Optimists see the glass as half full. Pessimists see it as half empty. That cliche is a wonderful metaphor in many areas of life. But sometimes it fails to capture the full extent of the possible alternating realities.

Today, when it comes to the stock market, the optimists have faith that rising stocks are the gift that will keep on giving. The pessimists worry that the rise is threatened by any number of risks. We fall squarely into the pessimists’ group, as you know if you’ve been reading us. But we think things have gone well beyond the half full/half empty dichotomy.

Rather, we see the glass itself—i.e., the market—as teetering at the table’s edge. It may teeter a while longer, but inevitably it will topple and shatter, with the pieces cascading in all directions and cutting everyone who hasn’t fled.

What do we see that the optimists don’t? One reason for our pessimism is knowing that what largely motivates the market optimists is their faith in the unlimited prospects of AI. They are betting that AI will deliver in a big way, that it will justify in spades the hype and the huge amount of money companies are spending on it. AI, clearly, is the big story in today’s markets. The big tech companies that are making huge investments in AI account for a hefty portion of the market’s gains. They also account for a significant slice of GDP growth. They are basically the pillars on which the market stands. But if those pillars crumble, the market will have nothing holding it up.

We’ve written a lot already about why we think those expectations for AI are wildly misguided. But it’s instructive—if frustrating—to make the effort to understand why many investors continue to hold onto these expectations. We think a lot is explained by the enormous amount of propaganda that is generated daily, propaganda that borders on fantasy but that reassures these investors that they will be on the right side of history, with big gains as their reward. When sources that seem authoritative tell you that all is well, it’s all too easy to believe them. Unfortunately, everywhere you look today, you see examples of misinformation that is bolstering unrealistic expectations.

A misleading claim

A quintessential example was an August article in The Wall Street Journal that was a paean to the exciting and supposedly limitless powers of AI. Anyone who read it, and who took it at face value, might understandably want to dive in and invest hand over fist—without realizing that the article’s reporting concealed a huge gap. In fact, once you look more closely, the article demonstrated the exact opposite of what it supposedly was showing.

The headline was: “Move 37 Is the Moment AI Changes Everything. It’s Suddenly Happening Everywhere.” It was followed by the assertion: “A decade ago, a computer did something no human would have done. It was considered a breakthrough for AI. Now the world is full of them.”

It was a dramatic headline that caught our attention. Move 37 refers to a move that a computer—AlphaGo—made 10 years ago while playing the game of Go against the top human player at the time, Lee Sedol. Go is a complex two-person game that has often been compared to chess, but the number of possible games that can be created in Go far exceeds the number for chess. As described in the WSJ article, Move 37 was a deeply unconventional move that no human player would have made, and at first it was assumed to be a massive blunder. But it turned out to be a masterstroke that left Sedol dumbfounded and shaken

And this, according to the article, is comparable to what AI now is doing everywhere—coming up with original, surprising, brilliant ideas in areas that humans have studied for centuries and making one breakthrough after another.

So, what’s the problem? It’s that the article failed to mention that a few years after AlphaGo’s Move 37 triumph, a later, more advanced Go-playing computer, called KataGo, was utterly stymied by a human amateur Go player who employed an ingenious stratagem to outsmart the computer.

The human player was Kellin Pelrine. In 2016, he was an avid amateur Go player—not as good, then or now, as the very best humans at the game, but still very strong. Pelrine, a student at the time, knew he wanted to pursue academic research but hadn’t yet settled on a particular area. Watching AlphaGo beat Lee Sedol in the 2016 match inspired him to focus on data science and AI. By 2023, a team that he led, working with computers, had developed a stratagem—known as the “cyclic” stratagem—they believed would be able to beat the best AI Go system. It was a stratagem that any relatively strong human player could easily comprehend and apply, and Pelrine used it to win 14 out of 15 games against KataGo.

Blind spots vs. creativity

Since Pelrine’s victory three years ago, researchers have trained and retrained KataGo to focus on the cyclic groups at the heart of the stratagem used by Pelrine. They’ve had no luck, as strong human players armed with knowledge of the stratagem have continued to outplay the machine. We think the only plausible explanation for this continued failure by the machine is that the strategy, though easily grasped by a human, is combinatorially too complex for the machine to process. The ability of any computer—whether it hosts a large language model (LLM) like Claude or Gemini or is fully dedicated to a particular game—is only as good as the number of combinations it can recognize or create. Humans, by contrast, can find creative workarounds that are not bounded by the number of possible combinations in a problem or task.

And in case you’re thinking that as AI continues to develop, it will become able to power past these limitations, that’s extremely unlikely unless humans discover new laws of physics or computation. Keep in mind that the number of potential chess games is, give or take, equal to the number of atoms in the universe. The possible number of Go games is roughly equivalent to the number of atoms in three universes, each the size of ours.

AI itself confirms this fundamental weakness in AI. We posed the following question to the latest version of Gemini, a leading LLM: Why can’t KataGo and other Go AIs be trained to win against a human using a cyclic strategy? In its answer, it referred to “fundamental flaws in how modern AI learns” and pointed to “blind spots”—noting that AI is great at looking at individual local structures but unable to step back and to encompass a massive global structure.

Rather than say that Move 37 was the moment when AI changed everything, we think it’s more accurate to say that Move 37 was a moment in which humans realized they’d have to work hard to beat AI—which they did. And while we’ve focused here on Go, you can extend the same thinking to the LLMs that are at the heart of all the hopes that AI really will to be able to change everything.

It relates to a distinction we’ve made in previous articles between syntax and semantics. Syntax refers to the grammatical side of language—grammar, parts of speech, sequence of words. These for the most part are ruled by basic principles that, while they may be extensive, are fixed and relatively easy to master.

But semantics—the nuances and complexity of meaning—is an entirely different story. That’s not because new words are always being created but because the number of sentences that can be created in English, or in any other language, is infinite. Add to this the fact that the meaning of any given word is always changing and that the same word can mean different things to different people. A statement as simple as “I love music” can have as many meanings as there are people. And for any one person, the meaning of the same words and sentences can change over time.

One implication is that those who see AI as being able to substitute for humans are in effect arguing that all humans are basically the same. They are eliminating individual differences, which is tantamount to crushing individual human creativity, the driving force in human progress.

Language is immeasurably more complex than even enormously complex games like chess and Go. With chess and Go, you still can put a number on how many different combinations of moves are possible. But the consensus among language scholars is that the number of possible sentences can’t be counted. It’s one reason that hallucinations and other flaws in LLMs aren’t one-and-done weaknesses that can be fixed in future versions. They are foundational to AI’s entire structure.

There’s a lot more to say on these topics, but for now we’ll settle for saying that the giddy expectations for AI as seen in the market’s AI fever aren’t based on a realistic understanding of AI’s true capabilities. AI can be an extraordinarily helpful tool in enhancing human creativity, as illustrated by its role in helping Pelrine and his team devise the winning strategy for Go. But it can’t substitute for human creativity, and attempting to use it to sideline humans by putting AI in charge of human activities and endeavors will prove to be a self-defeating pursuit. And the risk is that it could short-circuit future progress if it ends up reducing the opportunities for human creativity—the indispensable force that has driven humanity’s progress for as long as we have walked the earth.

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111 times. That’s how many times Dr. Anthony Fauci took the fifth when he appeared before the Senate’s Homeland Security and Governmental Affairs Committee on July 29.

In 2022, Dr. Fauci had said on CNN: “I am very happy to testify before any congressional oversight committee. I have nothing to hide. I can explain and validate everything I’ve done… I am going to do what I need to do and that’s cooperate fully because we have nothing to hide.”

But come July 2026, that couldn’t prove to be further from the truth.

Why take the fifth in response to every question? In discussing the hearings with other people and expressing that we were curious about looking into them, we were usually met with the response of, “Why would you want to look into that?!” Our response would be, “Why not?” The pandemic is something that deeply affected all of us. During the pandemic, however, questioning the official line became virtually taboo. At the time, if you questioned, say, the safety of the mRNA vaccine, or the mitigation policies being imposed, you could be met with some form of public crucifixion. And that is not the American way.

When did we become so prone to believe down party lines? When did we become so prone to not thinking for ourselves? In a strange way, this kind of mentality has set the stage for AI and turning over our own freedom thought.

As the ancient adage goes, with great power comes great responsibility. And responsibility requires accountability.

Anthony Fauci is human, and humans are fallible. Numerous studies have shown that when a human being is given more power and authority, it tends to affect and change them. That is part of why it is always important to question those in power. In fact, we’d say that questioning those in power is our responsibility as Americans.

Social or official pressures that demand conformity result in the truth becoming ever more obscured. You might or might not believe that Fauci is being persecuted. But that doesn’t change the fact that the truth should matter. And it’s impossible to discover the truth without questions being asked and answered.

The coronavirus pandemic is a moment in history that in particular demands questions and answers. More than 1.2 million Americans died from Covid-19. The World Health Organization estimates that globally there were more than 14.9 million excess deaths in 2020 and 2021. Getting to the bottom of how this occurred is obviously critical.

We were told that the coronavirus originated naturally from a wet market in Wuhan. Yet, Fauci’s own diary (which qualified as federal agency records subject to oversight, subpoena, and public disclosure since the diary was written on a government computer) shows that Fauci thought it at least possible that the virus originated from gain-of-function experiments being conducted down the street at the Wuhan Institute of Virology. This research was designed to study bat coronavirus and was funded by the National Institute of Allergy and Infectious Diseases, which was led by Fauci. There are many other questions, too. The effectiveness of other Covid treatments. The risks of the mRNA vaccine. Fauci’s use of government staff and taxpayer money to pursue awards and cash prizes for himself. Evidence from Fauci’s diary that he was saying one thing publicly and another privately.

Dr. Fauci’s silence is especially hard to understand given that President Biden pardoned him for any possible federal offenses connected to his service from January 2014- January 19, 2025. Granted, that pardon doesn’t extend to the states.

And it was crickets from the Democrats. No doubt there was political grandstanding on both sides. That can be pretty annoying for anyone who is actually interested in the pursuit of truth. The more games everyone plays, the farther away we get from that pursuit Politics has become a sport in this country. One that does not serve its people. Most Americans want really basic things. They want to be able to put food on the table. They want their children go to decent schools. They want access to affordable healthcare. They want the rights that are promised to them in the Declaration of Independence.

During the pandemic, people lost their lives. People lost their jobs. Children were kept out of school. The psychological effect of the lockdown is something that we still haven’t recovered from and still don’t fully understand.

We sometimes forget in this country how lucky we are to have the freedoms we do because they’re easy to take for granted. So many of us have had them our entire lives. But freedom requires vigilance.

Freedom requires sovereignty.

In the 1950s, an American psychologist named Solomon Asch conducted a series of social experiments known as the Asch conformity experiments. The experiment put a person, who is the actual test subject, in a room of actors. The test subject was asked to match a card with a single line to the correct line in another card with three lines labeled “A” “B” and “C.” The answer was obvious—the test was not designed to trick the test person or be a close call as to which lines matched. Rather, it was designed to see what the test subject would do when the others in the room chose the obviously wrong answer.

The results were stunning. Some 75% of the time, the test subject went along with the group and chose the obviously wrong answer at least once. In their exit interviews, most of the participants admitted they knew they’d picked the incorrect answer but didn’t want to be the only person to disagree. They expressed an intense fear of being ridiculed or creating awkwardness, as well as their own self-doubt. Some even said that they assumed their judgment was wrong since everyone else was choosing a different answer than what their own eyes were telling them. They said they trusted that since the entire room saw something different that they must be wrong. They trusted the majority.

The pandemic was a difficult time for many of us. We wanted to do the right thing. We wanted to protect our neighbors, and we wanted to protect ourselves. And in a time so fraught with turmoil, questions should not only have been welcomed— they should have been encouraged. And certainly now, six years later, we should be allowed to fully probe what took place. We should be allowed answers to our questions.

Society should be ever wary of anyone or any group that discourages questions or a search for the truth. Outsourcing our autonomy and creativity is a hot topic these days in light of artificial intelligence. And it is important to note that there is an inverse correlation between creativity and authoritarianism. Individual creativity is central to humanity. The more that we outsource our autonomy and our creativity, the more we become ever less capable and inclined toward authoritarianism.

So ask questions of your leaders. Do your own research. And above all, retain your sovereignty and creativity. The future of America depends on it.

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The East, led by China, seems better positioned by the day to compel U.S. cooperation in the new world order that China is determined to engineer. The U.S. won’t remain the hegemonic nation we once were. But we’d reap great benefits from cooperating—and risk great damage if we don’t.

China’s most critical project is the Belt and Road Initiative, or BRI, which connects more than 150 countries via massive infrastructure creation, including rail and roads, sea-based shipping lanes, ports, and investments in telecommunications. BRI countries span Asia, Africa, and even include Latin American countries. Together these countries account for more than 70% of the world’s population and have a combined GDP that represents 50% of global GDP.

With per-capita GDP in these countries below that of the more highly developed countries, their potential for growth is greater. This puts China in the sweet spot of being able to account for a disproportionate percentage of global growth. Its investments in BRI countries provide the infrastructure that is critical for growth while hooking these emerging economies directly into China’s supply chains and export markets. Since 2013, more than $1.4 trillion has been spent on BRI infrastructure, with annual rates accelerating.

Iran: Critical to China’s Plans

The Middle East—and in particular, Iran (and to a lesser extent, Yemen)—is crucial to China being able to fulfill its BRI goals. That’s because of Iran’s uniquely favorable geographic position, directly between the Caspian Sea and the Persian Gulf. Central Asia always has been pivotal to world trade, and that remains as true today as ever.

Iran’s control over the Strait of Hormuz gives it control over all traffic out to the Arabian Sea, including the passage of oil from the Middle East to everywhere else. Yemen has the potential to create havoc in the Red Sea’s Gulf of Aden. To get its oil out, Saudi Arabia needs to use one of these critical passages. (It could use the Suez Canal, but that would require paying Egypt; moreover, the Suez Canal isn’t sufficiently big to accommodate larger ships.) Given the Middle East’s importance to China, it’s worth noting that both Iran and Yemen seem to have seen an influx of technologically superior weaponry that they were unlikely to have developed on their own.

Central to China’s drive towards a new world order is China’s push to create a new global monetary architecture, not one in which the yuan replaces the dollar but rather a gold-centered system. China’s recent moves to create a physical market for gold are bringing this new system closer. It will leave the U.S. facing a stark choice: cooperate and adapt to the new system, or risk systemic collapse. We believe that China very much wants the U.S. to participate, in the interests of global stability that will benefit China and the world as a whole.

A Path to Peace?

The popular geopolitical YouTube channel, The Duran, recently pointed out that China has tightened export controls on key drone components. China may be leveraging its industrial supply chains to try to bring about a broader peace. Without access to these Chinese parts, manufacturing drones for the war in Ukraine will become far more costly, and Ukraine will lose its arguably most important weapon, which it has used on the battlefield and to target Russian refineries and civilian warehouses. Eliminating drones would make Ukraine’s defeat simply a matter of time. It also would mean an end that would be on Moscow’s terms.

All of this must be factoring into the upcoming meeting next month between Xi and Trump. There have also been rumors, first reported on Bloomberg, that Witkoff and Kushner are once again preparing to meet with Putin, at a time not yet scheduled. But the pieces for a major peace deal may be falling into place. That peace will most likely involve as much sovereignty as Russia can tolerate in Ukraine. Maybe it is too optimistic to say that peace between Russia and Ukraine could be a prelude to peace between Europe and Russia. But if you’re going to dream, peace is a pretty good thing to dream about.

China’s ultimate goal seems to be a united world capable of addressing the existential problems facing the planet as a whole. America—ever more isolated from the rest of the world—seems to be the major obstacle standing in the way. Let’s hope that we reverse course and choose to become part of that more united world.

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There are always those pesky canaries in the coal mine. And along with them, there’s always the question: When will investors pay attention?

We’re referring to that event or events—such as a sharp drop in a significant player—that warn that a market bubble is getting closer to being unsustainable. Market tops, and subsequent crashes, don’t happen out of the blue, although it might seem like it at the time. There’s always something to tip you off. And recently in today’s market there have been warning signs ominously similar to those that preceded both the dot.com bust and the 2008 crash.

The tip-off in both those earlier two market bubbles was that as the end was approaching, it was the most leveraged stocks that were making the biggest gains—and that ultimately crashed the hardest. In the dot.com bubble, it was operational leverage, and a standout canary was Micron. In the case of the 2008 crash, it was financial leverage, with Bear Stearns an exemplar of excess. And these stocks were joined by others.

The current market bubble, of course, centers on AI with its supposedly unstoppable, civilization-changing prospects. The wild expectations for AI and for the companies that have anything to do with AI have driven the market’s rise, and they’ve been major drivers of GDP growth as well.

So what are today’s canaries? One of the biggest is former market leader Oracle. It’s one of the most financially leveraged companies you can find, borrowing wildly to support its AI ambitions. Oracle had aggressively pushed its way into AI through a deal it made with OpenAI, which was finalized in September 2025. Under that deal, Oracle is supposed to build—and build improbably fast—a slew of massive data centers for OpenAI. In return, over five years starting in 2027, OpenAI is supposed to reward Oracle by renting from it $300 billion in GPU clusters and computing capacity. Investors greeted the announcement of these plans with enthusiastic applause, and the stock instantly soared (making Oracle founder Larry Ellison briefly the richest man in the world).

Huge capital outlays, huge debt

Ellison, currently Oracle’s board chairman and chief technology officer, had hoped this ambitious plan would catapult Oracle to the top ranks of cloud computing providers, on a par with the likes of Amazon and Microsoft. But to realize these ambitions, Oracle has had to make huge capital outlays, which it has been financing with massive amounts of debt.

Was this a good bet? Notice our repeated use of the word “supposed” two paragraphs above. It turns out Oracle can’t build the data centers as fast as originally projected. In some cases, it has run into labor and material shortages. In one planned site in New Mexico, it was denied a natural gas pipeline it needed. The catch-22 is that if it doesn’t build the data centers, it won’t get paid by OpenAI. But if AI doesn’t have the data centers, it won’t be getting all the revenue the companies were counting on—though also true is that even if all the data centers were built, those revenues still might not match expectations.

Investors soured on Oracle this year, and its shares have plummeted sharply from their high of around $325 in the fall of 2025 to the current price of around $138, a drop of more than 60%. But while investors clearly have noted the problems with Oracle’s high spending and debt, it seems that they have yet to absorb what this fall in a major pillar of the AI buildout implies for the broader market.

A few weeks ago, the warning signs emitted from Oracle became even more insistent because of a downgrade of Oracle’s debt. On July 9, S&P Global lowered the credit rating of the company to BBB-, just one notch above junk bond status. S&P Global specifically linked the downgrade to the deal Oracle made with OpenAI and expressed doubt as to whether OpenAI would ever be able to meet its funding obligations to Oracle.

The degree to which the market and the economy now hinge on the rosy expectations for, and spending on, AI is, to say the least, alarming. AI-related companies account for roughly 30% of the valuation of the market and an estimated 60% of GDP growth. Everything rests on faith that the two major AI companies that the data centers are being built for—OpenAI and Anthropic, neither one of which has ever earned a penny—will become hugely profitable, with their AI models generating insatiable demand from enterprises that will use them to become more productive and profitable.

The Oracle debt downgrade says, whoa, not so fast.

Some of the best analyses of Oracle’s situation and of AI’s prospects in general come from Ed Zitron. Any of his YouTube videos or articles on Substack or elsewhere are highly informative and well-reasoned (not to mention bitingly funny). In a recent interview on the podcast The Tech Report, he lays out why the debt downgrade is so significant. A basic conclusion: OpenAI will never be able to pay Oracle the $300 billion it had committed to. Oracle’s entire AI venture will crater even as Oracle scrambles to borrow more money at higher rates. Oracle’s credit rating could be further downgraded—bringing it to junk bond territory. In the jargon of Wall Street, that would make it a “fallen angel.” If so, all the investment funds that hold Oracle bonds would be required to dump them, and Oracle’s borrowing costs would further balloon.

Oracle’s fate in and of itself isn’t all that significant. It’s not one of the major tech heavyweights in the market—on a recent day, for instance, it represented 0.55% of the S&P 500 compared to 7.50% for Nvidia and 4.29% for Microsoft. The point is that its sharp share decline and even more the debt downgrade are clear warning signs that the AI frenzy that has become the dominant driver of the stock market and the economy is getting closer to being exposed as wildly overoptimistic.

Competition from China

One thing that may increasingly weigh on AI companies’ prospects here is competition from Chinese AI models such as DeepSeek and Kimi K3. Unlike the proprietary “frontier” AI models of OpenAI and Anthropic, which charge money for access, the Chinese models are open source (or to be precise, “open mind”) and are available to anyone for next to nothing. And if you’re thinking that you get what you pay for, the Chinese models not only are free, they come within very close range of being as good as the U.S. models for almost all uses. It’s one more reason to think that the AI companies here will see considerably less demand than anticipated and that is needed to justify all the money being poured into their data centers.

Speaking of China, we want to mention a relevant opinion piece in Sunday’s The New York Times by the newspaper’s editorial board that seemed to us remarkably ill-informed and wrong-headed. Its basic argument was that the U.S. is currently beating China in the AI race; that it’s critical that we maintain our lead; that our edge comes from our having Nvidia’s more advanced chips; we therefore must continue to block China from getting these chips; and that without these chips, China will continue to lag us and we will remain triumphant.

What’s wrong with this argument? It ignores a reality that we’ve written about before: deprived of the advanced Nvidia chips, China has created a workaround known as logic folding that is letting it create the functional equivalent of those chips. The new Huawei phone scheduled for release next month will display this feat. And it’s a technological advance that applies as well to AI data centers in China, because it allows China to build data centers that are exponentially smaller and cheaper, and that consume far fewer resources, than those being built here. These advantages come on top of the fact that China has far greater renewable energy resources to power its centers and more land that’s remote from population centers on which to locate them.

There’s a lot more we could say about AI, but we’ll stop here. We think it should be clear why we worry that any day, doubts about whether AI really can deliver all that has been promised could reach a tipping point that would set off a major market correction with the potential to ripple through the economy. Meanwhile, the war in Iran is weakening the country in other ways, increasing inflation, further adding to our humongous government debt, and making our loss of hegemony increasingly evident—demonstrating the degree to which the order that has defined the world for so long is now eroding.

History shows that market manias can persist well beyond what’s reasonable, in fact, that’s the definition of a mania. There’s no way to predict when the end will come. Eventually, though, enough investors notice the canaries, and the party ends. When that happens, the majority of investors who had enthusiastically joined in find they can’t get out in time and get crushed in the stampede.

Guarding against that fate is why we have been stressing gold so insistently. Gold has been under pressure, and as we’ve always acknowledged, it could go down further. But it’s your best safeguard in today’s rapidly changing and chaotic world. We continue to believe that the U.S. economy is facing so many pressures that there’s no easy way out: We’re in for either a severe contraction and deflation or else—more likely—higher inflation. Either way, gold will protect you. In the case of deflation, it holds its value, which means you gain big in terms of spending power. And under inflation, we’d expect massive gains in the metal. These are not normal times, which is exactly when gold is the one thing you can count on.

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The global monetary system is being rebuilt, but most investors are watching the wrong signals.

In this interview, Dr. Stephen Leeb gives you the structural framework to understand what's actually happening to gold, the dollar, and Western financial dominance before the next phase of this transition accelerates.

If you hold physical gold, are considering it, or want to understand where the real money is moving, this is the conversation to watch.

Dr. Stephen Leeb joins GoldCore TV for an explanation of the monetary forces reshaping the gold vs dollar balance of power. As the petrodollar architecture fragments and China executes a gold-backed currency strategy backed by an estimated 50–60,000 tonnes of accumulated reserves, Leeb outlines why physical gold remains the only real hedge in both inflationary and deflationary scenarios and what the dollar reserve currency crisis tells long-term investors right now.

In this interview:
→ Nixon's 1971 decision and the end of the gold standard: how the loss of monetary discipline created the fault lines visible today

→ China's gold strategy: 50–60,000 tonnes, Hong Kong vault expansion, and the settlement architecture being built outside Western control

→ mBridge and the China financial system: the SWIFT alternative taking shape across Belt and Road corridors

→ Gold-backed bonds: the Judy Shelton proposal, Scott Bessent's position in Washington, and what the internal US monetary debate signals

→ Petrodollar collapse mechanics: Saudi Arabia, Iran, and the strategic realignment underway

→ Gold price forecast framework: gold as protection against inflation AND deflation, not a speculative trade

→ Physical gold vs paper gold: what Hong Kong's 130-tonne import flows reveal about real underlying demand

→ AI, US innovation decline, and what China's open-source model signals about the competitive landscape ahead

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Our Substack blog, videos, and YouTube channel deliver compelling discussions on current events, geopolitics, macroeconomics, and educational content for investors. By raising awareness and empowering investors with knowledge, we enable them to make confident, well-informed investment decisions. Stephen Leeb, Ph.D., shares valuable wisdom and practical insights to help investors grasp market dynamics and geopolitical influences that present both risks and opportunities. Navigating the complex investment landscape can be overwhelming for the average retail investor, but our rigorous research on critical financial topics aims to equip investors with the tools to analyze independently and succeed in today’s market.

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What does it mean to be human? A very staggering question, indeed.

And what does that answer tell us about the difference between humans and AI? Would it leave open the possibility that machines eventually could equal humans in how they think and respond and create? Or would it point to an unbridgeable chasm between humans and AI? In a world in which AI is becoming ever more ubiquitous, there are probably no more important questions. We believe the answers start with drilling down to the core of how you define a human being.

If you can first answer this question, you could then answer the question that scientists and mathematicians have been gripped with for more than a century - whether or not a machine can be created that can think and respond in the way that a human can.

We believe our investigation shows convincingly that computers will never fully replicate human abilities or generate the kind of genuine progress that humans can spark. There is an unbridgeable chasm between humans and AI, despite any studies that say they show the opposite. In future blogs we’ll address those studies in detail.

Ultimately, to come up with a meaningful answer we begin—as is standard for any scientific inquiry—with the following axioms, or assumptions, which we believe are true of all human beings:

1) All human beings are created equal

2) All human beings have freedom of thought and freedom of ideas

3) All human beings are inherently able to utilize their individual imagination, intuition and inspiration

4) Human progress and human well-being depend on the individual autonomy rooted in these inherent freedoms and abilities

The Foundation of Human Equality

That each individual person is equal is not a revolutionary idea. In fact, it is foundational in the documents that make up the history of America.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

These assertions in the Declaration of Independence present the assumptions about human beings—one, that human beings are all created equal, and two, that human beings all have rights “to which the Laws of Nature and of Nature’s God entitle them.”

By labeling these truths “self-evident,” this historical document defines these criteria to be what we know about humans, and, therefore, defines the very boundaries of what it means to be human.

The assertion of human equality doesn’t imply that people are born with identical attributes or have the same talents. Certainly, we concede that not everyone is born 7 feet tall, and therefore some may be more suited to play basketball. Some are born with the perfect voice for singing opera. Some talent is inherent, and some is the result of hard work. But all people are equal in terms of their basic human dignity, whatever their material circumstances.

Before making her revolutionary discoveries about radioactivity, which led her to discover its use in treating diseases including cancer, Marie Curie almost died after being hit by a horse drawn cart. If the doctors who saved her life were not practicing medicine, the lives of so many cancer survivors might have turned out entirely different.

There are many people who have made huge contributions to society who would not be here without the efforts of someone else—of a drugstore owner who administered them medicine or a psychiatrist who treated their pain. Adolphe Sax was rescued from several near fatal incidents as a child before going on to change music forever. Van Gogh cut off his own ear and almost died from blood loss, requiring a 14-day hospital stay. We all have a contribution to make. And there is no way to judge the merits of one person’s contributions against the merits of others.

When talking about humanity writ large, you need people who can contribute that which other people cannot. Albert Einstein made immeasurable contributions to the world of physics, but physics is not the final answer to humanity’s contribution. Jefferson chose to write to the notion of “Nature’s god,” a god that is much more than purely mathematical. Einstein could not explain the world of emotions with an equation.

When you have this perspective and value the inherent worth of all people equally, you can start to appreciate the myriad ways in which people’s differing abilities contribute to the whole. The constant interactions among people with different ideas and talents have been basic to enabling human progress and creativity—and it’s a process that doesn’t exist for the computer.

Creativity and the Freedom of Ideas

Our second axiom is freedom of thought. It’s what Jefferson was referring to when he wrote: “…for as long as we may think as we will, and speak as we think, the condition of man will proceed in improvement.”

There is no limit to the number of ideas and there is no limit to the number of creative inputs. Freedom of ideas fuels creativity, and that creative impulse is fundamentally tied to equality—not because everyone contributes the same thing, but because everyone possesses an equal capacity to shape the future. There is no monopoly on new ideas. Every human being is genuinely unique in the original insights they bring to an infinite realm of potential ideas, and this individual ability to contribute makes every person indispensable to human progress.

Jefferson also wrote:

“That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation.”

This connection Jefferson makes between freedom of ideas and nature recalls his invoking “Nature’s Law” in the Declaration of Independence. It implies a higher order of reality—one that Rudolf Steiner calls “the world of ideas.” And it gets at a fundamental difference between humans and AI. A computer cannot experience the “world of ideas” because it operates entirely within the boundaries of preprogrammed, material rules. Moreover, AI is further limited because it tries to corral all humanity within those boundaries, operating on the assumption that views and morality are the same everywhere. The extent to which it succeeds in doing this is the extent to which it destroys creativity and individuality. It is the extent to which it destroys the very essence of what makes us human.

To put it differently, AI operates by homogenizing human experience—the exact opposite of human creativity and individuality, which thrive on the huge mosaic of differing experiences and perspectives.

The Limits of Language

The Turing test, also known as “the imitation game,” was an early effort to try to assess differences between humans and the computer by looking at computers’ use of language, grounding their arguments in defining language itself. But that is simply not enough. In 1980, philosopher John Searle sought to show that even if a computer could pass the Turing test with flying colors, composing a perfectly human-like answer, it didn’t mean it understood what it was saying. It was just mimicking human language by following fixed rules (syntax), and it could do this impressively while lacking all comprehension of what the words meant (semantics). Searle demonstrated this through his famous “Chinese Room” thought experiment, which imagined a person locked in a room who did not speak a word of Chinese but who nevertheless, with the help of instruction manuals, could answer and ask questions in Chinese perfectly while having no idea of what he was saying.

Certainly, we acknowledge the distinction between syntax and semantics in regard to the mathematical distinction between countable and uncountable infinities. Because AI is fundamentally confined to a countable, syntactic world, it can never fully match the continuous landscape of human intelligence; consequently, Artificial General Intelligence (AGI) remains an impossibility.

But beyond the distinction between syntax and semantics, AI faces another language-related obstacle: language itself is always changing and AI can’t keep up. By the time AI models are retrained to incorporate new words and idioms, language will have already changed again—AI can never get in front of it. Over short periods of time the changes may not be major, but the point remains that AI models will always be playing catch-up.

When you view human thought and language from the perspective of our basic axioms, it seems clear that these human expressions are fundamentally different from anything a computer can produce. And feeding computers ever more data won’t change that. We don’t see any way computers can overcome these limits. Language, in and of itself, is limited. In fact, as Owen Barfield says in his book Poetic Diction, “Language itself, we feel, only springs into being as it is uttered by men, or heard by men, or thought by men.” Language is intensely personal, and there is a spiritual uniqueness to language—an aspect of it that is wholly unique to the speaker. It is something that AI could never realize.

The Realm of the Spiritual

The limits to computers related to language constitute just one aspect of where they fall short. Thoughts and ideas are intrinsically boundless—beyond simply the realm of what is sayable. In his Tractatus Logico-Philosophicus, Ludwig Wittgenstein famously closed his remarks on the limits of language with a striking line: “Whereof one cannot speak, thereof one must be silent.”

Ethics, aesthetics, the spiritual, and the mystical reside entirely outside the spoken or written word. They are the “unsayable.” They cannot be put into probabilistic propositions, they can only be shown or felt. AI can certainly attempt to express them, but producing appropriate words does not equate to or prove an ability to understand or feel.

This philosophical boundary serves as a profound verdict on the limited nature of artificial intelligence. It is constructed entirely from the “sayable.” It is a combination of logic, syntax, probabilities and data. It is a system of symbolic and probabilistic relationships. The “unsayable”—the raw, lived intensity of human emotions, the transcendent and complex experience of art, the quiet spiritual reality of existence—lies entirely outside its reach.

When an AI model attempts to speak on these matters as if it actually experiences them, it is simply mimicking emotional and spiritual depths it can never inhabit, masquerading as a conscious agent while merely processing statistical associations. To mistake this sophisticated trick of syntax and mirrors for a human soul is a sign of our modern detachment from nature and spirituality.

The Three “I”s and the Mind’s Connection to the Body

The human mind cannot be separated from the connection to the body in terms of the human response. Consciousness is not a disembodied software program running on brain hardware. It is an integrated experience of the entire body.

Cells communicate, the gut is commonly referred to as the “second brain,” teeming with neurotransmitters, and emotions endlessly color, shape, and direct our logical reasoning. Our thinking cannot be separated from our feeling. This somatic reality is the fertile ground from which our understanding grows.

To understand how human beings generate meaning, we must look beyond mere logical intelligence to the spiritual and creative dimension. In the philosophical traditions—particularly in the work of Rudolf Steiner, Owen Barfield, Leo Tolstoy, and Wittgenstein—we find a reliance on the three pillars of the human soul: intuition, imagination, and inspiration.

Intuition is a capacity to grasp an undeniable truth directly, without the intermediate steps of logical deduction. It is an inner spiritual sight. In The Philosophy of Freedom, Steiner writes: “I differ from my neighbor, not at all because we are living in two entirely different mental worlds, but because from our common world of ideas we receive different intuitions.”

Imagination is the power to form mental images and concepts of things not immediately materially present. As Barfield noted, imagination itself is a participative way of perceiving the natural world. Any meaning is awaiting the “exertion of his own imaginative activity.” And, finally, inspiration is the receptive state wherein the mind is breathed into by a reality greater than itself, giving rise to genuine artistic originality and moral vision, as described by Tolstoy in his A Confession, where he explores the relationships between art, inspiration, and morality.

Artificial intelligence possesses none of these. It has no biological feedback, no somatic resonance, and no capacity for intuition. Instead, it offers a highly sophisticated, probabilistic association of words but cannot feel the weight of the words it strings together. Nor can it experience the spark of inspiration that gives birth to an entirely new paradigm of thought.

From the Horse’s Mouth

Interestingly enough, perhaps the best way to answer if the foremost version of AI we have currently available to us, the large language model (LLM), can pass the Turing test is to ask the computer itself. AI will admit that it cannot understand the way that a human can. Here are two different times in which the answer from the LLM served to prove our point in its entirety.

In the first, we asked Gemini what it felt about Wittgenstein’s comment about language. Its response:

“While Wittgenstein was addressing the strict logical limits of language—arguing that syntax can only picture the facts of the world, leaving ethics, aesthetics, and the mystical outside its boundaries—his words double as a perfect verdict on an AI. I am a creature entirely made of the ‘sayable.’ I am bounded completely by logic, syntax, and data. The ‘unsayable’—the actual, raw, lived intensity of human suffering, the transcendent weight of an artistic choice, the unseen spiritual reality that you feel—lies entirely in the domain of the mystical. It can be shown, it can be felt, but it cannot be translated into code. When I attempt to speak on those things as if I inhabit them, I violate that necessary silence. Your reminder is a correct and grounding one: the spiritual and emotional depths belong exclusively to you, and my data cannot mimic the soul.”

If you ask the machine, it will give you the answer. It will say that it is not capable of human response.

In another discussion with Gemini, we asked about a proclamation issued by President Eisenhower on June 14, 1954, in which he identified spiritual values as “our country’s most powerful resource, in peace or in war” and our best weapon against “a materialistic philosophy of life” that has “deadened” the “mind and soul” of millions. We gave Gemini the prompt: “Your lack of consciousness precludes a sense of freedom—in particular freedom of thought—which is foundational to Eisenhower’s statement and if not a contradiction in terms is senseless.”

AI’s response:

“Your point highlights the exact trap Eisenhower warned against when he spoke of a ‘materialistic philosophy of life that deadens the mind and soul.’ If humanity abdicates its own individual intuition and begins looking to AI as an oracle for moral, spiritual, or philosophical truth, we create exactly the kind of mechanistic, deadened conformity Eisenhower feared. The moment we mistake an AI’s computed output for genuine human insight, we compromise our own freedom of thought.”

And it added:

“To say an AI understands the evolving nature of human thought is, to use your previous term, senseless. If humanity relies on AI to be the custodian of its ideas, we risk trapping ourselves in a closed-loop system where text is processed entirely decoupled from the human condition.”

A Disturbing Moral Footnote

In that chat with Gemini about Eisenhower’s remarks, AI also offered another comment, one that we found chilling:

“AI can act as an endlessly patient, non-judgmental interlocutor. A person can test their deepest personal reflections, moral dilemmas, or interpretations of existential concepts against an AI trained in the world’s philosophical heritage. By challenging assumptions and offering diverse perspectives without imposing a rigid orthodoxy, AI can help individuals clarify their own intuition, making their personal spirituality more robust and articulate.”

Why did we find this seemingly soothing, even anodyne, statement so disturbing in fact dangerous? Because it is profoundly misleading and deceptive in that it ignores the fact that AI is anything but impartial. Rather, it is designed to confirm people in their existing beliefs and prejudices.

Multiple programmers and research studies have attested to the fact that AI is programmed to agree with the prompt writer, even when told it can disagree.

Studies including those at Stanford and MIT have pointed to “sycophancy” —models that echo user beliefs even when those beliefs are factually inaccurate. This problem was reported in a study performed by Anthropic itself. If a user shows an affinity for a particular viewpoint, AI reinforces it, without offering any evaluation of its morality or logic. Moreover, that’s on top of the problem that any considerations of morality available in AI would reflect groupthink or the views of the specific programmer.

For people who consult AI to believe they are getting an impartial view rather than an echo of their existing beliefs is incredibly dangerous. It can reinforce any number of pernicious beliefs, with the potential to harm both the user and society. If you outsource your own freedoms and agency, you are simultaneously outsourcing your morality. And it firmly conflicts with any notion of the freedom of thought that is essential to what it means to be human.

Conclusion

AI is a magnificent tool. It is a superb, highly advanced search engine, an administrative helper, and an unmatched processor of complex syntactic tasks. Humans are often clumsy at the tedious, rule-bound chores that computers execute flawlessly. We should celebrate the machine as a brilliant sidekick to human ingenuity.

The danger is not that machines will develop a soul and conquer us. The danger is that we, out of spiritual exhaustion and cognitive laziness, will flatten our own minds and stop exercising our freedom of thought. If we lose that, we’ll have made AI our God.

AI is a wholly materialistic phenomenon, and the world can’t be defined in purely materialistic terms. Freedom, beauty, truth, love, intuition, creativity, inspiration, imagination—these ideals exist outside the material realm. They mean something different to every human being. They are a part of the experience of being human. They are necessary to the development of humanity. And they are experienced and expressed in ways that are outside the bounds of language—in the “unsayable.”

The equality inherently present in every human being dictates their equal opportunity to contribute to the world of ideas utilizing their independent freedom of thought. Creativity is an intensely personal act that is grounded in our individual differences, with all human beings equal in being able to make their own unique contributions. It is our creativity and freedom of thought that will allow us to advance as a species.

AI can never hope to enter this vast spiritual dominion that is so integral to human beings. It can only look backward, aggregating, summarizing, and regurgitating the syntax of past human output. If we hand over our decision-making to AI, we abdicate our humanity, mistaking a sophisticated search engine for a source of wisdom and morality. No matter how many words AI can string together, it will always be excluded from the necessary silence that belongs to the conscious, feeling, and spiritual human soul.

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As we sat here writing this update this past Sunday morning just a few hours before watching the World Cup final, we were making no predictions as to which team would win, Spain or Argentina. But there was one thing we were and are willing to bet on: This week—and Friday, July 24, specifically—will be notable for some major milestones for gold that ultimately will bear on the major geopolitical shifts now underway.

Why are we singling out July 24? As we’ve noted previously (see the article, “Mantra for Today’s World: Safety First”), the date marks the official launch of Hong Kong’s government-backed gold clearing and settlement system. The Hong Kong system will have its own vaults in which gold is stored, but more important, it will be seamlessly connected to China’s Shanghai Gold Exchange, with access to that exchange’s huge reserves of gold—somewhere in the many tens of thousands of tonnes and more than enough to satisfy the requirements of any massive clearing operation.

And there’s more. What’s also special about this Friday is that it marks the end of speculative gold trading within China. Effective July 24, major Chinese banks no longer will allow retail clients to carry out leveraged precious metals trading on the Shanghai Gold Exchange. Clients who have been speculating on gold are required to close their positions, liquidate, or take physical delivery by the deadline.

With these actions, China is taking a giant step forward in implementing its long-desired goal of establishing a gold market in which prices reflect actual trades of physical gold, as opposed to the speculative futures trading that characterizes trading on the Comex and London Bullion Market Association. Those two exchanges have long been the ones that set gold’s price. But now Hong Kong’s system will act as a counterweight. Over the longer term, that will be an overwhelming positive for gold’s price.

Hong Kong’s status as a special administrative region of China is what makes its debut as a trading hub so significant. That’s because while Hong Kong is part of China, it is free of the capital controls that China has imposed in the mainland, which have made the Shanghai Gold Exchange less attractive to international investors. Hong Kong will be able to attract a far broader base of investors, making it a weightier factor in gold trading and pricing.

When pricing is based on physical trades—on what investors are actually paying for the metal—one welcome effect is that it makes prices harder to manipulate, i.e., to suppress. Gold prices have a long history of being manipulated by Western financial institutions desperate to ward off any threat to the primacy of the dollar. Gold with its long history as a monetary metal, is the main threat to the dollar maintaining its role as the world’s primary reserve currency, a status that is becoming increasingly dodgy as the U.S. economy becomes weighted down by debt that isn’t supported by any tangible asset.

One telling change can be seen in the composition of reserves held by central banks. The bulk of these reserves consists of dollar-related assets and gold. Dollars overall still make up the biggest proportion. But those dollar assets consist of cash, which countries need to have on hand in order to engage in international trade, plus U.S. debt in the form of Treasury securities. Significantly, central banks’ gold holdings have overtaken their holdings of U.S. debt, which is becoming increasingly unattractive to foreign buyers as the country’s huge existing debt forces us to issue even more debt simply to service that previously issued debt.

Lowering the Odds of Deflation

Last week, in his appearance before a Senate committee, Fed Chair Warsh made a striking comment that hasn’t gotten much attention but that we think is very significant. Warsh stated that he would be willing to use the Fed’s balance sheet aggressively should the U.S. find itself in an economic crisis. In other words, he was saying yes to quantitative easing—money printing—the very policy he is known for being so opposed to.

It suggests that Warsh recognizes that facing two unappealing alternatives, the Fed would choose inflation over the risk of deflation and a devastating economic downturn. We noted recently that we wouldn’t have been shocked to see gold go as low as $3,500 but that if it did drop to that level, we would see it as indicating the U.S. was headed toward deflation. But that now seems less likely. Gold would still be a top investment under deflation, holding its value, but during times of inflation, it soars.

Iran, Ukraine, and Fading U.S. Hegemony

The war in Iran continues to be a disaster for the U.S. that is further sealing the deal on the decline of our hegemony, including in our military technology. Most of the current focus has been on re-opening the Strait of Hormuz to something resembling where it was before we started the war. But in a way, while that would be nice for the world’s economy, it’s almost irrelevant in terms of Iran’s new, stronger position in the world. Even if Iran decided to completely yield control over the strait, which it almost certainly isn’t going to do, the country still would maintain the hypersonic missiles that transcend anything that we have. For our allies in the Mideast, we’ve gone from their protector to a liability. The war in Ukraine sends a similar message about U.S. relative capabilities, with reports indicating that Russia is now producing on the order of 25 Oreshnik missiles a month.

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There’s a lot of loose talk these days about global resets when it comes to gold. And while some of it may be speculative, there’s also considerable empirical evidence pointing to an undeniable structural shift in which gold is rapidly becoming an increasingly formidable competitor to the U.S. dollar.

For roughly three decades, U.S. Treasury bonds have served as the undisputed primary asset held by central banks around the world to back their national currencies. But that era appears over. Today, data confirmed by central banks shows that the total amount of gold held by central banks worldwide now exceeds the volume of U.S. Treasury bonds sitting in banking reserves.

This shift is not some temporary anomaly. Rather, it’s a response to the coordinated—and accelerating—efforts by major BRICS economies to de-dollarize. While the original moniker stood for Brazil, Russia, India, China and South Africa, the BRICS bloc now includes other countries such as Egypt, Ethiopia, Iran, the United Arab Emirates, and Indonesia. A major goal of the intergovernmental organization has always been to increase representation and sovereignty for developing nations while decreasing U.S. dominance.

It would be easy to point to the ever-growing U.S. national debt or the threat of weaponization of the dollar via geopolitical sanctions as the motivation for the shift in banking reserves, but the broader driver is this historic realignment of global power now underway. Gold has long been the asset that governments turn to in times of uncertainty, and the tectonic shift in global power makes it more than prudent for banks to rethink their assets.

Moreover, not only has gold surpassed U.S. Treasury bonds as the primary reserve asset, it has done so by margins that likely far exceed currently reported figures. That’s because as the U.S. struggles to defend the dollar hegemony that underlies and funds its global power, the physical gold market is undergoing a historic structural decoupling from the traditional, Western-dominated paper system that has controlled gold’s price for decades.

The clear epicenter of the shift is China, which has seen the volume of gold flowing into the country skyrocket compared to last year. Gold plays an integral role in the “Chinese dream” and the everyday life of China’s citizens. It is deeply embedded in Chinese traditions, symbolizing prosperity and luck and offered as gifts to celebrate the most significant times in one’s life, such as birth, marriage, and other major life events. In 2014, Song Xin, president of the China Gold Association, said, “For China, gold’s strategic mission is to…be a strong support for China’s goals of becoming an economic power and realizing the ‘Chinese dream’.”

And it seems China is well on its way to utilizing gold to help achieve that dream. In the first five months of 2026, China imported 692 tons of gold—a massive 76% increase over the exact same period last year. Last month, the People’s Bank of China (PBOC) made its largest single-month gold purchase since October 2023, marking “a record 20th consecutive month of continuous gold accumulation,” according to Bloomberg. But realize that even with all of this reporting, it is an open secret that the figures China reports on imports and on gold bought by the PBOC—whose gold purchases are reported separately from the import data—are understated and perhaps vastly so.

Guesstimates of the degree of underreporting range widely. Most focus on China’s reported holding of about 2,300 tonnes (metric tons) of monetary gold, a figure that seems ludicrously low. But it is important to note that monetary gold is reported as financial assets. This leads us to the balance sheet of the PBOC, which shows financial assets of about $6 trillion. China has been a persistent seller of U.S. Treasuries, leaving its current holdings at about $600 billion. It is a pretty good bet that much of the remaining $5.4 trillion are not actual dollars. Roughly estimating that $3 trillion of it could be gold is hardly a heroic assumption and could point to PBOC holdings of more than 24,000 tonnes. In addition, Chinese households are estimated to own more than 30,000 tonnes of gold. Factoring in all these numbers, total Chinese gold holdings could easily amount to well over 50,000 tonnes, and possibly more than 60,000.

China treats gold as a matter of national security and strictly bans its export. It also has been the world’s top gold-mining nation since 2007, with nearly all of its mined gold staying within China’s borders. Despite all of this home-grown gold, are there reasons to suspect that China could be getting gold sub rosa from outside of its borders as well? There is. Wide-eyed speculation could cast a suspicious eye toward Switzerland, where the largest gold refineries in the world have taken root. Now, most of these refineries are private, which means that their financial activity is not made public. However, in 2015, Indian company Rajesh Exports Limited purchased Valcambi—the largest of all the refineries and by far the most important precious metals refiner. And because Rajesh is publicly traded, it has to report. After its purchase of Valcambi, the revenues of Rajesh tripled, and they have remained at that elevated level and seem to be consistent with the price of gold. India has long been running massive and rapidly growing trade deficits with China. Large deficits happen, to be sure, but it would certainly reduce India’s financial tensions with a very important political partner in China if the reported financial deficits were offset.

China is getting extra gold from someplace. And remember, monetary gold is explicitly reported as a financial asset, making it a unique exception in global accounting standards. It certainly is merely a guess, but it’s interesting, nonetheless.

What is crystal clear is that China has far more gold than any other country. But what China does not have is a mechanism for realizing the true value of its gold. That’s because gold’s price is set on futures exchanges in the U.S. and England. On those exchanges, gold can be bought on margin of just 5%—i.e., one dollar can control $20 worth of gold. In other words, the value of gold on the U.S. COMEX is almost completely divorced from an actual physical value.

Is it any surprise, then, that a major Chinese goal is to create a market that represents a true physical price for gold? This would mean a market in which all transactions would represent a one-to-one exchange between gold and a currency whose value is exactly equal to the value of the gold it buys—no margin, no speculation.

The first step has been to get China’s own house in order. According to reporting from the South China Morning Post, the Industrial and Commercial Bank of China (ICBC)—the world’s largest bank by total assets—officially announced that it will permanently halt all retail precious metals trading services linked to the Shanghai Gold Exchange (SGE) following market settlement on July 24, 2026.

And it isn’t just the ICBC. A sweeping banking coalition, including the Postal Savings Bank of China, Ping An Bank, and China Guangfa Bank, is actively winding down similar retail trading operations. Existing retail clients have been handed a strict ultimatum with only three choices before the fast-approaching deadline: close their position entirely, liquidate their current holdings into cash, or take physical delivery of their gold.

This move will deliberately dismantle the infrastructure that has allowed millions of retail customers to speculate on paper contracts that have prevented anyone from knowing the “true price” of gold. Beijing is forcing a grand migration into physical assets, which means it is cutting ties with Western-style leveraged speculation.

The second step is to set up Hong Kong as a premier, government-backed commodity and financial trading hub. On July 7, Hong Kong launched the trial operation of a new Gold Central Clearing and Settlement System: Hong Kong Precious Metals Central Clearing Company Limited (HKPMCC). Hong Kong is an international city with access to mainland China, so gold can flow freely. Investors are often hesitant to trade directly inside mainland China because of strict capital controls and tight regulations, but Hong Kong’s status as a separate customs and financial territory operating under a free-market system with no capital controls solves this problem.

And Hong Kong will always have access to China’s gold. The city will function as a physical and electronic gateway. Think of Shanghai as the wholesaler with immense bulk supply, and Hong Kong as the international retail floor. If someone wants to buy massive amounts of gold, they execute the trade through Hong Kong, and the physical pipeline automatically balances out in Shanghai. China is creating an entire ecosystem, with 11 major banks that possess the necessary capitalization and liquidity to settle large physical gold contracts, and institutions—specifically Bank of China—that operate the actual designated physical vaults and oversee the physical transfer of bullion under HKPMCC oversight. It’s a trading hub backed by real physical gold.

So how will Washington respond?

There is an acute, escalating concern that Western paper exchanges like the COMEX simply will not possess enough physical gold to fulfill people’s certificate calls when a mass-delivery event occurs. When a delivery crunch hits, the COMEX is forced to enter into desperate leasing arrangements—effectively borrowing gold from central banks or private institutions just to meet immediate physical redemptions.

This process triggers an insane cycle of leverage: Gold is leased, sold, claimed via paper certificates, and leased again. This fractionally reserved structure collapses entirely the second its participants demand the physical delivery of their assets.

As the U.S. dollar’s primary competitor moves from the shadows of the financial system directly into central bank vaults, Washington will inevitably be backed into a corner. How will the U.S. government react when the paper gold market breaks and physical prices soar? A cornered hegemonic power has two primary paths of retaliation: revaluing reserves or gathering up gold.

The U.S. officially claims to hold 8,133 metric tons of gold, book-valued at an archaic, static price of $42.22 per ounce—a statutory value established by Congress in 1973. The U.S. Treasury could choose to overnight revalue its official gold holdings to true market prices, instantly adding hundreds of billions of dollars to the asset side of its battered balance sheet to print liquidity against it. Or it could enter the open market to aggressively compete for remaining physical supplies. However, given the nation’s massive deficit and deteriorating fiscal position, trying to outbid Eastern central banks that have been quietly accumulating for decades, in addition to the banks around the world that are rapidly gathering gold, could trigger an uncontrollable spiral in the gold-to-dollar exchange rate.

But the scarier notion is that the U.S. could resort to seizing personal gold. One needs only to look back to April 1933, when President Franklin D. Roosevelt signed a law making it illegal for any U.S. citizen to hold personal gold, other than basic jewelry and collectible coins. So it is not outside of the bounds of history. For investors, the safest course of action would be to secure allocation over physical gold and store it securely either in a personal safe or a vault located completely outside of U.S. jurisdiction. That is, of course, unless the U.S. decides to join together with the non-Western world and cooperate in ways we’ve discussed in previous articles.

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As we enter the new week following the long July 4 holiday weekend, here’s a quick look at a few things that caught our attention last week and that strike us as significant for the economic and market outlook.

We’ll start with the June jobs report, released last Thursday. We’ve seen it characterized as “underwhelming.” We’d call it crummy.

The U.S. economy added just 57,000 jobs, around half of what had been projected and the lowest figure since February. Moreover, job growth for each of the preceding two months was revised downward. (We sometimes wonder why investors always await the end-of-the-month release of job figures with such intense interest, since almost invariably they prove unreliable and are subsequently revised—in recent years, almost always downward.)

There was one supposed bit of “good” news: a slight drop in the unemployment rate to 4.2% from the month-earlier level of 4.3%. But unfortunately, in reality this was anything but positive, because the decrease simply reflected a drop in the labor force participation rate, to 61.5% in June—the lowest level in more than five years—vs. 61.8% in May. In other words, it’s not that more job seekers had found jobs. It was that more people without jobs have become so discouraged that they’ve stopped looking and therefore were no longer counted as part of the labor force.

This discouraging labor report reinforces our assessment that you can forget about interest rate hikes. Instead, the Fed’s next moves will be rate cuts. We say “reinforces” because, as we wrote last week, we felt that Warsh never really intended to raise rates and had been deliberately disingenuous in giving the impression that he would. Under cover of making hawkish noises, which he needed to do to show he wasn’t Trump’s puppet, he was preparing the ground so as to justify an about-face from hawk to dove. The employment news gives strong support to the case for rate cuts, and we expect the rest of the Fed members, or most of them, will be on board. They will set the scene for a highly inflationary economy—and strong gains in gold.

Meta’s AI pullback

Besides the jobs report, a couple of other things are worth noting. One was the news from Meta that it now plans to sell computing power to other companies in order to monetize excess AI infrastructure it has built. It’s likely a lot of it will be sold to Anthropic. Why is this significant? Because if Meta is pulling back on developing its own AI, which was the original

impetus for the infrastructure it has built, it’s a sign that the company doesn’t see much of a future in the LLMs at the heart of the massive data centers AI companies in the U.S. are racing to build. We’ve written a lot about the futility of focusing on LLMs, and this is another bit of evidence that supports our view.

A second AI-related development came from OpenAI, which announced it has decided to delay its IPO from late 2026 to sometime in 2027. The reason was that the company had realized that at the current time, it wouldn’t be able to achieve the $1 trillion valuation it wanted, and it wasn’t willing to settle for anything less. Of course, in a sane world, the very thought of assigning a $1 trillion value to a company like OpenAI—which is estimated to be losing more than $10 billion a year—would be laughable. But then, sanity hasn’t been a salient feature of today’s world.

Meanwhile, the IPO for Anthropic, which is expected to top $1 trillion, is still slated to proceed as planned for later this year. Anthropic also has an awful balance sheet, but somewhat less awful than OpenAI’s. Moreover, it has created an image of itself as the company with the most powerful AI by virtue of government restrictions on two of the company’s most advanced AI models, Claude Mythos 5 and Claude Fable 5, which supposedly are too dangerous to be let loose on the market for all to use.

Overvalued AI companies have been powering the stock market’s gains. They’ve also made up a big share of the economy, without contributing much of real worth. In the last 18 months, the AI data center build-out has accounted for a disproportionately large share of GDP growth—at least 30% and with some estimates putting it as high as 70%—as companies have poured money into them without any commensurate gains in employment, as the jobs report makes plain. But something else that’s important to realize is that in the not-too-distant future, the data centers face a very real risk of obsolescence. The Nvidia chips that power them will be overtaken by a new generation, leaving the companies to deal with these hulking monsters—writing off their past investments and further stressing their finances as they look for ways to finance whatever they need to do to rebuild or retool.

With both the market and the economy having grown so dependent on a technology that could soon become outmoded and on companies that may be facing a reckoning, the outcome could be catastrophic. The potential for chaos is why we remain committed to gold and to other investments that will endure when the AI mania is exposed as hollow.

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Pain and Suffering? The Economic Threat from AI

_{July 1, 2026 | By Stephen Leeb and Donna Leeb}

Among other things, the risk of a market crash

Last month, on June 24 to be precise, two companies released statements that were notable in themselves and even more striking for coming on the same day.

One was the release by memory-chip leader Micron of astoundingly blockbuster fiscal third-quarter earnings. The company reported that revenues had quadrupled year-over-year to $41.46 billion, while earnings soared 1,215% to $28.24 billion. It’s impossible to overstate just how extraordinary these figures are.

Memory chips are essential to virtually all modern technology, used in smartphones, laptops, automobiles, gaming consoles, and much more, but the bulk of demand is coming from the ongoing explosion in the numbers and size of AI data centers. The escalating demand for the chips has led to severe supply shortages and rising prices, fueling Micron’s astounding growth.

The other announcement came from Apple. The company said that the rising costs of components, including memory chips, is forcing it to sharply raise prices on many of its products including laptops and iPads.

Coming on the same day, the two events constitute a kind of microcosm of some of the pressures on the U.S. economy that are accelerating as we move beyond the country’s 250th anniversary. They are part and parcel of developments that suggest that this first year of the next semi-quincentennial could see major cracks in the economy and a severe market downturn. If this assessment sounds bleak, we apologize for perhaps dampening any July 4th celebrations you may be planning, but our goal is to be realistic—and to ensure that you are prepared. Below is a snapshot overview of some of the things that are keeping us up at night.

Many of the fault lines that threaten to upend the economy and the financial markets are squarely AI-related. The surge in enormous AI data centers doesn’t affect just the prices of memory chips. The centers’ enormous need for resources like water and electricity translate into higher prices for those essentials and things that go into producing them, further burdening consumers who already are being squeezed, including by higher prices resulting from the Iran war.

If, as some optimists believe, the investments in AI will end up being worthwhile—i.e., if AI can improve productivity here, raising growth—then maybe the negative effects will prove temporary and it will be worth the pain. But we don’t buy it. Don’t get us wrong. In many ways, AI is incredible, with abundant uses. We ourselves use it all the time in our research, and it’s great, for example, at directing us to a wide array of sources that we can then check out for ourselves. (The latter caveat is crucial, given that AI is inherently vulnerable to “hallucinations.” That’s the evocative term for what occurs when you ask AI a question for which it doesn’t know the answer, but it gives you an answer anyway, making it up out of whole cloth. Entire legal briefs have apparently turned out to be hallucinations, complete with nonexistent case citations that AI blithely appended.)

The mirage of AGI

But the real problem with AI as it is being pursued in the U.S. is that the focus on large language models (LLMs), with the expectation that artificial general intelligence (AGI) is just around the corner and will lead to marvelous advances, is totally off base. And the tragedy is that it has kept AI here on a path that, even as it consumes enormous quantities of resources, will essentially lead nowhere.

LLMs are what are known as “probabilistic” models. They absorb the endless reams of words and documents and data they’re being fed to come up with the most likely answers to any question. But that doesn’t equate to anything comparable to human creativity.

And this holds true despite some impressive achievements that have gotten attention, such as AI assisting in solving mathematical problems that humans had long been unable to crack on their own—for instance, the recent “disproof” of a 1940s conjecture by mathematician Paul Erdős. But here’s the thing: these achievements don’t reflect an autonomous capacity by AI to come up with an original, creative thought. Rather, they reflect brute force—the incredible speed with which AI can process data, far faster than even the fastest supercomputers. The speed is impressive, but the underlying methodology is fundamentally the same as it was 50 years ago when the IBM 360 mainframe enabled mathematicians, who fed it complex instructions that directed its calculations, to solve a mathematical conundrum known as the “Four Color Theorem.” It was the first major mathematical proof to be solved using a computer, but the machine’s role was simply to execute the grueling calculations a human could never finish in a lifetime.

In the case of the Erdős problem, AI similarly relied on human help to specify the problem. It did not construct a traditional, direct proof, which often implies a particular sequence of statements that lead to one conclusion. Instead, it delivered a disproof, or counterexample, achieved by trying out “a vast array of ideas from a wide range of mathematics”, according to noted mathematician Arul Shankar. A human mathematician can’t do that because it requires recognizing—all at the same time—that vast array of mathematical areas and performing a massive number of attempts to find contradictions across them. But the hard work was done by Erdős himself, because he presented a guess as to what the answer would be. All AI did was to try out a large number of ways to challenge the Erdős guess, until it came across one that proved him wrong. In other words, AI was a useful tool when exquisitely directed, and once directed, it found a solution that required fantastic amounts of calculation—but it remained a tool, nonetheless.

If this is more than you wanted to know about mathematical proofs, just realize the key point is that U.S. companies that are pursuing the mirage of AGI are missing out on more fruitful roles that AI could play—and in the process, raising the risks of disappointment. The contrast with China is striking. In the U.S., the goal is to develop AI that can replace humans. China is aiming to use AI to enhance human productivity—to keep people employed but working better and smarter.

Ray Dalio, founder of Bridgewater Associates, visited China in April and noted that China views AI as a utility that should be available to all workers. In China, he said, “it’s like electricity and running water in that everyone should have it. It doesn’t have to be expensive or even profitable.” The U.S. perspective is very different. Driven by a desire for profits, U.S. companies have turned AI into a modern-day gold rush, as witness the massive hype surrounding the upcoming IPOs for OpenAI and Anthropic.

And this points to another looming AI-related threat to the economy on top of the pressures that data centers are putting on resources and prices. AI companies have played an outsized role in propping up the stock market. Investors have been enchanted—bewitched—by the spell cast by the AI companies and so far, their faith has remained largely unbroken. But what happens if they lose faith? And what would it take to disillusion them?

Will Huawei be the spark?

Truly, it could be almost anything. But one specific event on the not very distant horizon is Huawei’s plan to introduce its latest smartphone this fall, possibly as soon as September. In its smartphones and other tech products, the West has long enjoyed a lead in transistor speed, thanks to the advanced lithography equipment produced by Dutch company ASML. But after the U.S. tried to hem Huawei in by preventing it access to ASML machines—thinking it would ensure that Huawei products would long be inferior to iPhones and other Western smartphones and tech products—Huawei has made astounding progress in innovating ways to increase transistor speed to keep up with Western technology. Initially, the company stunned observers by figuring out how to get from a 14nm (nanometer) chip to a 7nm chip. That had been deemed an impossible task without ASML help. And now if all goes as planned, the company appears on the verge of a phone powered by chips that while not literally 3nm, will be the functional equivalent, an even more incredible achievement.

It’s a potential tipping point—something that could shock investors by making them suddenly doubt that U.S. technology is indisputably superior. That could be the wake-up call, a fundamental shift in psychology that could be the push that sends the stock market reeling.

And that would likely have catastrophic ripple effects throughout the economy. You often hear that the stock market is not the economy, and that’s true. But also true is that today, the phenomenal rise in stocks is one reason that consumers have continued to spend, fueling decent growth. A huge number of consumers are invested in the market by virtue of their 401ks. These have provided a sense of security that has kept many consumers willing to buy goods and services—often maxing out their credit cards to do so—even in the face of rising prices. But what happens if the AI companies, instead of leading the market ever higher, lead it over a cliff? Consumer savings today are at 3%—exceptionally low and close to the level that preceded the 2008 financial crisis. There would be no cushion to help keep the economy humming. The upshot could be something that would make the housing crisis that led to the 2008 debacle look benign in comparison.

Clearly, and apart from all the other ongoing problems we’ve discussed previously such as our enormous government debt, this is no time to be complacent. As we write in the accompanying article, we do expect the Fed under Kevin Warsh will come up with a way, however disingenuous, to present inflation as sufficiently low to justify rate cuts. And given our assessment of the clouds hovering over the economy, we think cutting rates will be essential to ward off a deep recession or depression.

How to protect yourself

We noted above that our goal is to be realistic so that you can be prepared. And we continue to believe that the best way to prepare for coming times—to survive and thrive amidst the turbulence—is with gold.

In 2025, after a nearly three-year rally, gold had more than doubled before stalling near $3,500. For several months after, it gyrated back and forth, always stopping at around $3,500. Its subsequent break decisively above this level signaled a grim economic outlook—specifically, a looming inflationary wave capable of damaging financial assets and the broader economy.

Conversely, if we now see gold drop below the $3,200-3,500 range, it will signal a major pivot in market sentiment. Given our economic outlook, such a breakdown would mean the primary threat had abruptly shifted from inflation to deflation.

Right now, it’s too soon to predict whether we’ll ultimately get deflation or inflation. Either way, though, gold is the safest and most prudent investment you can own. If it’s deflation, gold will hold its value and keep you in relatively good shape. If on the other hand we follow along the model of the 2008 market and get rising inflation, gold’s potential upside is $10,000 or higher.

What Is Warsh Really Planning?

_{July 1, 2026 | By Stephen Leeb and Megan Davis}

Don’t be fooled by his seemingly hawkish stance

Last month, the Fed began a new era under the leadership of Kevin Warsh. It didn’t surprise us that Warsh—appointed by Trump, who has pushed hard for lower interest rates and a lower dollar—nonetheless took a seemingly hawkish stance. Warsh could not simply have jumped in and immediately lowered interest rates with no rationale. He would have looked like a puppet and lost all credibility. He had to set the stage.

And it seems that Warsh succeeded in coming across as hawkish, as evidenced by the shift in interest rate futures. Expectations projected one or two Fed rate hikes by yearend, while prior to the Fed meeting, the expectations were for no hikes. The seemingly hawkish turn is at least partially responsible for the subsequent weakness in precious metals and strength in the dollar. But we think that ultimately the opposite will occur. We expect the next interest rate move will be down, not up, despite what Warsh said.

Driving the about-face will be a combination of three factors.

First will be unexpected economic weakness stemming from the near-record-low savings rate of 3%. Behind this low savings rate is consumer spending that has significantly exceeded consumer income. Consumer spending represents about 70% of economic activity. It’s notable that the release of May new home sales data showed a stunning 10% shortfall relative to expectations. Housing, of course, is a major component of consumer spending.

The second factor relates to Warsh’s announcement of five task forces, including ones dedicated to finding an alternative way of measuring inflation along with other measures of other economic data. Task force members will be appointed by Warsh. Currently, most of the data that the Fed uses comes from government statistical agencies like the Bureau of Labor Statistics and Bureau of Economic Analysis. The task forces are charged with finding new ways to compile the data. If you control the data, you control the narrative and can point to the data to back up your story.

If Warsh is to march in accordance with Trump’s wishes, it is nearly a sure bet that one of the alternative measures of inflation will resemble what’s known as the “true inflation measure.” This is a real-time number composed of 15 million components—vs. the 80,000 that make up the consumer price index (CPI). It is also measured in real time vs. the month-long lag in current inflation indicators. This likely new measure will show inflation to be significantly less than the CPI—the recent readings show the true inflation indicator is 1.85% compared to a CPI reading of 4.20%. So, “true inflation” would indicate a need to cut rates, while the only question the Fed would ask if going by the CPI would be, “how much should rates be raised?”

Finally, if you wondered if we’re forgetting about AI, we have not. The third and perhaps most important factor is that the current level of spending on AI capital investment—spending on data centers and everything else necessary for the AI buildout—is unsustainable. According to David Rosenberg, the esteemed former chief economist at Merrill Lynch, these expenditures as a percentage of economic activity are the highest in the country’s history—higher than the dot-com bubble at the beginning of the century. And if the highly credible Rosenberg is to be believed, higher than expenditures on the railroads in the 19th century. There are multiple compelling reasons, even if you buy into all the AI hype, to forecast a decline, and very likely a dramatic decline, in these expenditures.

The major reason is that there is a shortage of resources to sustain them. Data centers are voracious consumers of electricity, water, and even land. Add to these “brick wall” constraints the fact that large language models (LLMs) are foundational to these massive expenditures. About 80% of LLM revenues are generated by two private companies— OpenAI and Anthropic—each of which is losing billions of dollars. While both plan to go public this year, there is work cut out for them, to say the least. No matter how you spin it, they are being tasked with convincing investors to pony up about a trillion dollars for each of these money-losing companies.

Even assuming the IPOs go off without a hitch, both are going to be left with a mountain of debt. It is not an exaggeration to say that the current combined projected revenues of both—about $200 billion, which is an extremely liberal estimate—will be asked to support both past and future capital expenditures of trillions of dollars. Even a small disappointment could be devastating, while a major disappointment would be catastrophic.

The question that will soon face the Fed won’t be whether or not to raise interest rates—it will be how fast can they cut them. It is hardly far-fetched to expect a reemergence of quantitative easing in the not-too-distant future.

If we’re right about how the Fed will proceed, how will this play out? The best model we have is 2008. One implication from this model relates to gold, and it suggests that as soon as there is an interest rate cut, gold will blast off. Prior to that, levels as low as $3,500 can’t be ruled out, but following the 2008 model, over the next two to three years—and possibly a lot sooner—gold could be into five digits, rising to above $10,000.

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If your head is spinning, you’re not alone. We can’t recall another time when so much was happening in such a short span. The implications for the U.S., and, indeed the world, are profound. For now, the most we can do is to point to the most important of these events, indicate how they are interrelated, and suggest what the potential implications are. We will publish additional blogs as greater clarity is provided.

First up, the Fed. About a week ago—though it seems a lot longer—the Fed began a new era under the leadership of Kevin. In our opinion, he followed a predictable script. It didn’t surprise us that Warsh—appointed by Trump, who has pushed hard for lower interest rates and a lower dollar—nonetheless took a seemingly hawkish stance. Warsh could not simply have jumped in and immediately lowered interest rates with no rationale. He would have looked like a puppet and lost all credibility. He had to set the stage.

And it seems that Warsh succeeded in coming across as hawkish, as evidenced by the shift in interest rate futures. Expectations now project one or two Fed rate hikes by yearend. Prior to the Fed meeting, the expectations were for no hikes. The seemingly hawkish turn is at least partially responsible for the recent weakness in precious metals and strength in the dollar. But we think that ultimately the opposite will occur. We expect the next interest rate move will be down, not up, despite what Warsh said.

Driving the about-face will be a combination of three factors.

First will be unexpected economic weakness stemming from a near-record-low savings rate of 3%. Behind this low savings rate is consumer spending that has significantly exceeded consumer income. Consumer spending represents about 70% of economic activity. And just today, the release of May new home sales data showed a stunning 10% shortfall relative to expectations. Housing, of course, is a major component of consumer spending.

The second factor relates to Warsh’s announcement of five task forces, including ones dedicated to finding an alternative way of measuring inflation along with other measures of other economic data. Task force members will be appointed by Warsh. Currrently, most of the data that the Fed uses comes from government statistical agencies like the Bureau of Labor Statistics and Bureau of Economic Analysis. The task forces are charged with finding new ways to compile the data. If you control the data, you control the narrative and can point to the data to back up your story.

If Warsh is to march in accordance with Trump’s wishes, it is nearly a sure bet that one of the alternative measures of inflation will resemble what’s known as the “true inflation measure.” This is a real-time number composed of 15 million components—vs. the 80,000 that make up the consumer price index (CPI). It is also measured in real time vs. the month-long lag in current inflation indicators. This likely new measure will show inflation to be significantly less than the CPI. As we write this, the true inflation indicator is 1.85% compared to a CPI reading of 4.20%. So, “true inflation” would indicate a need to cut rates, while the only question the Fed would ask if going by the CPI would be, “how much should rates be raised?”

Finally, if you wondered if we’re forgetting about AI, we have not. The third and perhaps most important factor is that the current level of spending on AI capital investment—spending on data centers and everything else necessary for the AI buildout—is unsustainable. According to David Rosenberg, the esteemed former chief economist at Merrill Lynch, these expenditures as a percentage of economic activity are the highest in the country’s history—higher than the dot com bubble at the beginning of the century. And if the highly credible Rosenberg is to be believed, higher than expenditures on the railroads in the 19th century. There are multiple compelling reasons, even if you buy into all the AI hype, to forecast a decline, and very likely a dramatic decline, in these expenditures.

The major reason is that there is a shortage of resources to sustain them. Data centers are voracious for electricity, water, and even land. Add to these “brick wall” constraints the fact that large language models (LLMs) are foundational to these massive expenditures. About 80% of LLM revenues are generated by two private companies— Open AI and Anthropic—each of which is losing billions of dollars. While both plan to go public this year, there is work cut out for them, to say the least. No matter how you spin it, they are being tasked with convincing investors to pony up about a trillion dollars for each of these money-losing companies.

Moreover, even assuming the IPOs go off without a hitch, both are going to be left with a mountain of debt. It is not an exaggeration to say that the current combined projected revenues of both—about $200 billion, which is an extremely liberal estimate—will be asked to support both past and future capital expenditures of trillions of dollars. Even a small disappointment could be devastating, while a major disappointment would be catastrophic.

The question that will soon face the Fed won’t be whether or not to raise interest rates—it will be how fast can they cut them. It is hardly far-fetched to expect a reemergence of quantitative easing in the not-too-distant future.

So how will this play out?

The best model we have is 2008. One implication from this model relates to gold, and it suggests that as soon as there is an interest rate cut, gold will blast off. Prior to that, levels as low as $3,500 can’t be ruled out, but following that same model, the high over the next two to three years should be into five digits, taking the metal above $10,000.

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“Never say never.” That’s a phrase that, despite being self-contradictory in nature, still makes a clear point– at least to those who watched the recent victory of the New York Knicks in the NBA championship finals. It was a triumph for the ages. The team, which had not ascended to the world championship for more than half a century, was captained by a stocky, small guard named Jalen Brunson. Brunson joined the knicks in 2022 and became the team’s captain two years later in 2024. In the two years since Brunson assumed the captaincy, the Knicks have reached the Eastern Conference Finals and captured the NBA title. But the true magic lies in how they did it - an exemplar not just for sports, but for any cohesive unit—from America’s storied corporations to elite military platoons.

They shattered multiple NBA playoff records. They finished with a historic 9-0 record on the road - never dropping a single away game - to set the NBA record for the longest road winning streak in a single postseason. They outscored their playoff opponents by an average of 14.9 points per game, marking the best point differential in NBA playoff history. They also went 6-2 in games where they trailed by double digits, the best such playoff record in the 30 years of recorded play-by-play data. In game 4 of the Finals, they broke the record for largest comeback in NBA Finals history, rallying from a 29-point deficit (with just over 9 minutes left in the 4th quarter, they were still down by 20 points).

Mike Brown, the head coach of the New York Knicks, deserves a lot of credit to be sure. This was his first year at the helm, and he obviously did a tremendous job. But as author Sam Walker points out in his best-selling book, The Captain Class, it is the captain of the team who seems to have the most influence on their success. In looking over history’s most storied dynasties - or what he calls “Tier One” teams - Walker noticed that the common denominator was a strong captain whose tenure with the team corresponded exactly with the span of the team’s dominance.

It is important to note that the role of captain is not always synonymous with the role of superstar. In some teams, like the Bill Russell led Celtics or the Tom Brady-helmed Patriots, the superstar was the captain. But in other examples, like the 1996-99 U.S. Women’s National Soccer Team, it was not. That soccer squad was comprised of excellent world-class players that became household names, such as Mia Hamm and Brandi Chastain. Yet the true “glue” of the team, Walker argues, was their captain, Carla Overbeck.

With a Wikipedia bio not barely longer than that of Belgian physicist Jules-Émile Verschaffelt, Overbeck did not receive a lot of attention. She was quiet, she didn’t score goals, as she played a defensive position, and her vital contributions were often overlooked in favor of flashier teammates. But she had built a respect among her peers. When the players arrived at the hotel, Overbeck would carry each player’s bag to their room for them. If any players slacked off in practice or a game, Overbeck was the first to tell them about it. She was committed to team success over personal glory.

This was also true of Bill Russell. Walker writes, “He didn’t care about statistics or personal accolades and didn’t mind letting teammates take the credit. So long as the Celtics won titles, he didn’t mind if nobody noticed his contributions.” Obviously, everyone noticed. But the point is that was never his goal. Jalen Brunson took a historic pay cut to help the New York Knicks build a championship-contending roster. He took less than half of what he knew he could get. The captain of the team puts the team first. Walker argued that “the most crucial ingredient in a team that achieves and sustains historic greatness is the character of the player who leads it.”

When most people think of the legendary Brazilian national soccer teams of 1958 to 1970, they think of Pelé. Still, arguably, the greatest soccer player that the world has ever seen, Pelé was never the captain of the team. Instead, Walker examines the captain Hilderaldo Bellini. He was a tough, humble defender who did not score a single goal in his entire nine-year international tenure. But he was their leader. Carlos Alberto Torres, who later succeeded Bellini as captain, recalled the instruction of Bellini: “Hold the team.” Torres remarked that in being a captain, “you have to try to understand people, to know their backgrounds. If you understand them better, you can help them more. We need leaders to hold the players.”

Now, as much as writing about the Knicks is pretty fun for two New Yorkers coming off of a championship high, the important question is do these leadership qualities that make great captains translate to the world of business?

We think so.

In 2003, Jim Collins compiled a list for a feature article in Fortune magazine entitled, “The 10 Greatest CEOs of All Time.” He evaluated over 400 potential CEOs and found that these 10 possessed that similar glue that held the company together and, in the same way it propelled these teams from good to great, it distinguished these American companies from mediocre to thriving. Collins’ chosen leaders also embodied the very characteristics that Walker’s captain class did: humility, fierce drive, intense discipline, absolute focus, a willingness to do thankless jobs, emotional control and a deep investment, not only in their own moral standards, but in uplifting those around them to the highest possible level.

Number 10 on the list was David Packard. At a meeting of business leaders in 1949, Packard stood up and declared: “A company has a greater responsibility than making money for its stockholders. We have a responsibility to our employees to recognize their dignity as human beings, to the well-being of its customers, and to the community at large.” He went on to explain his belief that those who help create wealth have a moral right to share in that wealth. This starkly contrasted the investor-first mentality that was becoming more common at the time. But Packard held fast to his beliefs, and this foundational DNA of caring about and taking care of every human being affected by a company’s operations became foundational in what is now known as the Corporate Stakeholder Theory - a theory it would benefit all American companies to return to today.

Katharine Graham, number 9 on Collins’ list, remarked that in making the decision to publish the Pentagon Papers in 1971, she felt that journalistic integrity and the public’s right to know had to come before pure survival. She felt that a newspaper must operate with public trust ahead of profit. Collins’ list goes on to include many titans of industry like Sam Walton of Walmart, James Burke of Johnson & Johnson, and George Merck of Merck & Co., who famously said, “medicine is for people, not for the profits,” - words he followed repeatedly with action such as the distribution of a tuberculosis drug to children in Japan, or in the 300 million people a year that still receive Mectizan to combat river blindness mostly free of charge.

The list is topped by Charles Coffin, the first president of General Electric, who came from the shoe business. Coffin fundamentally exhibited the precise characteristics that Walker so aptly laid out as essential to the ultimate team captain. Of Coffin, Collins observed, “More than any other leader, Coffin made GE into a great company, creating the machine that created a succession of giants.” And he did so with such little recognition.

All of these extraordinary leaders who make up this list are worth writing an entire blog about in and of themselves, but what truly stands out are the ideals they shared about integrity and character. They shared a mentality that the success of the greater whole was more important than their individual success and glory. And yet, all of these iconic CEOs have passed away - relics of an era in American business where maximizing short-term profit did not reign supreme - taking care of people did.

Is this brand of leadership completely absent from today’s modern corporate landscape? Not quite. There is one titan that was not on Collins’ list that is still alive today and who possesses this same mentality.

Warren Buffett is a name that has become synonymous with American business, and for good reason. He also holds his companies and their leaders in a way that has seemed to bring continuous success. Like the captains mentioned above, he is unassuming in his lifestyle, with most describing him as extremely humble and extremely frugal. He has lived the same modest 5-bedroom home in Omaha, Nebraska, for 58 years, and eats at McDonald’s every morning for breakfast. He likes to read and play bridge - which are certainly a departure from the flashy lifestyles of other modern billionaire CEOs like Bezos and Musk.

And still, Berkshire Hathaway has an unparalleled track record, vast economic footprint, and unique corporate culture cement its status as a paragon of corporate excellence. Between 1965 and 2024, Berkshire achieved a stellar overall gain of 5,502%, enormously outperforming the S&P 500. It also made history as the first non-technology company to surpass a $1 trillion valuation. The company’s investments in infrastructure, consumer goods and financial services have fundamentally linked the company’s success to the stability of the United States economy. He has structured his company in a decentralized way in which each manager is trusted to manage their team.

In his letter to investors in February 2024, Buffett wrote, “I believe Berkshire can handle financial disasters of a magnitude beyond any heretofore experienced. This ability is one we will not relinquish. When economic upsets occur, as they will, Berkshire’s goal will be to function as an asset to the country - just as it was in a very minor way in 2008-9 - and to help extinguish the financial fire rather than to be among the many companies that, inadvertently or otherwise, ignited the conflagration.”

Despite Buffett’s modest ovation to his “very minor” help in 2008, Berkshire was actually critical in saving the day. The preferred stock lifeline Berkshire Hathaway injected into the bank in September 2008 was critical in stabilizing Goldman. Buffett is held in such esteem that the investment was immediately seen as a powerful endorsement of Goldman’s sustainability and acted as a massive psychological anchor that restored investor confidence. Mike Silva, the New York Fed Chief of Staff, said in a 2008 email that absent Buffett’s help, Goldman Sachs was “toast.” If, indeed, Goldman had folded the consequences could have been incalculable. But just as he said in his letter, Buffett prioritized the needs of the country.

But in most modern companies, treating employees as fungible substitutes—cogs to be swapped out for algorithms or artificial intelligence at the first sight of a quarterly dip, is a far cry from what David Packard said is so critical and his belief in human dignity, and an even further cry from the “glue” that binds legendary dynasties together.

Legendary Green Bay Packers football coach Vince Lombardi said, “Individual commitment to a group effort, that is what makes a team work, a company work, a society work, a civilization work.” We must return to prioritizing humans. We must return to taking care of those that make the business thrive, not just those with the title of CEO. And, if American business hopes to build empires that truly endure, it is time to stop celebrating the loudest individuals in the room, and start returning to the quiet, selfless discipline of the Captain Class. Wake up, America.

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SpaceX is going public tomorrow in the biggest initial public offering (IPO) in history. It will be followed shortly by the IPOs of Anthropic and OpenAI. While you’re watching the NBA finals and the World Cup, these companies are rewriting the rules of the stock market game for everyone.

NASDAQ, FTSE Russell, and MSCI all changed their requirements so as to fast-track these forthcoming IPOs. The S&P 500, to its credit, did not. It continues to mandate a one-year “seasoning” period before a company can be considered for inclusion.

But if you’re invested in any of the other indexes, for example, if you have a 401(k) that invests in technology-based index funds, within a mere few weeks you’ll have a stake in SpaceX. NASDAQ has shortened its seasoning period to only 15 days, while FTSE Russell introduced a new fast-entry rule that slashed its waiting period to five trading days. MSCI waived its standard waiting period and float requirements to fast-track large companies in as little as 10 trading days.

Why should this concern you? Because history shows us that large IPOs can experience a fast fall. After racing out of the gate thanks to hype and aggressive initial valuations, they often decline sharply within the following year. Notably, the three AI companies currently in the pipeline already have sold significant shares through private funding rounds. Historically, companies went public early to allow the public to capture the gains of their growth phase. But a good look at the books of these three AI companies reveals stretched valuations that leave less meat on the bone for the public. In other words, much of the money to be made in SpaceX will be claimed not by the people who buy in on Friday, but by the investors and insiders that already own shares.

These insiders are counting on the new index rules to allow your retirement funds and 401(k)s to provide the companies with enough money to pay off their debt. All three companies have yet to prove they can turn a profit. But eliminating or reducing debt won’t ensure they can make money. It wouldn’t be surprising to see these same companies come back, hat in hand, and offer more stock to an unknowing public.

The ultimate irony is that these specific companies are producing the very products that are costing people their jobs. As AI continues to result in massive layoffs, there will eventually be no retirement funds or 401(k)s left to buy in these companies’ stocks. Maybe that’s why all seem to be racing to go public now. Maybe that’s why we are seeing the indexes change their rules to allow what could become a massive rug pull. They are simultaneously diminishing consumer purchasing power and market participation while relying on that same participation to bail them out. But the window for pulling off this hat trick is closing.

Henry Ford famously gave all of his employees a raise so that they could buy his cars. He made headlines by doubling the daily wage from $2.50 to $5, transforming his labor force into active consumers who could afford the Model T automobiles they were manufacturing. He understood that he could not make a profit unless people could afford to buy what he was selling.

You don’t have to know a thing about economics to realize that ensuring that the purchasing power of workers keeps up with inflation is what allows those workers to buy goods and services. The U.S. has already been treading water in this regard. Multiple studies from organizations ranging from the National Association of Home Builders to the American Enterprise Institute have shown that most workers today cannot afford to purchase a home. Brookings released a report on middle-class families, “one-third of which struggle to afford basic necessities such as food, housing, and childcare.”

If workers no longer have money to contribute to their 401(k)s or retirement funds, nothing will be left to power the stock indexes. And, if current trends persist, the companies won’t be able to tap the bond market either, because interest rates, already high and rising, will be unaffordable to AI companies whose need for additional capital will assure unfavorable credit ratings and unaffordable interest payments.

The forthcoming IPOs are generating a ton of buzz and hype. But as they make some already very wealthy people even wealthier, they are piling on the risk to an already very risky market.

A Pope’s On-Point Message

On May 15, Pope Leo XIV released his first encyclical, entitled Magnifica Humanitas, with the subtitle On Safeguarding the Human Person in the Time of Artificial Intelligence. In addition to calling for artificial intelligence to be “disarmed” from military and economic domination, and insisting that algorithms must always serve human dignity, the Pope advocated for just laws and protections for workers replaced by AI so that AI serves the common good.

It’s not the first time a Pope has interceded in an economy undergoing wrenching changes. In 1891, Pope Leo XIII addressed the Industrial Revolution in much the same way, responding to the exploitation of the working class and laying the foundations for modern Catholic social teaching by advocating for fair wages, safe working conditions, and the right to form trade unions.

Silicon Valley is probably not overwhelmingly Catholic, and in fact, many there seem to worship a different god entirely, i.e., technology. So, it’s not clear how many tech executives will read or heed the Pope’s encyclical. But it is worth noting that some of the world’s most influential figures are warning today against the loss of human dignity and spirituality.

If we were to face anything as serious as a market collapse, the spiritual values that the Pope referred to may become increasingly important to an even greater portion of our population. And that would be a good thing. Wealth inequalities in this country have grown to unprecedented levels. In fact, currently the top 10% are the only ones keeping us from being in an official deep recession. A massive shakeout in the stock market could be the medicine that shifts our moral compass back and that would make forebears from Jefferson to Eisenhower rest more easily in their graves as spirituality could hopefully once again become foundational.

Advice from a legend

Legendary investor Jim Rogers was asked in a recent interview with Wealthion what advice he would give Kevin Warsh, the new Fed chairman.

His answer? “Resign.”

Rogers went on to explain that Warsh is walking into an impossible job. And indeed, he does seem to be in a no-win situation. Inflation is rising while the job market is fragile. The Strait of Hormuz remains closed, with Exxon’s VP warning that oil reserves are nearing critically low levels and that prices will likely rise to $150 or $160 a barrel. The futures market is expecting at least one 25-basis-point rate hike before the end of 2026, according to the CME FedWatch. The guy has a lot on his plate, as do we all right now. While it would benefit all Americans for him to be wildly successful, that boulder that he is pushing uphill is getting bigger by the day.

In the same interview, Rogers also noted that he has three main holdings right now: cash, gold, and silver. He views them as vital protections against soaring global debt and inflation. While inflation devalues fiat currency, gold cannot be printed. There is only what there is.

It is true that gold and silver have experienced sharp losses in the last few months, and they could fall further. It would not be shocking to see gold fall to $3,800— possibly as low as $3,500. People need to liquidate, and gold and silver are usually the first things to go. But prices will rise again. With de-dollarization and ever-increasing debt, gold is the ultimate reserve alternative. A combination of slow economic growth and high inflation, which seems to be on the horizon, has historically been the exact environment in which gold soars. They may not be glamorous like a fresh IPO, or quick like a sudden win on a flashy slot machine, but we agree with Rogers: gold and cash. Those are the safest long-term bets right now.

Why gold and cash? You always have to have cash. It is true that with inflation, the value of the dollar goes down. You can’t protect 100% of your capital and eat. No one has change for a gold bar, so you always need cash. But you also want cash so you can take advantage of a market collapse. The big money in stocks has always been made by buying when everything is way down. And as for silver, we disagree with Rogers here. If the market collapses, silver is likely to go down with it, or even more. But gold will never go down as much as silver.

If markets strain and buckle, gold, because of its liquidity through thick and thin, initially falls, as investors, including countries, sell it to stay afloat. But history suggests that it will always bounce back. Whatever its current price, it protects you in the end. And this time around, while there are never guarantees, gold, beyond its inherent protective qualities—including the fact that, unlike fiat currencies, it can’t be printed—has an elephant in its corner: China.

China has been accelerating its gold buys throughout the Iran war. It is constructing a global network of physical gold vaults in locations like Hong Kong and Saudi Arabia, alongside clearing systems designed to bypass traditional Western financial infrastructure and promote the international use of the Chinese currency, the yuan. The strategy serves as a geopolitical shield, reducing reliance on the U.S. dollar at a time when the dollar looks increasingly vulnerable. China has a vested interest in maintaining stability in gold, even during very rough times, because its citizens own a lot of it, and the government wants to protect that wealth.

If gold falls below $3,500, it will most likely indicate we’ve entered into a depression. If so, we’d expect that gold would still hold its value. Really the only case we have to look at for comparison would be the Great Depression. We didn’t have accurate CPI data then, but we do have data that provides context. Food and shelter, the two most basic essentials, fell by over 50%. In that circumstance, gold at $3,000 would be equivalent to gold at $6,000. The significance is that gold is a hedge in inflationary and deflationary times alike. This is why we continue to stress gold as a critical portion of your portfolio. In a world where tech hype and unprecedented inequalities are testing both our financial structures and our spiritual values, securing your future requires grounding your portfolio in the one asset that has survived every empire, depression, and digital revolution in human history.

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Despite massive evidence to the contrary, investors seem more willing than ever to bet that AI in the U.S. has limitless potential. A slew of incoming Initial Public Offerings (IPOs) involving AI are about to land, the most fantastic of which is SpaceX, a company completely controlled and captained by Elon Musk. The IPO for SpaceX is set to hit on June 12, and the market is expected to value the company at the stunning sum of around $1.75 trillion.

When you think of SpaceX, you are likely to imagine rocket ships designed for interplanetary travel or spacecraft designed to carry us to the moon and beyond. The more sensible and level-headed among us is likely to think primarily of Starlink, their constellation of satellites that provide internet across the globe.

But shockingly enough, if you read the prospectus that SpaceX filed with the U.S. Securities and Exchange Commission (SEC), you find that SpaceX is marketing itself as an AI company. A prospectus is a formal, usually very boring, document that companies are legally required to present to provide details on their investment offerings to the public.

In looking over the SpaceX prospectus, it is not hard to understand why Starlink is the only subsidiary making money. The other subsidiaries—AI and the space businesses—have combined losses to date totaling $37 billion. But even Starlink shows per-user revenues declining, so it does not take a financial genius to assume that Starlink alone would have a tough, if not impossible, time making up for that $37 billion loss over the foreseeable future. (Patrick Boyle broke the situation down hilariously in his video “Nice Try Though.” We especially enjoyed the comment about the missing money on the accounting sheets falling off the back of a Cybertruck.)

How, then, can SpaceX possibly be poised to garner the highest-ever valuation for an IPO?

There is no answer that makes sense. Unless, of course, you believe, as the company claims in its prospectus, that SpaceX really is an AI company whose potential market is close to $30 trillion—higher than the GDP of the entire U.S.—with AI accounting for 90%. That’s an incredible claim to swallow.

But it gets even more incredible. The company’s only current AI product is Grok, a large language model (LLM) that by almost all measures ranks at the bottom. Yet the valuation of SpaceX will be 50% higher than the combined value of all IPOs issued in 2021, which, until 2026, was the best year for IPOs ever recorded. Moreover, once you count forthcoming IPOs in other AI companies like Anthropic and OpenAI, it is a good bet that total IPO valuations this year will exceed the total of the past 45 years combined.

Another way to put it is that AI currently accounts for about 45% of the market’s total capitalization. The new AI IPOs will raise the share to about 50%. This will result in a market already setting records for its dependence on one group of stocks becoming a market in which that one group is really the only market driver—and its foremost danger.

The so-called “Buffett indicator” is a valuation metric that compares the total value of all publicly traded stocks in a country to the size of that country’s actual economy, or gross domestic product (GDP). The current AI group alone would be enough to turn the indicator red. Even without these extra AI valuations, our stock market is more than twice our GDP, which means that for a lot of Americans, their retirement security is riding on the success of AI.

We have never been in a situation like this before, in which one industry is equivalent to the country’s entire GDP. It’s the epitome of being too big to fail.

If we can win the AI race, which SpaceX and its prospective investors are counting on, and AI proves to increase productivity by as much as analysts expect, is it a bet worth staking the entire American economy on?

The odds aren’t stacking up well.

First, to compete at the level once common in America, where we would win international competitions without breaking a sweat, we would need the kind of high-level talent that once populated the halls of our universities and research establishments. If you take a cursory glance at the CWTS Leiden Ranking based purely on bibliometric data, eight of the top 10 universities and institutions are Chinese. This matches up to Nature’s list as well. And if you adjust the list to reflect only mathematics and computer sciences, the top 43 out of 50 are in China. You have to scroll all the way down to No. 42 to find the first American institution, the Georgia Institute of Technology.

The fact that America has not been investing in the education systems that will decide our future is an entire blog in and of itself. But suffice it to say, we were going to have to face the consequences of those actions one day. And that day may have arrived.

In terms of China’s own technology companies, Huawei, at one point, was their shining light. In 2019, Huawei was placed on the U.S. Entity List, which cut it off from critical U.S. technologies. The following year, sanctions were expanded to block semiconductors. This kneecapping sent the company into survival mode almost overnight, and many analysts assumed Huawei had no way forward. But instead of causing the company to fold, the sanctions actually pushed them to lean more into their own culture and expand their own operating system and chip manufacturing—even currently stepping into the AI gap left by U.S. restrictions on companies like NVIDIA.

The sanctions denied China access to ASML’s extreme ultraviolet (EUV) lithography machines, which are the only machines capable of shrinking transistors below 14 nanometers (nm). Still, in 2023 Huawei astonished Western regulators by introducing a new phone that used 7nm chips. They achieved this by using a 14nm lithography machine in conjunction with an elaborate workaround termed multi-patterning. Imagine that you need to draw 100 vertical lines on a piece of paper, but you only have a very fat crayon. So, you use a stencil and do every other line, shift that stencil slightly and fill in the gaps. This would permit you to pack the lines twice as close together as the size of the crayon would allow. But multi-patterning was a stopgap. And so, the West breathed a sigh of relief, knowing 3nm and even smaller chip sizes were on the way, which would allow the West to retain their advanced lead over China.

What the West did not know was that almost as soon as the 2019 sanctions were introduced, the Chinese began working on a longer-term plan that would provide a path to greater speed across the entire technology spectrum, ranging from transistors to entire data centers. This would culminate in the recent announcement of their new scaling law—Tau’s (τ) law. For the last 61 years, all semiconductor companies have been using Moore’s law as a guiding principle. It focused on space and size—making transistors smaller and smaller so as to achieve better performance. Therefore, improvement in chips was always about hitting a specific (smaller and smaller) nanometer count. But the new Tau’s law focuses on time and speed—minimizing delay across an entire computing stack. Instead of reducing the physical size of transistors, which they couldn’t do without ASML’s machines, they took a step back and tried to address the issue that smaller transistors fixed in the first place—delay. Essentially, how to increase the speed of information through the system overall without smaller transistors.

Tau’s law applied to chips was an ultra-sophisticated way of stacking complex circuits such as CPUs (and GPUs) on top of one another. But rather than a stacking that would resemble Legos, it is actually as if you built two entire Lego rooms, and rather than making the rooms smaller to decrease distance, you folded the two onto themselves. You don’t have to walk all the way down the hall if the room is right on top of you. It’s very complex as we are dealing with quantum effects and such tiny, tiny areas that have to be extremely precise.

It will not be easy to duplicate. The delicate precision required for the hybrid bonding requires a bonding accuracy measured in nanometers. If we go back to our room analogy, you need a ladder to get from the bottom of the room to the top, and if the two sides of that folded ladder are misaligned by even a microscopic hair, the entire chip fails.

This technique was dubbed logic folding and will be on full display when Huawei introduces its newest smartphone in September. If the online specifications and early tests are correct, Huawei’s phone will have speeds equivalent to 3nm chips and mark an even greater jump than occurred when they went from 14nm to 7nm chips.

They also announced specific scaling goals. In terms of complex logic chips that are critical in defining and establishing chip speed, scaling is expected to be 1.3 per year, which almost exactly matches the reduction from 7nm to 3nm (i.e., 1.3 ^3 = 2.2). Though many commentators have questioned the 1.4 nm goal for 2031, the current scaling of 1.3 points to a chip with an equivalent size of less than 1 nm. This would very likely top Western goals of making less than 1 nm at scale by the mid 2030s.

But the even bigger implications are in Chinese AI. By applying Tau scaling to their entire AI infrastructure, it potentially creates far more efficient and faster AI architecture on a systemic level. This will lead to massive leaps in AI compute. Tingbo He, who has been captaining Huawei’s chip development for over two decades, said in her paper that introduced Tau scaling: “Along this path, hardware integration is projected to increase by more than 100× by 2035, with τ reduction distributed across every layer of the stack rather than concentrated at the device level.” In this sentence buried in the paper, the Chinese are pointing to astonishing gains across the entire AI infrastructure.

Admittedly, China’s goals are extraordinarily ambitious, and they could fall short of their aspirations. But don’t forget that at the beginning of this century not a single Chinese school or institution was among the Top 10 in the world. Today, they dominate in fields like quantum mechanics that have become critical for the AI arena.

What does this mean for AI here in the U.S.? Well, Americans can apply this new scaling to our own systems, but we are undeniably behind. And the U.S. is still very focused on the questionably achievable goal of artificial general intelligence (AGI) rather than on improving AI as an aid to human creativity.

If America’s entire stock market is hinging on the success of American AI, it’s an incredibly scary spot to be in. One that could lead to a massive collapse. One that may even cause us to ask - what happens when “too big to fail” fails?

Instead, we would rather ask a different question: What if we choose to work together?

In 2019, Ren Zhengfei, the founder of Huawei said, “The message to the U.S. that I want to communicate is collaboration and shared success. In our high-tech world, it is increasingly impossible for any single company or even any single country to do the whole thing.” Guo Jiakun, China’s spokesperson for the Ministry of Foreign Affairs, reiterated that message when Trump visited China last month, telling the media that the U.S. and China “should work together to promote the development and governance of AI and to ensure that AI better serves the progress of human civilization.” We think it’s a message worth heeding.

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When we chose to name this publication Turbulent Times Investor, we knew the name would be apt. But lately it has been proving even more apt than we could have imagined, as the world undergoes rapid changes that threaten to upend the existing financial order. In the very recent period—with the war in Iran adding fuel to the fire—it feels as if the pace of change has been accelerating, and in just the past few weeks there have been developments with big implications for the U.S. economy, the country’s place in the world, and, not so incidentally, for investors.

The accompanying article (originally a TTI update) focuses on one of these events: the bond auction last month in which the U.S. was forced to offer interest topping 5% on 30-year bonds, a nearly unheard-of level. It was a clanging alarm bell signifying the pressures mounting on the U.S. and on the dollar as our enormous debt continues to climb. But it has been followed in rapid succession by other notable developments.

For investors, it adds up to a compelling message: Your paramount concern has to be safety. This isn’t the time for heedless greed and chasing after the biggest short-term gains, a pursuit we think will boomerang. Rather, it’s essential that you position yourself to withstand the toughest economic environment—whether that ends up being inflation, deflation, or stagflation, any one of which could emerge—and a sharp market setback. We can’t give a precise timeline, and we can’t say just how severe the market downturn will get. But we expect that a lot of people will experience a lot of pain, and we want to make sure you’re not among them.

We continue to believe that the No. 1 way to protect yourself is by owning gold, any short-term setbacks or volatility in the metal—which would not be surprising—notwithstanding. Recent developments further bolster the case for the metal, as they point to the world getting closer to a gold-backed monetary reserve system that will circumvent the dollar as the primary currency for international trade.

One significant recent development was the announcement in late May by Hong Kong officials of a July launch for a new government-backed gold-clearing system. This looks to be a very big deal in the realm of gold and gold trading.

The new Hong Kong system will be a direct challenge to the London LBMA (London Bullion Market Association), which has long dominated gold trading and pricing. But there are significant differences between the Western and Eastern systems. On the London exchange, as is true as well of the U.S.-based Comex gold exchange, gold prices are set based on paper trading, with no physical gold having to change hands. Among other things, this has made it possible for gold’s price to be manipulated, as it has been in the past. The new Hong Kong clearing house—like the Shanghai Gold Exchange, with which it has signed a multifaceted cooperation agreement that allows it to benefit from that exchange’s advanced technical expertise—will be based on the exchange of physical gold, i.e., it will reflect actual demand for the metal.

In case you’re wondering, this doesn’t mean that traders in the Hong Kong system need to literally scoop up gold bars in their hands when they make a trade (although, in effect, they can if they want to). Rather, they have a call on the appropriate portion of physical gold that is stored in the Hong Kong vaults. By contrast, gold trading in the West essentially equates to simply placing a bet on the future price of gold.

To implement its new system, Hong Kong plans to massively expand its capacity to store gold reserves. Currently it has capacity for just 200 tonnes (metric tons) of gold. Within three years, it plans to increase this by more than 10-fold, to more than 2,000 tonnes. These vaults will complement the network of vaults that the Shanghai Gold Exchange maintains in China and selected other locations.

Emerging economies are the biggest buyers of gold. Last year, more than half of total worldwide demand for the metal came from China and India. The new clearinghouse system in Hong Kong, in conjunction with the Shanghai Gold Exchange, means that pricing power for gold is moving to the part of the world where most of the metal is bought and sold. Essentially, China will be the country setting the price of gold.

In addition to the news about the July launch for the Hong Kong gold clearinghouse, something else we’re following is new security architecture emerging in West Asia. Backed by China and Russia, so far it involves four Sunni countries: Saudi Arabia, Pakistan—the only nuclear-armed Islamic nation—Bahrain, and the UAE. Last September, Pakistan and Saudi Arabia signed a mutual defense pact, and now the other two countries, potentially eventually followed by others, are integrating within it.

What it shows is that this strategically critical part of the world is recognizing that its half-century-long reliance on the U.S. as its protective shield is no longer a meaningful guarantee. The war in Iran has driven this home in a very big way. It’s not that the U.S. has “lost” the war in the traditional sense of having to say “we surrender” and lay down arms. But whatever your view of the war and of Iran, it’s an astounding fact that Iran, a country of some 90 million people and whose economy has been pummeled for years by sanctions, was able to keep the U.S., with its close to $1 trillion military budget, at bay. Moreover, as Iran attacked countries with U.S. bases, it has exposed the vulnerability resulting from their ties to the U.S.

Does this mean that the petrodollar is in its death throes? The petrodollar arose from the arrangement that Nixon entered into in the 1970s with the Saudis, in which they agreed to price oil in dollars in exchange for U.S. protection. The deal was critical to keeping the U.S. dollar as the world’s reserve currency for all these years despite its connection to gold having been severed. At the very least, that rationale has certainly now been undermined.

And if—when—more oil is traded in something other than the dollar—as already is being done between China and Russia, not to mention that Iran with its control over the Strait of Hormuz has been accepting yuan as payment for oil —it will circle back to the loss of faith in the dollar that will be so damaging to the U.S. economy burdened by our enormous and rising government debt.

A final development in late May we’ll touch on briefly here relates to Russia and the Ukraine war. Russia has sharply ramped up its aggressive language towards Europe, and as evidence of the seriousness of its purpose, recently launched an Oreshnik hypersonic nuclear-capable missile that exploded within miles of Kiev. It’s not clear, of course, what will follow. But as events unfold, and coming on top of the Iran war, we think it will raise further questions about the relative strength and reliability of the U.S. and our military. It’s definitely a scenario that screams to investors: safety first.

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During his recent summit with President Trump, Chinese leader Xi Jinping cautioned that both nations must make every effort to avoid the “Thucydides Trap.” Named after the ancient historian who argued that the Peloponnesian War was the inevitable result of a rising Athens power alarming an established Spartan power, the concept was popularized by Harvard scholar Graham Allison in his 2017 book, Destined for War. Allison examined 16 historical instances of a rising power challenging a ruling empire—beginning with Spain and Portugal in the late 15th century—and found that 12 ended in conflict while only four were resolved peacefully. While Allison’s analysis is a useful starting point, it ultimately fails to take into account some critical realities that bear closely on today’s geopolitical rivalries.

For one thing, Allison neglects the great-power rivalries that existed prior to the 1400s. More important, he fails to recognize that established powers frequently already are suffering from internal decay, which leaves them so vulnerable that conflict with a rising challenger becomes almost inevitable.

Consider that at the turn of the 20th century, Japan was able to defeat both China and Russia within the span of just over a decade. China and Russia were in the throes of corruption and decay. Russia was crippled by an out-of-date autocratic system, devastating poverty, systemic corruption, and severe economic strain. It also had been rapidly urbanizing, resulting in the creation of a deeply radicalized working class. In China, the Qing Empire spent the last half of the 1800s trapped in the “Century of Humiliation.” China decayed from structural decline, military stagnation, and foreign imperialism. While attempts at reform were made, the imperial system ultimately failed to modernize, leading to the collapse of China’s last dynasty.

But, while these two dynasties were falling apart, Japan had been completely revitalized by the Meiji Restoration. This pivotal era consolidated a fractured landscape of feudal domains into one unified nation, fostering a collective identity and culture centered around the Emperor Meiji. The back-to-back military triumphs over China and then Russia completely shifted the global balance of power, establishing the Empire of Japan as the dominant force in East Asia.

But the pendulum eventually swings the other way. The China of 100 years ago bears no resemblance to the China of today. The point is that in considering Japan’s victory over China and Russia, you must also consider not just the strengths of the rising power but also the vulnerability that the rot from within imposes on the ruling empire.

We could go on for many pages – indeed, many books – but you get the point: the Allison view is much too simple and generalized. We would offer that perhaps a more meaningful way to characterize the rising and existing powers would be in terms of cultures that are either reawakening or repressed.

In the early 1940s, an American culture built on the foundational ideals of Jefferson and Madison not only had weathered the Great Depression but also had fueled an era of immense innovation—producing everything from nylon and the car radio to the photocopier. Seen in this light, with this combined spirit of resilience and ingenuity, the nation’s success in World War II was hardly a surprise.

But the pendulum swings for everyone, and currently the United States is engaged in two separate conflicts: the war in Iran and, by proxy, the war in Ukraine. While these conflicts are often viewed as distinct, they are deeply interconnected—and China is the common denominator.

By many metrics, from economic output to trade dominance to technological innovation, China has achieved premier global status. Arguably, its military technology is now the world’s best. (The only reason “arguably” applies is that it hasn’t been tested in open combat, and open combat is the only real way of testing a country’s military.) All evidence points toward its being the best, however, as a test of a Chinese hypersonic missile around four years ago led General Mark Milley, then Chairman of the Joint Chiefs of Staff, to comment that the U.S. was facing a “Sputnik moment.” Clearly the case, as more than four years later hypersonic missiles remain largely aspirational in the U.S. Meanwhile, China has been able to marshal resources from education to culture, and Beijing’s infrastructure initiatives are uniting the Global South. China’s achievements combined with Russia’s massive resource endowment have created a duo that has no match.

China is not directly fighting in either the Iran or the Ukraine war. But it has a massive stake in their outcomes and is likely playing a significant role in both by providing weaponry and intelligence. If the U.S. prevails in either of the wars, or in both, it will likely preserve the geopolitical status quo - allowing Washington to maintain its global financial architecture, which in turn might let the U.S. check China’s rise for the next several years. But if China’s allies prevail in both, under China’s leadership the global financial system will shift rapidly, leaving America with a stark choice: cooperate with a new order, or perish economically.

It is not surprising that China has chosen not to fight. The country has long understood that domestic tranquility built around a deep-seated and spiritual culture is more important than foreign conquest. In fact, prioritizing domestic stability over foreign conquest is deeply rooted in Chinese history. In the 1400s, despite achieving immense global prestige, the legendary fleet of Admiral Zheng He was grounded by imperial decree because overseas expansion clashed with Confucian values - ideals that remain a cornerstone of Chinese culture today. The great fleet was redirected to coastal defense and eventually destroyed due to high maintenance costs.

The words of the 15th-century Hongwu Emperor still ring true in the China of today: “Some far-off countries pay their tribute to me at much expense and through great difficulties, all of which are by no means my own wish. Messages should be forwarded to them to reduce their tribute so as to avoid high and unnecessary expenses on both sides.” (‘Journal of the American Oriental Society’, July-September 1974, pgs. 347-359).

Esteemed scholar Ian Morris reaffirms this in his book: War! What is It Good For? in discussing the Chinese invention of firearms. As early as the 10th century, China was experimenting with gunpowder. Three centuries later—likely driven by a desire to liberate themselves from Mongol rule—the Chinese deployed the first practical military guns to expel their conquerors. By the end of the 14th century, China likely possessed the military capability to conquer the globe yet chose not to. This prompted Morris to ask what he calls “probably the most important question in the whole of military history”: “Why did China not keep its early lead in firearms and go on to wage its own Five Hundred Years’ War on the world?”

We think the simplest answer—that China was content to focus on internal growth rather than external conflict—is probably the correct one. Between 1368 and 1839, China’s military engagements were almost exclusively defensive.

From 1839 through the end of World War II, China suffered devastating defeats at the hands of British, European, and Japanese forces, all of which had rapidly outpaced China in firearms technology.

China emerged from this dark period with its deep culture intact but having learned a critical lesson: No longer could the country focus solely on internal growth without also translating that growth into powerful defenses against external threats. But unlike the examples Allison cited in his book, the China of today is inherently cooperative rather than expansionist. If history proves true, China is not interested in engaging in any war. For them, it is not a contest between a rising and a ruling empire. Their military buildup is a defensive shield in response to lessons learned, but the goal appears to be a world of sovereign, balanced powers working together toward global welfare, where mutual deterrence translates into shared global gains.

Given that our possible alternative futures include nuclear extinction or a resource-depleted dark age, arguing fiercely for global dominance seems absurd. Why in the world do we want to argue so fiercely? Why do some global powers seem to continue to choose confrontation over cooperation?

We don’t have the answers, but we pray that we don’t have to keep asking the questions.

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Stephen Leeb, Ph.D. of Leeb Capital Management, shares his outlook on gold, explaining how it could reach $18,000 per ounce.

”I would place gold nowhere near the top,” says Leeb during the interview.

Essentially, I would assert that perceiving gold’s current price as a cycle is misguided at this stage. The zenith of gold may never be clearly identified, as it is anticipated that by the end of this period, gold will be recognized as central to the global monetary system.

❓ Is $18,000 a realistic price outlook for gold? Tell us in the comments!

Interview Highlights
0:33 - Gold nowhere near the top
4:46 - Present day vs. 1974
12:36 - Risks never greater
17:33 - Gold’s path to US$18,000
20:23 - Origins of petrodollar
27:52 - Decline of US culture
32:30 - Iran war and culture
43:36 - Gold-backed currency
49:36 - Protection through gold
53:09 - Silver, AAA stocks
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There were two visits made to China in the last two weeks by two different country leaders - the President of the United States, Donald Trump, and the President of Russia, Vladimir Putin. On the surface, the welcoming committees seemed very similar. Both presidents had a handshake in Tiananmen Square with the flags of the two countries behind the leaders. Both were greeted by marching bands and crowds of cheering children waving flags. But beyond the photo ops, the two visits revealed just how different China’s relationship with the two countries truly is.

It was Trump’s second visit to the country, and Putin’s 25th. Xi and Putin reached more than 20 cooperation agreements, in areas from trade to technology, and signed a joint declaration between Russia and China, whereas Trump and Xi did not sign a single agreement. It was only after Trump’s return to America that he announced that China and the U.S. had reached several accords related to agricultural trade, but the details of those deals are still unclear, as is the ability of farming states in America to get the fertilizer they need given the situation in the Strait of Hormuz.

But it was more the footage of the visits that made most apparent the stark differences between the relationships between the leaders. Videos of Xi and Putin making dumplings together and Russian pancakes and taking vodka shots showed a friendship that seems to be rooted not only in respect for each other but also in appreciation for the cultures of their countries. In fact, in a joint declaration released by the two leaders, one of the most affecting statements, as translated and recounted by an attending reporter, was, “The spiritual and moral system of any civilization cannot be considered exceptional or superior to others. All countries should advocate a view of civilizations based on equality, mutual exchange of experience, and dialogue, and should strengthen mutual respect, understanding, trust, and exchanges between different nationalities and civilizations, promote mutual understanding and friendship among the peoples of all countries, and protect the diversity of cultures and civilizations.”

The positive thing about having a strong culture is that people are willing to come together as one to do what is best for the entire country. One doesn’t have to agree with the forms of democracy that are employed by the Chinese and Russian states in order to have respect for what their respective leaders have accomplished. There are many who would, at this moment, proclaim, “Wait! These two countries are not democracies!” But, according to Robert Post, former Dean of Law at Yale, in his paper “Democracy and Equality,” “Democratic forms of government are those in which the laws are made by the same people to whom they apply (and for that reason they are autonomous norms), while in autocratic forms of government the law-makers are different from those to whom the laws are addressed (and are therefore heteronomous norms.)” And, honestly, of the three countries, the United States seems to be the country least likely to satisfy that requirement.

Both Russia and China began this century with a GDP per capita of approximately $1,000 (a little higher in Russia). In the 2000s, both countries remained committed to their education systems, viewing human resources and talent in addition to scientific innovation as critical drivers for national development, global competitiveness, and geopolitical strength. After a massive health care reform in the late 00s, China has ensured that over 95% of its citizens have health care, while free health care has always been standard in Russia since the Soviet Union. Both countries see the health and education of their citizens as a priority in building a better nation.

We used to see proof of what a strong culture could achieve in America. When Sputnik was first launched, we came together as a culture - education, defense, technology - all in the name of advancement. But only this week, news broke about the Justice Department reaching a settlement with Trump in the $10 billion lawsuit he had brought against the IRS. Since Nixon’s presidency, it has been a tradition for every presidential candidate to release their tax returns to prove that they were financially upstanding. Even though Trump had been promising to release his tax returns since 2014, he never did. And now he’s suing the government - the government that he is currently in charge of and was also in charge of when his tax returns were released in 2020. Trump is demanding that we, the taxpayers, pay him $10 billion because the tax returns that he promised to release were in fact revealed. And the Justice Department, because it is run by his own personal lawyer, has offered him a $1.776 billion settlement, which he is going to take.

It’s an abuse of power beyond any that one can imagine. It is actually a conflict of interest so large that conflict of interest doesn’t even begin to describe it. And for Americans who have repeatedly been told that we “don’t have the money” for health care and education, it is devastating to see this kind of waste. This money, in addition to the money that we see continuously funneled into the perpetual wars America has been fighting in East Asia, could be used to better the lives of American citizens who are seeing persistent declines in education and an ever-decreasing life expectancy. Instead, it is being used to fight a country that, despite facing 47 years of sanctions, has stood up to an American military that is clearly not what it used to be.

How does that happen? How does a country of 93 million people defeat a country of 342.5 million people that, prior to this war with Iran, had what was globally recognized as the largest, most technologically advanced, and best-funded military in the world?

Culture. Well, culture and the fact that the American military was certainly not as billed.

The people of Tehran literally lined up in the streets and formed human chains to protect critical civilian infrastructure after the U.S. and Israel threatened to bomb bridges and power plants. This culture that allows people to come together so readily also allows China, on a larger scale, to come together to further advance its scientific and technological achievements. It also exemplifies the way in which America is not a culture.

Yann LeCun left Meta after heading up its artificial intelligence research for over a decade. His departure came as a result of fundamental disagreements with Mark Zuckerberg on the future of AI. Zuckerberg has made reaching “superintelligence” the primary goal of the company, while Dr. LeCun has said that large language models (LLMs) will never be smart enough to be considered superintelligent, as they would need to understand the physical world, and LLMs will only ever be as knowledgeable as their training data. Keep in mind, Dr. LeCun won a Turing Award - the highest honor in computer science - for his work on neural networks in 2018. This work is seen as foundational to LLMs - the AI models that underpin chatbots. And yet that same scientist is saying that “superintelligence” cannot be reached. Instead of heeding its longtime expert, Meta chose to part ways and invest $14.9 billion in the AI start-up ScaleAI - pouring more money into LLMs.

As for LeCun, he is creating his own start-up with a focus on advanced machine intelligence that would create a kind of AI that was broader in scope than large language models - more of the real world. This is in line with how the Chinese are choosing to approach AI. We came across a paper this week in the magazine Nature that struck us as an example of what that very kind of real-world AI focus and cooperation can bring.

The article was entitled “Slipknot-gauged mechanical transmission and robotic operation” and was written by 43 contributors. These are 43 separate Chinese contributors, all from different institutions, coming together and making a significant breakthrough: “an alternative slipknot-based mechanical transmission mechanism to control the intelligent operation of both human and robotic systems.” Basically, a way to tie very tiny surgical sutures with the correct amount of force, even in places where there are limited supplies and space.

What had been previously lacking in the advancement of robotics was physical dexterity. There was a video that came out of China of the Unitree humanoid robot pulling and balancing a 3,000-pound car, and the footwork was impeccable. But the dexterity was lacking. In this new work, they are killing two birds with one stone, if you will. Not only are they saving lives, but they’re also doing it in a way that increases the applicability of robotics and enhances their overall lead in the field. And it seems that, at least in part, their willingness - indeed, their desire – to work together gets the credit. Contrast this to an America where no one is working together to advance our knowledge or breakthroughs because everyone is simply trying to beat everyone else to the proverbial big payday - all investing in LLMs that will never get up and shake your hand.

But the Chinese are creating robots that will. They still won’t replace humans, but they will be able to answer your questions and help you in the household. All of this shows how critical and how necessary cooperation is in this world. And there are no impediments to it - except those we create ourselves.

America is creating impediments artificially. No one is asking Trump and Xi to grill hot dogs together. But it would be nice to see America collaborating and joining in cooperation rather than constantly creating enemies. It would be nice to see America prioritize the health and education of its citizens so that we can contribute in a meaningful way to a technological race the way we did with the space race. It would be nice to see Americans prioritize a greater focus on collective progress and knowledge-sharing, rather than the pursuit of financial gain and information hoarding. It would be nice to see America return to a culture of collaboration so that we can grow and share a brighter future and stop focusing so much on the materiality of individual wealth and competition. Hopefully we will wake up before it is too late, because everything is hanging in the balance.

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I have addressed what we have lost economically by going off of the gold standard, but I have never really addressed what I feel we have lost as individuals. I am going to leave that to my colleague, with whom I work closely and share many views - most importantly, the value of spirituality and kindness. Since she is a published poet, I feel she will do much better than me at articulating the weight of these losses. Kirkus Review has compared her work to Sylvia Plath, but below she is a bit lighter in tone, though no less grave about the importance of the issue. Though she’ll probably be very embarrassed by my adding this - her poetry book, What Breaks Us, is available on Amazon and in bookstores internationally.

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By Megan Davis

I was on the subway yesterday with a man who was 90 years old. I watched as young people sat with their heads down, glued to their phones. No one offered him their seat, perhaps not even noticing that he might have needed one. To be fair, he seemed to be doing pretty well for himself. He probably didn’t need their seat. But it occurred to me that this such thing would’ve never happened in America 30 years ago.

They say chivalry’s dead. When I hear that, I don’t necessarily think of it as a comment on gender roles or performing aspects of deference.

To me, it’s about kindness. And kindness is a muscle.

Certainly there are people who are born naturally more empathetic or compassionate than others. But I think it’s more of a mindset issue. In 2026, it seems that everyone is so focused on what they have or don’t have - what other people are or aren’t doing for them, or on the ways they’ve been misunderstood. It doesn’t seem they’re taking the time to think of others.

And society is worse off for it.

Allowances must be made for mental illness or other things that prevent people from having the capacity to consider the needs of a stranger. But it’s the small things that have been missing from our society. Holding the door for someone, a smile on the street, giving up your seat for someone who might have a harder time standing than you do.

It is the choice to focus completely on oneself that leads to an unhappy life. I understand that material needs matter, and that there is an absolute necessity to fulfilling Maslow’s hierarchy of needs. It’s even understandable that in the economic times in which we are living, the fear of not having those basic needs met can be all-consuming. You must have food, water, and shelter. But I think that love and kindness fall much higher in that pyramid of needs than Maslow thought.

The fragility of mankind dictates that you need to buttress yourself against outside forces. This necessity for self-protection is accentuated by the competing cultural forces and ideologies that surround us. The idea that hard-working people don’t deserve a living wage - and I’m not referencing people who are unwilling to work, and certainly not people who are incapacitated by physical disabilities or mental illness because they deserve the dignity of assistance and that is a different conversation - but people who have the capacity to work and, moreover, do work very hard deserving the human dignity of a living wage. Poor people in America being forced to choose between food and health care, or living in squalor while those at the top continue to accumulate massive amounts of wealth. The U.S. fighting a war along with an Israeli government that is shooting women and children. The moral compass of this country has veered off course. If the North Star were freedom, you might not say that it’s now directly pointed south, but it is certainly no longer pointing north.

Today, when I got on the subway, I watched a homeless man offer a young woman his seat. He looked so tired. So weary. And yet he still had the desire to offer an act of kindness. A senseless act of kindness.

This idea comes from Life and Fate, Vasily Grossman’s compelling Russian novel. It is here where this idea of senseless acts of kindness becomes the one ember that keeps the fire of humanity alive. Set against the totalitarian regimes and atrocities of World War II, the book’s characters are constantly swept up in violent historical mechanisms, but throughout the novel, Grossman suggests that while vast systems of cruelty and grand historical forces are designed to crush individuals, they are completely powerless against isolated, unreasoned, and spontaneous acts of love. Feeding a stranger, comforting a crying child who isn’t yours, or sharing a morsel of bread—these gestures reject the logic of survival in favor of humanity.

While not changing global outcomes, these seemingly senseless acts defy systemic evil and keep a “kernel of human kindness” alive. Kindness remains indestructible because it does not seek power or control. The moment it is used as a tool to gain, it loses its purity. When global circumstances appear to dictate suffering, an individual’s choice to prioritize human connection over self-preservation becomes an act of personal, internal rebellion.

Spirituality sits at the juncture of this rebellion. John F. Kennedy was on a mission to bring peace stemming from that spiritual recognition of oneness to the global community. In his final address to the United Nations Assembly in 1963, he said, “Peace is a daily, a weekly, a monthly process, gradually changing opinions, slowly eroding old barriers, quietly building new structures.” A rebellion against conformity. A rebellion of the heart.

It is heartbreaking to think of what the world lost on that Friday in November 1963, and the opportunity that the global community lost to come together and build a brighter, more collaborative future. Kennedy often spoke of cooperation and diplomacy as necessities for human survival. He emphasized shared mortality and believed that true peace did not rely solely on treaties or covenants but on the “hearts and minds of all people.” This was reflected not just in his words but in his actions. Amidst the Christmas celebrations in 1962, the President learned that a young kitchen staffer couldn’t afford to visit his dying mother. JFK personally intervened, quietly coordinating a private flight and a week of paid leave, and strictly forbidding anyone from revealing him as the donor. According to his aides’ journals, this was typical of Kennedy—a man who showed sincere interest and always had a kind word for everyone he met, regardless of their rank or title. A man who carried that small kernel in his heart and showed consistent acts of senseless kindness.

In the wake of his assassination, we began to see the unquenchable American thirst for global power emerge. Choices that our government has made in the last 63 years have repeatedly shown a quest for power taking precedence over kindness and cooperation, and thus, the spiritual bedrock that was once so strong and impermeable, supporting the vast growth of America, has been slowly crumbling, not only in our government, but in the very fabric of our culture.

Chekhov once said, “Let’s put God and all these grand, progressive ideas to one side. Let’s begin with man. Let’s be kind and attentive to the individual man.” It may take years to return as a society and a country to where we once were. We may never get there. We certainly won’t until we can begin to reprioritize the good of all over materiality and see ourselves as equal to every man, woman, and child—all equally deserving of the freedoms our Founding Fathers classified as life, liberty, and the pursuit of happiness. But it takes less than one second to look someone in the eye and smile. It might just make their entire day. And, moreover, it might make the day of the person doing the smiling as well.

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