Rubino argues that the Federal Reserve and Treasury are trapped because raising interest rates causes economic collapses while lowering them would push inflation from 3% to 4 or 5%, making it very hard to control as people start front-running it. He contends that US housing prices must mathematically drop by 40% to return to affordable levels given that the 10-year Treasury broke 5% and mortgages hit 7.5%, freezing the housing market as fewer people can afford homes. Rubino concludes that China’s purchase of 1,100 tons of gold in the first 11 months of this year, combined with retaining all domestically mined gold, signals they are building monetary options while the US loses its choices, and he views the current precious metals correction as a buying opportunity because {{the financial mistakes that gave us $5,000 gold are still happening and accelerating}}.
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Housing priced out of reach: Rubino notes that US housing is frozen because prices are very high and mortgage rates are rising to 7.5%, meaning fewer people can afford to buy houses at current prices. He observes that on Zillow a growing number of houses show price reduction notices, and he calculates that prices must drop by 40% to move back into the affordable range, which would be a historically rare event.
Drone warfare revolution underway: Rubino describes a military revolution where cheap $20,000 drones are overwhelming expensive million-dollar interceptors, with the Houthis hitting Saudi energy assets at will and Ukraine hitting Russian refineries near Moscow. He argues that trillions of dollars in developed world militaries represent malinvestment because aircraft carriers and advanced jets are now vulnerable to swarms of cheap drones, and he warns that autonomous AI-controlled weapons could soon fail to distinguish between good guys and bad guys.
China accumulating massive gold reserves: Rubino reports that China bought 1,100 tons of gold in just the first 11 months of this year, which is serious in a market that produces only 4,000 to 5,000 tons annually, and China also retains all gold from its domestic mines. He suggests China is not price sensitive and appears to be dollar cost averaging with a monetary plan in mind, possibly to back a currency with gold or create a new BRICS currency, giving China more options while the US loses choices.
Inflation and energy supply shocks: Rubino explains that inflation is currently at 3% but cutting interest rates could push it to 4 or 5%, creating turmoil in bond markets as the Fed raises short-term rates while the Treasury tries yield curve control on long-term rates. He points out that diesel fuel is in a supply shock partly due to the Jones Act requiring US-owned transport between US locations, and diesel is in everything people buy because it powers trucks and trains throughout the supply chain.
Electric grid inadequacy and AI demands: Rubino warns that the US electrical grid was already antiquated and at risk before AI came along to consume extra electrons, noting that even energy-rich Texas suffers blackouts during snowstorms. He calculates that his personal monthly electrical consumption exceeds that of an average Cuban village of hundreds of people, and he cautions that over the next 5 years grid viability could become a major issue even without terrorist attacks or extreme weather.
