Last Week's Selloff and What It Means

This Is What Conviction Gets Tested On  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

February 7th, 2026   Donald Doge I sent this essay yesterday morning during the heart of the selloff, when emotions were running hot, and narratives were forming in real time. Since then, markets have recovered a meaningful portion of the move. That rebound doesn't settle the question or guarantee anything about what comes next. What it does do is clarify what last week's move was really about. This wasn't fundamentals breaking. It was positioning, narratives, and machines reacting faster than humans could think. With prices already moving again and uncertainty still very much in play, this framework matters even more now than it did when I first hit send yesterday morning. Last Friday morning, $847,000 evaporated from my portfolio in under four hours. Gold dropped 8.5%. Silver collapsed 19.8%. The mining stocks I've accumulated for years got hammered. My phone buzzed with alerts. My inbox filled with panicked messages from readers asking if the thesis was broken. I poured myself a coffee, sat down at my desk, and did something that probably sounds insane. I bought more. I'm not reckless, and I don't enjoy watching money disappear, but I've seen this movie before, and I know how it ends. My father came to this country with nothing. He worked jobs that would break most people. He saved every dollar he could. And he watched inflation slowly erode everything he built. That memory lives in my bones. It's why I've spent over a decade studying what actually protects wealth when the system starts cracking. Last week's selloff wasn't a warning to get out. It was an invitation to get in. Let me show you why. The Headline That Spooked Everyone First, let's talk about what happened. Kevin Warsh was nominated as the new Fed Chair. Wall Street branded him a "policy hawk." The algorithms sold first and asked questions never. But here's what the machines missed. In December 2018, Warsh co-authored a Wall Street Journal op-ed with Stan Druckenmiller, one of the greatest macro traders alive, titled "Fed Tightening? Not Now." They urged the Fed to stop raising rates and tightening liquidity. Druckenmiller set the record straight last weekend in the Financial Times: "The branding of Kevin as someone who's always hawkish is not correct. I've seen him go both ways." Think about this… The President didn't nominate Warsh to crash the economy before the midterms. He nominated him because Washington wants to run the economy hot. Tax cuts. Higher refunds. Targeted deregulation. All designed to juice GDP and keep voters happy. Running an economy hot doesn't kill inflation. It feeds it. The algorithms saw "hawk" and panicked. The humans who understand history saw something very different. The Math That Keeps Me Up at Night Core PCE, the Fed's preferred inflation measure, is stuck at 3%. It's neither falling nor stabilizing. Just stubbornly stuck. Meanwhile, market-based core inflation excluding housing has actually accelerated sharply. The data isn't cooperating with the "inflation is dead" narrative Wall Street keeps selling. I've been writing about this for a very long time. Even before I began publishing this newsletter, I argued that when faced with a choice between austerity and inflating away the debt, Washington would choose inflation every single time. Nothing has changed. The math has only gotten worse. Federal debt-to-GDP sits at record levels. Interest expense alone eats up 12-13% of tax revenue, roughly double what it was in the mid-1940s. And unlike the post-WWII era, we don't have a demographic tailwind. We have a demographic cliff. Baby boomers are retiring. Immigration is being restricted. The under-20 population is shrinking. Who exactly is going to produce the economic growth needed to service $36 trillion in debt? Nobody. Which means the only path forward is the same path every empire has taken when the bills come due. They print. Central banks can print money. They cannot print the copper needed to build data centers. They cannot print the silver required for solar panels. They cannot print the gold that has served as money for five thousand years. The Physical Market Tells a Different Story Here's what didn't make the headlines last week. While paper silver on the COMEX crashed to $75, physical silver premiums in Shanghai exploded to nearly 50%. As of the latest data, the premium still hovers around 20% above Western paper prices. In a genuine market selloff, physical metal trades at a discount to paper. Sellers dump inventory, buyers wait, and premiums compress. That's not what happened here. Physical premiums expanded to record levels precisely when paper prices collapsed. The paper price is a fiction maintained by futures contracts representing hundreds of claims for every ounce of actual metal. The physical price, what you actually pay when you want to hold something real, tells a completely different story. Beijing understands this. On January 1st, they classified silver as a strategic asset and limited exports. China controls 60-70% of the global refined silver market. They're not selling to the West until domestic needs are met. The same day Western paper prices crashed, President Xi's remarks were published in the CCP's official journal, Qiushi, calling for the RMB to "hold the status of a global reserve currency." I don't believe in coincidences when it comes to China. They're playing chess while Wall Street algorithms play checkers. 🚀 Get Moonshot Alerts Instantly Markets move in minutes. Your inbox can't keep up. Join the Moonshot VIP Text Service and get real-time alerts, portfolio updates, and first-move intelligence directly to your phone. Be first to know. Anywhere. 👉 [Join the Text List →] Supply Cannot Respond to Price Global gold mine production hit 3,672 tonnes in 2025. Up 0.6% from 2024. Up a grand total of 0.2% since 2018. Gold prices have nearly tripled in seven years, and production has barely budged. This isn't a demand problem. It's a supply problem that cannot be solved with money printing or policy changes. You can't will gold out of the ground. The easy deposits have been found. The remaining ore is deeper, lower grade, and more expensive to extract. Meanwhile, investment demand for physical gold and ETFs grew 84% year-over-year to 2,175 tonnes. Combined central bank and investment demand hit 3,039 tonnes, equivalent to 83% of total mine production. The math doesn't work. Demand is growing. Supply is flat. And the marginal buyer isn't some retail speculator, instead it's central banks who understand the dollar-based financial system is fracturing. Gold's share of global reserves currently sits around 24%. During the last multipolar periods in history, 1870-1914 and 1918-1939, gold comprised 85-90% of reserves. We're not at the end of this move. We're still in the first phase of the bull market. 🚀 Get Moonshot Alerts Instantly Markets move in minutes. Your inbox can't keep up. Join the Moonshot VIP Text Service and get real-time alerts, portfolio updates, and first-move intelligence directly to your phone. Be first to know. Anywhere. 👉 [Join the Text List →] What I Did and What You Should Consider I'm not telling you to panic buy. That's not how this works. But I will tell you what I did and why. Last Friday, when everyone was selling, I added to my positions in physical gold and the gold miners. Here's my framework: If you own gold and silver: Hold. The thesis is intact. Pullbacks in bull markets are features, not bugs. Every major gold bull market in history has experienced corrections of 15-25% along the way. This is normal and healthy. This is how markets shake out weak hands before the next leg higher. If you've been waiting to buy:  This is your entry. You're not going to get a better setup than a technically-driven selloff that leaves physical premiums at record highs while paper prices collapse. The divergence between paper and physical is screaming at you. If you think this is the top: Ask yourself one question. Has anything changed about the debt? The deficits? The demographics? The supply constraints? The central bank buying? The answer is no. What changed is sentiment. And sentiment is the worst possible guide for long-term investment decisions. The Wealth Transfer Is Already Underway Like it or not, the system transfers wealth from people who hold paper to people who hold real assets. When you print trillions of dollars, the dollars you already own become worth less. The things those dollars can buy, gold, silver, land, productive assets, become worth more. The question isn't whether gold and silver will be higher in five years. The question is whether you'll have the conviction to hold through the volatility required to get there. I've watched my portfolio drop by hundreds of thousands of dollars in a single morning. I've received the panicked emails. I've felt the temptation to sell and make the pain stop. But I've also studied history. The people who built generational wealth weren't the ones who sold during corrections. My father couldn't protect his savings from inflation because he didn't have access to the information you're reading right now. He didn't understand that the game was rigged against people who held paper. He trusted the system. I'm not going to make that mistake. And I don't want you to make it either. Last week's selloff was a gift wrapped in fear. The algorithms panicked, the physical market diverged, and the fundamentals remained unchanged. I know my answer. What's yours? Double D P.S. 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