Inside today’s Daily Journal…

Ironically, it was just before the war in Iran began that we warned explicitly about True Believers.

The True Believer, Eric Hoffer’s 1951 book, describes the people who get swept up in political movements and cultural revolutions. Desperate to escape the failure of their own lives, they seek validation, belonging, and status by believing in things that are obviously, and even dangerously, untrue. It’s this kind of thinking that’s driving our government’s current war in Iran.

Air power alone has never “won” any war. And it will not “win” this one, either.

You cannot believe what the government tells you about the war. You cannot believe what the Fed says about inflation. If you do not understand – and make rational decisions about actual facts – the coming crisis will wipe you out financially.

True Believers will go broke.

You must understand these critical facts. The United States has $40 trillion in outstanding debt. Mandatory spending plus interest consumes 37% of GDP (!) before a single discretionary dollar is spent. The federal deficit is running above 5% of GDP for the fourth consecutive year. Interest expense alone is on track to hit $2 trillion per year by the end of President Donald Trump’s term – if he’s not impeached first. No one cares about these debts – until they can’t be financed. That’s when it will matter. And by then it will be too late.

The Fed is printing $40 billion a month in what they call “reserve management purchases.” The actual reason is that $9 trillion in U.S. Treasuries must be rolled over this year, and there aren’t enough real buyers. The last several auctions were abortions with over 20% of the bonds purchased by dealers, using lines of credit supplied by the U.S. Treasury.

Why no buyers?

Central banks around the world bought a record 1,133 tonnes of gold in 2025 while cutting their Treasury holdings by $189 billion. Denmark’s national pension fund sold 100% of its U.S. Treasuries. Brazil and China completed a bilateral trade deal in which over 40% of transactions settle in China’s currency, the yuan, bypassing the dollar entirely.

Does this sound like a safe and sound world reserve currency?

Even the people responsible for the system are warning about the system. Larry Fink – the CEO of BlackRock, the largest asset manager on Earth – wrote in his annual letter that the U.S. risks losing the dollar’s reserve currency status to digital assets like Bitcoin. U.S. Secretary of State Marco Rubio has said publicly that the dollar is at risk of replacement.

When the people who built the house start telling you the foundation is cracking, you should listen.

I’ve been warning since January that the trigger for a 1973-74 style stock market crash (of 50% or more) is the 10-year Treasury yield crossing 5%. That’s the level at which Bank of America’s (BAC) $100 billion in unrealized bond losses – already the largest in the banking system – begin to detonate. BAC is down 14% year-to-date, from $55.95 to $48.09. It was the largest holder of Treasuries in 1973, when its stock crashed in the subsequent bear market. It is the largest domestic holder of Treasuries today. History rhymes.

Most of the time, investors can safely ignore macro fluctuations. Recessions come and go. The business cycle turns. But there are rare exceptions – like maybe once a decade – when expensive stock markets collide with problems that are serious enough to derail even great businesses. The two kinds you must watch for? Lasting energy disruptions. And genuine threats to the banking system.

Right now, we are facing both.

On March 19, Israeli forces bombed Iran’s South Pars gas field – the world’s largest, supplying 75% of Iran’s total gas production. In retaliation, Iranian-backed forces struck Qatar’s Ras Laffan complex. Ras Laffan was responsible for roughly 25% of global liquefied natural gas (“LNG”) exports. Both facilities are now offline. Estimated repair timeline: three to five years.

A peace treaty can reopen a strait. It cannot rebuild an LNG train that took 14 years and $50 billion to build.

But it’s worse than that. None of our ships or bases in the Persian Gulf have been safe from Iran’s missiles and drones. A Shahed-136 drone costs $20,000. It can turn the world’s most valuable energy infrastructure into a blazing inferno. What Iran has demonstrated – and what every government and energy buyer on Earth now understands – is that concentrated, centralized energy infrastructure in the Middle East is indefensible against cheap, mass-produced drone warfare. The old model is dead. And there is no new model.

The Strait of Hormuz isn’t just an oil chokepoint. Qatar supplies 40% of the world’s helium – required for semiconductor fabs and MRI machines, with no substitute. The Persian Gulf region produces 45% of global sulfur and 33% of global urea. Without sulfur, you can’t make phosphate fertilizer. Without urea, you can’t make nitrogen fertilizer. Without fertilizer, crop yields collapse. This is not an energy crisis. It is a food crisis, a technology crisis, and a medical equipment crisis – simultaneously.

Even if the Strait of Hormuz reopens tomorrow, the permanent U.S. military presence required to keep it open transforms this from an event into a permanent, structural cost.

The insurance markets are already repricing transit in the Persian Gulf area. Premiums have surged from $40,000 per very large crude carrier (“VLCC”) transit before the war to upwards of $1.2 million today, a 30-fold increase. That’s roughly 5% to 10% of hull value. A VLCC carrying $50 million in crude oil can absorb a combined $3 million in toll and insurance as a fraction of cargo value. A container ship carrying $5 million in manufactured goods cannot. The insurance premium alone exceeds the profit margin on non-oil cargo.

But even that isn’t the big risk. Here is the arithmetic that keeps me up at night.

Higher energy costs drive higher inflation. Higher inflation drives higher interest rates. Higher rates drive a higher interest expense on $40 trillion in U.S. federal debt. Higher interest expense forces more printing. More printing drives more inflation. It is a doom loop that starts at 5% on the 10-year U.S. Treasury bond. And there is no “off ramp” from this loop. The Fed cannot break inflation with rate hikes without triggering a sovereign debt crisis. They cannot hold rates low without surrendering the dollar. Something will have to break.

And it isn’t just the stock market that can’t handle 10% inflation. It’s Bank of America’s mortgage book – loaded with fixed-rate loans originated at 2% to 4% in 2020. It’s the U.S. Treasury itself, trying to roll $9 trillion at rates the government cannot afford. It’s the $1.7 trillion to $2 trillion private credit market – where companies that borrowed at 6% are being quoted 12% to 14% on refinancing, if they can get a quote at all. Major funds are already limiting quarterly redemptions to 5%. This is the 2026 version of Bear Stearns, and we are still in the early innings.

In January, I told you the trigger was 5% on the 10-year. In February, I told you something was about to break. On March 4, when gold, bonds, and stocks all fell simultaneously – the “John the Baptist” signal – I told you to move to 50% cash if you didn’t want to stomach a 20% drawdown.

That single decision was the most important call of the last several years. The S&P 500 fell 6.3% in March. Long-duration Treasuries fell 2.7%. Gold – supposedly the ultimate safe haven – fell 13.4% from its early-March peak.

To preserve your wealth, I recommended a portfolio designed specifically for a world where the Strait is closed and inflation is structural.

Here is how those recommendations have performed, from the closing price on the day I recommended them through March 31:

The energy and materials names I recommended returned an average of 15.5% in less than four weeks. Against the S&P 500’s decline of 6.3%, that is more than 20 percentage points of outperformance. Combined with the 50% cash allocation, the blended portfolio gained roughly 5% while the market lost 6%.

Two honest notes. Frontline was a late entry – the tanker thesis was right, but the stock had already moved. Bitcoin is underwater; the “liquidity sponge” thesis depends on the Fed beginning overt monetization, which hasn’t happened yet. If the $9 trillion rollover forces their hand, I expect the Bitcoin EZBC fund to reprice sharply higher. It’s coming.

Venture Global deserves a special mention. From our Best Buys recommendation last December to today’s $16.23, it’s up 138%. This company builds LNG terminals in half the time at half the cost of Cheniere Energy (LNG) – the current leading U.S. LNG producer – with 35.2 million tonnes per annum (“MTPA”) of uncontracted capacity that can sell into the global panic at whatever price the spot market will bear. In a world where Qatar is offline for three to five years, Venture Global is becoming the central bank of global energy.

This is far from over. The world hasn’t begun to come to grips with what it means for the Strait to remain closed – or for a permanent U.S. military presence to be the only thing keeping it open.

If the 10-year Treasury yield crosses 5%, I will tell you to exit the financial markets entirely and short the banks. That was my promise in January and it stands.

If oil remains above $100 and urea prices continue to climb, the inflation numbers in the second half of this year will be unlike anything since 1980. The Fed will be paralyzed. The private credit market will freeze. And Bank of America’s balance sheet – along with every regional bank that loaded up on long-duration bonds in 2020-2021 – will be in existential trouble.

I’ve seen two panics of this magnitude in my career: 2008 and COVID. Both caught nearly everyone off guard. This one shouldn’t – because I’ve been telling you exactly what to watch for, and every single indicator I identified in January is moving in the wrong direction.

Stay 50% in cash. Stay concentrated in the Permian and U.S. Gulf Coast energy names. Keep buying gold on dips – despite its March drawdown, it remains the only monetary asset that central banks are accumulating. Keep your Bitcoin position and be patient.

The math doesn’t lie. Politicians do.

Good investing,

Porter Stansberry
Stevenson, Maryland

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1.Commodity increases since the start of the Iran war.Oil and gas are not the only critical commodities whose prices have skyrocketed since the U.S. and Israel first attacked Iran on February 28. Here are 15 natural resources that have seen prices rise significantly in the last month – with jet fuel at the top, having shot up 78%.

2. Central banks are moving away from the U.S. dollar. The latest data from the International Monetary Fund (“IMF”) confirms a persistent, structural decline in the U.S. dollar’s dominance, with its share of global foreign currency reserves falling to 56.77% in Q4 2025 – the lowest level this century. While the greenback remains the world’s primary reserve asset, central banks are actively diversifying into non-traditional currencies and gold to mitigate the risk of dollar-denominated sanctions following the U.S. freezing $300 billion in Russian assets after it first attacked Ukraine.

3. The world still isn’t taking the Strait of Hormuz oil shock seriously enough. Oil is trading above $100 a barrel, up 60% since the Iran conflict began one month ago, while European natural gas has surged more than 70%. But dozens of energy industry insiders surveyed by Bloomberg believe the worst is yet to come: oil and gas supply buffers are nearly exhausted, critical LNG infrastructure has sustained damage that could take years to repair, and diesel shortages are just weeks away in Europe. If the Strait stays closed much longer, as Porter describes above, energy prices could shoot up to levels that plunge the global economy into a stagflationary recession.

While the overall market has taken a beating to start off the year – the S&P 500 is down 6% year to date – Porter & Co.’s Best Buys are up a remarkable 50% since December 31, 2025. The December Best Buys featured Venture Global (VG), The Hershey Company (HSY), and Booz Allen Hamilton (BAH), with Venture Global leading the way up 138% year to date.

Yesterday, Porter wrote an essay “When To Buy Gold” in the Daily Journal. Readers share their thoughts…

Gary B. writes:

Porter Comment: I’m sorry, but your question is nonsensical. Backing stablecoins with Treasuries will, at the margin, increase demand for those assets, but only at the expense of pulling reserves from the banks. And in no scenario will stablecoins “wipe out” any obligations of the U.S. Treasury, which must be redeemed with either tax revenue or the printing press.

Robert A. writes:

Porter Comment: I own gold in various ways, including gold royalty company Franco-Nevada (FNV), gold ETFs (like GLD), and I’ve always loved having “real gold” – which for me lately has meant buying U.S. gold buffalo coins. My preferred dealer is Van Simmons at David Hall Rare Coins. You can reach them at 800-759-7575. Van has been like a second father to me and is one of my oldest and best friends in the world. My wife and I just got back from a wonderful weekend in Palm Desert with him. There’s no one in the business I trust more. But just to be clear, I don’t have any commercial relationship with him and you should of course shop around. When you do, you’ll recognize the incredible value he offers his clients.

Margaret B. writes:

Porter Comment: Everyone comes to gold eventually. It just takes a long time for most folks.

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.