The Market Outlook for the Week Ahead, or Gold, Silver, and Bitcoin Crash!

I am writing this to you from the Celebrity Equinox from 37 degrees South latitude, 55 degrees West longitude in the South Atlantic off the east coast of Argentina. We are headed 194 degrees South, and it is a balmy 75 degrees. The sea is completely flat, with waves less than a meter.

I’m told there is a Wright Whale spouting off the port bow.

I was meeting with the ship’s head of IT to analyze the strength of their network security so I could trade on it. I noticed a Chinese woman sitting at the next table. She was looking with concern at the stock trading app listing the holdings of gold miners (B), (NEM), and (GDX). How did I know they were gold miners, even though I can read Japanese, but not Chinese characters?

The charts all pointed straight down.

Which highlights the seminal nature of last week’s trading action. We saw the biggest blowoff top and then crash in the history of all precious and base metals. They all melted up and then down, on no specific news. They fell simply from the weight of their own prices.

I haven’t seen any real numbers yet, but the total loss of all gold and silver plays worldwide is thought to be $6 trillion. Gold (GLD) dropped by 28%, while silver (SLV) plunged a much more ferocious 40%.

It was a true black Friday.

The entire gold move of the past year has been a firm vote of no confidence against US economic, trade, diplomatic, and military policies, the bond market, and the US dollar, which of late have all been in free fall. But in recent months, that vote became a meme trade, and the hottest of hot money piled in as the day traders, get-rich-quick crowd, and the scum moved in.

That’s when I abandoned the precious metals and ceased issuing trade alerts for them. They became too risky. What took GameStop (GME) up from $1 to $100 then then back down to $10 is the same thing that took gold from $1,500 to $5,500 then back down to $4,700 in a day.

And the downside may not be over yet.

The market certainly cleared out leveraged longs on Friday through margin calls and forced liquidations, much like we saw in October with Bitcoin. With inflation rising monthly, US wars against Iran, Greenland, Venezuela, and Lower Slobovia considered, the fundamental arguments in gold’s favor are still there.

I don’t want to be a buzz kill here, but let me dish out some harsh numbers. When gold peaked in 1979 (I was there), it didn’t make a new high for 30years! After it peaked again in 2011, it didn’t peak again for 10 years. As for silver, it took 46 years for it to surpass its old 1980 Bunker Hunt high of $50.

I sold my overweigh positions in precious metals at the end of last year, seeing the meme trade unfolding. But I kept on trading the weekly options for my own account just to keep my hand in the market. I bailed even on these on Thursday, a day early, sensing that something bad was going to happen this weekend (another war? another Minneapolis?).

Sometimes you just get lucky.

You may be forgiven for thinking that nothing else happened in the financial market last week, but it did.

Taking a cue from the route on precious metals, on Saturday, Bitcoin dropped an eye-popping $10,000, or 12%, a new one-year low. The deregulation argument is long gone. It seems that Bitcoin is digital gold only on the downside, but not on the upside. It has become an asset in search of a valuation.

Gigantic moves like these in single asset classes underline that not all is well in the financial markets. I shudder to see what the Monday opening will be like. I go into it 90% cash, but that may not be enough.

Energy (XOM) was the top performer again last week, not because of Iran or Venezuela, but because of a record national cold spell. And the same may be happening this week. Yes, sometimes stocks go up for the old-fashioned reasons.

Consumer staples (XLP) came in number two, pointing to the defensive bent of the market, but also because of the spectacular performance of single stocks. The sector has enjoyed its best start to a New Year in 25 years.

Telecoms like AT&T (T) and Verizon (VS), have been dead money for years, and my favorite shorts came in third.

The rotation out of tech continues unabated. The loss of momentum as the sector bumps up against resistance is obvious. Apple (AAPL), Amazon (AMZN), and Microsoft (MSFT) reported earnings, with the shares of the latter falling an eye-watering 12%. Palantir (PLTR) looks like it is on the verge of collapse.

Software continues to die a death of a thousand cuts. Homebuilding gave up recent gains on interest rate fears. Even small caps (IWM) pulled back.

I could go on, but after what happened in precious metals and bitcoin this week, everything else is meaningless.

Besides, at 3:00 PM I have an appointment on the Sun Deck with a countess from Bavaria who thinks my German is excellent and my stories fascinating.

Auf Wiedersehen!

I closed out January up +1.97%. That takes my trailing one-year return to +58.24% and, my average annualized return to +50.47%, and my performance since inception reaches a new all-time high of +815.93%. These are all non-compounded numbers. The past 24 consecutive months have all been profitable.

My long in CrowdStrike (CRWD) expired at max profit. I added a long on silver (SLV) right at the market $70 bottom, when it was down 40% on the day, and it then rallied $5. I may come out on Monday if the rally continues.

We never got the Supreme Court decision on tariffs. The government shutdown on January 30 as expected.

Some 65 of my 79 round trips in 2025 were profitable. That is a success rate of 82%. We were up every month for the second year in a row in one of the most difficult trading years in market history.

Try beating that anywhere.

Fed Leaves Interest Rates Unchanged. Reference was made to “Solid growth in the Economy” being mentioned four times in the press conference. That is not a time the Fed cuts interest rates. Powell said that without tariffs, the inflation rate would be 2.0%, but the current 2.8%. The Fed is unlikely to cut interest rates until May.

Copper Tops $14,500 per metric ton, an all-time high. Copper’s red-hot run to above $14,500 a metric ton on Thursday leaves investors facing a decision over whether or not to chase the market higher. Benchmark copper on the London Metal Exchange jumped 11% to a record $14,527.50 a ton in a rally fueled by speculators, with momentum ‌spurring yet further buying. It was the biggest one-day gain for LME copper since November 2008, which traders said was fed by short-covering.

Trump Comments on Currencies Trash the US Dollar, prompting ballistic moves up in (FXA), (FXE), (FXB), (EEM), and even the long beleaguered (FXY). These are all Mad Hedge long recommendations. The comments signal that there will be no future efforts by the FED to support the collapsing greenback. That European vacation is getting more expensive by the day. Sell any and all dollar rallies unless you spend it first.

Gold and Silver Go Ballistic on Weak Dollar Comments, Then Crash, with the barbarous relic topping a new all-time high at $5,500. Who knows how high is high? The decline of the US dollar, combined with heightened geopolitical risks and investor flight from currencies and Treasuries, has sparked a wave of investment demand in precious metals. Gold has gained around 22% already this year, smashing through $5,500 an ounce for the first time this week, while silver has surged almost 60%. Retail traders are pouring into silver plays faster than tech stocks.

Consumer Confidence Hits 12 Year Low, as the depressed jobs market weighs on the population. The Conference Board’s gauge decreased to 84.5, from an upwardly revised 94.2 last month, data out Tuesday showed. The figure was the lowest since May 2014 and fell short of all estimates in a Bloomberg survey of economists.

UnitedHealth (UNH) Dives 20%, on Trump’s effort to freeze Medicare spending in 2027. Medicare Advantage spending by seniors, paid for by the government, accounts for 70% of (UNH) business. The (UNH) CEO was assassinated last year. Rates at these levels won’t cover the cost of providing the service. Avoid (HUM), (CVS), and (UNH).

US Mergers & Acquisitions Top $65 Billion in 2025, a windfall for big investment banks Goldman Sachs (GS) and Morgan Stanley (MS). The rebound was driven by motivated buyers, including refunded private equity teams, increased use of securitized financing, and new international entrants competing for limited assets.

Weekly Jobless Claims Fall 1,000 to 209,000. The number of Americans filing new applications for unemployment benefits fell last week from an upwardly revised level in the prior week, suggesting layoffs remained low, but tepid hiring is stoking households’ anxiety about the labor market. While difficulties adjusting the weekly unemployment claims data for seasonal fluctuations around the year-end holiday season and turn of ‌the year have injected volatility into the numbers, economists said there has been no material change in labor market conditions.

Microsoft Dives 12% on Weak Guidance. Wrong sector at the wrong time, as software stocks are deeply out of favor. (MSFT)’s spending surged to a record high, and cloud sales growth slowed, triggering investor concerns that it could take longer than expected for the company’s AI investments to pay off. During the analyst call, Microsoft Chief Executive Officer Satya Nadella said companies are now paying for 15 million subscriptions to the M365 Copilot, Microsoft’s main AI tool for office workers. Adoption is growing among the company’s enormous base of corporate users, Nadella said. Avoid (MSFT)

Tesla Profits Plunge 16%, off a 3% drop in YOY sales. The company will scrap its expensive, flagship, but dated, models S and X to cut costs. The Fremont factory will be converted to robot production. The shares barely budged on the news, which has been trapped in a six-month trading range. Avoid (TSLA) for now.

Meta Soars on Big Earnings Beat. Analysts across Wall Street raised their Meta price targets after the technology giant showed in its latest earnings report that improving AI-driven advertising monetization helped offset concerns around higher operating and capital expenditures. The “Magnificent Seven” titan delivered fourth-quarter earnings of $8.88per share on revenue of $59.89billion. Stand aside from overbought (META) for now.

My Ten-Year View – A Reassessment

We have to substantially downsize our expectations of equity returns over the next four years. My new American Golden Age, or the next Roaring Twenties, is now looking at multiple gale-force headwinds. The economy will completely stop decarbonizing. Technology innovation will slow. Trade wars will exact a high price. Inflation will return. The Dow Average will rise by 600% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old. My Dow 240,000 target has been pushed back to 2035.

On Monday, February 2, at 8:30 AM, the ISM Manufacturing PMI is out.

On Tuesday, February 3, at 8:30 AM EST, the ADP Private Employment Report weekly is announced. We also get the JOLTS Job Openings Report.

On Wednesday, February 4, at 2:00 PM EST, the ISM Services PMI is released.

On Thursday, February 5, Weekly Jobless Claims are published.

On Friday, February 6, the January Nonfarm Payroll Report is printed. We also get the headline Unemployment Rate.

At 10:00 AM EST, we obtain the Baker Hughes Rig Count.

As for me, if you are a meat-eater, Buenos Aires is the place for you. Argentina is one of the world’s largest beef exporters, and its output is to be found on every menu in the city. Go to any kind of restaurant, and there is a long meat section on the menu. And you can get a top-rate steak and a fine bottle of Malbec for two for only $50.

Thank goodness I’m not a vegetarian.

One of the great joys of running around Buenos Aires, as I have done for the past two weeks, is the countless tree-lined streets. Someone made a major investment in tens of thousands of maples 100 years ago, and today their calming presence offers generous shade on the hottest summer days. They make the neighborhoods.

Buenos Aires certainly would rival New York for the number of public statues, of which there are hundreds. I spotted Simon Bolivar and José de San Martín, the generals who liberated South America during the early 19^th century. The rest were unknown Argentinian heroes of years past. It is another sign of a rich city.

One of the unique sights in Buenos Aires is an old opera house that has been converted into a bookstore, the El Ateneo Grande Splendid, which even has a small English section. It was fiction only, so there was nothing for me. It did, however, offer an ample collection of Harry Potter magic wands for sale. Maybe I can use one in the stock market?

No trip to Buenos Aires is complete without a visit to Evita Peron’s mausoleum. I was wondering how I would find her grave out of thousands. But when I arrived at the La Recoleta Cemetery, there were already 20 tour buses parked out front. I just followed the crowds, and all signs led to Evita.

It seems that nightclubs were a big deal in Buenos Aires in the 1930’s, which is where the tango came from. Evita sprang from one of those, eventually marrying the president of Argentina. She died in 1952 at the age of 33 of uterine cancer, and the army hid her remains for 16 years.

Before the stock market opened here at 11:30 AM local time, I visited the Museo Nacional des Belle Artes. When I was a teenager in Europe, I used to go to art museums to get out of the rain and look at the pretty girls. Now it’s time to see if I can remember all the artists. Plenty of Rodins, a few Monets, lots of local artists I’ve never heard of, and a special exhibition on Egypt.

I took a free weekend to fly up to Iguazu Falls, the world’s largest waterfall. Some 50% higher and four times wider than Niagara Falls, it is truly a sight to behold. From the park entrance, I had to hike a quarter mile, take a narrow-gauge railway for two miles, then hike a mile across a one-mile catwalk.

At 95 degrees that day, this was no easy task. But when you finally make it, you are met with 100 people enjoying one of the top bucket list items of their lives. The vibe is palpable. At one point, I noticed that people started taking pictures of me. I looked down at my feet and saw several cuoti, or long-nosed South American raccoons, eating scraps of food.

My Spanish words of the week, which I’m sure will give my Spanish readers a tickle: pesado (heavy, as in suitcase), boleto (ticket), and la factura por favor (bill please).

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader