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Brazilians began voting early Sunday in a presidential runoff, with right-wing Senator Flávio Bolsonaro and socialist President Luiz Inácio Lula da Silva statistically tied. Bolsonaro won the first round at the start of the month.

Nearly 160 million people are eligible to vote today, with polling stations closing at 1600 ET. A last-minute AtlasIntel survey for Bloomberg, released Saturday, showed Bolsonaro leading Lula 51% to 49%, largely in line with other final polls. The survey's margin of error was 1 percentage point.

Regular readers will remember that polls showed Lula ahead going into the first round, but Bolsonaro finished ahead with 47.03% of valid votes to Lula's 45.16%.

Goldman's chief Latin America economist, Alberto Ramos, provides the latest in his runoff Q&A (available to pro subscribers):

"The race has tightened considerably. Polls immediately after the first round gave conservative Bolsonaro a 4- to 5-point lead over left-wing incumbent President Lula in the October 25 runoff. His lead has since narrowed to 0 to 2.5 points, with one outlier, Vox, showing Lula slightly ahead. Prediction markets still favor Bolsonaro, but the odds are less lopsided than immediately after the first round."

Here is Goldman's poll-of-polls, which shows Bolsonaro's lead eroding in the final stretch (chart source: GS GIR):

And here is the full scorecard by pollster. Goldman's average still puts Bolsonaro ahead 51% to 49%, a 2-point lead right on the edge of most surveys' margin of error. Note how many arrows point down: in almost every poll, the senator's lead is smaller than it was in that pollster's previous survey.

Polymarket gives Bolsonaro an 82% chance of winning the runoff, while Lula's odds are around 20%.

Post-Election Market Outlook:

• Photo Finish: Brazil Votes With Polls Tied, Bettors All-In On Bolsonaro, And The Market Priced For A Lula Shock

UBS analyst Kyle Duca adds more color to FX impact on election results: 

Trading and strategy see a wide two-way range for BRL around the presidential runoff, but distinguish between the likely FX and rates reactions in each outcome. 

The FX trading desk sees a Lula win pushing USDBRL toward 5.40-5.45, where the move could run out of steam as higher rates bring the carry trade back into play and encourage USDBRL selling. 

On a Flavio win, trading sees more of a rates story, with USDBRL likely moving toward 4.90-4.80 before interest to clean up emerges. A sharp rates rally and diminished carry could then leave FX consolidating around those levels. 

FX Strategy sees USDBRL at 4.70-4.80 if Flavio wins 52%-48%, with less upside for BRL if the margin is below 1%. A Lula victory would put USDBRL at 5.30-5.50.

The "Bolsonaro trade" is already gaining momentum ahead of the runoff.

The black line, Hyperliquid's Brazil ETF perpetual, has surged to $45.16, about 6% above the iShares MSCI Brazil ETF (EWZ), which closed at $42.59 on Friday. 

By this evening, Brazilian voters will decide whether to accelerate Latin America's rightward shift or extend a failed left-wing economic agenda that risks deeper deficits, a mounting debt pile, higher interest rates, more economic gloom, and faltering investor confidence. A Bolsonaro win would cement the continent's rightward shift.  

By Peter Tchir of Academy Securities

Last weekend, in If This Was A Normal Week…, we focused on diesel and credit risk. Here it is, another weekend, and it seems like we once again need to focus on diesel and credit risk. We got to discuss this on Bloomberg TV on Monday. Bloomberg published this segment of the entire interview as a separate clip: AI Debt May Trigger Sharp Sell-off. It was also fun to get on the floor of the NYSE with the Schwab Network where we discussed Yellow Alert for Credit and the Risks of Cheap Chinese Compute.

While the concerns looked a little silly early in the week, after gains for big tech on Monday and Wednesday, they looked a lot more realistic by the end of the week. Thursday’s selling pressure brought the risks back to the forefront (the FT picked up on our view of what was driving markets).

They are two separate stories. Diesel is basically a function of geopolitics and conflict. Credit Risk and Equity Risk are primarily a function of the compute buildout: the pace of the compute buildout, the ability to fund it, and the profitability of the compute once it is funded and built.

Compute Spend is the single biggest story facing the economy and markets.

• Using Grok, it seems reasonable to attribute 50% to 60% of Capex spending on big tech, with the compute buildout and adjacent businesses comprising the bulk of that Capex.
• Estimates, according to Grok, are that of the 2.2% in real GDP growth, somewhere between 0.75% and 1% can be attributed to the compute buildout. At the higher end are some estimates that as much as 50% of U.S. GDP growth is being driven by the spend.

The importance of this compute spend to markets and the economy cannot be overstated.

Having said that, let’s start with energy, because it is “easier” and then we can work our way through credit, equities, and compute.

Diesel, Oil, Fertilizer, Iran, Russia, Ukraine, Shipping, and Refining

With Brent futures hitting their highest level since May, it is impossible to ignore what is going on with oil and gas prices. To be honest, my “go-to” commodity contract is QS (Low Sulphur Gas Oil futures) as it ties most closely to diesel, which is the “real” problem (that along with LNG and fertilizer).

There has been very little relief in this contract despite recent efforts to get diesel prices lower.

There is a lot of “chatter” about more oil flowing out of the Middle East now than before the war started. As with so much right now, it is difficult to figure out the veracity of these claims. Here are my working assumptions on oil and distillates:

• Bypasses and workarounds are getting a good percentage of the oil that once went through the Strait onto the market. Good.
• Strait Traffic Trackers understate how much oil is making it through the Strait as ships run at night, without transponders, etc. Also good.
• Iranian oil flows have slowed to a trickle. Most of the oil they had at sea (outside the Gulf) will have been offloaded by now. The U.S. blockade is working extremely well. Without Iranian oil flowing to China, there is less oil on the market and China has to bid up oil in “normal” markets. Good for clamping down on Iran, bad for the price of oil.
• Unclear that the flow of LNG, diesel, other distillates, or fertilizer has returned to anything close to pre-war levels. Just using Grok, LNG might be 25%, diesel under 50%, and “it throws up its hands in surrender” on fertilizer shipments versus pre-war. Oil is the most fungible and easily moved part of the energy supply chain. LNG is the most complex. Diesel requires the right product being brought into refineries with capacity, and that is a bottleneck. Oil is the “easy” problem; other products are more difficult and not doing well. Bad.
• The cost of shipping is much higher. Longer routes (the bypasses take more time, increasing the cost and time to market). Higher insurance costs, etc. If you want to get all “wonky” you can pull up the FD3CM0 futures contract (Middle East to China shipping cost per metric tonne). For those who want to have more “fun” just check out the ETF BWET.

• The fact that an ETF that tracks “the daily price movements of indices that track the future cost of transporting crude oil” proves there is an ETF for everything. Literally everything if all the sports betting ones get approved.
  
  So even the oil that is getting through is much more costly because shipping costs have exploded (250% in a few months seems like it “exploded” to me). Bad.

Until there is some sort of a deal in the Middle East, it is difficult to see the energy complex getting cheaper any time soon. A deal between Russia and Ukraine would help, but the key is the Middle East. In any case, it will take months after a deal for the supply chains to “normalize.”

Credit: Cheap, But Getting Cheaper?

There are two dominant themes that come up when talking credit:

• The names that have widened the most all look very “cheap.” In general, this is far less about concerns about default, and much more about concerns regarding future supply. The corollary of that is that these names look very expensive to short. Could that sentiment mark the bottom in credit?
  • The problem is that despite looking cheap, there is real concern and conviction that unless something changes in the pace of supply, they will continue to get cheaper.
• The pressure on credit is largely in the names and sectors that deserve it. There isn’t “widespread” spread widening. CDX (IG index) is still only at 63.5 (lower than its high of 68 back in March). The Bloomberg Corporate Bond Index OAS (spread) hit 89, still below the 93 it got to in March. LQD (a traded long-dated IG bond ETF) spread only got to 120 this week, lower than where it was as recently as August. So far this is both orderly and directed. There is a clear narrative around the names and sectors that have widened. As a whole, the market is trading in an orderly manner (the “beta” products all seem to be behaving “normally”).
  • One risk is that the cheapness and supply turn that orderly and directed behavior into selling pressure that gains momentum. Sell what you can, not what you have to. Any sort of breakdown in how the beta products are trading. Please read last weekend’s report for these concerns, which have NOT gone away. If anything, they may be intensifying. Maybe this is as good a place as any to reiterate my view that far more money is lost in credit from being a forced seller than from default. Literally orders of magnitude more money lost. This is a good time for a “gut check”: if spreads widen another [pick a number], will I really have the fortitude to hold positions (will management or risk let me hold them)? If the answer is no, it is time to be extraordinarily careful!
  • If the compute spend slows, the economy will slow, which is a “real” reason for spreads to widen. Everything in the bullet point above is “technical” in nature. This would be “fundamental” in nature.
  • If technicals and fundamentals align, in this world of “faux” liquidity, we could be surprised by how quickly spreads widen across the board.

I’m in a solid “yellow alert” or “caution flag” phase on credit spreads here.

Treasuries

The 10-year Treasury yield finished the week 8 bps lower, including a whopping 16 bps on Thursday.

• Compute spend slowing is good for Treasuries. Less competition.
• Compute spend slowing is bad for the economy and hence good for Treasuries.

These moves have little to do with inflation levels or Fed policy; they are primarily about potential shifts in supply/demand and potential changes in the trajectory of economic growth.

Also, French 10-year bond yields were higher than U.S. 10-year bond yields for the first time since 2013.

We also saw the “sovereign” problem slip into the “corporate” world (or at least the banking sector) this week.

Nothing alarming, but at the same time, another “caution” flag out there for credit risk.

Semiconductors

We will focus on the chip sector for two reasons:

• It is the lifeblood of the compute spend. So, anything we believe about compute spend will impact this sector.
• The relative size of leveraged ETFs in this sector (and I do lump in TQQQ) is quite large. I view this sector as being more exposed to “mechanical” buying and selling due to the proliferation of leveraged ETFs (at the index and single-name level) as a large amplifier of moves in both directions. If you add in “vol suppression” strategies (equity vol selling as part of “income” strategies), you have a further potential catalyst (to the downside right now) if there are any outflows from those sorts of funds. That is a secondary concern, as the leveraged ETFs are my primary concern for this sector.

Which brings us back to a “technical” level.

The SOX index is sitting right at the 200-day moving average. A level that should/could act as support. It is almost difficult to believe that with all the chatter about all-time highs (and the Nasdaq 100 isn’t that far off), we are back to sitting at the 200-DMA for this crucial sector.

It seems almost impossible to believe that the last time it broke this level was in the aftermath of “Liberation Day.” What looks like a tiny blip on the chart is actually a 30% drawdown! It looks like a tiny blip because 18 months ago, the index was at less than 5,000 and it is just below 11,000 now.

It is common that an index will test and retest a level before breaking through (if it is going to break through that support). So more of a warning flag (again) than true fear, but this setup is dangerous, especially given the “mechanical” nature of the leveraged ETFs linked to this sector where they need to buy on up days and sell on down days.

Chinese Compute

Supposedly DeepSeek raised the equivalent of $15 billion last week in a private sale of equity. I think dog years mean that for every year in human terms a dog ages 7 years? Where the heck did that thought come from?

I cannot help but wonder if $15 billion for a Chinese AI company goes a LOT further than a similar raise in the U.S.

I am incredibly concerned that just like in manufacturing, and then rare earths and critical minerals (the processed/refined/smelted versions), China is preparing to dump a lot of Cheap Compute on the world. Oh yeah, as General (ret.) Groen reminds me all the time, Huawei went from nowhere to dominating telecom equipment in much of the world.

Measures of average token price continue to decline (though they have been more stable of late). What is difficult to ascertain is how much of that is from greater efficiency from U.S. companies, versus a greater percentage of token usage coming from China?

The jury is still out on this, but the threat of Cheap Chinese Compute still seems underpriced.

Bottom Line

On energy prices, we need to see a positive resolution in the Middle East. Everything else seems like, more or less, a rounding error.

The amount and cost of the compute spend remains the key driver for credit spreads, equities, and the economy. We will get bits of information from earnings, and maybe more importantly, from the market reaction to those earnings.

If anything, I’d argue that Treasuries are “sniffing out” potential economic weakness, which would fit my cautious view on equities and credit spreads.

I don’t like how credit or the semis are positioned from a technical standpoint.

The entire market is going to be laser-focused on the Anthropic IPO. SpaceX was important and pivotal for markets, but given Anthropic’s importance to the compute build, we will all be looking for any signs of growth potential not priced in or any sign that valuations may have gotten ahead of themselves (even after recent pullbacks in the compute/AI stocks).

Looking forward to a busy start to the week and what should (unfortunately) be another tricky week to navigate (both bulls and bears had plenty of opportunity to feel smart and stupid last week; I know I did, and I don’t see it getting much easier this week).

Nearly 100 voters in Washington state have been issued replacement ballots after election workers recovered a large collection of undelivered mail from a dumpster at a Seattle park, just days before the midterm elections, according to KOMO News.

The incident came to light when a resident alerted King County Elections to suspicious mail disposal at Golden Gardens Park. County employees investigated and discovered two containers of discarded correspondence, including 92 election ballots that had never reached their intended recipients.

The KOMO report says that all 92 ballots have since been replaced, while federal postal authorities have been notified and are examining the circumstances surrounding the discovery.

King County Elections Chief of Staff Kendall Hodson said stolen mail occasionally turns up in public places during election season. According to Hodson, investigators generally find that criminals are searching for valuables or sensitive personal information rather than attempting to interfere with voting. Ballots are often simply thrown away with the rest of the stolen correspondence.

The U.S. Postal Service confirmed it was aware of the Seattle incident and indicated that its Office of Inspector General was handling the matter.

Election administrators also sought to reassure residents that the discovery does not mean the missing ballots could be used to cast fraudulent votes. Washington's election system uses individual tracking identifiers for voters and ballots, along with a review process intended to prevent duplicate submissions.

Officials examine the signature accompanying every returned ballot against the voter's registration records. Employees conducting those reviews receive instruction from the Washington State Patrol, and any questionable signatures trigger an additional verification process.

Rather than immediately rejecting a ballot with an uncertain signature, election workers contact the voter and provide an opportunity to establish that the ballot was legitimately submitted. Those discrepancies can be addressed until the day preceding the election's official certification.

KCE spokesperson Halei Watkins explained that these overlapping controls are intended to prevent anyone from successfully submitting a ballot on another person's behalf, even if election mail falls into the wrong hands.

Shortly after El Salvador's President Nayib Bukele announced a military operation Wednesday to rescue four Salvadoran aviation technicians kidnapped in conflict-ridden Haiti, reports late last week said 100 special forces operators from the Central American country had been deployed.

LOCATION: Croix-des-Bouquets, Haiti OCT 22 The Gang Suppression Force says Salvadoran special forces arrived to search for 4 of their soldiers missing since an Oct. 18 gang ambush. AP: 100 arrived, 100 more due. ?? ˜ Croix-des-Bouquets (approx. 10 km): 18.58°N, 72.23°W https://t.co/hAcrjtn1JJ

— Condition One News (@CONDITION1NEWS) October 25, 2026

The Miami Herald and the AP News reported Friday that El Salvador had deployed 100 special forces operators to Haiti to rescue the aviation technicians. By the weekend, unconfirmed footage had surfaced showing what appeared to be intense confrontations between the special forces and Haitian gangs.

Unconfirmed footage circulating on X:

IMAGENES DIFUNDIDA DEL INTENSO ENFRENTAMIENTO DE LAS BANDAS HAITIANAS LOS 400 MAWOZO CON LAS FUERZAS ESPECIALES UNIDAS HAITI Y SALVADOR ** https://t.co/f5z2g8HmE2

— Rolfy Martínez (@RolfyMartinez) October 24, 2026

Intense clashes are underway in Haiti between Salvadoran special forces and armed gangs as part of a major rescue operation authorized by President Nayib Bukele to recover four Salvadoran aviation technicians kidnapped after an ambush. https://t.co/kQypPuBF24

— Cartel Watch (@CartelWatchNet) October 24, 2026

"We have already finished with the gangs in El Salvador, and we can finish with you too," Bukele wrote Wednesday on X, addressing gangs in Creole and demanding the safe return of the four aviation technicians.

Pou chèf gang yo ak manm gang yo k ap kenbe kat konpatriyòt nou yo an otaj ann Ayiti: Mesye nou kidnape yo pa konbatan. Yo se teknisyen nan domèn avyasyon ki fè pati misyon nou ann Ayiti, nan kad yon misyon entènasyonal. Misyon nou an gen sèlman pilòt ak pèsonèl teknik, ki gen kòm travay prensipal fè evakyasyon medikal epi sove lavi moun, pa fè lagè. Men, nou te kidnape yo yon fason lach pandan yo t ap retounen apre yo te fin achte manje nan yon makèt nan zòn nan. Se poutèt sa, jodi a nou te lanse yon operasyon militè pou pote yo sekou. Nou gen yon sèl objektif: fè kat konpatriyòt nou yo retounen lakay yo vivan, san okenn mal. Men, mwen vle pou nou menm, chèf gang yo, konprann yon bagay byen klè: atak jodi a pa anyen devan sa k ap vini si nou pa remèt toule kat otaj yo vivan. Epi pa pran pawòl nou yo pou menas san fondman. Nou deja fini ak gang yo nan El Salvador, e nou kapab fini ak nou tou. Nou toujou gen tan pou evite sa. Remèt nou kat konpatriyòt nou yo vivan, san okenn mal, epi tout bagay ap retounen jan sa te ye anvan kidnaping lan. Desizyon an nan men nou.

— Nayib Bukele (@nayibbukele) October 21, 2026

The rescue mission comes as gangs have expanded their control beyond Haiti's capital, complicating efforts to organize overdue nationwide elections.

The UN authorized the deployment of up to 5,550 security personnel and more than 50 civilian staff last year in an effort to dismantle the command and control structures of the gangs.

More than 1,000 people were killed and over 100 kidnapped between July and September, according to UN data.

Elon Musk said Saturday that SpaceX throttled Starlink service in Ukraine, ending a week in which Washington and SpaceX pointed at each other over who limited the connection Kiev's drones depend on, the Associated Press reported. The admission came after President Volodymyr Zelenskyy said access to Starlink and Starshield had been restored to its earlier speeds.

Musk replied "Correct" on X and wrote that "Using Starlink, a civilian commercial service, for offensive drone strikes to kill people has never been allowed, nor should it be," adding that Starshield, "a different system, is controlled by the US government. What they decide to do is up to them." The rest of the post, as AP quotes it: "Ukraine military violated Starlink terms of service and used it for offensive drone strikes to kill people. That loophole was closed last week."

Correct.

Using Starlink, a civilian commercial service, for offensive drone strikes to kill people has never been allowed, nor should it be.

Starshield, a different system, is controlled by the US government. What they decide to do is up to them.

Ukraine military violated... https://t.co/ZXBB8bYfPn

— Elon Musk (@elonmusk) October 24, 2026

Neither Musk's post nor Hegseth's reference to terms of service names a specific violation. The Defense Secretary said Tuesday that terms of service "ultimately need to be complied" with, but gave no detail, Stars and Stripes reported. Ukrainian officials said the speed limit arrived without warning, and Zelenskyy said terminals in EU countries worked at speeds above 112 mph, which suggested the cutoff was not a technical failure.

Musk further pointed to Ukraine's own leader for proof of Ukraine's broken terms of service.

Volodymyr Zelenskyy confirmed the strike use to reporters in Brussels.

“We also use Starlink for mid-range strikes against enemy military targets in our temporarily occupied territories,” Zelenskyy wrote on X.

His forces stay off the network for operations inside Russia.

We don’t use Starlink for our responses inside Russia. We use Starlink to intercept jet-powered “shaheds” that attack our civilians and kill families. Starlink wasn’t turned off – its speed was reduced. And when the speed was reduced, we were unable to intercept a certain number of jet-powered “shaheds.” We couldn’t use a tool that helps protect people. That’s very painful and frustrating. We also use Starlink for mid-range strikes against enemy military targets in our temporarily occupied territories. We couldn’t do that when the restrictions were in place. And third, what matters most is people. Our warriors, who spend weeks and months on the front line, receive food and water delivered by drones using Starlink. Has the speed been fully restored to what it was before? No. Is it being restored now? Yes. From a conversation with media representatives in Brussels. (2/3)

— Volodymyr Zelenskyy / ????????? ?????????? (@ZelenskyyUa) October 16, 2026

Musk defended his company’s wartime record.

SpaceX “has done more to defend Ukraine than any private company on Earth BY FAR,” Musk wrote on X.

The Ukrainian front line would collapse the moment Starlink went dark, according to his post.

“I have nothing but UTTER CONTEMPT for the virtue-signaling evil warmongers who push for endless slaughter and offer no realistic solution to the conflict,” Musk wrote.

“May you burn in hell.”

Musk's account also sits awkwardly with what he said on Oct. 14. He then wrote that "Starshield systems are owned and controlled by the US government" and that any limits on speed or use "are decided by the US military and ultimately POTUS," Straight Arrow News reported. On Saturday he claimed credit for closing the Starlink "loophole" while still insisting that Starshield, the military-grade system behind Ukraine's drone operations, answers to the U.S. government, AP said.

The Wall Street Journal reported that Musk personally ordered the cap. One of its sources said he and President Trump discussed the move before it took effect, while others said they spoke only after it became public, and some U.S. officials said Musk acted alone. Administration denials have been broad. Secretary of State Marco Rubio said "there was no foreknowledge," Hegseth said "we haven't pulled anything back," and a White House official said "we didn't slow down Starlink at all." Trump has said he did not make the call but that Musk should not be blamed, AP noted.

The Journal later reported that Trump called Musk on Wednesday and asked him to lift the limits, a story ZH covered Thursday when Kiev said disruptions continued. Zelenskyy has since written that "the speeds are now where they need to be," with restoration starting overnight, and Defense Minister Yevhenii Khmara credited "direct dialogue" with Washington.

The cap, which Ukrainian officials put at about 100 mph, or 160 km/h, dropped terminals offline and, Zelenskyy said, caused interceptor drones to crash. It also landed as Kiev defied Trump's calls to stop hitting Russian refineries. Oleksandr Merezhko, who chairs Ukraine's parliamentary foreign affairs committee, called it "an attempt at blackmailing us," Newsweek reported. That is one Ukrainian lawmaker's reading, and nothing in the reporting confirms a link.

Congress wants answers. Rep. Brian Fitzpatrick (R-Pa.) said that if Musk ordered the disruption, "that is likely a violation of law," and Reps. Rosa DeLauro (D-Conn.) and Betty McCollum (D-Minn.) asked Hegseth on Oct. 19 to investigate and report to the defense committees within 30 days, per Stars and Stripes.

The restoration follows a new U.S. diplomatic push. AP said Russia agreed Wednesday to resume three-way talks with Washington and Kyiv next month, and Kyiv and Moscow agreed Friday to a localized ceasefire around occupied Oleshky, brokered by Melania Trump. Ukraine, meanwhile, kept striking Russian industry, with its General Staff claiming hits on a Tolyatti chemical plant and an Oryol electronics plant, and drones reaching Omsk, more than 2,000 kilometers from the border.

With that in mind, it makes sense that Ukraine is reportedly working to loosen its dependence on Musk. Zelenskyy’s government signed a letter of intent with Nokia and the Finnish firm ICEYE to build its own satellite communications, according to CNBC.

“We must all rely on capabilities that we can control,” Zelenskyy said in a statement.

Submitted by QTR's Fringe Finance

Markets have been volatile over the last several weeks, with selling pressure spreading across tech stocks and speculative assets. Gold and miners have been no exception, with the latter getting caught up in the broader liquidation and suffering significant selling pressure of their own.

While still beating the NASDAQ by about 6% over the last 3 months, miners are down -16.5% in the last month, plunging far more than the QQQ’s which are down just -5.75% in comparison. 

I thought it would be a good time to take a few minutes this morning to explain that personally, this is precisely the type of environment I have been anticipating for years (gold and miners plunging alongside a risk selloff), and it does nothing to change my longer-term bullish outlook on gold and gold miners.

What we’re seeing is entirely consistent with the thesis I’ve been laying out over the last few years, though the thesis is far from being proven right.

For years, I’ve said that if we experience a genuine market crash, I expect gold to sell off alongside equities, and I expect gold miners to get hit even harder. The reason is simple: when markets begin deleveraging in earnest, investors don’t sell what they want to sell. They sell what they can sell.

Margin calls need to be met. Leverage needs to be reduced. Cash needs to be raised. And in that environment, even fundamentally attractive assets can get thrown overboard indiscriminately. Gold is not immune to this process, and gold miners, which are ultimately equities with operating leverage to the underlying commodity, are even more vulnerable…they’re easier to sell than physical bullion.

In my August piece, My Favorite Investment In The World Right Now, I wrote:

“During the first phase of a true liquidity crisis, nearly everything gets sold. Investors do not carefully distinguish between good inflation hedges and bad businesses while they are meeting margin calls or trying to raise cash. Gold can decline. Gold miners can decline even more.”

I went on to explain that miners could easily suffer drawdowns of 20%, 30% or more, even while the longer-term investment case remained intact.

And just days ago, in my market dashboard, I reiterated essentially the same point:

“My ideal scenario isn’t necessarily for miners to march straight higher from here. In fact, I wouldn’t be surprised if GDX got absolutely crushed during a broad market liquidation.”

The important part of my thesis has never been what happens during the initial liquidation. It’s what happens afterward.

I’ve thought for a while that the next major financial crisis could produce a two-stage move in precious metals. First comes the deflationary shock, when leverage unwinds, asset prices collapse and investors scramble for dollars. Then comes the policy response, when the Federal Reserve and Treasury are eventually forced to confront the consequences of a financial system that has become hopelessly dependent on cheap credit and abundant liquidity.

That second stage is where I believe the real opportunity lies.

I’ve said repeatedly, including in recent interviews, that I would not be surprised to see gold fall toward $3,000 or $3,500 per ounce during a sufficiently violent market crash. But I’ve also said that I could envision gold subsequently making a beeline toward $7,500, or potentially even higher, quickly over the following months and years if the Federal Reserve responds with aggressive rate cuts, renewed asset purchases, liquidity facilities or other forms of monetary accommodation.

That all remains to be seen if we were to crash now…because inflation has the Fed’s policy responses somewhat hamstrung. But they would figure out a way to make an excuse to print or otherwise ease.

The sequence is what matters. Just earlier this month, during my October 6 appearance on the Macro Dirt podcast with Tony Greer and Jared Dillian, I said:

“I think gold will get clobbered with it and I think miners will probably overshoot gold to the downside in percentage terms.”

I then described the possibility of gold moving from deleveraging lows around $3,000 to $3,500 toward $7,500 or even $10,000.

That would represent a 150% advance from $3,000 to $7,500, or roughly 114% from $3,500. And because miners have operating leverage to the gold price, the upside in mining equities could be substantially greater, provided their balance sheets, production costs and underlying businesses remain sound.

Of course, none of this is guaranteed. The Fed could remain restrictive longer than I expect, a crash could damage miners’ fundamentals, and the recovery could take substantially longer to materialize. But those risks have always been part of the thesis.

What I find particularly interesting is that the very forces capable of creating the initial crash could ultimately force the policy response that benefits gold.

A credit event, disorderly bond market, severe equity drawdown or broader liquidity crisis would put enormous pressure on policymakers to intervene. And given the United States’ enormous debt burden, persistent fiscal deficits and growing interest expense, I continue to believe the political and economic incentives overwhelmingly favor intervention over sustained austerity.

In other words, the same financial instability that could temporarily crush gold and miners may ultimately provide the catalyst for their next major move higher.

And whenever I start questioning the thesis because of the latest ugly trading session, I find it helpful to zoom out.

Gold was trading around $1,900 per ounce five years ago. Even if it were to fall all the way back to $3,000 during a major liquidation, it would still be up approximately 58% over that period. That’s hardly the destruction of a secular bull market. It’s a reminder of just how far the metal has already come, and how much nominal purchasing power has been lost along the way.

And the structural reasons I have been bullish haven’t disappeared. Federal debt continues to grow. Deficits remain enormous. The government has shown little appetite for meaningful fiscal restraint. Central banks continue to have reasons to diversify reserves away from sovereign paper. And the monetary system remains dependent on policymakers’ willingness to provide liquidity whenever financial conditions become sufficiently dangerous.

None of those problems gets solved because GDX has a terrible week.

So today’s piece is really just a reminder, both to readers and to myself, that I don’t view the current weakness in gold and miners as some alarming development that requires me to rethink everything I’ve written over the last several years.

Instead, this is what I’ve been expecting. This is the volatility I’ve been warning about. And this is the kind of environment I’ve been preparing for.

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I don’t know where the bottom is, how much further miners could fall, or precisely when the Fed will be forced to change course. And I’m certainly not suggesting anyone blindly catch falling knives or underestimate the damage a genuine market crash could inflict on mining equities.

But I do know that the long-term reason I own and follow gold miners has very little to do with whether they are up or down on any particular day.

It has everything to do with what I believe policymakers will eventually be forced to do when the financial system comes under enough pressure.

The liquidation is the part everyone fears. The response to the liquidation is the part I’m interested in.

And if my thesis is correct, the most attractive opportunity in gold miners may arrive precisely when nobody wants to own them…or anything at all.

If Newmont Mining’s earnings yesterday showed us one thing, it’s that not all selloffs are created equal.

Gold miners are not some pre-profit AI garbage trading on promises of profitability a decade from now. Newmont just reported $6.36 billion in quarterly revenue, $2.48 billion in net income, and $1.9 billion in free cash flow, while sitting on $8.8 billion in cash and a net cash position of $3.2 billion.

These are real businesses producing real profits, with enormous operating leverage to the price of gold. And while I fully expect miners to get thrown out with everything else during a broader market liquidation, I think there’s an enormous difference between selling a cash-generating, financially sound business that fits squarely into my long-term gold thesis and dumping some cash-burning AI growth dogshit whose entire valuation depends on a future that may never materialize.

Both may get sold in a panic, but that doesn’t mean both deserve to be sold.

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QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. 

This post represents my opinions only. In addition, please understand I am an idiot and very often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning, meaning if I’m long I could sell or if I’m short I could cover at any time. Positions can change immediately. This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning.

I also may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and own things I’m bearish on. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions.

I cannot guarantee the accuracy of any or all facts and figures included in this article though I made an effort to get them right. I have been wrong before and will be wrong again, and encourage you to always double check, do your own research and speak to a licensed financial professional, which I am not.

 

 

 

Iran has launched a rare cross-border attack targeting an opposition group in neighboring Iraq over the weekend, state media says.

The Islamic Revolutionary Guard Corps (IRGC) sent drones atainst the headquarters of the Iranian Kurdish opposition group Komala in the Balisan region of Iraqi Kurdistan late Saturday, Mehr news agency said, and as reported in Bloomberg.

The drone strike inflicted "significant damage and casualties" - state media indicated.

There's been an intensified targeting of Kurdish dissident groups of late, given that in the opening months of Trump's Operation Epic Fury, US and Israeli officials openly talked about arming Kurdish groups along the Iran-Iraq border area.

One Middle East outlet notes in wake of the latest IRGC action: "The Revolutionary Guards have not immediately claimed responsibility for the strikes on these fighters, whom Iran accuses of being supported by Israel, its sworn enemy."

Asharq-Awsat reports of a prior similar cross-border strike this summer, "In the most deadly recent attack, nine Komala members were killed on July 17 near the city of Sulaymaniyah."

Kurdish and Middle East regional news sources are at the same time saying Iran's military is building up artillery and personnel in the country's northwest Kurdish regions bordering Iraq amid an intensifying crackdown on Kurdish opposition groups, and as Israel and the US threaten new attacks.

Additionally, the Kurdistan Free Life Party (PJAK) is being targeted, amid reports of recent clashes with security forces in the Shaho Mountains and other areas along the border with Iraqi Kurdistan.

The Kurdish population of Iran is a very sizeable minority of the country, commonly estimated at 10-15 million people primarily living in the northwestern and western areas of the country. Millions of Kurds also live on the Iraqi side of the border 

Rudaw news recently reported from Irbil, "Iran has deployed artillery and heavy weaponry to Kurdish areas in the west of the country amid growing fears of a wider conflict with Israel and the United States, as the Islamic Revolutionary Guard Corps (IRGC) intensifies operations against armed opposition groups along the country's western and southeastern frontiers."

Drones spotted near the Haji Omaran border crossing in the Kurdistan Region, near the Iranian border. https://t.co/OAmN2KnQ2L

— Wladimir van Wilgenburg (@vvanwilgenburg) October 24, 2026

There have been prior reports of sporadic drone activity and artillery fire in the areas of Shaho and Marivan.

These flare-ups have long predated the current US-Iran war, but the heightened state of alert and growing temperature of the region could bring an intensification to Tehran's anti-Kurdish opposition crackdown.