Submitted by QTR's Fringe Finance

Friend of Fringe Finance Lawrence Lepard released his most recent investor letter this weekend. He gets little coverage in the mainstream media, which, in my opinion, makes him someone worth listening to twice as closely.

Larry was kind enough to allow me to share his thoughts heading into Q3 2025. The letter has been edited ever-so-slightly for formatting, grammar and visuals.

Larry offers up what I believe to be an extremely clear, concise and accurate analysis of the situation the U.S. finds itself in heading into the summer.

In this part of his letter, you will read:

• Why the U.S. may already be in a “Crack-Up Boom” — and what that really means for markets

• How the stock market is behaving like Weimar Germany... and why that’s not bullish

• The “Everything Bubble” isn’t over — it might just be getting weirder

• Why Lepard threw in the towel on shorting the market (and what that signals)

• How Bitcoin and gold are quietly screaming about a sovereign debt crisis

• One key metric suggests gold is nowhere near its top

• Silver’s breakout moment has arrived — and what it implies for 5x+ upside

• The under-the-radar shift in ETF flows and central bank behavior you’re not hearing about

• Why Lepard thinks miners could triple — even without higher metal prices

• A sobering conclusion: it’s only a matter of time before the printing press turns back on

If you’ve been reading me for a while, you know I don’t hand out praise easily. But when it comes to Larry Lepard, I make an exception. Larry has one of the sharpest macro minds in the game — not just because he sees what’s happening, but because he says it plainly, without the usual Wall Street sugarcoating.

He’s been consistently ahead of the curve on inflation, monetary policy, gold, Bitcoin, and the dangerous illusions at the heart of our current financial system. He’s not afraid to connect the dots between politics, markets, and policy dysfunction — and he does it with clarity, rigor, and just the right amount of well-earned cynicism.

This latest quarterly letter is Larry at his best. I agree with nearly every word — from the absurdity of the so-called “Department of Government Efficiency” to the market’s delusional ability to shrug off war, tariffs, and fiscal lunacy. Larry’s diagnosis of the “Crack-Up Boom” is not just timely — it’s inevitable, unless the laws of economics have been permanently repealed.

Crack Up Boom

The great Austrian economist Ludwig von Mises coined the term “Crack Up Boom” to describe what happens when people lose confidence in money. Crack up booms are generally precursors to very severe inflation or hyperinflation. In his own words, here is how von Mises described it:

But then finally the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against “real” goods, no matter whether he needs them or not, or matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as a medium of exchange. They become scrap paper. Nobody wants to give anything away against them.

It was this that happened with the Continental currency in America in 1781, with the French mandats territoriaux in 1796, and with the German Mark in 1923. It will happen again when the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of the thing will increase beyond all bounds. Inflation is a policy that cannot last.
— Ludwig von Mises, Human Action, p. 426

So, the question is: are we presently in or soon entering a crack up boom? The evidence in favor is a record high in the U.S. stock market, rising bond yields throughout the world (particularly Japan), and record highs in the two best-known fiat currency substitutes — gold and bitcoin. The evidence against is that the bond market has kind of held together, QE is not present, and interest rates have not been taken to below the rate of growth of the debt and GDP. Although these factors could change rapidly.

U.S. Stock Market: Bull or Bear?

If you have been reading our reports for a while you know that we believe that an “Everything Bubble” is present in all dollar-denominated assets because the ZIRP and QE distortions of the past 17 years have inflated all asset values well beyond what traditional valuation metrics suggest is their fair value. In a sense, we have had a modest crack up boom in all asset prices.

The work of John Hussman, Jeremy Grantham, and others suggests that the U.S. stock market is an enormous bubble, and the valuation metric extremes exceed those of 1929. We have been warning of this for some time. The problem is we do not know when the bubble bursts. Metrics which are overvalued can become even more overvalued. If we go full speed ahead with the money printer in 2026, the stock market will go higher. Recall that the stock markets of Venezuela, Zimbabwe, and Weimar Germany all did spectacularly well before their respective currencies failed (all examples of crack up booms).

As David and I discuss it, we are trying to figure out if we are in 1998 or early 2000. Let me relate a story. In the first half of 1998, the U.S. stock market was doing extraordinarily well, and Dotcom stocks were flying. It felt like a bubble to me. The Asian, Russian, and LTCM crises emerged and it felt like the end of the bubble to me. In August 1998, markets tanked and my short positions worked very well. However, a combination of Wall Street and the Federal Reserve put together a bail-out package for LTCM, rates were cut aggressively, and this process kicked off the next phase of the Dotcom bubble which ultimately made the 1996–1998 period look tame.

Below is a summary of the key points on each side of the Bull/Bear ledger for U.S. markets:

Bull Thesis:

• Earnings growth — The economy is different than the stock market. Earnings are still growing mid-single digits in 2025, and 2026 S&P 500 EPS growth is projected to be +11%.

• Market sentiment contained — Bull/bear indices not at euphoria, rather just average.

• Healthy market internals — Breadth of stocks rallying in 2025 is healthy (80% of S&P above their 50-day moving average); S&P Industrials and Cyclical stocks are outperforming Defensive stocks — a positive momentum indicator and not a historical sign of a market about to tip.

• Still early in AI era — Bulls are looking at NVDA revenues growing 50–60% year over year. AI will drive corporate earnings growth.

Bear Thesis:

• Narratives of AI growth/efficiencies fade — Think March 2000 Internet FOMO fading. Expensive stocks like PLTR and TSLA decline.

• Tariffs could slow U.S. economy.

• DXY / U.S. dollar decline rapidly — Helps reshore American business, but is inflationary and interest rates reflexively spike.

• Corporate bond spreads are at all-time lows — BBB bond spreads at only 1% over U.S. Treasuries. Bond market at peak confidence.

• VIX near lows — With the stock market volatility index near its lows (around 16–17), equity markets are too cavalier toward risk.

So fairly balanced overall with valid points from both bulls and bears. A lot will depend upon the policy moves of the Fed and the President, but we are now leaning toward the idea that the next round of easy money will drive current high valuations to even higher peaks. We no longer want to be short. It just has not worked, and we are disgusted by the insanity. So, we are throwing in the towel. Maybe there is some signal in that, in that the last bears are giving up and now the market can fall. We shall see.

However, while this interim term of say the next year or so could keep markets together, out on the horizon are ominous signs, and sound money assets are the canary in the coal mine.

Bond Markets

As we have said before, we are in a sovereign debt crisis and the key indicators are threefold: the price of gold, the price of bitcoin, and the yields on sovereign debt.

Things have not fallen apart yet, but there are some significant cracks in the dam. For instance, gold and bitcoin are trading at or near all-time highs. In fact, after the passage of the Big Beautiful Bill, the price of bitcoin took notice and is up 6.5% in the space of two weeks. As we have pointed out before, the price performances of gold and bitcoin in bond terms are outstanding. Bonds are failing and sound money is appreciating in value measured in fiat terms.

The chart below shows the change in term premiums (what investors require to hold long duration bonds versus treasury bills). Since the 2020 COVID print-a-thon, term premiums have trended solidly up.

As prima facie evidence that this crisis is emerging, the following chart shows how the gold price is diverging from real interest rates. Note the historically tight correlation between the price of gold and real interest rates (they both compete for capital). Then note how, following the seizure of the Russian reserve assets by the U.S., the series began to diverge, suggesting that gold no longer believes that the 10-year U.S. bond is providing an attractive rate of return.

Finally, we are beginning to see very visible cracks in the bond markets of fiat currencies that have large debt-to-GDP ratios. Note the increasing yield on the Japanese Government long bond shown below.

Gold

Gold and silver are now clearly in bull markets. There can be no debate about that. Reviewing the history, gold hit a...(READ THIS FULL POST HERE).