Yesterday, the stock market closed its best quarter since 2020. Coming off the March lows, the S&P 500 Index rose from 6,500 to 7,500, roughly 15% in the past 90 days.
The move exceeded the old Big Tech names to include a solid rotation into chipmaker and space stocks. The move felt like too much, too fast, so we started to look for alternate causes and found one.
Total money supply.
M2 – total cash in the system – hit $23 trillion to end the second quarter, a record high:
The stock market’s recent surge is being driven by soaring leverage and a rising money supply. (Source: Barchart)
And then another.
Total margin debt in the stock market also reached a record high in the second quarter.
Data for May 2026 showed investor margin debt hit a peak of $1.42 trillion – a 54% surge over the same period in 2025 when investors were coming off “Liberation Day” lows.
Record cash and debt are two glaring features of the “terrible bull” crack-up boom we forecast for the middle part of this year.
Among the laggards in second-quarter 2026 – indeed, the first half of the year – are traditional inflation-safety plays, precious metals and bitcoin.
Gold has fallen 30% year to date since its historic January high. Silver is down nearly 50%, on par with bitcoin’s give back. Both precious metals finished the second quarter, notching their worst quarter in a decade. Bitcoin has settled into its cyclical four-year lows.
The market has already discounted war-driven energy price increases and does not fear inflation. That said, we see an opportunity. Our long-term forecast for gold includes soaring M2, margin debt and government deficit spending without end.
The long-term signals for gold and silver, amid the speculative rally in tech, chips and space, mean the price is right for you to add more to your pile. And be selective about adding miners and royalty companies.
Today’s Grey Swan Pro takes a dive into a well-managed precious metals company that we like for marquee profits during a rebound in gold and silver prices — details here.
~ Addison
P.S. Dan Amoss joined us last week for Grey Swan Live! Our replay is up on the site for members who weren’t able to join live here.
Analysts are wrong to expect an interest-rate hike… the Fed is more likely to cut interest rates before the year is out. Kevin Warsh is determined to overhaul Fed proceedings. At a conference of Central Bankers in Sintra, Portugal this morning, expect him to talk a lot about “how” the Fed operates, not the “why” of rate decisions.
If Warsh is persuasive enough, the Warsh Fed will engage in the most radical overhaul in the bank’s 113-year history. Among the objectives he articulated before getting sworn in is an abject lowering of borrowing costs to help finance the AI intelligence economy, which now accounts for 53% of S&P 500 companies.
Mr. Amos also came equipped to Live! with his top three investment recommendations for this year’s October surprise. Members will want to tune in for the replay.
With the short holiday week ahead of America’s 250th birthday weekend, Grey Swan Live! will be back next Thursday, July 9.
