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The markets are very strange. You have anomalies that are very unusual. Consumer confidence indices are at the record low, while the stock market is at a record high. This has never happened before. Why is that? Because we have two economies, the economy of the 1%, the rich people. And I'm not complaining.
I've also benefited from financial asset inflation. But 80% of Americans are the Americans that live a normal life, kind of the median household and the lower household. They have very few assets. And if they have assets, they have to borrow money to buy these assets. These people have essentially a problem of affordability.
They can't afford to buy things they would like to buy, but they can't because they don't have the money. And the super rich, they already have everything. And so, the economy is a very mixed the economy of the super rich, who own the yachts, which will they will sell later on at a loss, a colossal loss.
And the economy of ordinary people is in recession, period. That you can be sure of. The purchasing power of ordinary people has gone down and their spending in real terms. They go to the supermarket, they buy, but they have to pay much more. And they are starting to buy less. And what the companies do, because they also have rising costs, they reduce the size of helpings.
So, we have dis-shrinkflation. The poor people, like always, get screwed, period. Especially under the Trump administration, in my view, private equity and private credit is a major disaster waiting to happen. And it's not just Blackstone that is kind of limiting redemptions. In Switzerland, we have a very big private equity firm and they also limited redemptions and the stock has been cut more than in half.
Also, Blackstone's shares are cut more than in half. The market is telling you that private equity and private credit is in deep trouble. The mood during a bubble is to get rich quick. That people are caught in a mania. And there's a very good book on the subject by Gustave Le Bon. It's called The Crowd, La Foule.
It's a very interesting book that I recommend to your viewers and readers. Because it discusses also the manias that occurred like which currently people believed in witches or the crusades. Suddenly people believed that they could liberate Jerusalem from the Muslims and so forth. And the alchemists, they thought they could discover gold, how to make gold.
There are manias all the time. I saw it as a child in my school. One year they played with beads and another year with other games and so forth and then collectibles and stamps and so forth. It caught the attention of everyone and everybody was excited and then it disappeared again. I think next report I want to write about the symptoms of a major bubble.
First of all, you need excitement about an industry, about a sector, about a commodity. And that excitement exists at the present time about AI. Number two, you should deal with capital spending boom in that sector. That then kind of attracts a lot of money and it captures money that is then illiquid.
And the AI boom in terms of size as a percent of the economy is not as large as the railroad boom of the 19th century, but it is the biggest capital spending boom that we experienced since World War II, and it immobilizes capital. Number three, you need public participation. We have massive public participation in auction trading, in futures trade atmosphere is gigantic, and you need foreign capital flowing into the sector of I mean the object of the boom.
And that we didn't have in 2008, and we didn't have in 1999-2000, but now we have it. The whole world is speculating in Nvidia and MU, I mean Micron Technology, and up to recently in Tesla, now Tesla's cooled down, but it attracts the capital to US stock market is now something like 60% of the world stock market capitalization.
It's 70% of the MSCI World Index. It's huge. I hope that gold falls another 500 to 1,000 dollars an ounce, because then I would increase my gold position again, rather substantially. I have a substantial position already, more than most people would have, except the gold bugs like Eric Sprott, most of his assets are in gold or some other people I know, but most people that I know in the investment world, most fund managers do not have more than 1% in gold, and already a 5% involvement in gold is a lot.
I know rich people in Switzerland, they have most of their assets in real estate, in some stock portfolio, in some bond portfolio, private equity, and gold maybe, you know, a few ounces, which they inherited from their grandmother, which bought them during World War II for a commodity that has performed as well as gold and it's performed very well over the last 18 months and there's no excessive speculation and the inflows into ETFs have just recently picked up but then with the correction they've again sold.
I mean considering the performance of gold, silver and platinum over the last 18 months there has been remarkably little speculation. They're all active in Bitcoins and in Solana. I tell you of all the people I know only maybe five are active in precious metals. I'm not particularly active because I just hold gold period.
I've sold some of my gold shares because they had huge run-ups and I'm of two minds about gold shares. I think you can make a lot of money in gold shares if you buy them at the right time. But I think the mining stocks are quite inexpensive relative to everything else. I mean I have South African gold mines and I have Canadians and I have still fairly large position in Ivanhoe and I have a preference for platinum as a commodity because it's very cheap relative to gold and silver and silver is relatively cheap compared to gold.
But wheat, corn, soybeans is even lower relative to gold and everything else and oil is low compared to gold and I can tell you what is relatively low compared to gold is your work labor cost and what is relatively low compared to gold are food prices. I mean wheat, corn, soybeans, sugar and rubber.
I have a bond portfolio as well and as As say in the last few years, it hasn't been doing well, but not as badly as say a 30-year bond. When you look at the 30-year bond, its price from the peak in 2020 has almost been cut in half. But you have the interest payments every year, so the total return hasn't been that bad.
And in the last 2 years, I just checked, the return hasn't been negative because the 30-year has gone down a little, but you got the 4% interest. Look, as an investor and as a large asset holder, my view is that everything is in danger zone. When I grew up in the '50s, my grandparents said you have to save 10% of your income and put it on deposit with a bank.
That advice was a disastrous advice over time because of the depreciating currency, the loss of purchasing power of paper money. They should have said, "Mark, you stupid young boy, buy every day some stocks or buy every day some gold and so forth and don't put it with a bank on deposit." But interestingly, nowadays, if I look at the asset allocation of people, the cash position of investors is at one of the lowest points in history.
And the asset that nobody wants are Treasury bonds, long-term Treasuries. So it tells me, if we go into recession and the recessionary forces are much stronger than what people expect because if asset prices decline, it may [clears throat] affect consumption meaningfully. And if that happens, maybe cash and bonds is not such a stupid allocation for the next 6 months or 1 year.
It's not a long-term proposition. It's just a strategic opportunity. and I am cautious of increasing my stock position. I have a large portfolio of stocks in Thailand because the Thai stock market is one of the few stock markets that has gone down for the last 5 years. We economists, we have business cycle series.
Schumpeter wrote a book called Business Cycles. I mean, he wrote also Socialism and Democracy and Capitalism, which is a very entertaining book. Anyway, we have business cycles and some are called the Kondratiev, the Kuznets, the Juglar, and the Kitchen cycles and so forth. And historians have also war cycle series.
According to the war cycle theory, I want to tell you the conditions for war have never been better than now post the First World War. Because the First World War occurred largely because Germany overtook England as an industrial power. They became the larger economy than Britain in 1910 because they had [clears throat] grown dramatically between 1870 and 1910 under Bismarck.
And nowadays, you know, you have the superpower, the US, that was the absolute superpower after the Second World War. But over the last 20 years, China has gone from insignificant to very significant. They produce more steel than the rest of the world combined. And they have 1.3 billion people and their industrial production is much larger than the US and also the car industry is now the largest car industry in the world.
And they went from 2% of world consumption of industrial commodities in 1970 to now around 50% and that creates tensions between the superpower, the US up here, and the arrogant West who still lives in the age of neo, and the rising power of BRICS countries, including China, India, Indonesia, Brazil, and so forth.
And I tell you, the conditions for war are perfect. And that's why I don't think that the peace treaty they will sign something because Trump, he wants to win the midterm elections and so forth. And he basically made a huge mistake to get involved in something as complex as the Middle Eastern battlefields, war theater.
But he grossly overestimated himself. He thought he can go in in a week he solves the problem and so forth. And now he's stuck. And Netanyahu is not playing his game. I utterly dislike the character, but he's smart. Trump is dumb.
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