Making Hay Monday – October 13th, 2025

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David Hay

Editor

Haymaker

Making Hay Monday

Tenacity or Stubbornness?

“The economy, however, is a large net saver, as government is an equally large net payer of interest on its outstanding debt. Therefore, rate cuts directly reduce government spending and the economy’s private sector’s net interest income.” -Walter Mosler, making a valid point (despite his misguided defense of Modern Monetary Theory) that many economists overlook.

“Remember: the Fed is going to be easing over the next six months while the BoJ is hiking, so the interest rate differential is bullish for the yen.” -David Rosenberg, in his 10/10/2025 Breakfast with Dave.

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Tenacity or Stubbornness? – A Fine Line

More than a quarter-century ago, the elder Haymaker was defending his then-underweight stance in tech stocks to a client, who remarked that he wasn’t sure if he was being tenacious or stubborn. It was a reasonable point and, at that time, even Dave wasn’t sure which was the case.

A year or two later, conditions were in the process of a radical reversal. The tech wreck that afflicted the start of this century was well underway, a meltdown that would eventually see the NASDAQ relinquish roughly 80% of its market cap. Meanwhile, most of the income and value-type investments the Haymaker had loaded up on for the majority of his clients were actually appreciating. Additionally, in many cases, they were producing lush cash flows.

A far more recent example of tenacity rewarded was with the gold-mining stocks that this newsletter has repeatedly endorsed, particularly after they had been slammed. Those pastings happened several times over the last few years, disgusting both their tiny fan base and the vast majority of investors who had no exposure to them. As many of you are aware, that happened several times in the wake of their spectacular ascent coming out of Covid. Lest you think “spectacular” is hyperbolic, please check out this chart from 2020 showing the moonshot by both the senior and junior gold miner ETFs, GDX and GDXJ, in the six months from mid-March of 2020 to mid-September of that year.

Chart of GDX from March 15th, 2020 to September 15th, 2020

Bloomberg

Chart of GDXJ from March 15th, 2020 to September 15th, 2020

Bloomberg

To make it easier for you, GDX vaulted by 125% over that half-year interval, while GDXJ screamed by a yet more exceptional 177%. That upside explosion caused the Haymaker to do some serious gain-harvesting. Frankly, he’d never made so much money for his clients in such a short time before or after… until this year. Most investors seem unaware, despite our repeated (redundant?) efforts, that both GDX and GDXJ have risen by north of 100% in 2025.

Fortunately, for the Haymaker’s personal portfolio and, hopefully, for many of our precious paying subscribers, several other hard assets have also been ripping higher this year, particularly silver, platinum, and palladium, along with the miners of those rare commodities. Basically, it’s been a year of generating easy money for the owners of hard assets with one notable exception. That, of course, would be energy.

However, this Making Hay Monday (MHM) is not another focus piece on the face-down-on-the-floor oil and gas producers. Rather, it centers on a currency, one that, like oil, refuses to mount a sustainable rally. Its persistent listless price action again begs the question if our affinity for it is a case of me being tenacious or stubborn.

Before getting to the specifics, we wanted to share a thought that has been increasingly occurring to us: Are the tens of trillions capital we collectively keep in U.S. cash and bonds truly safe? That might seem like an odd question given the inherently low-risk nature of both of those bedrocks of portfolio construction. Yet we’re not referring to their ability to maintain value in fiat currency terms – i.e., U.S. dollars – but rather their exposure to what is suddenly being called the “debasement trade”. Behind this is the growing realization that fiat money may not be worth much more than the paper on which it is printed, at least in the fullness of time.

The U.S. with its $2 trillion budget deficits and its $1 trillion trade-related red ink, the once greatly feared twin deficits, is in a particularly perilous position in this regard. Aggravating the dollar angst is the indisputable fact that foreign central banks are increasingly moving away from U.S. Treasuries as their reserve asset of choice and toward gold. By avoiding and/or shedding USTs, they are effectively doing the same with the dollar since the former are denominated in the latter. (America has the “exorbitant privilege” of financing its towering twin deficits in U.S. dollars.)

It can be credibly argued gold is telling us that a profound change is unfolding with the global monetary system. The rapidly swelling popularity of the “barbarous relic” – despite the competition from AI-related stocks, 4% money market rates (gold pays zippo, of course), and cryptocurrencies going postal – indicates this bull market in bullion is of a different character. In our view, gold’s advance has further to run, quite possibly much further. This is notwithstanding that we’re fully expecting repeated corrections that serve to shake out the newbies and trend-followers (watch out, Jimbo Cramer!).

Few strategists have anticipated the swan song of Western fiat currencies as accurately as has Luke Gromen, frequently quoted in this newsletter. He’s been so far ahead of the curve there wasn’t even a curve visible when he began to write years ago, like pre-pandemic, that most major “rich country” currencies were at risk of becoming certificates of confiscation.

Yet the dollar has only recently begun to crack against its leading counterparts. And when it comes to this week’s highlight, it has actually rallied about 4% over the last month. For the year, the USD has receded a mere 3% in 2025 versus this currency, a tiny fraction of the 50% increase the greenback has enjoyed relative to it since 2011. (It actually takes twice as much of it to buy one dollar today as it did then; thus, one could reasonably assert the USD has doubled compared to this monetary unit.)

Alright, enough beating around the bush, or, in this case, the currency. Let’s get to our actionable idea of the week…