Even AI Takes The Summer Off

In the ’90s, everyone talked about the internet. Streaming video? Video calls? Online banking? They all came to pass — but not before the original dotcom boom went bust and took half the market with it.

AI today is flirting with its own dotcom moment. The technology is advancing at The Quickening’s pace. But the market story — that every AI stock will make you rich — is still built on ghost wealth, the kind Bill Bonner warns about.

Just look at AI usage trends this summer:

Turn Your Images On

AI usage has dropped off over the summer (source: OpenAI)

Usage has dropped off sharply. Why? Because right now, the killer app for AI is still helping college kids write term papers — and it’s summer vacation.

There are real breakthroughs in drug development, engineering, and data analysis (I’ve seen it firsthand with GPT-5), but those aren’t yet what’s driving the speculative frenzy in the stock market.

This is the first bout of handover turbulence for AI: rapid technological change colliding with early-stage adoption patterns and overheated valuations. Two things can be true — AI will change the world, and the AI stock boom can still crash.

~ Addison

P.S. From tech to hard assets — specifically gold.

For the first time in living memory, a Fed principal economist has openly explored the mechanics of gold revaluation.

To be clear, the U.S. government still officially values its 261.5 million troy ounces of gold at $42.22 per ounce, a relic from the early 1970s. But what if — as Ray Dalio, Elon Musk, and even the Chinese central bank seem to believe — the U.S. is preparing for a new monetary regime?

According to Musk’s new Grok model, revaluing the U.S. gold stash to today’s ~$3,380 spot price would generate an $873 billion paper windfall. That could be used to expand the Fed’s balance sheet, issue new certificates, or offset the nation’s eye-watering debt load.

Dalio added on X: “The U.S. dollar used to be backed by gold. It’s not far-fetched to think we may be headed there again… Once people lose trust in fiat, the pattern repeats: print, inflate, devalue, and return to gold.”

Meanwhile, China is preparing. Their gold deliveries against futures contracts have doubled in the past month. The signal is clear: when the faith in fiat falters, the old gods of money — gold, silver, hard assets — tend to return.

We know that relative to money supply creation, gold prices are still undervalued — as are many other metals and commodities in general. We continue to like gold as a long-term store of value, and this quarter’s earnings reports from gold miners are showing signs of life across the resource sector.

For our own research on gold revaluation, see: Elon Musk’s Coming Gold Shock Could Instantly Start a 700% Rise in the Price of Gold Over the Next 2 Years!

While this market rally continues, by all means, take some profits in high-flying trades. But it’s still safe to stay invested in parts of the market that are rising for fundamental reasons.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

Just look at AI usage trends this summer:

Turn Your Images On

AI usage has dropped off over the summer (source: OpenAI)

Usage has dropped off sharply. Why? Because right now, the killer app for AI is still helping college kids write term papers — and it’s summer vacation.

~ Addison

P.S. From tech to hard assets — specifically gold.

For the first time in living memory, a Fed principal economist has openly explored the mechanics of gold revaluation.

For our own research on gold revaluation, see: Elon Musk’s Coming Gold Shock Could Instantly Start a 700% Rise in the Price of Gold Over the Next 2 Years!

While this market rally continues, by all means, take some profits in high-flying trades. But it’s still safe to stay invested in parts of the market that are rising for fundamental reasons.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

By then the receipts on my desk had arranged themselves into a sort of chorus. I heard, faintly, another refrain—one from Kentucky. In the first days of the shutdown, Senator Rand Paul stood alone among Republicans and voted against his party’s stopgap, telling interviewers that the numbers “don’t add up” and that he would not sign on to another year that piles $2 trillion onto the debt.

That, I realized, is what the tariff story shares with the broader budget theater: the habit of calling a tax something else, of shifting burdens into the fog and then celebrating the silhouette as victory. Even the vote tally made the point: he was the only Republican “no,” a lonely arithmetic lesson in a crowded room.

Senator Rand Paul, (R. KY), who was the sole Republican to vote against a continuing resolution, seems to care about the actual finances of the government. “I would never vote for a bill that added $2 trillion in national debt,” Paul said in various interviews over the weekend.

The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.

Oy.

We liked what Liz Wolfe at Reason wrote on Friday, so we’ll repeat it here: “One of the dirty little secrets of every shutdown is that everything remains mostly fine. Private markets could easily replace many federal functions.”

It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.

The Liberal Democratic Party victory has sent Japanese stocks soaring, as party President Sanae Takaichi – now set to become Japan’s first female Prime Minister – is a proponent of stimulus spending, and a China hawk. The electoral win is a vote to keep the yen carry trade alive… and well.

The “yen carry trade” is a currency trading strategy. By borrowing Japanese yen at low interest rates and investing in higher-yielding assets, investors have profited from the interest rate differential. Yen carry trades have played a huge role in global liquidity for decades.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.

Affordability is much more of an issue. Food, rent, healthcare, and childcare are all rising faster than wages. Households aren’t jobless; they’re stretched. Job “quits” are at crisis-level lows.

In addition to the top 10% of earners, consumer spending is still strong. Not necessarily because of prosperity, but because households are taking extra shifts, hustling gigs, working late into the night, and using credit cards. The trends hold up demand but hollow out savings.

It’s the quiet form of financial repression. In an era of fiscal dominance, savers see easy returns clipped, workers stretch hours just to stay even, and wealth slips upward into assets while daily life grows harder to afford.

The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.

Oy.

It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.