The Institutional Risk Analyst

The difference between the Western markets that settle predominantly in cash and Asian markets where physical delivery is the norm is fundamental. A growing number of global central banks are moving their physical gold out of the US because of the erratic behavior of Donald Trump. They fear expropriation of their gold by a future government in Washington.

When the price of gold rises what is really happening is that the value of fiat currencies is falling. The rout ongoing in the bonds of the various industrial nations suggests that the dollar and all of its subsidiary currencies are in big trouble. Yet none of these democratically elected governments are willing to take steps to arrest the decline in their credit standing, namely raising taxes and reducing public spending.

As the war with Iran continues to fester, we suspect that there will eventually be a majority on the Federal Open Market Committee to raise short-term interest rates – whether or not Warsh joins the majority or even votes for the move. With the Treasury running a fiscal deficit of 6% of GDP, we think the FOMC has little hope of slowing inflation but may soon be dealing with a slowing economy -- this despite the massive fiscal stimulus.

Over the past 30 days, both gold and silver prices have experienced a notable upward trend, recovering from mid-July dips to close higher in early August near $4,340–$4,400/oz for gold and $63–$64/oz for silver, driven by shifting Federal Reserve policy outlooks and economic data. As rising inflation pressures LT interest rates, we expect to see both gold and silver prices recover from the July lows. As attention increases to the deteriorating fiscal situation of the US...

What it says to me is every institutional portfolio has to think about holding some gold, if they want to protect themselves against extremes of default risk, some allocation permanently to gold. Now, should it be 3% or 4% or 5%? I don’t know. We can do what the europeans are doing and go 50% into non-dollar assets. In other words, we are in dollars. So, the only way to address US default risk is for us to own gold or something else. Because for us to own the CDS in dollars

The key point to make about gold and backwardation isn't a gold price correlation to interest rates, but a gold basis correlation to interest rates. The basis spread is far more important than the price level when we talk about gold. I argue that we'll get to a point where essentially gold withdraws its bid on the dollar entirely. And gold goes into permanent backwardation more than a devaluation of money the backwardation of gold really represents a collapse in trust in the

The renewed fighting between the US and Iran again jeopardizes global oil supplies, after stockpiles were drained earlier in the conflict, Reuters reports. “We’ve burned through all of the buffers we had. Everything,” one trader told the Financial Times. Energy markets had some slack to absorb the first shock, but that cushion is “smaller and shrinking further.” We continue to be concerned about shortages of refined products and particular grades of petroleum in 2H 2026.

Len Tannenbaum, founder of Tannenbaum Capital, told Bloomberg's Carrol Massar that some BDCs could buckle as the pressure mounts, depending on how leveraged they are, their overall exposure to troubled loans and “how long they’ve swept things under the rug” using such methods as "payment in kind" or PIK to avoid default. “PIK is POOP — Principal On Outstanding Principal — and it doesn’t matter how much, POOP smells,” Tannenbaum said.

This week in “The Wrap,” we feature the top events in Washington and on Wall Street over the past week. The IRA is fishing in Maine this week, but please do watch “The Wrap with Chris Whalen” on The Julia LaRoche Show next Saturday on YouTube to catch our discussion of what’s hot and what’s not in the world of finance and investing. This week we address some reader questions at the end of this comment. June 12, 2026 | Yet another week has gone by and there is still no peace a

The Entropy Trap treats markets the way physicists treat complex systems under stress. It does not begin with a forecast. It begins with measurement: level, velocity, acceleration, correlation, feedback loops, and whether stress is rising or falling. The central claim is simple: we are not in another normal cycle. We are in a structural reorganisation in which the old equilibrium is no longer recovering.

We have updated the WGA Precious Metals Top 25 for June 2026. Many of the gold funds are down for the year, having given up the gains seen in 2026 in the face of triple digit returns for AI related stocks. As we noted last week in “The Wrap,” when AI stocks are soaring and interest rates are rising, precious metals typically retreat. It's all about short-term yields and chasing the shiny object.

Another week goes by and there is still no peace agreement between the US and Iran. The Strait of Hormuz remains closed and much of the world’s capacity for producing key refined products remains offline. The Iranians have made clear that they are not going to give up the nuclear program nor the Strait of Hormuz. We spoke with our friend John Dizard this week and he wonders why the Trump Administration is refusing to begin planning for rationing for key refined products.

In a system where tax avoidance is a national aspiration, the currency must inflate continuously and at varying rates to accommodate the Treasury’s cash needs. Last week in "The Wrap," we noted that real gasoline prices, adjusted for inflation, are actually quite low. We also predicted that inflation could touch double digit rates later this year as a result of the US-Israeli war with Iran, but the big driver of inflation remains the federal debt.

In the past five trading days, gold has moved up almost 3% but silver has done even better. Physical supply constraints in India and Asia are pushing prices for gold and silver higher, illustrating the disconnect between the momentum driven financial markets in the US and Europe and the physical market in Asia.

On Capitol Hill, Kevin Warsh appeared before the Senate Banking Committee this week to consider his nomination as Fed Chairman. Warsh reiterated that Fed “monetary policy independence is essential.” But he got some rough questions from Democrats, especially ranking member Elizabeth Warren (D-MA) She asked whether he will be a “sock puppet” manipulated by President Trump. Warren called Warsh “uniquely ill-suited for the job as Fed chair,” but frankly Warren is uniquely unquali

Bank earnings this week have been mostly what we expected, with income up, credit loss rates continuing to trend lower and most banks refusing to provide additional disclosure on private credit exposures. As the private credit mess proceeds in the weeks and months ahead, a lot of the “debt” in these deals will turn to equity – which is what it should’ve been all along.

The past week has been a decidedly volatile period, but with spreads widening in response to growing concern about the US fiscal trainwreck ℅ the US Congress and President Donald Trump. Even the possible intervention of the Federal Reserve Board does not impress a market about to see the largest IPO ever in Elon Musk’s SpaceX.

“Since the start of the Iran war, base rates are up 48 bps and spreads (the six rates I use) are up 80 bps, for a total impact of 128 bps. The impact on EBITDA to support equity is roughly $5 billion per bp. At an EBITDA multiple of 8-1, each bp reduces equity valuations by $40 billion. SIMPLY STATED, the “cost” of the war now stands at $5.12 trillion in reduced “fair value” of US investments. ARE WE HAVING FUN YET?”

In this week’s edition of “The Wrap,” we feature our view of the top-ten key events in Washington and on Wall Street over the past week. Don’t forget to watch “The Wrap with Chris Whalen” on The Julia LaRoche Show every Saturday on YouTube to catch our discussion of what’s hot and what’s not in the world of finance and investing. March 20, 2026 | Gold and silver prices continued to pare gains from the past 90 days, even as deliverable supplies of both metals are shrinking

When we saw the vicious backwardation in oil prices this week, and the equally steep slope down in the price of oil going into the out months, we were struck by this dichotomy. Likewise the relative stability in the US Treasury market, with the ten-year note still confined to that 4.10-4.20% range that has prevailed all year and long-before the new conflict with Iran, suggests that the current kerfuffle in the media is overdone.