Economist Mark Thornton warns of 150-year market peak, calls Fed nomination a ‘hit job' on precious metals

• Consumer sentiment hit a record low of 44.8 in May with 57% citing high prices as a strain, while corporate profits reach records—a divide Thornton attributes to the Cantillon effect where new money benefits asset holders before inflating consumer prices
• Thornton alleges major banks had advance notice of Warsh's nomination, enabling coordinated selling that drove down precious metals prices, calling it 'the biggest hit job on the market for precious metals'
• The closure of the Strait of Hormuz has pushed U.S. gasoline above $4.50/gallon and the CRB commodity index to historic highs, representing structural supply chain damage that won't recover for years even if conflict ends

Summary

Austrian School economist Dr. Mark Thornton warns that U.S. markets have reached a 150-year valuation peak, citing severe overvaluation metrics. The Buffett indicator sits 2.5 standard deviations above historical averages, while the Case-Shiller valuation measure has reached its second-highest level in 150 years of data.

Key Economic Divide: Thornton attributes the disconnect between record corporate profits and collapsing consumer sentiment to decades of monetary expansion. University of Michigan consumer sentiment plunged to a record low of 44.8 in May, with 57% citing high prices as a financial strain. He argues the Cantillon effect—where new money benefits large corporations, banks, and government first—leaves working-class consumers facing inflation's brunt.

Federal Reserve Criticism: Thornton sharply criticized Kevin Warsh's Fed chair nomination, calling it "the biggest hit job on the market for precious metals." He alleges major banks received advance notice of the announcement, enabling the immediate precious metals price drop that followed. Despite hawkish speculation, Thornton argues significant rate hikes are mathematically impossible with U.S. debt exceeding 120% of GDP—a level economists consider unsustainable.

Geopolitical Pressures: The Middle East conflict has effectively closed the Strait of Hormuz, pushing U.S. gasoline prices above $4.50 per gallon. The CRB commodity index has reached historic highs, signaling a broader commodity supercycle. Thornton warns regional production capacity destruction will impact global supply chains for years.

Precious Metals Outlook: Thornton advocates for physical silver holdings as protection against currency debasement. He supports bottom-up state initiatives like the SILVER Act, which decentralizes precious metals depositories and eliminates capital gains taxes on gold and silver in states like Texas.