Bitcoin and most big crypto assets jumped Tues and Wed when the S&P 500 was under pressure. And then crypto hardly softened when the Clarity Act stalled, even as equity prices for crypto companies took a beating. Then Trump hit America’s NATO partners with a new 10% tariff on Saturday. And despite being the only market that’s tradeable on the weekend, crypto markets barely budged when you’d have expected them to fall as investors hedge their stock portfolios for a weak Tuesday open. After months of trading like a dog, it’s too early to call the all clear for crypto. But it’s trading better for no clear reason, which is new. And crypto is long overdue for a big catch-up trade to gold and silver.

Overall: I’m pretty sure it was just a week ago that Powell filmed that video. Seemed like a hostage vid, with the Fed Chairman held in captivity at some undisclosed location, but defiant. Or maybe I got that all wrong, and it was more like an underground rebel video. But it doesn’t matter. There was so much other crap flying that a criminal investigation of the Fed Chairman on some trumped-up charge was no big deal. And besides, it was a former Fox commentator who Trump hired as a DC judge or something who opened the Jerome investigation. Karoline Leavitt told reporters her boss had nothing to do with it. And Trump himself claimed an Ollie North about the whole affair. Which for someone unwilling to ever admit even the most trivial mistake, is the equivalent to taking full responsibility. But that was Sunday and the week hadn’t even started. There were so many exciting things to get done for a president still basking in the warm afterglow of having flawlessly extracted a foreign dictator in his pajamas. Trump had the Ayatollah to overthrow. Until Bibi called. He had Greenland to invade. Or purchase, or whatever. There was federal aid from sanctuary cities that had to be withdrawn. The revocation of citizenship for Somalis found guilty of fraud. Deployment of the National Guard, ICE. And remember, the Insurrection Act of 1807 was not going to be invoked all by itself. Someone had to do it. Or threaten to. And no sooner had the weekend started, then America’s President threatened 10% tariffs on 8 NATO allies until such time as Denmark sells Greenland. The tariffs will rise to 25% in June, perhaps. And now there’s some plan for a Peace Board, that costs $1bln to join. Or something like that. But that’s as of ten minutes ago, it may change by Monday. And no one knows where any of it leads to. But we do know that humanity’s oldest safe-haven asset rose again last week. And silver prices surged 11% to another record high, tripling in a year.

For Week-in-Review and Weekly & Year-to-Date market data, scroll to the bottom.

Seventy-Nine: There are 118 elements on the Periodic Table. 94 occur naturally on Earth. The remaining 24 are synthetic, meaning they have been created in laboratories. Most of these are highly unstable and decay into lighter elements within fractions of a second. The heaviest element ever synthesized is named Oganesson (Og). Yuri Oganessian led the Russian/American team that discovered it. Only 5-6 atoms have been synthesized. They had a .89 millisecond half-life. Yuri has lived 92yrs - a millisecond. Born a poor Armenian. He’s a nuclear physics legend.

Seventy-Nine II: The seventy-ninth element is created when two neutron stars - the incredibly dense husks of dead suns - collide. This cataclysmic event releases enough energy to forge about 10 Earths’ worth of gold in a single second. These cosmic explosions scatter gold-laden dust throughout space. Roughly 4.5 billion years before the Americans started arguing with the Europeans over who controls Greenland, a portion of this dust was pulled into the swirling nebula that condensed to form our solar system and the Earth. For some reason, we value it.

Seventy-Nine III: Just as it is easier to synthesize Oganesson than it is to create another Yuri Oganessian, it is simpler to discover how gold is formed than it is to have predicted the multitude of ways it influenced the course of human history. That’s because no matter how complex natural phenomena may first appear, once the underlying laws are known, they become simple, immutable equations - squares on the Periodic Table. And we are the opposite. The most complex creations in all the universe. And the more we advance, the greater our enigma grows.

Seventy-Nine IV: If we are each a mystery, manifest, then predicting the future course of humanity’s collective activities is our most difficult endeavor. And this of course is why those who are better at it than others accumulate the most gold. One of the better ways to predict the future is to develop mental models that help explain why certain forces, once set in motion, lead us in particular directions. The more models you have the better. And as the future unfolds, you judge which model shows the best fit to the present moment and use that to bet on tomorrow.

Seventy-Nine V: Ninety-nine percent of the seventy-ninth element sank to our planet’s core when it was molten. If you could lift it to the surface, Earth would be completely covered in 1.5 feet of pure gold. We could cover Earth in 10 feet of silver, the forty-seventh element, if we lift it from the planet’s core. The gold and silver we mine come almost entirely from asteroid impacts that happened 3.8-4.1 billion years ago. We use this silver for many things, perhaps the most important of which involves converting solar radiation into electricity, which is in short supply.

Seventy-Nine VI: We use gold for one very important thing. We use it to store time. It’s by no means a perfect element for this purpose. But of the 118 that we know exist, it has proven to be the most durable. Throughout history, humans have been able to exchange a unit of their labor for an amount of gold and store it indefinitely. During periods of relative calm, our overlords devise ingenious contracts to store time that pay interest, dividends, fancy cash flows of all sorts. And the value of gold declines. Then, when the chaos of humanity returns, gold’s value rises.

Anecdote: One of the first things I learned as a pit trader in Chicago was that your word is your bond. It was in a time of open outcry, when traders agreed to buy and sell with one another verbally, or sometimes by simply making eye contact across a crowded sea of screaming people, frantic, stressed, speculating. Once such a trade was made, each trader would write it on a card; the commodity traded, the number of contracts, the price, and the badge number of the person you dealt with. Tens of thousands of trades took place each day, half of them were losers. Such a system required everyone to honor the code, own their trades, for better or worse, richer or poorer. Anyone who didn’t was rejected by the pit traders, then expelled from the exchange. It is exactly the way our world should work. When I eventually left the pit, it became clear what a special place it was. In the decades since, I learned how to honor that code in my own affairs while protecting myself and business interests from those who blur the lines between right and wrong, truth and lies. One way to do it is to invest in exchange-traded products, where the rules are well defined, counterparty risk is minimized, and you can buy and sell cleanly. I have deliberately steered clear of private credit markets and the knife fighters who make their living in distressed securities. But even those fellas lean on the rule of law, no matter how hard they work to bend and distort it to meet the necessity of the moment. And the one thing that connects those who live by the honor code, those without any code at all, and everyone in between, is that we know that as a system loses its integrity, money flows away from it. That process is quite clearly underway. As the ingenious contractual promises that were printed over decades of relative calm in our world are being exchanged at an increasing rate for the seventy-ninth element.

Good luck out there,

Eric Peters

Chief Investment Officer

One River Asset Management

Week-in-Review: Last Sun: Fed Chair Jerome Powell stated the Fed had been served grand jury subpoenas threatening criminal indictment from the DOJ regarding renovation costs and raised concerns about Central Bank independence. Mon: India CPI 1.33% (1.56%e). Trump to impose 25% tariff on countries doing business with Iran. Trump administration nears trade deal with Taiwan that would lower American tariffs on goods and expand Taiwan Semiconductor Manufacturing Co’s planned investment in chip production in the US. S&P +0.2%. Tue: US CPI 2.7% as exp, Core 2.6% (2.7%e). China imports 5.7% (0.9%e), exports 6.6% (3.1%e). South Korea unemp rate SA 4.0% (2.7%e). Greenland PM Nielsen ruled out joining the US, and prefers to be in a union with Denmark, suggesting the island is putting their longstanding independence debate on the backburner. Musk’s SpaceX is offering free Starlink in Iran as internet blackout persists amid political protests and unrest. S&P -0.2%. Wed: Poland base rate unch 4.0% as exp. Japan PPI 2.4% as exp. South Korea base rate unch 2.50% as exp. Denmark-US rift persists as NATO nations deploy to Greenland, despite the creation of a working group to address differences stemming from Danish meeting with Vance and Rubio. US State Department will pause issuing immigrant visas for people from 75 countries beginning Jan 21. OpenAI signs $10b deal to use Cerebras hardware for computing power. S&P -0.5%. Thu: US init jobless claims 198k (215k e), cont claims 1884k (1897k e), emp mfg 7.7 (1.0e). UK IP 2.3% (-0.4%e). China money supply M2 8.5% (8.0%e). Oil tumbles after Trump signals US response to Iran is on hold, following Iran’s pledge to not execute protestors and an ask from Netanyahu to postpone military plans. Trump threatens Insurrection Act as protests against ICE in Minnesota continue. S&P +0.3%. Fri: US IP MoM 0.4% (0.1%e). Germany CPI 1.8% as exp. Russia CPI 5.59% (5.80%e). OpenAI to test targeted ads in free versions of ChatGPT, a major shift for the company as it seeks to bolster revenue. Trump voices reluctance at nominating Hassett as Fed Chair. White House weighs executive action to enact a cap on credit card interest rates. S&P -0.1%. Sat/Sun: Trump announces 10% tariffs on northern EU nations and UK until Denmark agrees to sell Greenland (tariffs rise to 25% in June). Chinese surveillance drone violates Taiwan airspace for first time.

Weekly Close: S&P 500 -0.4% and VIX +1.37 at +15.86. Nikkei +3.8%, Shanghai -0.4%, Euro Stoxx +0.8%, Bovespa +0.9%, MSCI World +0.2%, MSCI Emerging +1.8%, Bitcoin +5.3%, and Ethereum +6.5%. USD rose +0.8% vs India, +0.5% vs Indonesia, +0.5% vs Turkey, +0.3% vs Euro, +0.2% vs Sweden, +0.2% vs Sterling, +0.1% vs Yen, +0.1% vs Brazil, +0.1% vs Australia, and flat vs Canada. USD fell -1.9% vs Mexico, -1.3% vs Russia, -0.9% vs Chile, -0.5% vs South Africa, and -0.1% vs China. Gold +2.1%, Silver +11.6%, Oil +0.5%, Copper -1.2%, Iron Ore -5.6%, Corn -4.7%. 10yr Inflation Breakevens (EU +6bps at 1.84%, US +4bps at 2.32%, JP +7bps at 1.92%, and UK +8bps at 3.05%). 2yr Notes +6bps at 3.59% and 10yr Notes +6bps at 4.22%.

YTD Equity Index Returns: Colombia +15.9% priced in US dollars (+13.4% priced in pesos), Korea +12.3% priced in US dollars (+14.9% priced in won), Turkey +11.7% in dollars (+12.5% in lira), Israel +10.8% in dollars (+9.2% in shekels), Hungary +8.9% (+10.2%), Denmark +8.7% (+10.3%), Chile +8.3% (+6.4%), Taiwan +8% (+8.4%), Russell 2000 +7.9%, Mexico +6.5% (+4.4%), Japan +5.9% (+7.1%), Philippines +5.8% (+6.8%), Vietnam +5.4% (+5.3%), Sweden +5% (+5.4%), Netherlands +4.9% (+6.2%), South Africa +4.9% (+4%), Greece +4.6% (+5.9%), HK +4.5% (+4.7%), Brazil +4.3% (+2.3%), Belgium +4.2% (+5.5%), Singapore +4.1% (+4.4%), Norway +3.9% (+4%), Indonesia +3.9% (+5%), Portugal +3.7% (+5%), China +3.6% (+3.4%), Saudi Arabia +3.1% (+3.1%), Euro Stoxx 50 +2.9% (+4.1%), Canada +2.7% (+4.2%), UK +2.5% (+3.1%), Poland +2.4% (+3.8%), Australia +2.3% (+2.2%), Finland +2.2% (+3.6%), MSCI World +2% in dollars, Malaysia +1.9% (+1.9%), Germany +1.9% (+3.3%), S&P 500 +1.4%, Austria +1.3% (+2.7%), UAE +1.3% (+1.3%), NASDAQ +1.2%, New Zealand +1.2% (+1.3%), Spain +1.1% (+2.3%), Thailand +1.1% (+1.3%), Czech Republic +1.1% (+2.7%), Italy +0.5% (+1.9%), France +0.1% (+1.3%), Switzerland -0.4% (+1.1%), Ireland -1.4% (-0.2%), Argentina -2.3% (-3.9%), India -2.6% (-1.7%).

Disclaimer: All characters and events contained herein are entirely fictional. Even those things that appear based on real people and actual events are products of the author’s imagination. Any similarity is merely coincidental. The numbers are unreliable. The statistics too. Consequently, this message does not contain any investment recommendation, advice, or solicitation of any sort for any product, fund or service. The views expressed are strictly those of the author, even if often times they are not actually views held by the author, or directly contradict those views genuinely held by the author. And the views may certainly differ from those of any firm or person that the author may advise, converse with, or otherwise be associated with. Lastly, any inappropriate language, innuendo or dark humor contained herein is not specifically intended to offend the reader. And besides, nothing could possibly be more offensive than the real-life actions of the inept policy makers, corrupt elected leaders and short, paranoid dictators who infest our little planet. Yet we suffer their indignities every day. Oh yeah, past performance is not indicative of future returns.