Showing posts with label Geoeconomics. Show all posts
Showing posts with label Geoeconomics. Show all posts

Wednesday, October 29, 2025

How Countries Go Broke: The Big Cycle | Ray Dalio

The big cycle is the period from one era of great change and turbulence, in which various systems or orders are transformed, typically through fighting, to the next. Then, through that evolutionary process, we arrive at yet another period of breakdown. The last big cycle began in 1945 at the end of World War II.
 
» This will lead to dramatic changes. «
 
Within that world order, there are shorter-term cycles, like the economic and political cycles. The economic cycles have lasted for about six years from one recession to the next, and they unfold in a way where the economy is weak.  
 
» In considering which spending to cut, when one looks at the possibilities, one quickly notices that about 70% of the non-interest spending is considered “mandatory”—i.e., it is either contractually required or politically nearly impossible to cut. «
 » In considering which spending to cut, when one looks at the possibilities, one quickly notices that about 70% of the non-
interest spending is considered “mandatory”—i.e., it is either contractually required or politically nearly impossible to cut. «
 
Central banks put a lot of money and credit into it. That causes markets to go up. There's a lot of spending; it gets too hot; inflation rises. They tighten monetary policy, and that causes the economy to go down into recession. Since 1945, there have been twelve and a half of those.
 
» It appears clear that, as the gaps in people’s productivity, wealth, and values grow along with levels of dissatisfaction about how their democracies are working, it leads to more populist conflict. « Average global levels of political polarization since 1900.
» It appears clear that, as the gaps in people’s productivity, wealth, and values grow along with
levels of dissatisfaction about how their democracies are working, it leads to more populist conflict 
and more policies that are like those in the 1905-14 and the 1933-38 periods. «
 
We sometimes don't pay as much attention to the big cycle when it reaches excesses, such as debt excesses. This is because debts rise relative to incomes. If you look at a chart of most countries, their debts keep rising relative to their incomes, but the incomes are needed to pay the debts. So, when you get to a point where the debts are high relative to the incomes, and debt service is very expensive and starts to crowd out other spending, and investors do not want to hold the debt as much because the debt does not provide them good returns and they start to sell that debt, you begin to have a change in that big debt cycle.
 
» For the United States, the big cycles look mostly unfavorable. « Ray Dalio's “Power Index” for great powers and empires over time.
 » For the United States, the big cycles look mostly unfavorable. «
 Ray Dalio's “Power Index” for great powers and empires over time.
 
That big debt cycle typically corresponds with the big domestic political and social cycle because wealth and well-being matter to people. When there's disruption to people's wealth and well-being, then you have political disruption, such as what we are experiencing now. Consequently, there's more fighting over wealth and power, and so on. These things come together, which then creates the new conflicts, the new big conflicts: the changes and breaking down of the old orders, the old monetary orders, the old domestic political order, the geopolitical order, and such things to cause seismic shifts. These are periods of great risk for the markets and great risk for society. It's very important that they're understood.

Quoted from: 
Ray Dalio (May 28, 2025) - The Big Cycle Explained in 3 Minutes. (video)

Countries are allowing their reserves or assets to decline while acquiring gold. Central banks bought more gold 
in 2025 than in any year in history. They are not telling the public why, but their actions speak volumes.

See also:
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Tuesday, October 21, 2025

On Gold, EU Capital Controls, CBDCs, Cryptos, and Stocks | Martin Armstrong

The Gold price is driven by geopolitical uncertainty, not peace expectations, with central banks acquiring it for its neutral status against collapsing European sovereign debt. European investors buying gold while leaders escalate Russia tensions create a self-reinforcing fear cycle. This risk has prompted major European institutions to relocate gold reserves to New York and Singapore, anticipating the historical certainty of European capital controls during crises.

Gold's powerful rally is terminal, completing Wave (3) past $4,380 just as Market Vane's Bullish 
Consensus hits a historic extreme of 95, signaling an imminent, major corrective Wave (4).

Evidence of control includes the new mandatory bank account declarations—the initial phase of preventing capital flight. Further anticipated steps include regulating cryptocurrencies and implementing Central Bank Digital Currencies (CBDCs) by January 2026, likely justified by a false flag event. Existing withdrawal limits (e.g., in Spain) confirm the focus on financial control, a practice rooted in historical currency cancellations and asset restrictions during past European crises.

 Dow-Gold Ratio from 1792 to 2025:
Dow valuation relative to gold now below mid-1960s.

The Socrates model forecasts a panic cycle in 2026 with intensified conflict and Euro stress, marked by a dangerous, unprecedented convergence of the international conflict and civil unrest cycles. This systemic risk is compounded by the destabilizing effect of Europe's large, unsupported migrant population. Economically, interest rates will rise, particularly in Europe, as geopolitical risk increases debt service costs. The unsustainable US debt trajectory confirms the sovereign debt crisis will lead to government failure when debt cannot be rolled over.

Investors are now in a "private wave," prioritizing private assets over government solvency. The primary stock market bubble risk lies in AI stocks, not blue-chip indices used by institutions for large-scale capital parking. Consequently, "smart money" is relocating capital to the United States (equities and real estate). This strategic move anticipates the CBDC's ultimate function: an impenetrable barrier to capital outflows, reflective of Europe's controlling political philosophy.

 
Larry Williams' outlook for gold in Q4 of 2025.

The EU planned to launch the digital euro in October 2025. Now it’s delayed to 2029, officially for “technical reasons,” 
but actually after Trump banned the Fed from issuing digital legal tender, effectively sidelining the ECB too.

See also:
David Hickson (October 20, 2025) - Hurst Cycles Update for S&P 500 and Bitcoin; Focus on Gold. 
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Sunday, October 12, 2025

Early Global Commodity Supercycle: Top Investment Picks | Andrew Hoese

Commodity Supercycles are long-term, decade-spanning periods of sustained above-average price surges, driven by major demand shocks—such as industrialization, energy transition, and urbanization—alongside supply constraints and geopolitical shifts. Notable past cycles include 1896–1920 (US industrialization), the 1970s (oil crises), and 2000–2014 (China’s rise). 
 
Gold-S&P 500 Ratio (monthly closes, 1925 to October 2025).
» There is an early breakout in Gold versus the S&P 500, a double bottom breaking higher. This signals a shift into a world unlike the past 40 years — a transition from an era of declining interest rates to one of rising rates. That creates different money flows. Money is no longer flowing mainly into bond and stock markets; instead, it is increasingly moving into precious metals, mining companies, and commodities. This marks the beginning of an outperformance of commodities and precious metals over traditional financial assets. «
Today, advancements in AI, digitization, electric vehicles, robotics, the emergence of thousands of new data centers, other technologies, and the relentless rise of BRICS+ are set to fuel an unprecedented surge in energy demand, including coal, oil, gas, hydrogen, nuclear, geothermal, solar, and more. Urgent grid overhauls and expansions will drive a massive increase in demand for key metals such as lithium, nickel, silver, and copper.
 
The current Commodity Supercycle (2022-2045) is driven by several financial key factors, with interest rates playing a central role. From 1980 to 2021, declining rates favored Bonds and Stocks, creating cup-and-handle patterns in Gold and Silver. Now, the shift to an increasing interest rate environment is disrupting this dynamic, as evidenced by a shoulder-head-shoulder topping pattern in bonds. 
 
When rates hit 4.5-5% on the 10-Year US Treasury Note Yield, stocks are likely to decouple, with rates rising while stocks stagnate or decline. The Dollar (DXY), currently in an uptrend channel, could accelerate commodity gains if it breaks downward. Inflation cycles further shape this landscape: disinflation boosts safe-haven assets like gold and silver, while accelerating inflation drives broader commodity markets. Money printing, such as the significant stimulus in April 2025 (Trump's One Big Beautiful Bill Act), fuels gold and silver in real-time, with other commodities responding as money flows through the system.
 
 
 Investment Potential Rankings: Commodities and Financial Instruments (October 2025):
Top: Lithium, Coal, Iron Ore. iShares MSCI Brazil ETF (EWZ: tracks large/mid-cap Brazilian equities for emerging market exposure), VanEck Steel ETF (SLX: tracks global steel sector companies (production, mining, fabrication). Highest potential due to recent bottoms, high historical leverage (50-150x for coal/iron ore, 20x for EWZ), strong breakout patterns, and inflation-sensitive demand (EV/BESS for Lithium, Steel +1.1%). Under-the-radar status maximizes asymmetry.
Mid: Copper, Nickel, Natural Gas, Silver, Platinum, Palladium: Strong performers with breakouts or bottoming patterns; Silver/Platinum have top performer potential but face consolidation or supply risks; Copper near highs but neutral Q4 2025; nickel oversupply concerns.
Low: Oil bearish short-term ($60/bbl YE2025); Gold strong but nearing consolidation, and less leverage than Silver.
Lowest: S&P 500, NASDAQ, Bonds. Financial assets face headwinds from rising rates (4.5-5% disconnect); bonds least attractive due to downtrend and rotation to commodities.
The ongoing and escalating worldwide commodity boom is unfolding in a clear sequence: It began in 2022 with a disinflation phase, where gold and silver led as safe-haven assets, potentially pushing silver prices toward $60-90. Over the next six to twelve months, a transition is expected where gold and silver may consolidate or experience choppy trading (point 7. in the historic long-term fractal).
 
 Platinum-Palladium Ratio (monthly bars, 1986 to October 2025).
 
 Platinum-Gold Ratio (monthly bars, 1986 to October 2025).
 
 Platinum-Silver Ratio (monthly bars, 1986 to October 2025).
 
 Copper-Gold Ratio (monthly bars, 1986 to October 2025).
 
  Oil-Gold Ratio (monthly bars, 1984 to October 2025). 
 
Uranium (monthly bars, 2011 to October 2025): Bullish.
 
During this period, other commodities like Crude Oil and Base Metals, which bottomed in April-May 2025, will begin to gain traction. As the cycle shifts to accelerating inflation, oil and base metals are poised to surge, driven by money rotating out of bonds and stocks into hard assets. 

This mirrors historical patterns, such as the 2018-2020 period when gold rose during a slowdown, followed by oil's sharp rally in August 2020 after gold consolidated. The current cycle aligns with the 2001-2008 commodity bull market, characterized by a declining dollar and strong commodity outperformance against financial assets, as signaled by gold's breakout against the S&P 500.
 
In 2025, Precious Metals are surging, with gold and silver both up over 60% year-to-date and mining stocks nearly doubling in value. Technical indicators suggest short-term overbought conditions, but the long-term outlook remains bullish. Notably, spot silver has climbed above $50, showing backwardation against futures prices around $48.70, indicating strong physical demand and potential discrepancies between paper and physical markets.
 
Certain commodities are poised to lead in performance. Gold is a key leader but not the top performer; Silver and Platinum are expected to outshine it, with silver potentially reaching $300 based on historical fractals from the 1940s to 1980s. 
 
Platinum, currently at a 0.4 ratio to gold, could revert to its historical mean of 1.2-2x gold’s price, with potential to hit 5.5-6x as seen in the early 1900s. Crude Oil, Natural Gas, Copper (nearing all-time highs), Steel (breaking out), Iron Ore, Nickel, and Lithium (up 100-300% from bottoms) are also strong contenders. 
 
Platinum-Gold Ratio currently 0.41 (gold/platinum 2.44) as of October 2025, with platinum at $975/oz, gold $3975/oz. Historical: Platinum premium (up to 6.63:1 in 1968) until late 1990s due to industrial demand (catalysts, auto); low 0.05 in 1885. Fluctuations from supply disruptions (South Africa/Russia mines), financial crises, geopolitical tensions, inflation fears; gold safe-haven spikes ratio in downturns (e.g., 2.3x in 2020, 3.1x Feb 2025).
Coal and Iron Ore offer high leverage, with potential for 50-150x gains as seen in the 2000s bull market, making them prime investment targets. Emerging markets like Brazil, through ETFs like EWZ, present 20x potential driven by currency exchange rate unwinds, particularly as the dollar weakens.

Historical parallels provide further context. In the 1930s, gold’s revaluation with flat input costs led to massive mining gains. The inflationary 1970s and 2000s resemble today’s environment, while the 1940s-80s increasing rate cycle mirrors current conditions, with silver moving from consolidation to a boom. 
 
This is not solely a precious metals bull market but part of a broader commodity and hard assets cycle. To maximize returns in the current commodity cycle, one should have invested in under-the-radar commodities like oil, natural gas, iron ore, nickel, and copper between April and May 2025, when they formed quiet bottoms—evident in patterns like inverted head-and-shoulders and double bottoms—before gaining mainstream attention. 
 
These assets, now moving higher, offered significant asymmetry as smart money positioned early, capitalizing on low public interest. For those yet to invest, opportunities remain in inflation-sensitive commodities like steel, coal, and lithium, which are breaking out or showing early uptrends, particularly as the dollar weakens and money flows from bonds and stocks. 
 
 
Commodity Supercycles from 1805 to 2045.

A rotation from Gold back to the Dow might be most prudent if/when inflation-adjusted DJI retreats
back to its 2000 level, which could take many years.  For now, we are right at the upper rail.

The Great Rotation out of Paper Assets into Hard Assets: 
The biggest Bull Market of our Lifetimes is underway.

Gold entering the parabolic phase of the Debt/Fiat collapse.
Moves that took years to unfold now happen in Months/Weeks.
 
Copper: The new oil for this century.

Palladium: Now joining the party. Target $3,430.
 
Platinum: Bullish. First target above $3k. 
 
Silver: A chart pattern that has taken five decades to form.
A generational set-up unfolding. Go long and stay long. 
 
An epic Silver fractal is playing out. 
  
162-Year, 54-Year, and 18-Year cycles in Silver from 1802 to 2025 (quarterly closes, log scale). 
 
The global financial shift isn’t coming—it’s already here. Gold. Silver. BRICS. De-dollarization. Geopolitics and geoeconomics now underpin the unfolding of the next great global commodity supercycle: escalating US–China rivalries, supply-chain fractures, and rising WW3 risks accelerate the decline of the United States’ 250-year empire-life cycle while cementing China’s ascent. 
 
Collapsing US stock indices–to–gold ratios reveal deep monetary stress, aligning with inflationary, interest-rate, and commodity-cycle dynamics that signal dollar devaluation and the breakdown of the post–World War II global financial system. The Great Rotation out of paper assets—equities and bonds—into hard, tangible assets is igniting what the charts suggest will become the greatest commodity bull market of our lifetimes.
 
Wealth preservation now hinges on tangible inflation hedges—metals such as lithium, copper, and nickel; precious metals including gold, silver, platinum, and palladium; and energy assets spanning coal, oil, gas, hydrogen, nuclear, geothermal, and solar. Avoid rate-sensitive exposure in US stock indices, and bonds; instead, accumulate undervalued, cash-flow-rich commodity producers and physical holdings to capture asymmetric, real-asset returns into around 2040.
 
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Thursday, October 9, 2025

The West's Dystopia: War, Fragmentation, and Perversity | Emmanuel Todd

Trump’s perversity is unfolding in the Middle East, NATO’s warmongering in Europe. [...] Such is our world as we approach 2026. The dislocation of the West takes the form of a ‘hierarchical fracture’.

» One of the fundamental concepts of the West’s defeat is nihilism.  «

The United States is giving up control of Russia and, I increasingly believe, of China. Blockaded by China for its imports of samarium, a rare earth element essential to military aeronautics, the United States can no longer dream of confronting China militarily. The rest of the world – India, Brazil, the Arab world, Africa – is taking advantage of this and slipping away. But the United States is turning vigorously against its European and East Asian ‘allies’ in a final effort at overexploitation and, it must be admitted, out of sheer spite. To escape their humiliation, to hide their weakness from the world and from themselves, they are punishing Europe. The Empire is devouring itself. This is the meaning of the tariffs and forced investments imposed by Trump on Europeans, who have become colonial subjects in a shrinking empire rather than partners. The era of liberal democracies standing in solidarity is over.

 
[...] Cutting the European continent in half economically was an act of suicidal madness. [...] The rage resulting from defeat is leading each country to turn against those weaker than itself in order to vent its resentment. The United States is turning against Europe and Japan. France is reactivating its conflict with Algeria, its former colony. There is no doubt that Germany, which, from Scholz to Merz, has agreed to obey the United States, will turn its humiliation against its weaker European partners. My own country, France, seems to me to be the most threatened.
 

[...] One of the interesting features of America today is that its leaders are finding it increasingly difficult to distinguish between internal and external issues, despite MAGA’s attempt to stop immigration from the south with a wall. The army fires on boats leaving Venezuela, bombs Iran, enters the centres of Democratic cities in the United States, and sponsors the Israeli air force for an attack on Qatar, where there is a huge American base. Any science fiction reader will recognise in this disturbing list the beginnings of a descent into dystopia, that is, a negative world where power, fragmentation, hierarchy, violence, poverty and perversity intermingle.
 
So let us remain ourselves, outside America. Let us retain our perception of the inside and the outside, our sense of proportion, our contact with reality, our conception of what is right and beautiful. Let us not allow ourselves to be dragged into a headlong rush to war by our own European leaders, those privileged individuals lost in history, desperate at having been defeated, terrified at the idea of one day being judged by their peoples. And above all, above all, let us continue to reflect on the meaning of things.

(from the preface to the 2025 Slovenian publication of La Défaite de l'Occident) 

Emmanuel Todd, one of the last phenotypical old-school French intellectuals, is a historian, sociologist, demographer, statistician, anthropologist and political scientist at the National Institute of Demographic Studies (INED) in Paris. A prominent critic of the US, globalization, and European integration, he is best known for predicting the collapse of the Soviet Union (La Chute Finale, 1976), After the Empire (2002) and his 2024 book The Defeat of the West. 
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Monday, October 6, 2025

Mexico's Economic Rise Shifts Power from the US | Richard D. Wolff

Mexico, often viewed as dependent on the US, holds a significant edge in the global economy, with the US relying more on Mexico than most Americans realize. Beyond avocados and automobiles, Mexico is a vital hub for US supply chains in electronics, pharmaceuticals, automotive, aerospace, medical devices, textiles, consumer goods, and information/communications technology. As the US depends on Mexico, Mexico has strategically built leverage, shifting focus from politics to economics.
 

Mexico’s rise as an economic powerhouse challenges its subordinate image. Its leverage in trade, energy, and geopolitics makes it vital to the US. Rising labor and environmental demands could disrupt supply chains. The era of US dominance is fading, replaced by interdependence, and Mexico wields unprecedented influence. A fracture in this delicate relationship could swiftly impact the US. 
 
Mexico, once a trade partner, is now a force reshaping trade and energy policies, catching the US unprepared. The US has long focused on migration and border security, overlooking intricate economic ties. Mexico is a cornerstone of US production, driven by cost-effective labor and trade agreements like the United States-Mexico-Canada Agreement (USMCA, 2020).
 
 
This dependency stems from lower wages and proximity, but this corporate strategy has created vulnerabilities. US companies’ reliance on Mexico’s manufacturing gives Mexico significant leverage. The North American Free Trade Agreement (NAFTA,1994) boosted trade but moved US factories to Mexico for cheaper labor, eroding American jobs. USMCA preserved this structure. Mexico, no longer just a low-cost hub, has diversified into energy, consumer markets, and geopolitics, prioritizing labor rights and domestic growth, threatening the cheap labor model and US supply chains.
 
US policies, like subsidized agricultural exports, have displaced Mexican farmers, driving migration. US firms’ job relocation to Mexico exploits low-wage workers, creating an underclass on both sides of the border, with migration as a symptom of economic disparities.

Mexico, a key US oil supplier, is asserting control over its energy resources, nationalizing and tightening oversight, challenging US corporations. Its push into renewables diversifies its portfolio, enhancing global leverage. Prioritizing domestic energy could disrupt US imports, forcing a strategic shift.

 Mexico has surpassed China as the top US trade partner.
 » In fact, the most direct and simplest way for the US to reindustrialize would be to 
militarily occupy Mexico and use it as a substitute for China in its economic system. «  

Mexican labor movements demand better wages and conditions, undermining the cheap labor model, potentially raising US consumer prices. Environmental activists push for sustainable practices, challenging resource exploitation.
 
Amid the US-China trade war, Mexico is a nearshoring hub, benefiting from USMCA and proximity. China’s investments in Mexico create a trade triangulation, with Chinese components assembled in Mexico for US export, bypassing tariffs. Mexico negotiates favorable terms with both powers, gaining strategic autonomy.

 
 
Richard D. Wolff, American Marxist economist known for works like "Democracy at Work,"
is teaching at the University of Massachusetts Amherst and The New School.
 
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How America Became a Financialized Rentier Economy | Jiang Xueqin

From 1950 to 1980, America’s economy was mainly focused on manufacturing. Manufacturing made up 40% of GDP, generated 40% of profits, and employed 30% of the workforce. If you were a factory worker between 1950 and 1980, life was good. You worked 40 hours a week, had health insurance, could buy a home, and your wife didn’t have to work. Families raised three to four kids, owned two cars, took vacations every year, dined out weekly, and retired with solid pensions. 
» The US economy has shifted from production to speculation. «
 
After 1980 came the Reagan Revolution and the rise of neoliberalism, an economic philosophy centered on free markets and deregulation. Since then, the US economy has been financialized. Today, financial services account for 22% of GDP, while manufacturing has fallen from 40% to just 10%. Financial services now generate 40% of all corporate profits but employ only 5% of the workforce.

These numbers reflect a radical transformation of American society. From 1950 to 1980, workers had political power. As a confident middle class, they joined unions and participated in politics. Today, most of that power has shifted to Wall Street and to the professional-managerial elite—highly educated, coastal, Ivy-League graduates clustered in New York, Washington, Boston, and San Francisco. This elite, multicultural and financially dominant, has become the most powerful political bloc in America. As a result, government policy increasingly favors them at the expense of workers. That’s the first major shift: political influence moving from labor to finance.

Education reflects this change. In the 1950s and 1960s, graduates of top schools often aspired to be professors, scientists, entrepreneurs, or corporate executives. Today, nearly all want to go to one place: Wall Street. Why? Because that’s where the money is. The brightest PhDs in statistics and artificial intelligence—who might otherwise be developing breakthrough technologies at IBM—are instead running hedge-fund algorithms, speculating with other people’s money.


The US economy has shifted from production to speculation. Financial services don’t create goods; they move money around to make more money. It’s not productive—it’s speculative. And America’s smartest minds are devoted to it. This shift has made the economy far more unstable. In 2001 came the dot-com crash. In 2008, the subprime mortgage crisis. More recently, multiple banks collapsed in a single week.

Why? Bubbles. Housing, stocks, and other assets are all overpriced. People gamble on the assumption prices will always rise. When bubbles burst, the result is volatility, instability, and uncertainty. That’s bad for the economy. Inequality has also surged. The top 1% now capture a vastly greater share of wealth, and the gap keeps widening.

In short, financialization has been destructive. It has made politics more divisive, the economy more volatile, and redirected the nation’s best talent into speculation rather than innovation. Young people today struggle to own homes. Many rent indefinitely, with little hope of upward mobility. This is the rentier economy: when ownership is out of reach, people are locked out of building wealth. Instead of producing, many speculate—buying Bitcoin or chasing bubbles.

Reference:
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