Wishing a merry Christmas to my Christian readers. Happy holidays to the rest of us. I will write a letter next week sometime; in the meantime, stay safe.

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The winner of the world’s most boring job goes to Harvard economic historian Paul Schmelzing, who spent years in European archives reconstructing something no one had ever built before: a continuous record of real interest rates stretching back to 1311.

Apparently Paul watches paint dry for excitement when he isn’t in an archive. Paul, from the bottom of my heart, thanks for your service.

On a serious note. I cannot overemphasise the importance of understanding the history of time. So I write today’s Spotlight as a scolding to my 54-year-old self for the impatience of youth.

What we have here is a regression line cutting through the cycles of life like a serial killer with a carving knife. We are at zero; actually, we were at zero, so the question as we round out 2025 is what will the future bring?

This is not a recent phenomenon that started with Alan Greenspan greasing the press. This is what big wave surfers call the moment you wish you were playing tennis. I have mixed more metaphors than a barman at the Ritz Carlton, so let me get serious for a second.

The economic world doesn’t operate efficiently in a zero-rate environment. That environment has come and has now gone. We have started a new trend. This is not going to pass in 10 or 20 years. We are at the start of a centuries-long interest rate cycle higher.

On the back of my centuries-long higher interest rate forecast, we need to rethink the impact that the unwind of the yen carry trade is going to have on global markets.

I want to share what gold and silver look like in yen. The BOJ and a complicit government are the poster children for reckless interest rate manipulation. The US be warned.

I want to thank a reader for introducing me to Charlie Garcia from the Capital Mischief newsletter. I love reading people who are intelligent, well-read and unafraid to say what they want to say. I have become more and more disenchanted with the lack of courage to say what you think out of fear of losing readers, customers, and friends.

I thought I would add something a little technical to exercise the pip in case you were starting the holidays too early and were looking for a bit of exercise. In the chart below I look at Silver’s future, but I look at it in 2 ways. The top chart looks at a continuous contract by joining the front month. In it you can see that the new all-time high was reached a few months ago. This is closest to reality.

However, to make backtesting and charting easier, there is a synthetic way of handling the monthly/quarterly “roll” called a continuous back-adjusted futures contract. As you can see with the bottom plot, a new all-time high was only just reached, taking out a high set nearly 50 years ago.

Just like flying across the Atlantic as a passenger doesn’t require a pilot’s licence, neither does investing in futures require understanding the “roll”. However, if you are the one flying the investment returns in futures contracts, it’s probably a good idea to learn how to fly.

The Dow Jones Global Index made a new ATH.

Gold had a big 3-sigma day, as did platinum.

For my Aussie brothers and sisters. Silver in Aussie dollars has produced bigger returns than the Magnificent 7 in giddy-up mode.

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