Friday, September 11th, 2026

Laramie, Wyoming

By Dan Denning

Are the Silicon Valley insiders who’ve built the closed-source American frontier models trying to scare the government into regulating them? Might they be exaggerating the threat from AI in order to ‘freeze’ the industry, restrict competition, and lock in high prices for the tokens (and even higher valuations for the intial public offerings they hope to make this year)?

It kind of seemed like that was going this week. A 27-year old unknown AI researcher named Jacob Coxon made an X post earlier this week saying, ‘the people building AI earnestly believe that it could kill us all by the end of the decade.’ His post came just before the Wall Street Journal published an article about him. Mostly left-wing politicians in Europe in the US immediately re-tweeted Coxon’s post, calling for a halt to AI development pending more studies about its safety and possible regulation/nationalization.

Maybe this will be just the thing to prick the AI bubble. It’s a topic Bill Bonner and I discussed yesterday in our latest Private Briefing for BPR readers. We talked about the ceiling for interest rates, why deflation is inevitable, and the future of wealth in a world gone bonkers.

Enjoy the video and transcript below.

Until next week,

Dan

P.S. In simple terms, it’s possible that OpenAI and Antrhopic are burning through so much cash so fast, they realize there is no business model where they can show prospective investors a profit—so they’re ramping up AI fear in order to freeze the market (and token prices) to prevent competition via regulation. It’s called regulatory capture and we’re seeing a full court press for it right now.

(This transcript has been lightly edited for brevity and clarity)

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Wednesday, September 9

By Tom Dyson, Investment Director

A vicious scramble for scarce resources…fueled by bottomless paper money…in search of profitability at massive scale…that may or may not materialize…

Our investment strategy is perfectly positioned for this AI-led Inflationary Boom… which we track with this chart of stocks/oil and the interaction with its moving average.

Above the moving average signals we’re still in the Inflationary Boom.

Kate and I are buying MORE gold. I have the strongest conviction that gold will be making new all-time highs again next year. The bubble is deflating and the run from paper has started. I hope my updates of the last few months have made this position unequivocally clear.

Greetings from Chiswick, West London.

The debasement trade is ON again…and we’ve likely entered the final melt-up of the great paper money experiment.

The debasement trade had been working beautifully until February 28, when the US and Israel attacked Iran, and the trend reversed, knocking 16% off the gold price.

As a reminder for new readers: The debasement trade is based on the observation that huge government debt and deficits all around the world will require even more money printing, yield curve control, and quantitative easing by central banks. This is happening with nearly all currencies in nearly all countries.

Interest rates are rising around the world, responding to the 8% US money supply growth we’ve seen over the last twelve months (and we’ve been tracking, thanks to Professor Tim Congdon)...

The mad scramble for resources to build AI infrastructure, which as yet hasn’t produced a profit…

And the government’s gargantuan appetite for borrowing.

We’ve seen two important Scott Bessent interventions this summer…in the yen and in the US yield curve. Both these decisions reinforce something we’ve known all along: They will defend interest rates, by sacrificing the currency and our cost of living.

The result?

A gradual debasement of paper money and claims on paper money in general against real assets; things like precious metals (gold, silver, platinum), and energy assets that cannot be printed or created with keystrokes (uranium, natural gas, crude oil). In a nutshell, sell paper, buy stuff.

This is the “debasement trade.” The following three charts show copper, making a new all-time high, diesel, making a new all-time high, and iron ore futures sneaking back above $100/ton.

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Laramie, Wyoming

By Dan Denning

Imagine a brief but violent civil war in the next twenty six months. A ‘benevolent dictator’ takes power as the war ends. He (or she) seizes on the national emergency to make sweeping economic and constitutional changes to America as we know it. Everything changes.

A wealth tax is introduced. Social Security benefits are means tested (and the cap on taxable earnings is lifted from $184,500 to $1 million). Universal Basic Income (UBI) and a Central Bank Digital Currency (CBDC) become compulsory for the receipt of government benefits and all transactions (both sold as technological solutions to welfare fraud and illicit cash profits and tax evasion).

The Supreme Court is expanded from nine justices to thirteen. Three new states (Guam, Puerto Rick, and DC) are admitted to the Union, adding six new members to the US Senate. The debt ceiling is abolished. So is the filibuster in the Senate.

Sounds far fetched?

What if I told you a radical revolution very much like that already happened in America? And it didn’t even take a civil war to bring it about. Yet it resulted in the greatest expansion of Federal power (and loss of personal and economic liberty) since the Civil War.

It led directly to to America’s involvement in the Great War, ensnaring the US in more than 100 years of endless wars costing trillions of dollars, ‘paid for’ with huge debts. Could something even worse happen again? Could the country survive it this time? Could you? More on all that shortly. But first…an important chart this week.

In late July, we added five ‘Pre Crash Indicators’ (PCIs) to our BPR analytical tool box. These were on top of the valuation metrics we regularly track month-to-month. We added the five PCIs in an attempt to better pinpoint WHEN the market might start mean-reverting back to the valuations our metrics tell us are inevitable. This week, telling news on one of the PCIs.

Margin debt may be rolling over. This happened in 2000, 2007, and 2021 before big falls in the stock market. A change in the appetite for leverage is a change in expectations for future stock returns. Is that what’s really going on? First the numbers.

Margin debt is when an investor borrows money from a broker to buy more stocks. The collateral for the loan is the value of the investor’s portfolio. It’s free money to change your life, as long as stocks keep going up. When you’re worried they might not go up as fast—or, ye gads, might go down–you quit borrowing (and maybe start selling).

In June, margin debt peaked at $1.5 trillion. That was an all-time high. The year-over-year rate of change was 49.5% (that’s what you see in the chart above). The official July number was $1.41 trillion, a decline of 5.7% from the June high. The rate of change slowed to 38.6% year-over-year.

Borrowing less fast. Is this the great roll over before a bigger decline? It’s too soon to say. And it’s only one of five ‘Pre Crash Indicators’. But it’s the same trend we saw prior to the last three big mean-reverting down moves in the markets. If investor expectations about the next ten years of returns are changing, why? Next chart.

The dividend yield on the S&P 500–one of the regular valuation metrics we track–has made a new all-time low (you calculate the yield by dividing the trailing cumulative dividends of S&P 500 members by the value of the index). The current yield is 1.04%. The previous low was 1.11% (this is based on Yale Professor Robert Shiller’s data set, which goes back to 1871).

As you can see on the chart, the median level over the life of the American stock market is around 4.2%. Anything above 6% and the stock market index is making a new low (the exception was in 2009 when the yield peaked at 3.9% as the market bottomed). Anything below 2% and the market is at or near a peak in price terms.

All of which makes sense, in terms of price action. The yield goes down when the index is rising (price terms) but cash payouts by firms (dividends) are not. But the lower the yield goes, the more investors are expecting that ALL FUTURE RETURNS will come from capital gains. This is a problem. Why? See below.

Reinvested dividends accounted for almost half of the total returns generated by US stocks from 1900 to 2000. This is according to the most comprehensive dataset of stock market returns, published in a book called Triumph of the Optimists. Capital gains come and go in waves. But reinvesting regular dividends is what gives compounding so much power over time.

When the dividend yield is low–as it is right now–it means investors are betting on capital gains doing all the heavy lifting in the years ahead. For this year, next year, the next decade, and probably the next 100 years. In big picture terms, you could say the record low dividend yield on the S&P 500 is a bet that high-tech/growth firms from America will be the best-performing investments of the foreseeable future.

Maybe they will!

Not much of the future is foreseeable. But are European companies going to do better? Can you invest in Chinese companies? Will Japan come back from the equity dead to rise again? Maybe.

But let’s not forget a point Investment Director Tom Dyson brought up earlier this week: the corrupting role of artificially low interest rates on asset prices. Artificially low interest rates support historically high stock valuations. Low rates raise the present value of future cash flows. So what?

For growth and tech companies–some of whom project higher cash flows a decade or more into the future–low rates lower the discount rate. The discount rate is the rate investors use to determine what future cash flows are worth right now. In other words, low rates create a massive bias to invest in high-growth/tech companies.

And that’s exactly what we’ve seen in the stock market. When the biggest and fastest growing companies in the stock market are tech companies, dividends don’t matter, do they?

What’s more, if you include stock buybacks as a kind of dividend, the ‘shareholder yield’ replaces the dividend dividend yield as a broader measure of how investors/owners receive cash from operators/management. You can ignore the warning signs, right?

No.

High growth…buybacks…an Intelligence Revolution where information and how it’s organized and analyzed is more important that the cost of labour, capital, or real resources….these are all arguments used to justify why…this time its different…and why an all-time low in the dividend yield on the S&P 500 does not necessarily mean stocks have made/will soon make an all-time high…before the historic mean revision begins.

Whatever. I present the numbers and facts. You decide. But I know what history shows.

There will come a time when investors are less sanguine about future cash flows. They will expect higher yields to compensate them for the risk of owning stocks. And they will begin to use a much higher discount rate, as the Primary Trend in interest rates is up…and headed higher. See the PS below for one final comment on dividends. But before that, check out this cool cat with his cool hat below.

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Wednesday, September 2

By Tom Dyson, Investment Director

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Friday, August 28th, 2026

Laramie, Wyoming

By Dan Denning

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Friday, August 14th, 2026

Laramie, Wyoming

By Dan Denning

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Wednesday, August 12th, 2026

Chiswick, West London

By Tom Dyson, Investment Director

Thank you for all your kind messages about my father. We especially appreciate your ideas and suggestions for treating Parkinson’s disease, which some of you sent us. We’re looking into everything.

It was incredibly hard saying goodbye to him last week, as frail, gaunt and shaky as he is, watching him get into a taxi and head to Heathrow Airport by himself, for a transatlantic flight. Thankfully, he got home to NY safely and quickly.

For Kate and I, life is coming at us fast. Kate just lost her father in Florida. My father can’t really get around by himself anymore. And our children are growing up fast…and will soon want more independence…

In short, after seven years, we think the time is coming for us to bring our family home to the USA. We’ll see.

There was a partial (90%) eclipse this evening, visible from our back garden in London. The kids figured out that we could view it by looking through six pairs of sunglasses. We got a perfect view! Here’s Penny taking it in…

Greetings from Chiswick, West London…

Not much to report from our investment strategy. We’re not changing anything. We have 65% of our allocation in gold, silver, platinum, oil, gas, uranium, iron ore and tankers.

And the other 35% in cash.

We have no exposure to the major stock market indices and a zero allocation to bonds.

We’re keeping the dial set at “Maximum Safety” and bracing for volatility as the big paper money default inches closer.

It’s the most defensive position I can come up with.

When the crisis arrives, hopefully we’ll be able to duck and weave appropriately…

The latest government inflation reading came out today, showing the dollar had lost 3.4% of its purchasing power over the last 12 months. As always it prompted discussion of the Fed’s interest rate policy and the possibility of raising rates soon. Don’t pay any attention. The Fed only has one policy option: debase the currency but try to maintain plausible deniability for as long as possible. They won’t raise interest rates.

While the US made a show this week of auditing the gold in Fort Knox, we learned the Chinese retail investors keep buying gold. In the West, more open discussion of what a sovereign debt crisis might look like...and whether we’re already in one. In China, methodical buying of gold, including fourteen straight days of inflows to gold ETFs.

We’d rather own the real stuff. And I hope I was clear in these letters that the sell-off this summer in gold and silver was an excellent buying opportunity. It’s worth noting Chinese investors appear to be betting the same way… that gold prices are resuming the bull market and may run much higher in the four and half months left of the year (relative to the dollar, the euro, and the yen).

QUESTION: With the FED supposedly “done” with rate hikes, is it time to start securing more long term notes with our cash and lock in that 5.5% range?

MY RESPONSE: This chart shows the yield curves of the big governments. US paper (blue line) offers the second highest bond yields, after UK paper. And although the yield curve has a positive slope at the short end, it’s pretty flat beyond the 2-year tenor. In my opinion, the small bump in yield between a 2-year note (4.2%) and a 10-year note (4.69%) and a 30-year bond (5.26%) isn’t worth the extra risk we’d take by holding long term paper. So I still think 2-year notes offer the best value for yield.

We’ve been thinking about the next steps for our eldest son, Dusty. He’s 18 and he’s had an awesome, stress-free childhood. So it’s time for us to start thinking about how he might earn a living for himself in the future…and what skills and training he might need.

One idea we’re seriously beginning to explore is working in the energy industry — oil, gas and nuclear power, which syncs nicely with our Bonner Private Research Official List.

There’s such an acute shortage of skilled workers in energy, they’re practically begging (and bribing) young people to enter the industry. And it’s only projected to get worse, as the average age of workers is near 50 and they’re retiring faster than the industry can hire new people.

There are hundreds of different jobs available in the energy industry…welder, lineman, pipefitter, substation operator and many more. A GED is the only academic qualification you need to apply for apprenticeships, which Dusty is going to get started on next.

I’m just thinking out loud here, but an apprenticeship would be a great next step for him as an alternative to college. I think he likes the idea, too. We’ll see.

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Friday, August 7th, 2026

Laramie, Wyoming

By Dan Denning

Here we are, eighty-one years later, sandwiched between the anniversary of the atomic bombs dropped on Hiroshima (August 6th, 1945) and three days later on Nagasaki (August 9th 1945). Japan announced its public surrender six days after the second bomb. The official surrender took place on September 2nd, 1945, on the deck of the USS Missouri, anchored in Tokyo Bay.

What if Japan hadn’t surrendered?

The soonest the US could have dropped a ‘third shot’ on Japan was ten days from August 9th. The ‘demon core’ of the third plutonium implosion bomb was scheduled to be deployed to Tinian Island where the bomb would be assembled. US President Harry Truman halted the deployment (the 1989 Hollywood movie Fat Man and Little Boy features actor John Cusack playing a fictionalized version of Los Alamos scientist Louis Slotin, who was killed by a massive dose of radiation in testing the criticality threshold of ‘the demon core’...this process…which killed another scientist on the project, was called ‘tickling the dragon’s tail.’)

Declassified official records show that the US could have manufactured about three atom bombs a month in 1945. It’s commonly believed that Los Alamos, New Mexico was the only location in the Manhattan Project. It wasn’t. The Met Lab Chicago, headed by Enrico Fermi, crated the world’s first self-sustaining nuclear chain reaction. And the facilities for enriching uranium into fissile material were in Oak Ridge in Tennessee and the Hanford Lab in eastern Washington.

There was a real shortage of both raw ore and enriched uranium that constrained US bomb production. I’m mentioning this in the context of current events in Iran and the US, but also in while keeping in mind our BPR theory of Megapolitics. The evolving theory holds that States who can drive down the cost of violence down fastest and the most (as a function of technology and efficiency) become the most powerful.

But Empire is not so simple these days. The cost of violence (or having a credible threat of overwhelming force) is a function of policy, technology, geology, and geography. The US has great technology. And it currently has a national security/industrial policy designed to accelerate the processing of critical metals and materials crucial to the Warfare State. But that may not be enough in the current circumstances. Why?

A neodymium-iron-boron magnet is the kind used in fighter jet motors and for guidance systems on missiles. Economy-wide (including the US military) the United States consumes about 48,000 metric tons worth of these type of magnets a year. It produces around 300 tons. The difference has to be made up through imports.

The trouble with rare earths and critical minerals isn’t that they’re rare. It’s that you can’t ramp up the ore processing and refinement overnight to produce ‘just in time’ metal inventories. Even if you have favorable geology and geography, which America does, a real constraint on the cost of violence emerges. If you can’t make and deploy the weapons of war, your ability to wield violence is diminished. Power shifts. You are less powerful and maybe even backed into a corner of your own making. Back to that in a moment. First a quick chart.

All week, especially after Tom’s note on Wednesday, I’ve been wondering why the US government intervened in the FX market to strengthen the Yen by selling Euros. It was unusual, for one country to so actively try and help another country strengthen a weakening currency.

What risk were US policymakers trying to mitigate: stocks crashing with the un-wind of the Yen-carry trade, or US bond yields rising as the Japanese sell their Treasuries so they can buy dollars with Yen?

Which is it? Or is it both?

Quantifying the risk to a disorderly unwinding of the carry trade is hard. It’s hard to tell how much money has been borrowed in Japan and invested (with leverage) in US stocks. A falling yen forces the rather rapid unwinding of a leveraged position (a stock market crash).

BIS records about official bank borrowing put the low end of the figure at around $260 billion. The high-end, which is really just a guess, includes short positions in the FX market and is closer to $11 trillion. The middle figure, also mostly a guess, is between $700 billion and $1.2 trillion.

It’s a big position. If leveraged, it’s even bigger. But is it enough to take down US stocks? Or is the risk in the bond market? And what IS that risk?

Well, according to the latest TIC data, Japan is the single-largest owner of US Treasuries, with about $1.2 trillion as of May 2026. One way for Japan to ‘defend’ the yen is to sell those US bonds and then turn around and use the dollars from the sale to buy yen. Only that’s not what happened this week.

The US government intervened as described above. And Treasury Secretary Scott Bessent actively urged the Japanese to use a special Fed facility that allows them to use Treasuries for collateral against which they receive dollars (the official name is the Foreign and International Monetary Authorities Repo Facility).

It’s an awful lot of trouble to keep the fiat money shell game going. Japanese selling of US Treasuries would force US interest rates higher. The Fed would have to either ‘monetize’ new debt issued by the Treasury. Or the US government would face much higher interest costs on borrowed money.

In case you haven’t noticed, the US government can’t afford higher interest costs. Uncle Sam spent $857 billion on interest payments in the first nine months of the government’s fiscal year. It’s on pace to be well over a trillion dollars by the time the fiscal year ends in September. Hence the shenanigans we saw in the last ten days to ensure an orderly Treasury market and avoid a crashing stock market.

To return to the original question, which is the bigger risk: a disorderly unwinding of the carry trade resulting in much lower US stock prices…OR…a spike in US bond yields as Japan sells Treasuries, which would also, all things being equal, lead to lower stock prices?

It reminds me of an old Saturday Night Live skit from 1976 featuring Dan Akroyd (husband), Gilda Radner (wife), and Chevy Chase (product spokesman). It was about a household product called ‘New Shimmer.’ The wife says the product is floor wax. The husband says it’s a dessert topping. The spokesman says don’t worry.

It’s both!

The world’s financial markets run on borrowed money on leverage. The yen carry trade is a huge pipeline of credit supporting US asset prices. To prevent a crash in those prices (asset deflation) be prepared for the Fed to try anything. But don’t be complacent about the risks of a sudden re-pricing of stocks and bonds. And for goodness sake, don’t eat the floorwax.

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Wednesday, August 4

By Tom Dyson, Investment Director

Reuters:

Japan and the United States conducted coordinated yen-buying intervention and will not hesitate to take further action…

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Friday, July 31st, 2026

Denver, Colorado

by Dan Denning

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Wednesday, July 22nd, 2026

By Tom Dyson, Investment Director

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Friday, July 17th, 2026

Laramie, Wyoming

By Dan Denning

Prediction: Now that Christopher Nolan’s cinematic version of Homer’s Odyssey is in theaters, the ‘tomato meter’ on Rotten Tomatoes will plummet–below 75% by Monday and on its way to 50% by the end of the month. All the initial ratings, which drove the score up to 98% at one point, were critics who’d seen a screening before the public. Critics are generally elitist line-toers. The Crowd will now vote. And it will be merciless.

The good news is we can now look forward to the final installment of the Dune series as re-imagined by Denis Villeneuve. Aside from some odd casting choices here and there (nothing as unabashedly ‘woke’ as the choices made by Nolan), the first two Dune movies have pretty much stuck to the book: a coming of age story in which a charismatic son avenges a murdered father and unleashes a galaxy-wide jihad on the decrepit, corrupt, and elite ruling order with an army of fanatical jihadist warriors who believe their leader fulfills a religious prophecy about the coming Paradise.

Pretty standard stuff. If you’ve read Frank Herbert’s Dune books, you’ll know that Paul Atreides isn’t the hero. He’s the villain. And even though he thinks he can find ‘a golden path’ to restore justice and peace and order in the universe, he’s wrong. History marches to its own rhythm and appoints each man his role. Paul drenches the world in blood.

The books are a warning. It’s not that power tends to corrupt, or that absolute power corrupts absolutely (as Lord Acton famously said). It’s that power is magnetic to the corruptible. Herbert wrote, ‘Power attracts pathological personalities…Such people have a tendency to become drunk on violence, a condition to which they are quickly addicted.’

We’ll see how the story ends when Dune, Part Three comes out December 18th, 2026. Until then, let us resume with our story about American power, drunk on debt. We’ll set aside liquidity and valuations this week and look at two other variables that affect our investment returns for the next ten years, policy and strategy.

To the extent that the Trump Administration has an actual strategic policy goal, we learned in 2024 that it might look like Stephen Miran’s new global currency re-set, dubbed the Mar-a-Lago Accord. The argument was simple: the use of the US dollar as a global reserve currency made it over-valued. This chronic/structural over valuation resulted in the US running large trade and government (fiscal) deficits.

From an economic point of view, the large trade deficits helped American consumers in the form of low import prices and massive choice in consumer goods, textiles, and food. But it did not benefit American manufacturing nor the inflation-adjusted hourly wages of American workers. Trump promised to get a new deal. A better one.

Miran’s paper said the US also deserved more equitable ‘burden sharing’ for the cost it has paid to protect the global order with massive military spending. American taxpayers pay for this ‘security umbrella’ (mostly by large annual deficits). It benefits Americans in the sense that the world’s goods continue to flow into the US (or did) at bargain basement prices. But Trump wanted a new deal there, too.

Miran’s solution came in three parts. First, punitive tariffs to force bi-lateral trade deals more favorable to American industry and labor. Second, make US defense and security spending conditional on better currency/trade deals. Third, impose fees on the interest payments due to foreign holders of US government debt if trade and currency deals aren’t re-arranged.

Lots of stick. A tiny bit of carrot. And to thoroughly mix the metaphor, no dice. The chart above from the Congressional Budget Office shows the US government collected $195 billion in tariff revenues in 2025. But when the Supreme Court ruled them broadly illegal earlier this year, the government began issuing rebates (it’s not clear to whom, but it’s definitely not consumers).

The Administration does have other statutory authority it can use to impose tariffs and has already done so. But the stick is limp. Tariffs are not going to generate enough revenue to eliminate the income tax (as was very briefly discussed before being discarded). Nor are they going to lead to a broad de-valuation of the dollar like the 1985 Plaza Accord devalued the Japanese yet. Speaking of the dollar.

Here it is. Remember that this time last year, the US dollar was coming off its worst first-half performance in 50 years. Not since the collapse of the Bretton Woods system in 1973 had the greenback fallen by 10% in six months against its international peers.

Of course that was all part of the Miran plan. Weaken the dollar without damaging foreign demand for US government bonds. But the chart above shows that the Dollar Index [DXY] is almost exactly where it was ten years ago. Not stronger. And certainly not weak to the point where US exports would suddenly surge according to the plan.

The available evidence shows there has been no restructuring of the global trade system by fiddling with the dollar’s financial plumbing. Money moves where it wants and where it’s treated best. In the meantime, DOGE didn’t cut $2 trillion in wasteful spending (although it probably found at least that much…and Congress didn’t seem to cut any of the waste DOGE DID find). And with the war in Iran (which Congress has still not declared) military spending will go up 44% to $1.5 trillion if the President has his way.

This is the New Boss behaving a lot like the Old Bosses. No new deal for American workers. No New Dollar. No year in the sun for Main Street. Just more debt for future Americans to pay off and higher financial asset prices for Wall Street now.

The trade deficit has not gotten smaller either. You can see it absolutely blew out in early 2025 with importers trying to front-run the tariffs and build up inventories. Since then it’s been more of the same. Month after month, America importing more than it exports.

It’s been that way for a long time. But the real decline began with Bill Clinton and a Republican Congress passing the North American Free Trade Act (NAFTA) in 1995. US political leaders from both parties made a conscious decision to favor Wall Street and the dollar (the capital account) over Main Street, manufacturing, and trade (the current account).

Deep in the details, the result is creation of one of the largest debtor nations the world has ever seen. The Net International Investment Position (NIIP) of a country tells you whether it’s a creditor or a debtor. It’s the difference between what we own versus what we owe. We owe.

The most recent numbers show the NIIP at a negative $21.2 trillion (liabilties of $66.64 trillion versus assets of $43.37 trillion). And if you can believe it, that was a $600 billion improvement over the net debtor position at the end of 2025. But that improvement came entirely from the increase in the value of foreign assets owned by Americans and not a smaller trade deficit.

A net creditor (like Japan) can afford to run a debt-to-GDP ratio over 200%. It can finance its deficits out of available domestic savings (it saves). The ONLY way a net debtor like the United States can afford to do the same—without seeing a huge spike in interest/rates and borrowing costs–is if investors see the global system as safe, basically fair, and stable.

Yet the whole intellectual basis of the Trump Trade Stategy was to make that order LESS stable….It’s a bold strategy, Cotton. Let’s see if it pays off for them.

So far, it hasn’t. And you could argue that it is un-like Trump to have a complex mechanical plan for restructuring the entire global trading system. He’s a self-styled deal-maker. And he probably thought he could get a better deal using the usual tactics he’s employed over the years—move fast, be chaotic, set unrealistic expecatations, make bombastic announcements, settle for something. Rinse. Wash. Repeat.

Only it hasn’t worked. And that begs the question, IS there a strategy?

Well on that question, the answer is probably ‘yes.’ The idea that tariffs and manufacturing are the source of a nation’s wealth, strength, and security go back all the way to Alexander Hamilton. Writing soon after the Revolution, Hamilton was worried that a nation of farmers and commodity exporters would not be able to stand up to Great European Powers for long. In his report ‘On the Subject of Manufactures,’ published in 1791, he wrote:

Not only the wealth; but the independence and security of a Country, appear to be materially connected with the prosperity of manufactures. Every nation, with a view to those great objects, ought to endeavour to possess within itself all the essentials of national supply. These comprise the means of Subsistence habitation clothing and defence.

The Trump Administration, through the investment programs at the Departments of Energy, War, Commerce, and Interior, has made a conscious effort to re-shore manufacturing in the nuclear supply chain (mining, processing and refining, next gen reactors), rare earths, and critical minerals. We’ve covered some of those stories in these pages.

Whether it results in self-sufficiency and resiliency in industries deemed critical to national security, only time will tell. The soonest any of the investments might bear fruit, according to my research, is 2028. A lot can happen in the interim.

In the meantime, it’s clear that some people in the US government (and in the industries most likely to benefit from government investment) believe the country ought to have an industrial policy. That industrial policy ought to be linked to various trading strategies. And that done correctly, all that should result in more security, a better and more self-sufficient industrial base, and higher wages for the American worker.

Maybe. It’s an idea. And this is a departure from throwing hundreds of billions of dollars toward renewable energy and hoping for a mythical ‘Energy Transition.’ That resulted in wasted money and wasted time, or at the very least, the lining of a lot of pockets from those closest to the money in Washington.

It’s certainly not the free market as we know it, though, is it? The more important question is will investors and BPR readers benefit from the Trump national industrial strategy, such as it is, and for however long it lasts?

Energy Fuels Inc. [UUUU] is a company we wrote about in May of 2024 (Nero Would Weep). Its White Mesa Mill in Utah is/was the only operating uranium mill in the country. It has a licensed capacity of eight million pounds of uranium per year. It’s the leading US producer of U308, the concentrate you need to make fuel for nuclear power plants.

It is/was a uranium play. But it’s also a rare earth play. Processing uranium is toxic partly because the ore is radioactive. You have to make all sorts of provisions for the dust generated. And you have to be in a jurisdiction/geography friendly to such endeavors. Utah is such a place.

Last month, the Department of War signed a $720 condition loan with UUUU to process monzanite ore at the White Mesa Mill. This might make it (might) a successful domestic producer of rare earth elements. That would fit nicely with the ‘Mine-to-Magnet’ strategy the Administration is pursuing. We’ll see.

The stock chart shows the thrills and perils of piggy-backing on US industrial policy. Without a 50% trailing stop, you would have been knocked out of the position twice since May of 2024 before being in the money. Then you MIGHT have tripled your money. Or suffered some massive drawdowns. It would involve a lot of tactical trading, which is not our bag.

It’s all very exciting. But it’s also well beyond our Maximum Safety mandate. Tempting with play money. And worthy of continued study. But nothing to bet the farm (or the factory) on. Especially at these prices/valuations.

We’re making a few revisions to our dashboards to make them more visually appealing. Here’s an example above. It’s ‘the long view’ of the Buffett Indicator. Record times. Record risk. We’ll stay off stocks on the golden path for now.

Until next week,

Dan

PS We’re also looking at updating the look of the Official List. What do you think? These two images are based on Wednesday’s data (not updated for today’s close). Leave a comment below. We’ll publish the full dashboard, the BPR Reckoning Index, and the Doom Index in the upcoming August Monthly Strategy Report.

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Friday, July 10th, 2026

Laramie, Wyoming

By Dan Denning

Happy statehood day Wyoming!

On this day, July 10th, in 1890, Wyoming became the 44th State in the Union. Jubilee Days in Larimie at the moment. Big parade and pancake breakfast tomorrow. But nice work on becoming a state 136 years ago, Wyoming. President Benjamin Harrison admitted it. And as it turns out, there are some things we could learn from 1890 and President Harrison. More on that shortly.

First, the clowns, charlatans, and counterfeiters at the Federal Reserve have released their semi-annual Monetary Policy Report. The paper argues that inflation expectations are ‘anchored’ at 2%. Which is funny because in the same report, the Fed says that Personal Core Expenditure inflation is actually at 4.1% for the last twelve months.

You wonder who the Fed is asking about inflation if it concludes inflation expectations are ‘well anchored’ at 2%. They’re not asking anybody who buys gasoline or groceries. Or pays for insurance, tuition, or prescription drugs. And keep in mind that a policy goal of maintaining 2% inflation is not ‘price stability.’ It’s a slow-drip devaluation in the purchasing power of your savings…by design.

The report went on to ‘blame’ inflation on three things: tariffs, high energy prices, and supply-side shocks from the AI/data-center build out. Meh. The only one of the three for which there is real evidence is high energy prices. And those are almost entirely related to the ongoing war/cease fire/war in Iran.

Notably, the Fed did not blame itself for inflation. But the paper indirectly admitted the Fed’s role in undermining sound money by publishing the chart at the top of this week’s note. The chart shows a sharp spike in US government debt held by the public beginning in 1913, which was the year the Fed began perverting US money in earnest.

Huge US annual deficits and public debt equal to 100% of GDP are not possible without the Fed’s intervention in the market. It creates money to buy bonds from banks. It also directly buys bonds issued by the Treasury. The Fed is the beating heart of the US Welfare/Warfare State. But you won’t read that in the report.

The scariest line on the chart is the rise in net interest expense on the debt since 2020. A trillion dollars a year is one thing. That’s the nominal amount (more or less) of annual interest expense on $40 trillion in debt. That’s about 3.5% of GDP. If Bill is right (and he is) about the Primary Trend being higher interest rates, the US is going to spend a lot more money in the coming years just paying interest on debt. Even a small increase in interest rates will be a big problem.

A BIG increase–the kind caused by a failed Treasury bond auction or the fear of massive money printing–well that will be a death sentence for the dollar, executable immediately. The Fed appears to prefer a slow, managed decline–the kind you will barely notice unless you’re paying attention. Pay attention. And don’t forget to buy the dip in precious metals!

When is a Strategic Petroleum Reserve no longer a reserve? There are about 320 million barrels left in the reserve at the moment. That number is critically low and getting lower. When will it stop? When does it HAVE to stop? First some context.

The Biden draw-down in the SPR—ostensibly to compensate for the ‘oil shock’ at the beginning of the Russia/Ukraine war in 2022 (but also about lowering gas prices before the US mid-terms) was 180 million barrels. The Trump draw-down has been around six million barrels per week and now sits at a total of around 172 million barrels.

By the time the next official data comes out, the Trump draw-down will exceed the Biden draw-down and the Reserve will be at its lowest level since 1983. Again, how low can it go?

The answer is determined by how oil in the SPR is stored and released. It’s stored in underground salt caverns. It’s released by pumping briny water into those caverns. Highly saturated salt water has a much higher density (specific gravity) than oil. Pumping the water into the cavern displaces the crude oil up, forcing it out at the top.

But there’s a catch.

Even briney sea water can alter the structure of the caverns in which the SPR resides. It mixes and erodes or distots the walls of the cavern. Below 300 million barrels, the government says the salt cavern structures become less stable with the added water. At current rates of depletion, that means in about three weeks, the Administration will have to decide whether to go below 300 million barrels…or buy oil on the open market. Or do something. Or do nothing and hope for the best.

Congress hasn’t been helpful (when IS it helpful?) In 2017, it began using the SPR as a piggy bank by selling oil to fund special government projects. It failed to replenish the Reserve when oil prices were low (something Trump suggested in his first term…but wasn’t done because mostly Democrats said it would be a subsidy to ‘big oil.’)

The statutes on the books say the Reserve can never go below 150 million barrels. We’re a long way from that (about 24 weeks according to current draw-down rates). Will we still be engaged in a special military operation in Iran in 24 weeks? Will other transit options that bypass the Persian Gulf entirely be available by that time? What will the oil price be?

Nobody knows. But in the meantime, we’re quite happy with our positions in uranium, oil and gas, and other real assets that throw off a stream of income. New readers can catch up quickly by reading Investment Director Tom Dyson’s July Monthly Strategy Report.

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Wednesday, July 8th, 2026

By Tom Dyson, Investment Director

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Friday, July 03rd, 2026

Laramie, Wyoming

By Dan Denning

Happy 250th America!

🎆 🎇 🧨💣🇺🇲

And here’s to all those who celebrate liberty and the idea of America. Fire up the barbecue. Crack open a beer. Light up a sparkler.

Enjoy!

But don’t think any of the festivities this weekend will keep the coming reckoning at bay. Not gonna happen. In this week’s research note, I’ve compiled more evidence. But not just about valuations. Also about certain indicators that will help us narrow down the ‘when’.

Before I get into them, check out the chart above. It’s an index that measures both the price and the volume of AI use by big businesses. At the ‘enterprise’ level, big businesses have been spending heaps of time and money trying to make AI (subscription-based Large Language Models like ChatGPT or Anthropic’s Claude) do something.

C’mon AI! Do something! Anything, really.

Replace lawyers and accountants, pad the bottom line, automate and optimize processes…be the transformative general purpose technology Silicon Valley has told us you’ll be.

But what if it isn’t?

There are several good reasons why ‘token maxing’--spending millions on AI compute blindly–might be in a downtrend. First is that the US players are closed-source, subscription-based models. You can’t customize the model. You don’t really own it. And there’s no guarantee the proprietary intellectual property from your business that you entrust to the AI vendor is secure…or won’t be used to copy your business model.

Second, the open-source models from China are cheaper and by most accounts, just as good. Granted, the Chinese open-source models may have also…effectively borrowed all the training data used by US companies. But the US companies ‘scraped’ a lot of the data they used to train their model and didn’t pay for it either. My point is that neither group is in command of the moral high ground here.

The third reason for the decline in AI spend is that customers may have doubts about whether they’re getting–or will continue to get–the best services (at any price). I’m referring to the Trump Administration’s brief suspension of Claude’s Fable model on national security grounds last week. It now appears that new models will require Uncle Sam’s permission to go public…and the implied threat of nationalization (in which case the government owns third party data) is now a factor users must consider.

I also refer you to Palantir’s stock chart above. And I encourage you to think about the term ‘AI Sovereignty’ this weekend. The ‘frontier’ companies in AI like Anthropic and OpenAI have basically built a brain you can rent. But they don’t show you how they trained the brain (is it Woke…is it anti-racist…does it have ‘guardrails’ to prevent you from ‘wrong-think’?) and they don’t let you customize it. You pay to use it…in the way they allow you to use it.

Palantir’s CEO Alex Karp made waves this week when he all but said that LLMs and AI based on the subscription model aren’t going to make it. He implied these companies have no real business model going forward. Why? Corporations and nations want to ‘own’ the whole technology and keep their data private and proprietary. That’s not what the big US firms offer.

Karp is partly talking his own book. Nvidia has an ‘open weight’ model called Nemotron. It runs on Nvidia hardware. And you can run Palantir’s various software offerings on it. But you can tweak and improve the model to suit your needs (that’s partly what ‘open weight’ means)–without surrendering your data back to a model provider.

You get AI Sovereignty, in other words. That’s a world where you can run your own AI or army of agents on your own machines with no constraints. The individual, the corporation, and the government are all sovereign. Not the AI provider. Nemotron is also ‘multi-modal,’ meaning you can input text, images, video, and audio into your training data for the model. That’s a LOT more data for the model to ‘learn’ form.

Bottom line: If big corporate spenders move away from the ‘closed source’ frontier AI models, then it’s a danger to the hyperscalers, to the AI capex boom, and to the entire AI bubble that’s been building in the stock market since November of 2022. That’s what’s at stake. The catalyst for the Big Loss and the mean reverting crash.

Palantir’s stock chart doesn’t give any clues. It’s not an AI play. And you could argue that Palantir has been quietly delivering advanced business intelligence and analytics for the government (especially the Depart of War and intelligence services) for years. Maybe LLMs like ChatGPT are just the watered down versions of this technology that are ‘safe’ to make available to the public (on a subscription basis only…and if that turns out NOT to be a viable business model…than nationalization as an ‘intelligence utility.’)

Lots to consider. In the meantime, Fable is back, baby. It got out of Trump jail mid-week. And I put it right to work improving our BPR valuation dashboard. I’ve broken it up into three parts–Valuations, Triggers, and the Verdict. I’ll show them to you now…and I invite your feedback in making them even more useful. Let’s start at the beginning with valuations.

All honest measures of value — the CAPE, the Buffett Indicator, the price you pay for a dollar of earnings — will tell you the same thing today: U.S. stocks are historically expensive. That’s a fact.

But it answers only one of the two questions a serious investor needs answered. Valuation tells you the size of the eventual reckoning (how far we have deviated from historical levels). It tells you almost nothing about the timing (which I’ll come back to in a moment).

For example, Robert Shiller’s Cyclically Adjusted Price Earnings ratio (CAPE) CAPE is good at predicting ten-year returns but not especially helpful for what will happen in the next ten months. For the new and improved dashboard, we’ve taken out the silver/oil ratio and the equity risk premium. Both are too abstract with too little useful informational content. We may come back to them from time to time when relevant. But not each month.

We’ve replaced those two with three new ones: the household equity allocation, the gold/silver ratio, and the S&P 500/GSCI ratio. These are all additional insights based on financial data. For example, the household equity allocation is based on eighty years of Federal Reserve data. It’s a great forecaster of ten-year returns. At 45.8%, US households have a record amount of their financial assets in stocks. They are ‘all in.’

The gold/silver ratio is more controversial subject to debate about its value. It doesn’t tell you anything about the individual prospects for gold or silver individuall. But in my view, it does tell you roughly where we are in the precious metals bull market. The lower the ratio the later it is (silver rallies to catch up with gold). If this were a baseball game, I’d say we were in the seventh inning.

The last new valuation edition is the S&P 500 to Goldman Sachs Commodity Index ratio. In some ways, this is similar to the Dow/Gold ratio. But it’s broader. You can think of it as the ratio between financial assets and real assets, or ‘paper’ and ‘stuff.’

One last thing: we’ve added a percentile bar. This shows you where the current reading sits for as far back as the data is available. For example, there are 675 readings on the Buffet Indicator (market cap-to-GDP) going back over 56 years. This month’s reading is the highest ever (100th percentile).

The percentile shows you where today’s reading is relative to all past available readings. It doesn’t have anything to do with ‘fair value’ or ‘intrinsic value.’ Stocks could go higher. The bubble could get bigger. The experiment may run longer. Or it could blow up.

When you condense all our percentile indicators into ONE indicator–the BPR Reckoning Index–you get a more precise read of what all of them are telling you. And THAT tells you what you can likely expect from stock market returns for the next ten years. Now for the second part.

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Wednesday, July 1st, 2026

By Tom Dyson, Investment Director

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Tower Bridge, England

By Dan Denning

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Wednesday, June 17

By Tom Dyson, Investment Director

The Four Quadrants model we’re using, created by Charles Gave, has moved definitely into the INFLATIONARY BOOM quadrant.

This is the biggest news this week.

In the Inflationary Boom quadrant, stores of value like real estate, precious metals, commodities perform well. Gold beats stocks. Also, high fixed-cost, cyclical producers do well like shipping, like oil and gas infrastructure, and the new iron ore royalty idea we introduced last week.

The worst investments in the Inflationary Boom quadrant? Long term bonds.

More importantly, we can take down our Crash Alert flag as we’ve now left the Inflationary Bust quadrant, which Gave calls the ‘Equity Hell’ quadrant. All the major bear markets of history have occurred from the Inflationary Bust quadrant.

On the other hand, he says “nothing too dramatic tends to happen” in the Inflationary Boom quadrant.

Here’s the key signal. When the stocks/oil ratio is above its 7-year moving average, the model says ‘Boom.’ As you can see, the ratio is now well above the moving average. This signal doesn’t flip flop very often, notwithstanding the flip flop we’ve just had, so hopefully we’ll stay in the Inflationary Boom quadrant for a few more years now. We’ll see.

It’s important to note that this model doesn’t forecast or predict what comes next. It only tells us where we are now and what assets do best now. For all we know, oil could soar again, the stock market could dive and the ratio goes back below its moving average again. In which case the model would flip again. We’ll see. The chart is the chart!

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