#385 Chris Whalen: Gold Headed Higher, Goldman $4,900 Target, Silver China Buying Spree

Chris Whalen kicks off the July 4th episode of The Wrap by diving into private credit implosion with BDCs turning unprofitable, using the acronym POOP (Principal on Outstanding Principal) to illustrate how debt is being converted to equity because companies can't pay—essentially turning investors into equity holders in insolvent companies. The June jobs report shocked with only 57K payrolls added (far below expectations) while household employment actually fell by 500K, making the data contradictory and unreliable despite the overall labor market still showing relative steadiness in many markets. Housing shows sharp bifurcation: sales above $1 million hit a record high while overall volume is down, revealing that only luxury properties are moving as the broader market softens. Goldman Sachs projects gold could hit $4,900, and Whalen is holding silver as a hedge against dollar debasement and inflation, noting the Chinese are aggressively buying silver in both futures and spot markets. Trump has profited handsomely from his various crypto ventures while most investors in those same ventures have lost significant money—a familiar pattern from Trump's business history. With the US national debt now at $39.35 trillion on America's 250th birthday, Whalen warns the Democratic Party will split between socialists and Republicans, with policies like New York's rent freezing turning cities into slums while hurting mom-and-pop landlords. He recommends watching interest rates, the Fed under Kevin Warsh, and expects another uptick in gold and silver prices after recent selloffs, while cautioning on BDCs and private credit exposure as the distress signals mount.

Thank you to today's episode sponsor, The Entropy Trap by Mickey Maini. Order your copy: https://www.amazon.com/Entropy-Trap-Physics-Knows-Markets/dp/B0H1ZP7NZX/ref=sr_1_1

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Twitter/X: https://twitter.com/rcwhalen    

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Timestamps:

00:00 — Intro and World Cup chat

1:09 Gold rebounds, AI stocks slump

1:38 Private credit - BDCs turning unprofitable

2:40 POOP acronym - Principal on Outstanding Principal, crap debt

4:07 POOP emoji Bloomberg article, Victor Hong invented term

5:54 AI stocks slumping, pressure on private credit portfolios

6:00 Market doesn't like it right now

11:23 June non-farm payrolls - 57K added, much worse than expected

11:44 May/June comparisons all over place, household employment down 500K

12:21 Can't take a lot out of these numbers

13:33 Labor market steady to extent we can rely on statistics

14:12 Housing costs up, Americans work harder to compensate

14:12 Goldman Sachs says gold could hit $4,900

15:31 Chinese aggressive buyers of silver, not changing view

16:06 Gold/silver hedge against dollar and inflation

17:40 US national debt at $39.35 trillion on country's birthday

18:12 Democratic Party gonna get torn in half

18:50 Rise of democratic socialist candidates

19:49 Rent freezing turning NYC into slum, mom and pop landlords hurt

20:17 How much money to live in NYC reasonably? Way more than poverty level

21:45 Trump crypto - Done well, investors lost a lot

23:32 Book - Entropy Trap by Mickey Maini

29:33 90% of mortgage market government insured, no systemic bailout needed

32:43 Silver good play medium to long term as hedge

34:13 Back half of year focused on interest rates

35:13 Watching Fed, Kevin Warsh, uptick in gold/silver coming