Author: Robert Kahl

Independent Investment Advisor | Investment Portfolio Management | 401(k) and 403(b) Advisor | Nonprofits | Families
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Here We Go Again

US federal government had a 43-day partial shutdown from October 1 to November 12 last year, as appropriations legislation for the 2026 fiscal year failed to pass.  Congress then passed legislation to provide full-year funding for agriculture, military construction, veteran affairs, and the legislative branch.  A continuing resolution extended flat funding for the remaining agencies through January 30, 2026.  There are six major appropriations bills that have not been passed and the following departments remain unfunded for the remainder of the fiscal year:

      • Defense
      • Homeland Security
      • Labor
      • Health and Human Services
      • Education
      • Transportation
      • Housing and Urban Development
      • Financial Services and General Government
      • State Department
      • National Security programs

After the House passed a $1.2 trillion spending bill that included the Department of Homeland Security, Senate Democrats are demanding that DHS-related agencies – Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP), and Border Patrol – be reformed or separated from the broader funding package before they approve anything.  There are several obstacles to quick resolution:

      • The House of Representatives is in recess until February 2, so any revisions to their version of the spending bills will be delayed.
      • A major winter storm is delaying Senate negotiations and voting.
      • Republicans hold a majority of Senate seats (53-47), but 60 votes are required to overcome a filibuster by Democrats.

The obvious catalyst for Senate Democrat opposition was the shooting of Alex Pretti in Minneapolis, but opposition had already been building rapidly to the actions of ICE in Minneapolis and other cities.  Now, Senate Democrats want to use their legislative leverage to change immigration enforcement policies.

The partial shutdown of federal agencies will result in the furlough of approximately 480,000 federal employees in affected agencies.  Another 500,000+ federal employees are expected to work without pay as they are considered essential.  All employees are likely to receive backpay after the situation is resolved.  The partial shutdown will also result in the disruption of some services and affect federal contractors.

Deficit spending is not an issue for the two political parties at this point.  The US government debt ceiling was raised to $41.1 trillion when the One Big Beautiful Bill Act was passed in July 2025.  The current federal debt outstanding is $38.5 trillion, and the Congressional Budget Office (CBO) is currently projecting a budget deficit of $1.7 trillion for the current fiscal year ending September 30, 2026.  If there is one thing that Republicans and Democrats can agree on, it is that they should borrow more money rather than raise taxes and reduce spending.

If you have any questions or comments, please contact me.

Robert G. Kahl
CFA, CPA, MBA

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Signs of Economic Slippage

The Atlanta Fed’s GDP Now forecasting model shows that the latest estimate of GDP growth for the third calendar quarter is 3.9% as of December 1.  While the US economy appears strong now, some economic commentators believe that the US economy has some signs of weakness that are likely to inhibit economic growth.  READ MORE

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Early Innings for Gold and Silver?

Since January 1, the price of gold through October 1 has risen by 47.6% and the price of silver has risen by 63.7%.  Are we in the early stages of a bull market for precious metals?

The primary reasons for continued price appreciation are 1) ongoing purchases of gold by central banks; 2) individual investors are now taking an interest in precious metals; and 3) physical supply deficits.  Major investment firms are now getting on board the gold train.

On June 10, JP Morgan Research published a bullish opinion on gold.  They wrote, “After three consecutive years of more than 1,000 (metric) tonnes of CB (central bank) gold purchases, the structural trend of higher CB buying has further to run in 2025 and 2026.”  They cited policy uncertainty, stagflation or recession, lower interest rates, geopolitical risks, and diversification away from US dollar reserve holdings by central banks as reasons to include gold in investment portfolios as “one of the most optimal hedges.”

On September 16, the Chief Investment Officer of Morgan Stanley, Mike Wilson, recommended that investors shift from a traditional 60/40 allocation of equities/fixed income to a 60/20/20 allocation of equities/fixed income/gold.  As US Treasury securities are losing some of their safe-haven status, Wilson wrote: “Gold is now the anti-fragile asset to own, rather than Treasuries.”

On September 17, Jeff Gundlach, Founder and CEO of DoubleLine Capital, recommended in a webcast that investors allocate 25% to gold.  Gundlach has made positive comments about gold in the past, so this was not a surprise.  DoubleLine Capital manages fixed income and has no precious metals investment products at this time, so Gundlach’s recommendation is unusual because it cannot benefit his firm.  Gundlach commented: “So I’m still hanging in there owning gold until such time as we get a totally different regime as regards the deficit situation and the kind of international flow situation, which is now kind of not benefiting the United States.  And I think that’s going to be a trend for the next few years.”

On a global basis, the current valuations of equities (common and preferred stocks), fixed income (sovereign, corporate, municipal, and asset-backed securities), real estate, and precious metals are approximately as follows:

      • Equities                                          $124 trillion
      • Fixed Income                              $140 trillion
      • Real Estate-Commercial       $  58 trillion
      • Real Estate-Residential         $287 trillion
      • Gold                                                 $  27 trillion
      • Silver                                               $  0.2 trillion

While neither Wilson nor Gundlach included real estate in their allocation, they represent significant portions of net worth for many families.  To get close to the target allocation levels that they talk about for gold, the price of gold would have to rise substantially, or the price of other financial assets would have to decline substantially, or it could be a combination of both.  Despite the logic supporting precious metals, few investment advisors are including them in their model portfolio allocations.  Thus, I expect gold and silver to continue their upward trends as more individual investors start to participate in the rally.

If you have any questions or comments, please contact me.

Robert G. Kahl
CFA, CPA, MBA