The Morning Line
Musk Will Be the Last AI Entrepreneur Standing
AI hubris has got itself in a bind, trapped between two conflicting stories, neither of which seems likely to end well. One story has the boys in the billionaire’s club throwing untold sums of money at a technology that seems increasingly unlikely to produce commensurate returns. The other story has been threatening whole sectors of the economy with creative destruction: software development, financial, legal and accounting services, money management, entertainment and even trucking. Each day, there’s a menacing new headline about some industry whose workers, mostly white-collar, are about to be replaced by thinking machines.
The recent trucking news concerned the logistical problem of routing vans so that they are filled with cargo all the time. Artificial intelligence has taken on this challenge, squeezing out inefficiencies in ways that human workers could not have imagined just a few years ago. The shares of companies that do this work crashed last week, victims of AI’s Grim Reaper. It won’t end there, either, since driverless fleets of trucks are coming, and soon. Humans will be needed to load and unload them — that is, until Musk robots come along to relieve them of their jobs.
A Chimpanzee Reflex
Whenever creative-destruction stories hit the tape, the chimpanzees entrusted with America’s 401(k) savings instantly dump the shares of all companies likely to impacted. The trouble is that the list is growing so fast that it has become hard to imagine an area of the economy that will not be affected. We are talking mainly about job losses, and there seems to be no end to the number and variety of positions in AI’s crosshairs.
So what’s an investor to do? Our money is on Musk, arguably the only player with a strategy imaginative enough to encompass and integrate AI’s myriad possibilities while also tackling its biggest challenges. Some laughed at his demand for a trillion-dollar paycheck, but it grossly understates his ambitions. With plans to be on the moon in just a few years, he is thinking not only outside-the-box, but outside-the-planet. Lunar manufacturing and assembly done by robots will not only solve the problem of how to cool and power GPU server farms, but also provide a low-gravity launching pad to slingshot building supplies to Mars. Humans will get there in rockets, already engineered, that can be refueled and reused within hours of returning to Earth.
Musk has repeatedly demonstrated that he can take multibillion-dollar losses without flinching if an idea hits a dead end. The tens of billion he supposedly overpaid for Twitter has come to seem like relative chump-change for him. And he has the technological means to put Uber, Lyft, Waymo and even Apple out of business in mere months if he wanted. But he has bigger fish to fry. Musk will be the last man standing when the huge AI shakeout now under way buries the Billionaire Boy’s Club (although not Palantir’s Alex Karp, whose mind is as sharp as Musk’s). Musk makes them all look like amateurs, and the planned merger of SpaceX and xAI, his AI startup, will be the most significant business deal ever hatched. Take a piece of it and you can’t lose. [Here’s a link to my latest interview with Jim Goddard at HoweStreet. The headline alludes to ‘downside targets for silver and gold,’ but that was but a minor concern in this interview. RA]
Time to Jump on the Miners
[The following commentary was written by Steve Houck,a longtime investor in bullion and knows the markets well. He is also a friend and a former business partner. RA ]
Looking at the froth in silver, it became apparent it was time to rotate from overvalued to undervalued once again. Selling precious-metal ETFs like SLV and AGQ meant cash was available for the next trade, but where to go? While silver has been on a relentless tear, the miners have only grudgingly moved higher. Yes, there have been good moves in many of the miners, but quite a few trade with a ball and chain weighing them down in the form of fear. That’s because the last two times silver surpassed $50, in 1980 and 2011, it collapsed and went into long, grinding bear markets. Silver mining stocks get caught up in this because the public doesn’t believe prices will hold, and that silver will fall back to earth.
But what if the new floor is $55 to $70, and not the $15 to $25 range that obtained for decades? This silver run-up is different because it’s about one thing: physical metal. Just look what;s happening: China, the U.S. and the rest of the world are hoarding and trying to secure metals. That puts the miners in the catbird seat, because they produce and control the supply. Their shares, however, are still being priced as though silver were selling in the $20s even though it averaged close to $50 for the entire fourth quarter 2025. The miners wil start to report earnings next week, beginning on February 16. Because many of them will announce blowout earnings, now is the time to capitalize!
How to Play It
How to play this? Over the last two decades of investing in silver miners, the most important lesson I’ve learned is to stick with producers and developers with projects slated for the near-term. I want the companies I invest in to be extracting metal from the grown now, or within no more than 1-2 years. I start with the major producers and such crowd favorites as Coeur Mining (CDE), Hecla (HL), and Pan American Silver (PAAS). Once I have a good group of the majors, I’ll move to junior producers whose stocks have the potential to appreciate by 500% to 1000%. My largest junior positions are Avino Silver & Gold (ASM), Americas Silver (USAS) and Santacruz Silver Mining (SCZM). These major and junior producers Guanajuato Silver (GVSRF). Silver Storm (SVRS: Vancouver); and Vizsla Silver (VZLA). Here’s a link to comments on ‘X’ that corroborate the essay above with added details.
Microsoft’s Plunge Pricks AI Bubble
Pity the J-school rookies who are paid to explain why the stock market did what it did on a given day. On Thursday, Microsoft shares lost nearly a half-a-trillion dollars of value. But why? Bloomberg’s Evening Briefing called it a ‘rap on the knuckles’ for the company’s huge spending on AI projects that seem increasingly unlikely to pay off. But isn’t a rap on the knuckles the way nuns used to deal with minor behavioral lapses in young boys? If so, then Microsoft deserved 40 lashes with a rattan cane. Although the story was treated by the hacks who wrote it as a news event, what it portends is nothing short of financial calamity, reported in daily installments. For it is not just Microsoft that has squandered hitherto unimaginable sums on failing AI projects, but a dozen other corporate behemoths, including lunatic-sector (aka ‘Magnificent Seven’) stalwarts Amazon, Google, Facebook, Nvidia and Tesla.
Analysts have projected total global AI spending of $2.6 trillion across all companies and markets in 2026. Here’s where the math gets interesting. Microsoft share of those outlays would be an estimated $140 billion. Investors knocked three times that from the company’s valuation last week, while also imploding the world’s gaseous ‘wealth effect’ by a rich but still-invisible multiple. If equal punishment were to be inflicted on the companies planning to spend the $2.6 trillion, the haircut would amount to nearly $8 trillion. That is arguably the approximate size of the AI deflation that lies just ahead, and it will activate a black hole that could double or triple losses in other classes of investible assets. Treasury paper will go bounding in the other direction, finally getting some respect as a safe haven.
When to Take Heart
Granted, neither the math nor the logic is airtight. But the $8 trillion guesstimate is probably more credible than the rap-on-the-knuckles summation offered by Bloomberg. Their reporters are too lazy and too poorly trained to attack the real story, which will soon spread far beyond Microsoft. As it develops, and stocks begin to fall with increasing momentum, the op-ed columnists will catch the scent of panic and write more explicitly about the AI bubble’s collapse. Reporters will eventually follow suit, and that’s when you can take heart, since the bear market will be half-way to a bottom by then. (Click here for my latest interview — “Let it all hang out!” — with Jim Goddard at Howe Street.)
What Rough Beast?
If you can’t guess what commodity the chart shows, you must be living on Mars. It is in fact a long-term picture of silver, which went ballistic in December. The price has doubled since, blowing out a $50 top that had stood since 1980. That price became a part of silver’s legend, since it is where one of the wealthiest men in the world, oil tycoon Nelson Bunker Hunt, met his financial Waterloo. With his brothers, Lamar and William, ‘Bunky’ had attempted to corner the market by buying up silver and futures contracts amounting to about a third of the world’s supply. Comex regulators responded by raising margin requirements so high that there were just two players left in the game: the Hunts and Eastman Kodak, a huge industrial user of silver. From a record $50.45 per ounce, the price plunged by half in mere days, forcing the Hunts to sell nearly everything they owned to meet margin calls. In retrospect, they seem not to have broken any rules. However, the Comex was forced to crush them in order to stabilize the metals market.
What Does It Mean?
Silver’s current rise has been orderly, more or less, but with a pitch so steep that it caught many players with their pants down. No reason to feel sorry for them, since they are ethically and morally on a level with child molesters, broad-tossers and cannibals. But the radical shift in precious-metal prices relative to all other classes of investable assets raises a question that should concern us all. For it is not happening in a vacuum, and we can only guess at what it will mean years down the road. Will silver resume a monetary role? Is Trump licking his chops over the prospect of borrowing against all of the gold supposedly stored in Ft. Knox? Is gold predicting a crisis that would leave the global money system in wreckage? We’ll have our answer eventually, but it could already be very late in the game for those seeking the bomb-proof safe haven that gold has always offered.
Don’t Worry, Be Happy: The Bots Are Coming
Readers can be forgiven for wondering how long the ‘topping process’ I’ve alluded to over the last several months will drag on. As you will have long since concluded, no one can answer that question with confidence. For all that we supposed experts know, the bull market begun in 2009 could still be chugging blithely along two years from now when Trump’s successor takes office. But this will be the last you’ll hear from me about a topping process, even if the bear market for which it will set the hook is as likely as tomorrow’s sunrise. It will be a doozy, catalyzed by the unwinding of an Everything Bubble that already owns us, up to and including M&A superstars and big-time real estate developers. The implosion will inflict hard times on most Americans, especially Baby Boomers who went all-in with Nvidia shares, private equity schemes and rental properties mortgaged to the eaves.
How worried should you be? I’d suggest taking doomsday predictions with a grain of salt. Speaking as a die-hard permabear who has been predicting a Second Great Depression for as long as anyone can remember, I’d be the first to concede there is no reason why the Dow Industrials and the S&Ps could not co ascend, possibly doubling or even tripling over the next 5–10 years. Just realize that any reported gains in the standard of living would be largely illusory, even as quality-of-life amenities that we took for granted in the 1950s continued toward extinction. Things like doctors making house calls, and mothers being able to stay home with their children. That was America’s Renaissance, even if no one knew it at the time.
Science to the Rescue!
Technology will come through for us as it always has, right? AI wizardry, huge productivity gains and millions of robotic workers are about to make life’s necessities plentiful for everyone, including baristas, down-and-out middle managers and college grads with useless degrees. If Elon Musk is right, savings will become optional, or at least less important, as thinking machines attend to our needs. They will help us navigate the shoals of daily life, sleeping with the homeless in doorways, and keeping them warm with blankets made from used styrofoam cups. They will cure cancer and make diesel fuel from spent cooking oil if an energy shortage should strand yachtsmen. And why not? If you believe Musk, the robots will be smarter than we are in five years. So deep and sincere is his faith in AI that we must assume he thinks the bots will be even smarter and more capable than he is. If such a world is coming, why worry about the stock market and the economy? Why worry about anything, really?
Why the Bull Market Doesn’t Need MAGA
The Dow is poised to hit 50,000 this week, a milestone that would have seemed surreal when the blue chip average, plagued by covid, was bottoming near 18,000 six years ago. Although there can be little doubt that Trump helped kick stocks into high gear, one could argue that a powerfully bullish economic cycle made the man rather than the other way around. Stated another way, the stock market’s spectacular rally reflects a cyclical mood-change across America that made Trump’s election not merely possible, but inevitable.
Would shares be at these heights with Kamala Harris in the White House? It seems implausible, since she could never have matched Trump’s ambitious agenda. This is not to suggest that all or even most of his initiatives will succeed. In fact, some of the most important ones could lay an egg. Tariffs, for instance. They amount to little more than a new tax on global trade, with consequences that have yet to produce a clear result, let alone a positive one. His promise to make life more affordable for most Americans could also be a non-starter for reasons explained here a couple of weeks ago. And his plan to revitalize Venezuela’s oil production has already been labeled ‘uninvestible’ by the CEO of ExxonMobil. As for the reshoring of manufacturing. no one is talking about how revived and new factories would have to be practically worker-less to compete with heavily robotized plants in South Korea, China, Japan and elsewhere.
What Jobs?
And what about Trump’s plan to radically reorganize the mortgage market so that young people can buy houses? Although this sounds appealing, what will be the source of their income? The job market is changing so rapidly, especially with AI increasingly replacing more white-collar workers, that even seasoned recruiters can no longer predict where the jobs will be in ten years.
Stocks have soared nonetheless, not because Trump will necessarily succeed at making American great again, but because, for better or worse, he is perceived by investors and the entire world as being solidly in command of the nation’s affairs. Realize that stocks rose sharply during Biden’s first two year in office. If shares could do that while a head of cabbage occupied the White House, their turbocharged performance under Trump should have surprised no one. Even a do-nothing Harris might have enjoyed the economic Grand Supercycle’s runaway finale by simply holding onto the reins.
So Much Is Riding on Silver!
The speculative frenzy in silver has provided welcome relief from AI claptrap, but will it last? There are a hundred theories about why silver has come exuberantly to life after lagging gold for so long. I’ve been puzzled myself, since my technical runes suggest that gold futures could make an important top at $5132, about $800 above Friday’s settlement price. Silver would likely peak at the same time, unless the squeeze on physical supply were to pick up enough climactic energy to cause an historical readjustment in the gold:silver ratio. The Founders thought 15:1 was the correct peg, implying silver could be trading for $342 with gold at $5132. That sounds farfetched, but stranger things have happened in the financial world, especially in markets caught in short squeezes.
What is most peculiar about the current run on silver is that it probably couldn’t have occurred without Trump’s blessings. He has said he wants a much higher gold price in order to monetize America’s few remaining, unhocked assets (including residential real estate). Letting silver off the leash would make almost everyone feel at least a little richer. The problem is, some of Trump’s most powerful buddies in the banking business are short silver up the wazoo. Citi and B of A alone reportedly have loaned out at interest $4.5 billion of silver they do not possess, exposing themelves to potentially catastrophic losses if AG quotes should soar anew.
Trump’s Fortunes
And what if gold goes no higher than $5132? A corresponding top in silver followed by a steep slide in both could cap Trump’s fortunes. It would certainly destroy the comforting illusion that financial markets are under control. Of course, crazy ideas like that can only persist in bull markets. If stock averages were to sell off by 30%-40%, which they absolutely will at some point, whoever is President at the time will be not just a lame duck, but a dead duck. Keen for more of my latest rantings? Find them on This Week in Money by clicking here.
Holiday Greetings!
My best wishes to you all for the holiday season and the New Year. May you and yours enjoy good health, prosperity and serene contentment in 2026. My regular weekly commentaries will resume with the edition scheduled for publication on Sunday, January 4. In the meantime, trading ‘touts’ (see below) will update as usual late Sunday afternoon.
Grand Supercycle Will End with Trump
The widespread notion that a U.S. president can significantly influence the economy is mistaken. In observable fact, the broad cycles that bring us good times and bad, booms and busts, are vastly larger and more powerful than the presidency, too overwhelming to even affect, let alone command. Even the radical policies of Roosevelt’s New Deal were insufficient to end a depression that had taken more than a generation to gather force. America’s eventual emergence from those very hard times happened gradually during the administrations of Truman, Eisenhower and Kennedy. Moreover, the post-war rebuilding process that made Europe and Japan America’s best customers arguably would have happened cyclically without a Marshall Plan, and the U.S. financial system would have receded naturally from the fiscal excesses of a war that itself was an uncontrollable cyclical event.
In this view, Kennedy, Clinton, Obama and Biden were simply lucky to have been elected with the economy and the stock market at cyclical lows. For in no way did they cause the upswings that shone on their terms in office, nor the felicitous shifts in the mood of consumers. The bullish cycle had to have been particularly strong to survive the misbegotten policies of Obama, the first president to revile American exceptionalism, if not America itself.
Surfing the Big Wave
Which brings us to Trump, the president who has come closest to affecting the economy both inside and outside the U.S. Trump inherited a fiscal blowout impelled by the covid hoax, but he has since turned it into a credit and fiscal bonfire that can only end in ashes. Trump has merely extended an especially powerful upswing that he did nothing to cause. It should have ended with the senile Biden and his autopen administration, but Trump’s aggressive economic activism kicked already booming asset values into high gear. It is no ordinary boom, but rather the spectacular finale of a Grand Supercycle that long-wave forecasters date back as far as the 1700s. It was logical and perhaps even inevitable that the coming, severe downturn should have summoned so grandiose a personality as Trump to stage a last hurrah.
His popularity and credibility have already peaked with his all-in bet to give Americans ‘affordability’. This should have been apparent to anyone who watched his relatively short, heavily stuffed speech last week. Trump trotted out charts and tables to show how the cost of eggs, gasoline, poultry and such have begun to fall. Well, whoopee doo. But even if half-price Ozempic for every American were to arrive before midterm elections, the nation will still be dealing with the deeply structural, intractable problems of unaffordable big things: housing, healthcare, insurance, college education and automobiles. Trump’s affordability promise is doomed to failure, and every American senses this. His hubris will put a fitting end to the Grand Supercycle, and it is the reason why the stock market has seemed so dead-tired lately. [For an earful on silver, AI and ‘lunatic-sector’ stocks that have begun to sputter out, click here for my latest rant at HoweStreet.]
Conviction, Guts Finally Paying Off in Bullion
Just one more push could exhaust a bull market that is coming up on its seventeenth year. Although that’s only about three dog years, it equates to about 120 human years. In fact, no other bull market has lasted even remotely that long. The next-oldest, birthed at the low of the October 1987 Crash, was 13 years old before a crash in tech-sector stocks ended the dream for millions of investors grown stupid on greed.
Could it happen again? Only a fool would ask that question. My recent commentaries have warned with increasing shrillness that stocks are in a topping process. I have purposely left the details vague, since bull-market tops are notoriously full of deceptions. However, the chart above provides a compelling number for the party to end, a 7492 Hidden Pivot target for the E-Mini S&P futures that lies 8.6% above.
Last week featured the second straight Friday on which bulls and bears did little more than screw the pooch. Usually, Fridays are fun, or at least interesting, for one group or the other. But lately it’s been like watching a heavyweight slugfest that turned bloody in the seventh round. Bears have lacked the guts to deliver the haymaker, but the buy-the-dips junkies, who have been winning on points since 2009, seem too fatigued and lacking in conviction to counterpunch. Thus did stocks fall to end the week, although not enough to worry anyone, much less spook the herd.
Paralyzed by Doubt
All the excitement was in gold and silver, which have been rising since early 2024 in a steepening trajectory. The uptrend is practically vertical now and in need of a rest. But that is not how bull markets work, as many bulls are discovering. Although they’ve been praying for a big move for years, now that it is finally happening, they are paralyzed with doubt, unable to board an uptrend that left them waiting at the station months ago. And so they sit on their thumbs, hoping to scoop up bullion near the bottom of a big correction that never comes.
Some who frequent the Rick’s Picks trading room are notable exceptions. They have been sitting on bullion stocks and ingots for months or even years. As one of them notes, the big money is made not by playing the whipsaws and joining in the madness, but by waiting patiently for an enduring bull market that was always certain to come sooner or later. It is here now, and those with the patience and conviction to stay with it are reaping outsize rewards that implicitly rebuke the trader mentality.