| More Articles | Free Reports | Premium Services Happy New Year! 2024 could not have been more chaos filled. But we closed out the year with more money than we started it thanks to many of the investment and trading opportunities that I and our Freeport friends identified. Now we look forward and prepare ourselves to grow our wealth even more through 2025. We start with a simple question: What kind of year will 2025 be for us as investors? I’m optimistic. There will be fantastic opportunities. But I also expect a full dose of chaos along the way. Afterall, we live in an Age of Chaos. Thanks to the confluence of three megatrends – the debasement of the dollar through high inflation, the end of globalization and the postwar geopolitical order, and the exponential rate of change in technology, in particular AI – the 2020s are one of the most chaotic, turbulent, and opportunity-filled decades in modern history. An incoming administration that has promised to upset the status quo is one more “chaos agent” in an already turbulent world. When I look ahead, I’m reminded of former Defense Secretary Donald Rumsfeld’s musing on the Iraq War two decades ago… There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say, we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know. So, today, let’s look at what to expect in 2025 through that same lens. We’ll cover some wild projections for quantum computing and AI… and Elon’s Musk’s waste slashing Department of Government Efficiency (DOGE). But we’ll start with one of the biggest known knowns… The Known Known – Inflation Is Running Hot This is one “known known” I’m so confident about I would rate it ahead of my certainty that the sun will rise in the East tomorrow. We’ll start 2025 with inflation running hot. “Core” Consumer Price Index (CPI) inflation has been running at 3.3% for the past three months and hasn’t meaningfully fallen in seven months. It’s one of the government’s favorite ways to measure the change in the prices of goods and services excluding food and energy, which have more volatile prices. The Fed’s target for inflation is 2%, not 3.3%. But Fed boss Jerome Powell still thought it a fine idea to slash interest rates in 2024. That’s it, Powell! Let’s dump gasoline on a still simmering inflation fire. Brilliant! I don’t know exactly how much higher or lower the inflation rate will go this year. That’s a known unknown. But inflation will be our Achilles’ heel in 2025. And if inflation stays high… it will force Powell to slow roll additional rate cuts, as he hinted in his December post-meeting press conference… create all kinds of friction with the incoming Trump administration… and potentially cause lots of extra volatility in the stock market. We don’t need a lengthy rehash of how we got into this situation. Suffice it to say that out-of-control government spending, a spineless Fed, and a demographic-based labor shortage all played their parts. But now that we’re in this mess, it’s extremely hard to get out of it. I can’t tell you that it’s a known known that our dollar hedges such as Bitcoin and gold continue to move higher. That’s up to Mr. Market. But I can tell you that our reasons for owning them are stronger than ever. The Known Unknown – How Deep Will They Cut? Trump has promised – with the help of Elon Musk and Vivek Ramaswamy – to take a knife to the federal budget and start a massive rollback of regulation. That sounds fantastic! But it remains to be seen how deep these cuts will be. First, you need to get Congress on board. That’s not going to be easy. Every dollar of government “waste” is someone else’s cherished “budget priority.” Convincing Congress to stop wasting money is like trying to teach your cat to do your tax returns. You can try, but you’re not going to get very far. One potential workaround for Team Trump is to challenge the Impoundment Control Act of 1974 (ICA). Before the ICA, presidents chose not to spend money Congress had budgeted and impound it instead. But “Tricky Dick” Nixon used impoundment to defund programs he simply didn’t like. So, Congress passed the ICA following the Watergate scandal to stop future presidents from doing the same thing. Will Trump be able to pull off a grand bargain with Congress to resurrect impoundment? Or will he challenge the Act to a friendly Supreme Court? Let’s hope so. Eliminating or modifying the ICA would be the single strongest anti-waste measure of my lifetime. But it would take the “power of the purse” away from Congress. So, it will fight tooth and nail to hang onto that power. The Unknown Unknowns – Exponential AI Growth Here’s where we can let our imaginations run wild. Artificial intelligence (AI) and quantum computing are advancing at an exponential rate. So, it’s hard for our linear human minds to grasp what happens next… or what the effects will be, good or bad. When something grows exponentially, it’s doubling at consistent intervals. Instead of the linear changes we’re used to – 1, 2, 3, 4 – we get increasingly bigger increases – 1, 2, 4, 8. And that’s what makes it so hard to grasp. Exponential growth often stays "invisible" for a long time before hitting a critical point where the growth suddenly becomes obvious and overwhelming. Right now, the power of AI is obvious. And it’s about to become overwhelming. How quickly does it replace human jobs? And what about energy? AI consumes gargantuan amounts of power. Estimates suggest a single AI query uses 10 to 100 times the electricity of a typical search. And as AI ChatGPT, Gemini, Grok, and other AI chatbots become more popular that strain is only getting more severe. Big Tech is desperate to find new energy sources. Will nuclear fusion become economically viable and scalable? Unlike nuclear fission, the source of current nuclear power, nuclear fusion creates no radioactive waste. And it carries no risk of a meltdown accident like Three Mile Island or Chernobyl. You can also extract the fuel you need for fusion from water, which covers 70% of the Earth’s surface. What would a complete reconfiguration of our energy production mean for us as investors? Who will be the winners and losers? These are questions we’ll be seeking answers for here at Freeport Navigator in 2025. So, stay tuned for more from me and the team on that. For now, let’s enjoy this holiday… watch a little football… and get ready to hit the ground running tomorrow. To life, liberty, and the pursuit of wealth, | 
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