars but pay players in US dollars. As the exchange rate worsens, Canadian teams struggle to meet rising payrolls and remain competitive. The effects extend beyond team operations. A weaker Canadian dollar could undermine the NHL’s upcoming multi-billion-dollar media rights deal, reducing the league’s overall value. And smaller-market teams like the Winnipeg Jets may face declining attendance if higher ticket prices are used to offset currency losses.

This case shows how trade wars, intended to protect domestic interests, can backfire—hurting industries on both sides of the border and damaging long-standing economic and cultural ties. The National Hockey League would probably prefer the goal of putting trade wars on ice.

 

 

 

Tech Leaders Deal with Uncertainty Under New Administration

 

 

At The Wall Street Journal’s CIO Network Summit, technology leaders discussed how early policies from the Trump administration are prompting shifts in their strategies. Concerns are rising over tariffs, which could increase hardware costs and strain stagnant IT budgets. Some companies are delaying upgrades, while others rush to purchase equipment before price hikes.

The administration’s repeal of the previous administration’s 2023 executive order on AI regulation received mixed reactions—some welcomed the reduced red tape, while others feared regulatory uncertainty would stall innovation. There was consensus on the need for balanced AI governance to ensure safety without stifling growth. Immigration policy changes also sparked debate, with worries that restricting skilled visas could hurt innovation. However, leaders praised initiatives like Career and Technical Education Month, which boosts cybersecurity education.

Many business leaders still see potential for long-term growth under a pro-technology, deregulation-focused administration. The short-term risk for investors to monitor is a possible growth scare later this year if policy uncertainty leads to a pause in capital spending. 

 

 

 

Should You Pay Off Your Mortgage Before Early Retirement?

 

 

Many people who own homes face a dilemma when planning for an early retirement (typically around age 55). Should they pay off the mortgage for peace of mind or keep the loan and maintain liquidity?

While some love the idea of being debt-free, others, like financial expert Ben Carlson, argue that low-rate mortgages are too good to give up, especially with inflation reducing real debt costs over time. Early retirement changes the equation. Without a steady paycheck, carrying a mortgage can feel riskier. Yet, if you plan to sell your home upon retiring, paying off the mortgage early may unnecessarily lock up cash in an illiquid asset. Carlson advises prioritizing flexibility, as plans and markets can shift over time. In the end, the best decision depends on your comfort with debt and your need for financial flexibility.

As detailed in The Four Minute Retirement Plan, we agree with Ben that some forms of debt can be good. But we think it's generally better for most people to reduce debt as they age. One simple sanity check: if you can't find a guaranteed investment yield that eclipses your mortgage rate, you probably want to pay it off ASAP.   

 

 

 

The Timeless Power of a Handwritten Thank You Letter

 

 

In an age of digital communication, a handwritten thank you note reminded a Missouri community of the power of gratitude. After receiving a free Christmas meal from Black Sheep Burgers & Shakes, an elderly woman, with no family and living on social security, expressed her appreciation in a heartfelt note. Her letter, describing how the meal lifted her spirits during a difficult time, deeply moved the restaurant staff and the local community.

Restaurant owner Mike Jalili shared the letter on social media, hoping to find the anonymous writer and invite her to future holiday gatherings. The story has since inspired many, proving that old fashioned thank you letters still hold immense emotional value and connection.  So, take pen to paper and make someone’s day!

 

 

---

This material is not intended to be relied upon as a forecast, research or investment advice. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and non-proprietary sources deemed by Silverlight Asset Management LLC to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Silverlight Asset Management LLC, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any of these views will come to pass. Reliance upon information in this post is at the sole discretion of the reader.​​