About 60 people sat in those rows. What are the odds that two of them share a birthday? Day and month only.

Then I asked who was born in January. A few hands went up. I asked for dates.

We had a match before we got out of January.

The math says we should have. With 23 people in a room, the odds are better than even. With 57, they’re 99%. The first time someone asked me, I guessed one in a million.

I didn’t open the Paradigm Shift Summit with statistics’ famous Birthday Problem just for fun. I did it to make a point about investor “feels.”

Everyone in that room had all the facts. Sixty people. 365 days. Math that was settled ages ago. I didn’t take a vote, but I’d bet most people would get the probability wrong.

Now think about the market. You never have all the facts there. And the people on the other side of your trade are the smartest, richest, most ruthless players on earth.

Since you’re dealing with incomplete information, “unsure” is your default setting.

My Tuition Bill

Before that dreadful Friday in late January, I was sure that as governments print money, silver’s price had to rise. On January 30th, silver fell from about $120 to $78 in a single day. It trades in the low $50s now. I told you that story two weeks ago, so I’ll spare you the replay. I got out by February 8 and kept most of my gains. The cream on top was gone.

I was sure about Intel, too. In July of last year, my colleague Alan Knuckman told me to buy it near $20. I told him it was a lousy company. By late June, it had touched $142. That’s seven times Alan’s entry price. Even after its recent awful earnings announcement, it sits near $59… still a 3x gain.

One mistake cost me money I had. The other cost me money I never made. Both came from the same place. I trusted what I believed over what I saw.

Aristotle warned about this 2,300 years ago. “Credit must be given to observations rather than to theories,” he wrote, “and to theories only if what they affirm agrees with the observed facts.”

He never traded silver. He might have been good at it.

The Line I Keep Hearing

“For every ten-bagger I ever had, I took a 50% loss at one time or another.”

I admire the mining magnates who’ve been through those times. Some have helped me personally, and they’re generous with what they know. I don’t doubt the line for a second. In the 1970s bull market, 50% drops came with the territory.

My trouble is with what you hear when they say it. You hear a rule. If you want the ten-bagger, you must sit through the 50% loss. Selling means you lack the stomach for investing.

I’m telling you that you don’t have to sit through it. And the reason has nothing to do with intestinal fortitude.

The Ten-Cent Seat

The big names don’t buy miners the way you and I do.

A broker calls them. A young company needs money, and they can get in at ten cents a share. They do their homework, they like it, and they buy.

Later, the story gets out. The stock climbs to $2. That’s when you and I hear about it, and that’s when we buy.

Then the stock falls to $1.

The man who paid ten cents has watched his position get cut in half. That’s a 50% loss, and he’s telling the truth. He’s also still up 10x.

You paid $2. You’ve lost half your money, and you need the stock to double just to get even.

It’s one chart with two different trades on it.

Superstar mining investors earned those phone calls through decades of work and at their own capital’s risk. Maybe they had rough beginnings back in the 70s, but now their patience rests on a low entry price.

What I Do Instead

I’m the most emotional investor I know. I look at a falling stock and think it might still love me. So I have to take the decision out of my own hands.

When I buy, I place two more orders in the same breath. One sells at a profit I’d be happy with. The other sells at a loss I can live with. Brokers call it a bracket order. After that, I don’t have to be brave or clever. I just have to leave it alone.

My colleague Matt Badiali keeps a simpler rule. When a position falls 25% from its high, he’s out. That rule got me out of silver in February with most of my gains.

A stop isn’t armor. A stock can gap down through it overnight. But it lets you choose while you’re calm, before fear or regret chooses for you.

I told the room I’m a coward when it comes to investing. I meant it. Cowards live to fight another day.

Half a Portfolio Doing Nothing

If you still think cash is for the timid, look at Berkshire Hathaway.

I reviewed its June 30th filing before the talk. Berkshire held about $359 billion in cash and Treasury bills. That was 51.3% of its liquid portfolio, more than its stocks and bonds combined.

The best investment company in history had over half its chips off the table.

Then Berkshire reported again on Saturday. The pile grew. The Associated Press put it at $377 billion at the end of September.

Yes, inflation eats cash. Over 20 years, it’ll chew through your savings like termites through a barn. It won’t ruin you in three months. Berkshire’s managers know that, and they’re essentially paying “inflation” for the right to wait.

Wrap Up

Look at what’s in front of us.

We’ve got a new Congress on the way and two wars. Brent crude sat near $100 the morning I spoke. It’s trading at $92 this morning.

Silver’s chart is still broken, but the recent hourly charts suggest we've hit the bottom. Of course, it may just be a bear market rally.

I don’t know what happens next. I told the room so, straight out. My colleagues who spoke after me had plenty of good ideas.

But you don’t owe any idea your money on the day you hear it.

Preserving your capital must be your number one goal. Then, when you’re ready, make a decision you’re comfortable with. And win.

Have a great day ahead.

Plenty of smart people believe the same thing, and I disagree with all of them.

Today, I’ll show you why. But to be fair, let’s start with what the claim gets right.

For far too many people, stocks are gambling. The man who buys a meme stock because a stranger on the internet told him to is gambling. So is the fellow who trades options on his phone at red lights. They’ve got no edge, no plan, and no idea what they own.

But that’s more about the players than the stocks.

Gambling isn’t something done only in a casino. It’s done everywhere you don’t have an edge.

Two Kinds of Not Knowing

In 1921, a University of Chicago economist named Frank Knight wrote a book called Risk, Uncertainty and Profit. It split the unknown into two kinds.

Risk is when you don’t know the outcome, but you know the odds. For instance, if you roll a die, you can’t say what’ll come up. But you know each face has a one-in-six chance of coming up.

Uncertainty is when you don’t even know the odds. Nobody can give you the true probability that a new drug works or that a mine finds the vein.

Now, let’s step into a casino.

An American roulette wheel has 38 pockets. If you bet on one number and it comes up, you get paid 35 to 1. The odds are fixed, printed, and known to the penny. Over time, the house keeps about 5.26% of every dollar wagered.

That’s pure risk, built for a single purpose: to take your money. The more you play, the more certain your loss becomes.

Conversely, the market runs on uncertainty. No one can print the odds on a business, because the future hasn’t been written yet.

Knight’s great insight was that profit comes from uncertainty, not from risk. If the odds are known, then someone will price them, and the edge will vanish. Real returns go to the people willing to carry the unknown. Early Bitcoin investors are a great example.

So the casino is the only place where your loss is mathematically certain. The reward for not knowing lives in the market.

And there’s one more difference. A roulette ball doesn’t make anything. A share of stock is a slice of a business that sells goods, earns profits, and pays you while you wait.

The Man Who Beat Both

If you want proof that gambling and investing aren’t about the venue, meet Ed Thorp.

Thorp was a math professor. In 1962, he published Beat the Dealer, which showed that a card counter could tilt blackjack odds in his favor. Casinos hated him and changed blackjack rules to stop people like him.

Realizing he could make more money with less risk to his kneecaps, Thorp applied the same mindset to the stock market. His fund, Princeton Newport Partners, compounded at about 19% a year before fees for nearly two decades. Thorp had 227 winning months out of 230, for an insane 98.695% win rate. And his worst loss was under 1%.

Let’s consider the implications. Even in the casino, Thorp wasn’t gambling. He had an edge, and he sized his bets to it. That’s investing, despite the tacky venue.

And the stock buyer with no edge, betting on a hot tip? He’s gambling, even though his venue is the prestigious stock market.

In short, your edge, not your venue, decides whether you’re a gambler or an investor.

Three Rules From Men Who Don’t Gamble

An edge is the first half. The second half is how you bet. Three of the best investors of the past century each said it in their own way.

I’ve written about Charlie Munger many times. One of my favorite things about him is that he didn’t try to be brilliant. He tried not to be stupid. He once said he and his old friend Warren Buffett got a remarkable long-term advantage by trying to be consistently not stupid, rather than very intelligent.

That might sound like a brilliant man feigning humility. But it’s also simple math. If you lose 50% on an investment, you need a 100% gain to break even. If you lose everything, no gain can save you. That’s the risk of ruin. The gambler swings for the fences. Munger stayed in the game until he finally died a few weeks short of his 100th birthday.

George Soros put it this way: It doesn’t matter whether you’re right or wrong, but how much you make when you’re right and how much you lose when you’re wrong.

In short, keep your winners big and your losers small.

His partner Stanley Druckenmiller said that was the most important thing Soros taught him.

The rule implies you can be wrong half the time and still get rich, if your losers are small and your winners are big. The gambler does the reverse. He cuts winners early to lock in a thrill, and he doubles down on losers to win it back.

Then there’s Druckenmiller himself. His favorite line comes from Mark Twain: put all your eggs in one basket, and watch that basket very carefully.

Most people only hear the first half. But Druckenmiller’s point is the second. He said that when you own a big position, it must have your full attention. Read every report. Notice when the facts change. And when they do, you sell.

By contrast, the gambler doesn’t watch his basket. He prays for it.

Wrap Up

You don’t need Thorp’s math skills or Soros’s cojones to stay on the right side of the table. You need to ask - and answer - three questions before taking any position.

1. What’s my edge? What do I know or see that the price hasn’t caught up to? If the answer is “nothing,” buy the index or keep your money in cash.

2. What do I do if I’m wrong? Size your position so a mistake hurts but doesn’t kill. As Ray Dalio says, “You can ding the car, but you can’t total it.”

3. Will I keep a watchful eye? If you own it, read about it. If the story changes, you must change with it.

If you can answer those three questions, you won’t be the saddo in the casino pulling a slot lever.

He’d just won China’s civil war. He wanted a treaty, money, and respect. Stalin made him wait.

Mao sat in a dacha outside the city for weeks. He grumbled that his only jobs were to eat, sleep, and use the toilet. When the deal came in February 1950, the loan was $300 million, spread over five years. For a nation of more than 500 million people, that was pocket change.

In essence, Stalin announced to the world who the junior partner in this deal was.

Seventy-six years later, the train runs the other way.

Today, it’s Moscow that waits. Its money waits too, sometimes for weeks, in the back offices of Chinese banks. How that happened tells you more about sanctions, and about the dollar, than any speech from Washington or Beijing.

The Great Escape

When Russia invaded Ukraine in 2022, the West froze about $300 billion of the Russian central bank’s reserves. Big Russian banks got cut off from SWIFT, the network that carries most of the world’s cross-border payment messages. Visa and Mastercard walked out.

The plan was simple. Cut Russia off from the dollar, and its economy chokes.

It didn’t choke. It rerouted.

Russia and China now settle more than 90% of their trade in rubles and yuan, according to China’s Commerce Ministry. The dollar has nearly vanished from the deal.

China’s own payment network, CIPS, keeps growing. It had 210 direct members by June, with reach into banks in 191 countries. In February, new rules let CIPS settle yuan against other currencies at the same time. That’s a step toward a full rival to the Western system.

Even tourists have options. Since May 19, a Russian with a VTB bank app can scan a QR code in a Chinese shop. Rubles leave his account. Yuan land in the shopkeeper’s. No Visa. No Mastercard. No dollar.

On paper, it looks like a clean escape.

The Toll Gate

But every escape route has a gatekeeper.

Russia’s payment network, SPFS, and China’s CIPS still don’t fully talk to each other. So the money has to pass through Chinese banks. And Chinese banks are nervous.

In June, Washington widened its threat of “secondary sanctions.” Those are penalties on foreign banks that do business with sanctioned Russians. By August, Reuters reported that Russian payments to China were slowing and costing more. Some deals sat for weeks. Reuters has also reported oil payments stuck for months.

So Russian firms turned to middlemen. These are payment agents and “trading houses” in Hong Kong, Central Asia, and the Gulf. They move the money… for a cut. Fees are rumored to run as high as 6%. Some Russian reports put them higher.

That means sanctions didn’t stop Russia’s trade. But they put a tax on it. The people collecting the tax aren’t in Manhattan. They sit in Chinese and third-country banks.

You don’t escape a toll road by cutting through your neighbor’s yard. You just pay your neighbor instead.

Why Beijing Won’t Bend

You’d think China would help its “no limits” partner. Why let Chinese banks squeeze Moscow?

It’s because of who keeps Xi Jinping in power.

In China, that includes the giant state banks, the export bosses, and party elites whose families hold wealth abroad. Those people need the dollar system. They need London branches, New York accounts, and American customers.

A Chinese banker who risks his bank’s dollar access for a Russian invoice isn’t helping Xi. He’s threatening the people Xi depends on.

So the big banks pull back. Small regional banks step in, with higher fees and slower service. Beijing gets cheap Russian oil and a captive customer. It gives up nothing it values.

The dependence runs one way. China makes up about a third of Russia’s foreign trade. Russia is a small slice of China’s. Moscow needs Chinese factories, cars, and chips. Beijing needs American shoppers far more than it needs Russian goodwill.

Meet The New Boss, Gentler Than The Old Boss

Back in 2021, DC could freeze Russian bank accounts. Today, one word from Emperor Pooh Bear can make their payments move as slowly as snail mail. In the end, Old Vlad traded one master for another.

A system with a single point of failure is fragile, no matter whose finger rests on the switch. It hums along for years. Then one day, someone flips it.

Two is one, and one is none, as they say.

Moscow knows this. Look at what the Russian central bank has done with its gold. It’s been selling since 2025 to pay war bills. By September, its gold holdings sat at their lowest since late 2019.

As soon as the yuan tollbooth got pricey, Russia reached for the one reserve that needed nobody’s permission.

Gold has had a rough year. It’s fallen from nearly $5,600 an ounce to below $4,000. Turkey dumped tons of it to defend the lira. Gulf money reportedly sold, too.

They all sold gold because they could. In a crisis, they could spend gold without asking anyone. That’s gold’s job description.

What This Means for the Dollar

So is the dollar safe?

For now, mostly. Settling trade in rubles and yuan is one thing. Replacing the world’s deepest bond market and most trusted reserve currency is another. Nobody has done either. The Russia-China experiment shows why. The yuan comes with Beijing’s strings, and those strings tighten when The Donald pulls them.

But the dollar’s grip isn’t what it used to be, either. CIPS keeps adding banks. QR payments keep spreading. More countries test their own currencies for trade. The shift is slow, but it’s real.

Wrap Up

Sanctions didn’t break Russia. But Russia didn’t break the dollar, either.

Something quieter and stranger happened. Moscow traded a landlord on the Potomac for one in Shanghai. It still pays rent on every transaction.

The lesson isn’t about Putin, though. It’s about your own money.

Every dollar you hold in a bank, a brokerage, or a fund answers to someone. That’s ok. It’s how modern finance works.

But a slice of your wealth should answer to no one. It should be something you can hold, move, and spend without permission.

Russia learned that lesson the expensive way. Learn from its mistakes.

He called it Mafia. You may know its American cousin, Werewolf.

The rules are straightforward. A few players become wolves, unbeknownst to the other players. Those other players become the villagers.

At night, the wolves pick a villager and kill him. The next day, the whole village tries to figure out who did it, while arguing, pointing fingers, and voting to hang a suspect.

The wolves know who the other wolves are. The villagers start with no information. Davidoff called it a contest between an informed minority and an uninformed majority.

His rules called for wolves to fill about a third of the table. Two decades later, three mathematicians proved he was far too generous.

Ten Wolves, One Hundred Villagers

In 2006, Mark Braverman, Omid Etesami, and Elchanan Mossel published a paper that worked out the best strategy for each side. Their answer was startling.

The wolves don’t need a third of the village. They need roughly its square root.

In a village of 100, about 10 wolves give them an even shot. In a village of 10,000, about 100 will do. The bigger the village grows, the smaller the share of wolves it takes to run it.

Ten percent. Then one percent. Then less.

America has about 260 million adults. The square root of that is around 16,000.

It’s a party game, not a political law. Real life has more players, more rules, and more noise. But the result will ring a bell.

Why the Few Beat the Many

The wolves don’t win because they’re smarter than everyone else. They win because they all know each other.

Every villager starts the day alone. He doesn’t know whom to trust. So the village spends its votes on hunches, grudges, and whoever talks loudest. Half the time, it hangs one of its own.

The wolves never waste a vote. They know whom to spare and whom to blame.

The economist Mancur Olson spotted the same pattern in Washington in 1965. A small group with a lot at stake will out-organize a huge group with a little at stake, every time.

A great example of this is sugar. A 2023 Government Accountability Office report cited studies finding that federal sugar policy costs American consumers an extra $2.5 to $3.5 billion a year. In 2022, Americans paid 2x the world price for sugar.

Spread across the country, that’s about $10 a head. Nobody marches on Washington over $10.

But the growers pocket an extra $1.4 billion to $2.7 billion a year. For them, it’s everything. They show up at every hearing, know the staffers by name, and donate generously to both parties.

That’s a wolf pack. Not evil men. Just organized ones.

A politician who wants to keep his seat doesn’t need the whole village to vote for him. He needs a small group to keep him there, so he serves them. That’s how the game is played.

The Seer Changes Everything

Now for the good news. It sits in the same paper, but no one mentions it.

Later versions of Werewolf added a special villager called the Seer. Each night, the Seer learns the truth about one player.

The three mathematicians added a single detective, their version of the Seer. One player who gathers real information.

It changed the game.

With one detective at the table, the square root rule collapses. To keep an even shot, the wolves now need a fixed slice of the whole village. Their cheap ride ends.

The wolves’ edge was never their numbers. It was the villagers’ ignorance. Remove the ignorance, and the pack has to grow as fast as the village does.

That’s a far harder game to win.

Shrink the Village

The square root rule holds a second lesson, and the Church taught it long before any mathematician did.

Catholic social teaching calls it subsidiarity. A decision belongs at the lowest level that can handle it: the family, the parish, the town, the state, and only then the capital.

Run the numbers again. In a town of 2,500, wolves need about 50 to have a chance. And in a town that size, people know each other. The baker knows the banker. The pastor knows who skips Mass and who drinks. A town like that is full of Seers.

Push the same decision up to a capital that rules 260 million people, and the math hands the wolves a gift. They can hide in a crowd too big to watch.

The Founders grasped this. They split power among towns, states, and the federal government so that no single decision would be too big to handle. Every decision we push upward makes the village larger and the wolves’ job cheaper.

Wrap Up

You can’t make the wolves vanish. Every system breeds them, in every party and every era. But you now know the two moves that beat them.

First, be a Seer. Gather real information. Watch the hips, not the lips. Ask who gains a lot from a policy while everyone else pays a little. That one question exposes most of the packs in The Swamp.

Second, keep the village small. Favor the local over the national whenever you can. Show up for your school board, county, and state. Power that stays close to home is power the wolves can’t buy cheaply.

The wolves are betting the village stays huge, scattered, and in the dark.

Make them pay dearly.

INT3 is a 3x leveraged bet on Intel. It promises three times Intel’s daily move. If Intel rises 5%, you make 15%. If it falls 5%, you lose 15%.

On Thursday night, Intel told Wall Street its next quarter would come in light. On Friday, the stock fell 28.6%. It was Intel’s worst day since the 1970s.

But INT3 fell a whopping 87%.

If you held $10,000 of it Thursday afternoon, you had about $1,300 by Friday’s close.

An analyst named Oktay Kavrak posted the chart on X with a line that made me laugh out loud. He wrote, “If you thought your Friday was rough, check in on the INT3 holders.”

Credit: @OKavrak

The Airbag

Let's do some nightmare math for the issuer. Three times a 33.3% drop is a 100% drop. So if Intel ever fell a third in a day, INT3 would go to zero.

So Leverage Shares, the Dublin-based issuer, built in an airbag. If Intel falls 16.67% from the prior close during the day, the issuer rebalances on the spot. It cuts the exposure, so a second leg down can’t finish the job.

On a normal bad day, that works. Intel slides, the airbag fires, and the product lives to trade tomorrow.

Friday wasn’t a normal bad day. In fact, it was less a “gap down” than a “yawning chasm.”

Intel reported at 8 p.m. London time on Thursday. London opened at 8 a.m. Friday. But the New York market didn’t open until 1:30 p.m. London time.

For five and a half hours, INT3 traded in London while the shares it tracked sat behind a locked door. Dealers priced it off the premarket, where Intel was already down more than 20%.

When the bell finally rang in New York, Intel’s first trade printed at $68.41. That was down 25.7% from Thursday’s close of $92.07. The airbag fired one second later.

By then, it was too late. Leverage Shares sold the position at an average of $65.50, resetting INT3’s value to $17.80. Thursday’s price had been above $134.

An airbag is built for a skid. It does little once the car is already through the wall.

Both Sides of the Road

You might think the smart move was to bet the other way. Leverage Shares sells that, too. It’s called the -3x Short Intel.

Here’s how that went. Intel nearly quadrupled from January to its late-June record. The short product got crushed so hard that in June, the issuer glued 333 old units into one new one. That’s a reverse split, and you don’t do one of those when things are going well.

So in one year, Intel crushed the bears by June and the bulls in October. The issuer collected its 0.75% annual fee from both.

I don’t say that to call anyone a crook. The products do what the prospectus says. The trouble is that most buyers never read the prospectus.

Why DC Says No

In America, you can’t buy a 3x single-stock fund. The SEC holds most new funds to 2x under a rule called 18f-4. Last year, issuers filed for 3x and even 5x funds. The SEC sent warning letters and told them to fix the filings or pull them.

Europe gets around this with packaging. INT3 is a note, a kind of debt, issued by an Irish company. That lets the issuers offer 3x on single stocks and 5x on indexes like the Nasdaq 100 and the FTSE 100. Leverage Shares lists more than 180 of them.

You know I’m no fan of regulators deciding what grown adults can buy. I’d rather you be free and informed than shielded and ignorant.

But being free means doing your own math. Here’s some more math from Morningstar’s Bryan Armour:

Indeed, 13% of the 518 single-stock ETFs in my study have already closed. Of these 65 ETFs, the median lost 25% and lasted just 206 days on the market.

The greater the volatility of the underlying security, the faster the ETF performance decays. It’s partly why 24% of all leveraged ETFs—not just single-stock ETFs—that launched over three years ago have lost over 90% of their value.

The River Runs Four Feet Deep

Author and professor Nassim Taleb warns people never to cross a river because it’s four feet deep on average. The average doesn’t drown you. The one deep spot does.

A 3x product doesn’t own Intel’s average day. It owns every day, one after another, including the deepest one. And it only takes one.

Look at what each holder needs to get back to even. Intel’s plain shareholders need a 40% gain. That hurts, but a good quarter or two could do it.

INT3 holders need a gain of about 680% to break even.

Plain Intel stockholders had an awful Friday. INT3 holders had a fatal one.

Wrap Up

Prudence is the charioteer of the virtues. It holds the reins so the other horses don’t run you off a cliff. In markets, prudence looks boring. That’s the point.

If you want a big bet on a big idea, buy a call option. See my colleagues Alan Knuckman and Nick Riso about them. They know their stuff.

If you’re in doubt, own the real thing. Shares in a business can come back from a bad day. A product that loses 87% in one session mostly can’t, which is why I never trade leveraged ETFs.

Now you have the math on these things. I’m thrilled you watched the crash test from a safe distance.

Back in Warsaw, riot police had ringed the country’s highest court. A group of judges picked by the ruling coalition had walked in and suspended the chief justice. When he tried to return, police kept him out. Some of his supporters cut through the fence with a power tool.

President Karol Nawrocki landed and went straight to the court. Video shows him pushing past one of the new judges at the door. Inside, he told them they weren’t judges at all. He left around 5 AM and called the night a forcible takeover.

Most Americans haven’t heard a word about this, but now, you have. Poland is America’s best friend in Europe, and right now it has two kings.

Who’s Who

Poland splits power two ways. The prime minister runs the government. The president can veto laws and must sign off on some key jobs.

The prime minister is Donald Tusk, who once ran the European Council in Brussels. He’s Europe’s man in Warsaw, and he’s always keen to show it.

The president is Nawrocki, a historian elected in 2025. He’s a conservative and a close Trump ally.

Tusk and Nawrocki agree on very little, but each needs the other to get things done. So not much gets done.

How They Got There

The fight is over the Constitutional Tribunal. Think of it as Poland’s Supreme Court for constitutional questions.

Both sides have dirty hands here, so we must be fair.

When the conservative Law and Justice party (PiS) ran Poland from 2015 to 2023, it filled the court with friends. Courts later found that three of its judges were seated unlawfully. When Tusk took power, his government stopped recognizing the court and ignored its rulings.

This year, parliament chose six new judges. But under Polish law, a new judge takes the oath before the president. Nawrocki refused to swear in three of them. They held their own ceremonies instead. The chief justice, a former PiS official, wouldn’t seat them. On Friday, they seated themselves.

Why Neither Man Will Blink

Right now, the two men stand on different bases of support.

Tusk answers to his coalition, urban cosmopolitan voters, and friends in Brussels. They elected him to clean house. If he backs down now, they’ll ask what he’s good for.

Nawrocki answers to the right, the small towns, and The Donald. If he lets Tusk take the court, his side will ask the same question.

The clock is ticking. Poland elects a new parliament in autumn 2027. This summer, close to 60% of Poles said they expect Tusk’s coalition to lose. Whoever controls the court controls the referee in any fight over that vote. Neither man will hand the whistle to the other.

Tusk’s partners feel the heat. Two of the four parties in his coalition went to Nawrocki’s crisis talks on Saturday. One of their leaders said Friday night brought shame on Poland.

The Gold in the Background

Poland’s central bank has quietly built one of the world’s largest gold piles. In 1996, it held 14 tons. Now it holds 673 tons, more than the European Central Bank. The governor, Adam Glapiński, wants 700. He says gold carries no credit risk and doesn’t depend on other countries’ choices.

And considering the choices his fellow European countries have made, who can blame him?

PiS put Glapiński in place. Tusk has wanted him gone for years. In October, a parliamentary committee backed putting him on trial before the State Tribunal, which judges top officials. If parliament agrees, he’d be suspended while the case runs.

So it’s the court today and maybe the central bank tomorrow. That’s why some on the Polish right warn that Tusk’s real goal is the euro, with Poland’s gold shipped off to Frankfurt.

But to swap the złoty for the euro, Poland must change its constitution. That takes two-thirds of parliament. Tusk doesn’t have nearly enough support. His own finance minister has said there are no plans for the euro.

So happily, Poland’s gold isn’t going anywhere soon.

Poland Has Been Through This Before

In the 1600s and 1700s, Poland’s parliament ran on a rule called the liberum veto. Any single member could stand up, say “I do not allow,” and kill everything. Foreign powers learned to buy one vote and freeze the whole country.

Russia, Prussia, and Austria used that weakness. They carved Poland up three times between 1772 and 1795. Poland vanished from the map for 123 years.

When Poland’s rulers freeze each other, its neighbors notice. Tusk himself says Moscow wants Poland’s institutions broken. On that, at least, both kings should agree.

The People Are the Point

So are Poles globalists? Not quite. They’re smarter than that.

In a poll early this year, 82% backed EU membership. They like the open borders, funds, and market. But only about a quarter want closer union, and 38% say the EU takes too much of their sovereignty. They want Europe’s club without Brussels’ leash.

That’s Europe's healthiest instinct. Poland spends 4.8% of its economy on defense, more than any other NATO member, America included. It hosts about 10,000 U.S. troops and wants more. And it buys gold while others print money.

I’ve written about how much I love the country, as I’ve taught there a few times. It’s a wonderful place, with lovely people, delicious food, and excellent beer. I pray they can keep it that way.

Wrap Up

In June 1979, a Polish pope stood in a Warsaw square under communist rule. John Paul II asked God to “renew the face of the earth, the face of this land.” A year later came Solidarity. Ten years later, communism was kaput.

The two kings will fight this out. The court may be patched, or it may not. But Poland’s strength never came from its rulers. It came from its people, who outlasted the partitions, Nazis, and commissars.

So when the headlines call this chaos, you’ll know better. It’s two men fighting over a referee, in a nation that knows exactly what it is.

When energy jumps that hard that fast, it doesn’t just raise costs. It drains cash from every other trade on the board. Margin clerks don't care what your thesis is. It’s a crude tax, indeed.

Gold and silver got dumped in a risk-off month, which happens when someone needs money pronto. Crypto was sold the same way, hardest at the speculative end. Big Tech, the most crowded trade on Earth, took the biggest index hit.

In the bond market, yields fell. Treasuries read the oil spike as a hit to growth, not a fresh inflation scare.

Sure, that crude tax got collected. But the question is “Who paid it?”

Let’s get to the charts.

S&P 500

Energy and value stocks absorbed most of what tech gave back, which is what a broad index is supposed to do. If you only watched the top-line number, you missed a violent rotation underneath it. Nevertheless, the chart gives us no reason to be overly bearish, though a test of the 200-day moving average at around 7,310 shouldn’t surprise us.

We still have upside targets at 8,668 and 10,425.

Nasdaq Composite

Long-duration tech fell hard in a month when long-duration bonds rallied. That means rates aren’t driving the sell-off. That points straight at positioning. Add a rising energy bill, which hits the power-hungry AI buildout directly, and you get a crowded trade facing a new cost it can’t hedge away.

We have a new downside target of 23,735, only a 6.6% move from here. And we still have a long-term upside target set for 32,020.

Russell 2000

Small caps finished green while the giants bled. That almost never happens, and it isn't an accident: the Russell is stuffed with domestic energy producers and regional banks, both of which just got a gift. Cheaper funding plus pricier crude is their ideal weather.

There’s a new downside target for 2,670, a short 5% drop from here. 

US 10-Year Yield

Well, the administration was hell-bent on lowering yields. Unfortunately, it looks like they gave the economy a tranquilizer to do it. There are no current targets on the 10-year yield.

US Dollar (DXY)

The old reflex says an oil spike crushes the dollar. That reflex is 40 years out of date. America now exports energy, so expensive crude is a terms-of-trade windfall here and a straight tax on Europe and Japan. The buck firmed quietly for exactly that reason.

We’ve come off a bit, but still have the big 109.75 upside target looming over us.

TLT (20Y Bond)

A strong month for duration, driven entirely by the growth scare in T-bonds rather than anything to do with credit. Though I loathe them, long bonds remain the cleanest expression of the slowdown trade. Just remember they are still swimming upstream against a longer, nastier downtrend.

The downside target is still 70.50.

LQD (IG Corp)

Investment grade’s gain came almost entirely from the government curve. Spreads did close to nothing. Corporate balance sheets at this end of the market are fine, so the money here is a bet on rates, not credit.

No targets in LQD for now, but I’d bet on the downtrend resuming in due course.

HYG (High Yield)

Treasuries ripped, and junk barely budged, which means spreads widened while nobody was looking. Credit investors declined to buy the soft-landing story the bond rally was selling. Keep an eye on this corner before you trust any equity rally.

No targets here, either.

VNQ (Real Estate)

REITs had a fine month for one reason: the long end rallied. Property is a leveraged wager on the ten-year, and financing cost is the whole game right now. Enjoy the gain, but know exactly what you own — this was a rates trade with a building attached.

We nearly hit the 88.15 downside target before the uptrend. We may yet hit it in the coming months.

WTI Crude Oil

This is the engine every other line in this report runs off. Supply, not booming demand, drove the move, which is the worst kind for everyone downstream. Energy is the one input no business can substitute away from in a single quarter. Oil nearly doubling in a year is a political story.

The upside target is $123.00. If the war resumes, we’ll hit it sooner rather than later.

Copper

Copper slipping while crude soared is the cleanest proof you’ll get that this wasn’t a growth boom. Real industrial expansion lifts the red metal first.

If I had to bet on something rolling over, it’s copper. Even if you don’t bet on the metal directly, FCX, HBM, and CS have significant downside targets, following other mining companies in the gold, silver, platinum, palladium, lithium, and uranium industries. Speaking of which…

Gold

How many more 5% down days must you suffer? That’s the question I’d ask owners of gold and silver mining companies right now.

If you have Ali Baba’s cave under your house, stacked with gold and silver, great. If you’re trading this price action via futures or options, invite me to your new desert island. But if you’re still a miner owner, my heart goes out to you. I’ve been out since early February for a reason.

Friday’s smash was tough to watch. The good news is the daily target of 3,860 is only a few percent away. The bad news is that 3,350 is a live target on the weekly charts. No bueno.

Silver

Silver is where leverage goes to die. It carries industrial demand and monetary demand at once, which makes it the highest-beta thing in the metals complex on the way up and on the way down. This is how squeezes end… always, every time, without exception.

Again, the good news is we’re only a bad day away from the daily downside target of 44. The bad news is that the 36 target below is still activated.

Bitcoin

Bitcoin again traded as the Nasdaq's leveraged cousin, which should bother anyone who bought it as a hedge. The ETF wrapper is a two-way door: money leaves as easily as it arrived. Still, it held its longer trend while the altcoins didn’t, and that gap may matter more than the monthly loss.

The downside target sits right beside its 200-day moving average, so it may just bounce off it. If not, we’re probably looking at 60,000-ish.

Ethereum

Ethereum fell roughly twice as hard as Bitcoin, and the reason is structural. Staking leverage and corporate treasury plays amplify moves in both directions. The “digital oil” pitch was a tough sell in a month when actual oil was the only trade working.

Though I must admit, we’ve got an upside target of nearly 3,000, so there’s that.

Summary: Traditional Asset Classes

Summary: Crypto

Wrap Up

The bond market read the oil spike as a drag on growth and bought duration. The dollar firmed because America now sells oil, and that got expensive. The most speculative corners of the market, like altcoins, silver longs, and crowded tech, got hit first.

They always do.

I leave you with this, from my colleague JC Parets:

Have a great week ahead!

It hasn’t been that low in a long while. In late January, it was trading near $120. If you’ve held since then, more than half your money has evaporated.

Yesterday, the miners had it worse. Some of them fell double digits.

Yesterday’s miner bloodbath. Credit: TradingView

I used to own the Integra Warrants at the top of the list, along with Kinross Gold (KGC) and Avino (ASM). They’re good companies. I like them still. But as I wrote earlier this week, when metal prices fall and costs rise, miners’ margins get flattened.

Listen, the last thing I want to do on a Friday morning is put you in a foul mood. But last night’s Omega Wealth Circle call gave me food for thought, and I think you should hear it.

Two Forces, One Market

Jim Rickards kindly invited me to yesterday’s Omega Wealth Circle roundtable. I was excited to see my dear colleagues Adam Sharp, Matt Badiali, Dan Amoss, and Zach Scheidt. The “Hit Man” Aaron Gentzler emceed the event for us.

After Jim’s informative midterm election analysis, we got into a roundtable, similar to the Whisky Bar we do at live events. At one point, it may have sounded like Zach and I were squaring off. We weren’t. We were describing two different forces that move a market.

If you own anything that’s gone against you, you need to know both.

I was talking about ideology. Zach was talking about sentiment.

Let’s take them one at a time.

The Stopped Clock

Ideology is a belief about how the world must work.

It sounds like this: “We have inflation. Governments will print forever. So silver must go to $210.”

Every link in that chain feels true, and much of it is. Governments do print. The dollar does lose value over time. I’ve written that a hundred times, and I’ll write it a hundred more.

But the conclusion doesn’t follow. At least not on any schedule you can use to pay your bills.

Mind you, I was telling myself those very words for all of 2025. Only a tidal wave of reality’s ice water disabused me of the notion on January 30, 2026. That was the day silver’s negative gamma squeeze took it from over $100 to under $80. My colleagues Enrique Abeyta and Nick Riso warned me it was coming… only days earlier! Oh woe was me!

To my credit, I changed my tune within a week. I try to avoid hyperbole, but I was genuinely heartbroken when I told you to sell your miners… and sold my own. Not only did I sell late and at a diminished profit, but the capitulation also forced me to change my beliefs. It hurt, but now I know that bitter elixir was worth swallowing.

Ideology works like a stopped clock, always showing the same time. Twice a day, the market agrees with it, and the believer mistakes this for his own genius. The rest of the day, it costs him money.

What bothers me is that many mining writers I’ve followed on X for years are telling their followers, “Hang on,” or “The turn is coming soon.”

An update of my silver chart from earlier this week. Credit: TradingView

Silver has fallen from $120 to $51, but none of those guys have said, “Maybe I was wrong.” 

These folks aren’t bad people. Some are talking their book. Some run newsletters and can’t bear to reverse a call in public. I know the feeling. It’s human. But it’s damn expensive for anyone who follows them.

I’ve made some bad calls. Admitting it never feels good on the day, but it makes a fresh start easier.

Zach’s Point: Watch the Crowd

Now for Zach’s side, which warrants our attention.

Sentiment isn’t what you believe. It’s what everyone else is doing with their money right now. Ideology tells you what “should” happen. Sentiment tells you what's actually happening.

Zach’s warning was simple. Be mindful of when sentiment turns. Markets that fall this hard don’t fall forever, and thank heavens for that!

At some point, the selling burns itself out, and the crowd swings the other way. We want to be ready when it does. Honestly, I can’t wait to pile back into the miners. But that time isn’t now. We need to be patient.

Zach’s right. Hold your ideology loosely. Watch sentiment closely.

What does a turn look like? We should watch for three things. Bad news has to stop pushing prices lower. The miners need to start rising before the metal does. Finally, the loudest bulls need to give up the ghost.

That last one tells us where we stand. The X bulls are still preaching. Sentiment hasn’t turned yet, and I don’t think it will for a while. In my experience, a bottom comes when the last bull finally sells.

Wrap Up

Combine ideology and sentiment, and you get a simple framework.

Your beliefs can tell you which assets to care about. I still believe in hard money over the long haul. That hasn’t changed.

But beliefs can’t tell you when to own those assets. Only the crowd can. When your belief and the crowd point the same way, you have a trade. When they point in opposite directions, you're in for an expensive lesson.

One last thought. If you sold some silver along the way, or kept your powder dry, you weren’t being disloyal to sound money. You were being a good steward of your own.

Have a lovely weekend!

“I’m sorry, sir,” she said with a smile. “We don’t exchange Iraqi dinars.”

Well, that was a bummer! I had a couple hundred dollars’ worth of dinars from my trip to Erbil and no way to get my dollars back. I thought I would get something for them in Dubai…but nope. What ever happened to Arab brotherhood? Or even good old-fashioned greed? I guess that’s what I got for not doing the exchange in Erbil itself. 

Fortunately for me, my “fixer” on the trip took some of them in payment. But I still ended up with a stack of artistically designed, but ultimately worthless paper.

Worthless souvenirs from my Iraq excursion.

Where? Why?

What on earth was I doing in Iraq, you ask? In October 2013, during my merchant-adventurer days, I traveled to Erbil in northern Iraq to visit some Canadian oil companies. I got caught by the “official” exchange rate when I bought them. I got 1,170 dinars per dollar. But I later found out no one outside Iraq wanted them. 

For Iraqis, that was a problem.

It meant that if you didn’t have anything besides paper money to sell, you couldn’t leave. So they resorted to history’s simple solution: gold.

The photo below comes from the bazaar in Erbil. Don’t believe for a minute that everyday Iraqis wandered around looking like Mr. T.

Their jewelry was a store of value. It’s easily portable wealth. As you well know, when paper money falls in value, it takes more of the stuff to buy gold.

That’s inflation.

A not-so-bizarre bizare

Many Europeans learned that lesson the hard way. As a result, cultures began giving gold and precious metals as gifts. China, India, the Middle East, France, Italy, and Switzerland all give babies traditional gold gifts. That tradition spread to many South American countries, too. 

It comes from a bone-deep cultural knowledge that paper money doesn’t last, but gold does. Many learned this hard lesson by watching their currencies collapse. 

So did Americans once. But unfortunately, most Americans don’t know that lesson. They look at other countries with soaring inflation and scoff.

It can’t happen here, right? 

But we have seen it here before…we just forgot the story.

Confederate Confetti

In 1861, the Confederate Congress authorized a national currency. It started with Montgomery notes, paper money issued to pay for arms, troops, and rations. Between 1861 and 1865, the Confederate government issued millions of Confederate dollars. It created massive inflation (partly due to rampant what we call “counterfeiting,” but what the Fed calls “quantitative easing”). 

Noted economist Eugene Lerner studied Confederate inflation. He found that money supply increased 11.5 times in the first three years of the war. And commodity prices rose 28 times over that same period. Today, even the most amateurish economists admit that more money chasing the same scarce goods creates massive inflation.

In total, the Confederacy issued over $1.7 billion in 72 different note designs. They ranged from $0.50 to $1,000. However, the notes were not backed by gold or other precious metals. By 1864, faith in the Confederacy was gone. The exchange rate on the Confederate Dollars was about 3 cents. Food and supplies became unaffordable.

This is a painful lesson from history. But if you don’t understand it now, you may learn it the hard way.

Doomed to Repeat?

The U.S. is in a bad place. We’re in the grip of historic inflation. Perhaps bizarrely, the government has no incentive to get us out of it.

In fact, it’s in their interest to keep inflating. The Wharton School projected that raising the inflation target from 2% to 3% could cut the U.S. government's debt by 7%. The study says raising it to 5% would reduce the debt even more.

The U.S. owes over $40 trillion today. And we all know how the government pays for it. They issue bonds…to themselves. It’s a convenient arrangement, isn't it? 

This Ivy League study provides the “evidence” to support the government’s continued printing.

As always, the Academy provides “intellectual” cover for the State to keep itself gainfully employed.

The Flip Side

Fighting inflation works only when debt is low. Raising interest rates decreases spending. Higher rates push down inflation. You have fewer dollars chasing goods. We see that in real estate today. 

The graph below shows U.S. home sales. In January 2022, you could get a mortgage at about 3.22% interest. By October 2022, that spiked to 7.0%. And it had a dramatic impact on home sales. 

Credit: StockCharts.com

In 2021, home prices rose by 18% in a year. Low mortgage rates and work-from-home programs drove sales. But rising rates brought that down to 11% in 2022, 5% in 2023, and 2% this year.

That doesn’t mean home prices fell. It just means home price increases are less than inflation today. Borrowing costs are so high because the bond vigilantes are fighting the government’s profligate spending on our behalf.

Of course, the government doesn’t want higher interest rates, because they make it harder to pay down the national debt.

The problem for us is holding dollars. If you are a saver, on a fixed income, or live paycheck to paycheck, you are the State’s piggy bank. The government destroys your wealth by decreasing the value of the dollars in your bank account.

In short, the Fed taxes you via inflation because Congress can’t pass tax-raising bills… if the Congress Creatures want to keep their jobs. 

Wrap Up

This should worry everyone, because hyperinflation is real. And when it comes for you, you need to be prepared. I’m not saying you need to dump all your dollars today. But I am saying there are lessons to learn from how folks in older societies hedged their paper money. 

They buy gold. Boring, stodgy old gold.

Because insurance comes in many forms. Gold is insurance against State theft.

Enjoy!

The Question

Hi, Sean.

Help me out. If I recall from your missives over the last year or two, you are anti-tariff. But then you write an article… that states this problem with workshops going overseas. I can't square the two positions.

What other means does America have to become the world's, or at least its own, workshop without tariffs?

Sure, maybe removing regulations would help, but that's almost impossible without allowing people and companies to go absolutely rogue on our environment and health.

For example, how does one ever get pesticides and chemicals out of our food? This is one of many examples of immoral and amoral people raping nature and society without any way for society to control them.

Regardless, tariffs can be imposed by one person. Removing regulations and stupid laws requires a body of 535 incompetents to act for the betterment of America, not themselves.

Anyway, how do you square these two perspectives, or are you for tariffs?

Jim S.

The Answer

Thanks for writing in, Jim. That’s a great question.

No, I’m not for tariffs. I’m also not for shipping our workshops to Shenzhen or our coding jobs to Hyderabad. Those two positions don’t clash because tariffs don’t fix what sent the jobs away in the first place.

I suspect a line of mine caused the confusion. In “Who Ate the Seed Corn?” I wrote that capital consumption is what The Donald is trying to stop “in his own way… with mixed results.” He’s right about the disease. I just think he picked the wrong medicine. I back the goal, but not the tool he’s using.

So why did the factories leave? It’s not because Americans forgot how to make things. They left because The Swamp made manufacturing in America a bad trade.

Three baddies were responsible.

The Three Culprits

First, our money.

Since Nixon cut the dollar loose from gold in 1971, the world has held the USD (and Treasury bonds) in place of gold. That demand keeps the dollar strong and American exports expensive. It also let us buy more than we sell for over half a century because foreigners lend those dollars right back to America. No other country gets that deal. But it came with a cost: America’s factory floor.

Second, an insane amount of cheap credit.

The Fed held rates near zero for most of 14 years. Cheap financing buys back stock, flips real estate, and funds apps. Building capital-intensive businesses? Why bother?

Capital went where the Fed told it to, away from the factory floor. America’s seed corn was depleted in the process.

Third, policies that change every four years.

A factory is a 30-year bet that no CEO would make under rules that change by the year.

That last point is where tariffs do their real damage. A tariff is a tax, and the American buyer pays it, despite White House protestations.

Tariffs raise the price of the imported machine tool, and that in turn raises the cost of the American factory needing that machine tool. We tax the cure along with the disease.

You wrote that one man can impose a tariff, while fixing bad laws takes 535 people. The Supreme Court just disagreed. In February, it ruled 6–3 that tariffs are a tax, and the Constitution gives the power to tax to Congress alone. The emergency tariffs fell. Within hours, the White House announced new ones under a different law. I wish The Donald had cut his losses there, but that’s not his style.

Think about what this back-and-forth does to a company weighing a new plant. The tariff that protects it this year could vanish in a courtroom next year or double next Tuesday. So the money waits. Uncertainty is its own tax, killing capital investment.

The Founders put the taxing power in Congress on purpose. They’d just fought a war over taxes set by one Mad King across The Pond. Slow and hard tax imposition was by their design.

But at least this version of the “Do Nothing” Congress already did one thing right. Last year’s tax law lets a manufacturer write off the full cost of a new factory the year it opens. That does more for American industry than any tariff schedule because it rewards building, not lobbying.

The sad part is that it’s temporary. Construction has to start before 2029. If they make the law permanent and pull the tariff roulette off the table, you’d see a flood of concrete pouring.

However, we need two more things.

The first is cheap, plentiful energy because factories run on kilowatts, and we sit on more energy than anyone else. See Germany if you doubt that.

The second is sound money, so the dollar finds a level where American goods can compete again. This is why The Donald wants the dollar down.

Regulation

Jim, your point about regulation is the strongest thing in your letter.

You’re right in that nobody wants a free-for-all on our water and our food. But there’s a difference between rules and permission slips.

Rules say if you poison your neighbor’s well, you pay him, and you may go to jail. That’s old common law, which worked for centuries. Permission slips say you can’t act until a federal office signs off. That office ends up answering to the big firms it oversees.

We have the second system, and look what it gave us. The EPA didn’t keep the pesticides out of your food. The big chemical makers can afford the years of paperwork it takes to license those pesticides. The small competitor with a cleaner product can’t do that. A captured regulator like the FDA protects the incumbents and calls it safety.

So I’m not for gutting the law. I’m for liability with teeth and fewer offices selling permission. If we make the polluter answer to a jury, order will be restored.

Wrap Up

There’s a narrow case where I’d hold my nose and accept a tariff: a true national security chokepoint. If China controls nearly all the gallium or antimony our weapons need, I’m happy to live with a targeted shield.

But that’s a precision target, not a blanket tax on everything.

So no, Jim, I’m not for tariffs. I’m for fixing what broke America’s workshop: the money, the credit, and the permission state.

Thanks again for writing in. I hope I’ve cleared that up for you.