2025 State of the Union

~~James West, Midas Letter

It is said that it is a common perception among older people is that they are living in the “end times”. Martin Luther in the 14th century, Issac Newton in the 1700’s, Ronald Regan and a long list of others dating back thousands of years all believed the end was nigh.

And yet, here we all are. Another year, another set of hurdles to leap, opportunities to explore, relationships to maintain or end or start. Funerals to go to. Weddings. Parties. Concerts. Vacations. A full list of life’s events that fill the days until the days come to an end. Every day, some shuffle off this mortal coil, while others begin.

What is remarkable to me is that we spend so much of our lives in vain pursuits of that which ultimately we acknowledge is meaningless, often ignoring the most meaningful and ultimately valuable experiences, or taking them for granted.

The best passage of a life, that passes in the blink of an eye, is to arrive at the point where you can put yourself in the midst of all that you truly value, and that is valuable from the perspective of your physical, emotional, financial, spiritual and mental well being without having to compromise the important relationships and associations that make life truly interesting, and fill it with meaning.

Love, after all, is the only thing that you take with you into the next realm when you die. You leave it behind, and it lingers in the air among those who you knew and who knew and loved you. So one could argue that love is the only worthwhile pursuit.

All that aside, we are unfortunately cursed with the day-to-day requirement to make money, and thus, as somebody who only seems to care about money when I run out, I am rolling up my sleeves for yet another turn at the trough, elbowing my way into the fray to attract sufficient wealth that I can return to my bucolic and pastoral country existence where I am surrounded by all that matters.

So, now we look around the world in 2025, consider some of the news tools on the scene, like AI and crypto, and ponder the best use of energy to achieve the required income.

Where will the money flow?

That is what we want to know.

Obviously, the opportunities inherent in the explosion of AI and all the computing resources that implies – electricity, chips, water, real estate, talent – stands out as a worthwhile segment to consider.

xAI, Open AI, Anthropic (now essentially Amazon AI). All present opportunities to deploy capital and harvest a profit at some point in the future.

As a service provider to the masses of publicly traded and funded companies out there, I gravitate toward where the capital is gravitating, because thats where budgets for content production and distribution are being spent.

Following the money. Like Cariboo following the grass.

From an investment perspective, it’s confusing as ever to get a sense of which direction the market is going to go. With the wild card of Donald Trump bringing the highest possible degree of unpredictability into the mix, a forecast is impossible.

So, as usual, we can look at what we know, acknowledge what we don’t know, and consider that against what has the highest potential to occur.

~~James West, Midas Letter

So, now we look around the world in 2025, consider some of the news tools on the scene, like AI and crypto, and ponder the best use of energy to achieve the required income.

Where will the money flow?

That is what we want to know.

xAI, Open AI, Anthropic (now essentially Amazon AI). All present opportunities to deploy capital and harvest a profit at some point in the future.

Following the money. Like Cariboo following the grass.

So, as usual, we can look at what we know, acknowledge what we don’t know, and consider that against what has the highest potential to occur.

~~James West, Midas Letter

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

As you can expect, any grandiose plan would get all kinds of blowback… but this year exhibited all manner of Trump Derangement Syndrome on top of the difficulty of steering a sclerotic empire clear of the rocky shores.

The “phases” were never about optimism or pessimism. They were about sequencing — how stress surfaces, how systems adapt, and what must hold before confidence can regenerate. And in the end, what do we do with our money?!

Relative to GDP, the net international investment claim on the U.S. economy was 20% in 2003. It had swollen to 65% by 2023. Practically every type of American company, bond, or real estate asset now has some degree of foreign ownership.

But it’s even worse than that. As the federal deficit has pumped up the GDP figures, and made a larger share of the economy dependent on government spending, the quality and sustainability of GDP have deteriorated. So, foreigners, to the extent they are paying attention, are accumulating claims on an economy that has been eroded by inefficient, government-directed spending and “investments.” Why should foreign creditors maintain confidence in the integrity of these paper claims? Only to the extent that their economies are even worse off. And in the case of China, that’s probably true.

As global government interest expense climbed, gold quietly followed it higher. The IIF estimates that interest costs on government debt now run at nearly $4.9 trillion annually. Over the same span, gold prices have tracked that burden almost one-for-one.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

Over that same period, gold prices have surged about 135%, while silver is up roughly 175%. Zoom out two years, and the divergence becomes starker still: gold up 114%, silver up 178%, while the S&P 500 gained 44%.

According to the American Association of Individual Investors, the average retail investor has about a 70% allocation to stocks. That’s well over the traditional 60/40 split between stocks and bonds. Even a 60/40 allocation ignores real estate, gold, collectibles, and private assets.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.