Protection From the Odd Man Out

“There is nothing new in the world except the history you do not know.”

–Harry Truman

One asset isn’t behaving the same way as the others – and could be dangerous for investors now

May 23, 2025 — The bond market broke this week, with yields on 30-year U.S. Treasuries topping 5% for the first time since an incredibly brief, blink-and-you-miss-it move in October 2023.

This time, it’s stickier, with the 30-year even topping 5.1%. Higher yields are a sign that bond investors want better returns. And that bond investors aren’t too keen on financing another $5 trillion in government debt.

So, as we near the end of May, financial assets couldn’t be throwing off any more confusing signals. Bonds are screaming danger. Bitcoin and gold are pointing to monetary and inflationary challenges as they hold strong. And the stock market shrugs.

Right now, the stock market is the odd man out. If it moves into a more defensive stance like these other asset classes, stocks could be in for another leg lower. The good news – such as it is? The next pullback likely won’t be as fast or as extreme as the April selloff.

But investors should be prepared.

This is all part of President Trump’s playbook to reset the economy. As outlined in our latest research, which we call The Great Reset  , it involves three parts.

We’re still in the first phase – the Great Fire. It’s where the economy has to go through a painful transition to refocus on private sector growth, and where asset prices will be whipsawed – just as they are now.

This isn’t the first time a heroic figure in the U.S. government has the guts to deliberately tank the markets to secure America’s financial future.

Harry Truman’s Trial by Fire

Though it wasn’t taught in history classes, at the end of World War II, America was drowning in debt. After years of wartime spending, the national debt was at a record 106% of GDP — the highest in U.S. history.

President Harry Truman had two choices:

Keep spending, risk hyperinflation and destroy the dollar.

Or, rip the band-aid off – slash government spending and rebuild on firm foundations.

Truman chose short-term pain for America’s long-term gain.

He slashed government spending by 75%, canceled lucrative government contracts – just like Trump and DOGE are doing right now – and pulled billions out of the economy.

The results were devastating in the short run.

The U.S. economy contracted 12%. Unemployment doubled. And the stock market plunged 25% in a single year. Truman’s plan looked like a disaster.

At least, at first. After the dead wood of the economy was burned down, a private sector boom began.

New industries like vehicle manufacturing, home construction, and electronics exploded. And the stock market more than tripled over the next 10 years as America’s debt-to-GDP ratio took a nosedive.

That was all thanks to President Truman’s willingness to put his reputation on the line and do what needed to be done in order to save America’s future. To go against the grain and create short-term pain for huge long-term gain.

History Rhymes

While history doesn’t repeat itself exactly, President Trump’s moves today are designed to help reboot the economy towards a more private sector footing, much like Truman.

Part of that is being done with increased trade barriers and higher tariffs on imports.

That will both raise more money for the government, which then doesn’t have to come directly from Americans, and increase domestic production – much like Trump’s comment this morning about Apple manufacturing its iPhones in the U.S.

Part of that could be done by streamlining government, although the GOP’s “Big, Beautiful” bill falls short of that goal.

Either way, from here, the plan will keep pressure on risky assets like stocks.

That’s why it’s good to be prepared, and to know how to protect your own portfolio.

This can be done in a few ways.

The simplest and easiest is to buy the assets that are holding up right now. That includes gold and bitcoin.

Sure, it’s a suggestion I make a lot. I’ve even been accused by prior publishers of being a broken record on the subject.

Guilty as charged!

With bitcoin topping $111,000 this week, it’s up over 30% in the past month. Gold has fared better than stocks this year, up 25%. And that’s on top of 2024’s gains.

I don’t think we’ve seen the 2025 top for either of these assets yet. And that there could be more gains ahead as trade war talk intensifies after a few quiet weeks.

For bitcoin, investors can easily set up a dollar-cost average to buy some on a regular basis, similar to the regular contributions to a 401(k) plan.

There are a few specific apps where you can get set up in a few minutes. The top two are River Financial and Swan Bitcoin. River offers 3.6% on cash held in their app right now, and Swan offers $10 in bitcoin for new accounts. (Full disclosure: I’ve been using Swan for years to accumulate bitcoin.)

On the gold front, the metal itself has been the most consistently strong performer. Investors can buy physical gold, but would have to pay a premium to do so, whether through an online dealer or a local coin store.

A tracking ETF like the SPDR Gold Shares ETF (GLD) is a simple way to play gold’s moves higher.

As we outline in our latest research into how this Great Reset could unfold, we’ve found a niche corner of the gold mining market that offers the best potential returns here.

Either way, the market is telling you to avoid bonds, buy gold, and, when it comes to stocks, prepare for a small pullback.

On the stock front, focus on high-quality, industry-leading companies to buy on a dip. Those types of companies are never extreme bargains, of course, but on a market pullback they can become reasonable buys.

– Andrew Packer

P.S. from Andrew: For the next few weeks, expect the stock market to go through short-term pullback. Bitcoin and gold are holding strong, as both assets are a vote against fiat currencies. And the bond market is likely to keep pushing yields higher. This isn’t a time to buy the dip, but to have one foot out of the door – and take advantage of the relatively high yields being offered in cash and cash-like investments now.

P.S. from Addison: Our offices will be closed on Monday in observation of Memorial Day. Enjoy the long weekend!

Your thoughts? Please send them here: addison@greyswanfraternity.com