Kevin Warsh Might Surprise
The World Next Week
Long-term interest rates are exploding across the global landscape, touching 19-year highs. The 30-year Treasury yield recently surged past 5.3%—levels unseen since 2007—while 10-year yields hold highs above 4.7%!
The financial headlines are screaming panic: the U.S. government is facing a multi-trillion-dollar debt-service squeeze, mortgage rates are choking housing, and global liquidity is hitting a brick wall.
Don’t FALL for this – like I said, markets will SUFFER a major correction, but after the midterms, the stock market will SOAR to one of its best ever years!
If you look beneath the surface, this bond blowout is the direct result of a structural geopolitical victory for the United States—and Federal Reserve Chair Kevin Warsh has zero intention of hiking rates to kill it.
The Real Driver is China’s Economic Implosion.
The mainstream financial press wants you to believe the bond market is crumbling solely from domestic fiscal deficits.
The ground truth is collapsing Treasury demand is the deliberate economic containment of Beijing. Under aggressive tariff enforcement, reshoring mandates, and strategic trade decoupling, China’s mercantilist export engine has been thrown into reverse!
China is dipping into deep economic deceleration and recessionary stagnation.
With its trade surplus shrinking and internal property crisis consuming liquidity, Beijing can no longer recycle massive surpluses into U.S. government paper.
What little capital reserves the People’s Bank of China (PBOC) deploys is being rotated directly out of dollar-denominated debt and into physical gold bullion to de-dollarize its balance sheet.
China’s absence from U.S. Treasury auctions is a primary reason yields are soaring. But this is a core strategic objective: forcing capital back into American borders while neutralizing Beijing’s manufacturing dominance. This is Bessent’s genius and if you think China’s CCP has anyone smarter or more astute and brilliant than Scott, you’re drinking too much Tucker Carlson Juice.
Traditional central bankers would misinterpret high yields as an overheating crisis requiring aggressive policy rate hikes. Not Kevin Warsh.
Warsh understands that this rate environment reflects capital scarcity caused by geopolitical realignment, not an uncontainable domestic wage-price spiral. With the federal funds rate already restrictive and sovereign interest expenses escalating rapidly, hiking benchmark rates further would unnecessarily crush domestic business investment while providing zero help to foreign Treasury demand.
Warsh is committed to regime change at the Fed: holding the line, refusing to panic-hike, and letting the real economy adapt.
The Big Winner are Gold Stocks as the S&P’s Margin Kings!
This dynamic creates a prime environment for precious metals: a decelerating East dumping paper assets for physical bullion, a Western central bank constrained from tightening, and rising debt-refinancing pressures.
Physical gold is breaking records, but the ultimate asymmetry belongs to gold mining equities:
- Unprecedented Operating Margins: While broader corporate margins contract under higher borrowing costs, gold producers maintain all-in sustaining costs (AISC) around $1,300–$1,400/oz. Selling gold at historic highs gives them profit margins exceeding 60%.
- The S&P 500’s Cash King: Gold producers have emerged as the most profitable sector in the S&P 500 on a free-cash-flow yield and margin expansion basis.
- Fortress Treasuries: Unlike 2008, miners are debt-free, accumulating record cash reserves, and preparing massive share buyback and dividend programs.
The bond market is undergoing a reset, China is stalling out, and the dollar debt apparatus is feeling the squeeze. Position in premier gold equities now before the broader market recognizes the shift.
Best Regards,
Lior Gantz
President, WealthResearchGroup.com
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