WEBVTT 00:00:00.000 --> 00:00:02.419 Welcome back to the deep dive. So you've handed 00:00:02.419 --> 00:00:04.519 us quite a stack of sources this time detailing 00:00:04.519 --> 00:00:07.059 one of the biggest market puzzles we've seen 00:00:07.059 --> 00:00:10.259 in years, maybe this decade. We're talking about 00:00:10.259 --> 00:00:12.980 this really dramatic divergence between gold 00:00:12.980 --> 00:00:15.939 and stock performance, specifically in 2025. 00:00:16.420 --> 00:00:19.280 Yeah, it's it's a fascinating situation. The 00:00:19.280 --> 00:00:21.219 sources are throwing around some pretty serious 00:00:21.219 --> 00:00:24.660 terms like bubble warnings for equities. But 00:00:24.660 --> 00:00:28.269 here's the weird part. You've got stocks. The 00:00:28.269 --> 00:00:31.710 S &P 500 hitting record highs. And at the exact 00:00:31.710 --> 00:00:34.829 same time, gold is also hitting unprecedented 00:00:34.829 --> 00:00:37.079 record highs. Assets that often move. You know, 00:00:37.079 --> 00:00:39.759 it feels like a major historical anomaly. It's 00:00:39.759 --> 00:00:42.179 confusing. It really is a split personality market, 00:00:42.179 --> 00:00:44.579 you could say. So our mission today, I think, 00:00:44.579 --> 00:00:46.399 is to get under the hood here. Let's unpack what's 00:00:46.399 --> 00:00:48.219 really driving this extreme behavior. What's 00:00:48.219 --> 00:00:50.119 it actually telling us about portfolio risk? 00:00:50.460 --> 00:00:52.179 And maybe most importantly for you listening, 00:00:52.359 --> 00:00:54.859 how do you even begin to interpret this to refine 00:00:54.859 --> 00:00:57.100 your own strategies? OK, let's start with the 00:00:57.100 --> 00:00:59.200 scale of it, because this isn't just gold sort 00:00:59.200 --> 00:01:01.880 of ambling along. It's it's sprinting ahead, 00:01:02.100 --> 00:01:03.899 even while the stock market party seems to be 00:01:03.899 --> 00:01:06.370 going strong. The sheer outperformance of gold 00:01:06.370 --> 00:01:09.269 in 2025. It's just stunning because it really 00:01:09.269 --> 00:01:10.870 flies in the face of that conventional wisdom, 00:01:11.109 --> 00:01:13.310 doesn't it? That gold only shines when stocks 00:01:13.310 --> 00:01:15.150 are tanking. Well, that conventional wisdom, 00:01:15.250 --> 00:01:18.689 it holds water maybe 80 % of the time, historically 00:01:18.689 --> 00:01:21.310 speaking. But this year, no, the metal hasn't 00:01:21.310 --> 00:01:23.890 waited for panic selling. It's surging right 00:01:23.890 --> 00:01:26.569 alongside the equity rally. That dual track, 00:01:26.670 --> 00:01:28.569 that's the key thing our sources are flagging, 00:01:28.650 --> 00:01:31.609 a risk asset soaring next to a safe haven. It's 00:01:31.609 --> 00:01:33.989 unusual. Let's put some hard numbers on it. As 00:01:33.989 --> 00:01:37.329 of early November 2025, gold, it's blasted past 00:01:37.329 --> 00:01:40.510 $4 ,000 an ounce, first time ever, and stocks. 00:01:40.810 --> 00:01:43.840 The S &P 500 is firmly over the $6 ,000. 700 00:01:43.840 --> 00:01:46.480 mark another new peak both are incredible milestones 00:01:46.480 --> 00:01:48.939 absolutely but the year -to -date games that's 00:01:48.939 --> 00:01:51.340 where you see the markets underlying anxiety 00:01:51.340 --> 00:01:54.459 creeping in gold is up get this 48 percent 48 00:01:54.459 --> 00:01:56.540 percent meanwhile the S &P 500 even with its 00:01:56.540 --> 00:01:59.519 records is up 15 percent 15 percent is great 00:01:59.629 --> 00:02:02.689 normally, but 48 % for gold. I mean, that's the 00:02:02.689 --> 00:02:04.569 kind of return you usually associate with some 00:02:04.569 --> 00:02:08.009 speculative tech stock at peak hype. For a safe 00:02:08.009 --> 00:02:09.889 haven asset to do that suggests there's some 00:02:09.889 --> 00:02:13.069 deep systemic fear that, well, the equity markets 00:02:13.069 --> 00:02:14.909 are just kind of ignoring right now. Precisely. 00:02:14.949 --> 00:02:18.150 And if you put that 48 % versus 15 % into historical 00:02:18.150 --> 00:02:21.139 context? Well, this level of gold outperformance 00:02:21.139 --> 00:02:24.419 makes 2025 the seventh worst relative year for 00:02:24.419 --> 00:02:27.439 stocks compared to gold since 1973, since the 00:02:27.439 --> 00:02:30.060 gold standard ended, basically. So it's not just 00:02:30.060 --> 00:02:32.520 a blip. It feels like a genuine rotation is happening 00:02:32.520 --> 00:02:35.479 or protection is just massively outpacing risk 00:02:35.479 --> 00:02:38.199 taking. You've got this market showing both extreme 00:02:38.199 --> 00:02:41.659 greed in stocks and frankly, extreme fear in 00:02:41.659 --> 00:02:44.560 gold simultaneously. OK, that simultaneous greed 00:02:44.560 --> 00:02:47.090 and fear that leads us right into these. bubble 00:02:47.090 --> 00:02:49.590 warnings and equities. If the S &P is soaring 00:02:49.590 --> 00:02:52.569 past 6 ,700, why are serious people ringing alarm 00:02:52.569 --> 00:02:55.729 bells? It really boils down to valuation, specifically 00:02:55.729 --> 00:02:58.449 the KPE ratio, cyclically adjusted price to earnings. 00:02:58.509 --> 00:03:00.490 That's the indicator that's flashing bright red 00:03:00.490 --> 00:03:02.870 right now. Right, the KPE ratio, sometimes called 00:03:02.870 --> 00:03:05.629 the Shiller PE. For anyone not familiar, it's 00:03:05.629 --> 00:03:08.069 different from your standard PE because it tries 00:03:08.069 --> 00:03:10.030 to smooth things out, right? Yeah. It averages 00:03:10.030 --> 00:03:11.830 earnings over the last 10 years, adjusts for 00:03:11.830 --> 00:03:14.389 inflation to give you a sort of longer term view 00:03:14.389 --> 00:03:17.090 of how expensive the market is. Exactly. It filters 00:03:17.090 --> 00:03:19.389 out the short -term noise. And what the sources 00:03:19.389 --> 00:03:21.629 are showing is that the CP ratio has been stuck 00:03:21.629 --> 00:03:24.710 above 40 for months now. Months. You have to 00:03:24.710 --> 00:03:27.409 ask, when's the last time we saw valuations sustained 00:03:27.409 --> 00:03:29.590 at that kind of level? We know the answer. It 00:03:29.590 --> 00:03:32.060 was the peak of the dot -com bubble. Late 90s, 00:03:32.060 --> 00:03:34.400 early 2000s. That's the only real comparison. 00:03:34.740 --> 00:03:36.520 Right. And here's a kicker, the implication. 00:03:36.740 --> 00:03:39.159 Look, high valuations aren't automatically a 00:03:39.159 --> 00:03:41.659 disaster if earnings growth explodes to justify 00:03:41.659 --> 00:03:44.699 them later. But when CPE is this high, it signals 00:03:44.699 --> 00:03:46.860 the market is basically pricing in perfection 00:03:46.860 --> 00:03:49.759 for the next decade. Just absolute perfect execution. 00:03:50.180 --> 00:03:53.099 So if those rosy growth forecasts stumble even 00:03:53.099 --> 00:03:56.159 a little bit, the risk of a really nasty correction 00:03:56.159 --> 00:03:59.020 gets amplified. It leaves portfolios that are 00:03:59.020 --> 00:04:02.310 heavily concentrated in say, the S &P 500 index 00:04:02.310 --> 00:04:05.430 very exposed. And we should probably add what's 00:04:05.430 --> 00:04:08.469 driving that high HUP number right now. It's 00:04:08.469 --> 00:04:10.189 not like the whole market is booming equally. 00:04:10.449 --> 00:04:12.849 It's concentration, isn't it? A lot of that 15 00:04:12.849 --> 00:04:16.110 % gain in the S &P is really down to just a handful 00:04:16.110 --> 00:04:19.149 of mega -cap tech names. That kind of distorts 00:04:19.149 --> 00:04:21.569 the picture for the overall market. That concentration 00:04:21.569 --> 00:04:24.790 makes the risk even sharper. Absolutely. If those 00:04:24.790 --> 00:04:28.290 few giants stumble, that whole 6 ,700 level could 00:04:28.290 --> 00:04:31.120 vanish pretty quickly. So you basically got stocks 00:04:31.120 --> 00:04:34.040 priced like it's $19 .99. But maybe with the 00:04:34.040 --> 00:04:36.079 market structure risks, the concentration risks 00:04:36.079 --> 00:04:39.819 of $20 .25, it's a potent mix. OK, so stocks 00:04:39.819 --> 00:04:43.360 are flirting with maybe historical excess. But 00:04:43.360 --> 00:04:45.459 then why is gold acting like it already sees 00:04:45.459 --> 00:04:47.920 the train wreck coming? What's making gold surge 00:04:47.920 --> 00:04:50.050 independently? Well, we have to step back and 00:04:50.050 --> 00:04:52.329 think about gold's fundamental role. It's an 00:04:52.329 --> 00:04:54.769 independent asset. In normal times, you know, 00:04:54.889 --> 00:04:56.829 healthy economic growth, gold's correlation with 00:04:56.829 --> 00:04:58.889 stocks is pretty weak. Maybe fluctuates between, 00:04:58.889 --> 00:05:02.329 say, 0 .1 and naira 0 .3. They mostly just do 00:05:02.329 --> 00:05:04.649 their own thing. But you don't own gold for the 00:05:04.649 --> 00:05:06.930 normal times, usually. It's meant to be that 00:05:06.930 --> 00:05:09.069 insurance policy for when things go really wrong. 00:05:09.199 --> 00:05:12.759 Absolutely. During those prolonged nasty bear 00:05:12.759 --> 00:05:16.079 markets or a full -blown systemic crisis, think 00:05:16.079 --> 00:05:18.899 2008, that correlation often flipped sharply 00:05:18.899 --> 00:05:23.339 negative, like negative 0 .5 or even lower. That 00:05:23.339 --> 00:05:25.220 negative correlation, that's the holy grail for 00:05:25.220 --> 00:05:27.379 diversification, right? When your stocks are 00:05:27.379 --> 00:05:29.839 cratering, gold is often actually rising, providing 00:05:29.839 --> 00:05:32.259 that real hedge. The fact that it's rising so 00:05:32.259 --> 00:05:34.860 strongly now suggests Big investors are already 00:05:34.860 --> 00:05:36.800 pricing in the need for that kind of protection. 00:05:37.279 --> 00:05:38.639 They're getting ahead of it. Which brings us 00:05:38.639 --> 00:05:41.000 to the institutional drivers the sources highlight. 00:05:41.259 --> 00:05:43.439 This isn't just small retail investors getting 00:05:43.439 --> 00:05:46.740 jittery. This is big, sticky money moving into 00:05:46.740 --> 00:05:49.519 gold. It seems entirely strategic. Look at the 00:05:49.519 --> 00:05:51.259 central banks. Globally, they hold something 00:05:51.259 --> 00:05:54.560 like 51 ,000 metric tons of gold reserves. That's 00:05:54.560 --> 00:05:56.680 a huge number. And it's not just sitting there 00:05:56.680 --> 00:05:58.819 gathering dust. It's a core part of their strategy. 00:05:59.180 --> 00:06:01.600 They value its diversification, its protection 00:06:01.600 --> 00:06:05.100 against, you know, sovereign risk. 51 ,000 tons. 00:06:05.540 --> 00:06:08.269 Yeah. And the sources are saying that in 2025, 00:06:08.870 --> 00:06:10.670 other institutions, pension funds, sovereign 00:06:10.670 --> 00:06:13.389 wealth funds, even big edge funds, they've significantly 00:06:13.389 --> 00:06:15.389 upped their gold allocations too. What flipped 00:06:15.389 --> 00:06:17.410 the switch for them this year? It looks like 00:06:17.410 --> 00:06:20.110 a kind of dual hedge against these major macro 00:06:20.110 --> 00:06:22.509 shifts that are underway. First, like the central 00:06:22.509 --> 00:06:24.569 banks, they're hedging currency risk. There's 00:06:24.569 --> 00:06:28.029 this ongoing effort by global players to reduce 00:06:28.029 --> 00:06:30.050 their dependence on the US dollar as a sort of 00:06:30.050 --> 00:06:32.810 sole reserve asset. They want genuine diversification 00:06:32.810 --> 00:06:35.370 away from fiat currencies altogether. And second, 00:06:35.509 --> 00:06:38.389 they're hedging inflation, the aftereffects of 00:06:38.389 --> 00:06:40.889 all that monetary stimulus, high government debt 00:06:40.889 --> 00:06:43.509 levels. It keeps raising questions about whether 00:06:43.509 --> 00:06:46.199 inflation is really under control long term. 00:06:46.779 --> 00:06:49.660 Gold has always been the classic hedge when faith 00:06:49.660 --> 00:06:52.639 in fiscal or monetary policy starts to wobble. 00:06:52.879 --> 00:06:54.939 And you see that printed and flows into gold 00:06:54.939 --> 00:06:57.360 ETFs, for instance. It's institutional money 00:06:57.360 --> 00:06:59.980 trying to lock in inflation protection and currency 00:06:59.980 --> 00:07:01.819 independence at the same time. That makes sense. 00:07:01.959 --> 00:07:03.600 They're not necessarily waiting for a crash. 00:07:03.699 --> 00:07:06.720 They're reacting to these bigger structural shifts 00:07:06.720 --> 00:07:09.680 already happening. OK, let's pivot to the long 00:07:09.680 --> 00:07:12.410 view, the historical context. It helps appreciate 00:07:12.410 --> 00:07:14.569 just how significant this moment might be. We 00:07:14.569 --> 00:07:16.910 often forget that market leadership isn't permanent. 00:07:17.230 --> 00:07:18.910 Yeah, it's easy to forget. We have to remember 00:07:18.910 --> 00:07:21.470 gold bull markets often pop up during periods 00:07:21.470 --> 00:07:24.370 of really intense uncertainty, especially around 00:07:24.370 --> 00:07:26.790 monetary regime changes. Think about the 1970s. 00:07:26.829 --> 00:07:29.209 That's the classic example, right? The Bretton 00:07:29.209 --> 00:07:31.129 Woods system collapsed. You had high inflation, 00:07:31.370 --> 00:07:34.100 oil shocks, geopolitical tension. Gold was the 00:07:34.100 --> 00:07:36.459 undisputed king then because the very foundations 00:07:36.459 --> 00:07:39.279 of the financial system felt shaky. And the sources 00:07:39.279 --> 00:07:42.079 included this incredibly powerful anecdote about 00:07:42.079 --> 00:07:44.759 asset rotation, something that frankly should 00:07:44.759 --> 00:07:47.100 make anyone pause when they see the S &P at 6 00:07:47.100 --> 00:07:50.819 ,700. We always measure market recovery in dollars. 00:07:51.160 --> 00:07:53.800 But if you measure in gold terms, well, the story 00:07:53.800 --> 00:07:55.939 changes dramatically. It really highlights the 00:07:55.939 --> 00:07:57.740 sort of tyranny of the long term, doesn't it? 00:07:57.939 --> 00:08:00.860 After the 1929 stock market crash, the Dow Jones 00:08:00.860 --> 00:08:03.519 Industrial Average, the symbol of American capitalism, 00:08:04.040 --> 00:08:06.600 it took an unbelievable 30 years just to get 00:08:06.600 --> 00:08:09.199 back to its 1929 value when measured against 00:08:09.199 --> 00:08:12.319 gold. 30 years. Just imagine telling an investor 00:08:12.319 --> 00:08:15.079 in, say, 1930 that they'd have to wait three 00:08:15.079 --> 00:08:17.160 decades just to break even relative to gold. 00:08:17.279 --> 00:08:19.810 They'd think you're crazy. That fact alone just 00:08:19.810 --> 00:08:21.730 hammers home that asset leadership doesn't just 00:08:21.730 --> 00:08:23.970 rotate. It can stay rotated for a generation 00:08:23.970 --> 00:08:26.269 or more. And that kind of perspective really 00:08:26.269 --> 00:08:29.189 puts this year's 15 percent S &P gain versus 00:08:29.189 --> 00:08:31.670 48 percent for gold into sharp relief, doesn't 00:08:31.670 --> 00:08:33.789 it? It suggests maybe what we're seeing isn't 00:08:33.789 --> 00:08:36.870 just a tactical adjustment, but potentially the 00:08:36.870 --> 00:08:40.049 early innings of a really significant structural 00:08:40.049 --> 00:08:42.730 regime shift in asset leadership. So, OK, let's 00:08:42.730 --> 00:08:44.649 pull it together. We've got the historical parallels. 00:08:44.669 --> 00:08:46.789 We've got the current data. What are the immediate 00:08:46.789 --> 00:08:49.230 macro trends in 2025 that are really feeding 00:08:49.230 --> 00:08:51.769 this investor anxiety and driving money into 00:08:51.769 --> 00:08:53.799 gold? Well, as we've touched on, it's kind of 00:08:53.799 --> 00:08:55.879 a cocktail of worries. You've got these persistent 00:08:56.139 --> 00:08:58.899 sticky inflationary pressures that central banks 00:08:58.899 --> 00:09:01.279 seem to be struggling to fully stamp out. You 00:09:01.279 --> 00:09:04.320 have ongoing geopolitical instability in several 00:09:04.320 --> 00:09:07.539 hot spots, which drives up sovereign risk perceptions. 00:09:07.919 --> 00:09:10.220 And yes, the background concern about the long 00:09:10.220 --> 00:09:12.360 term value of the US dollar is definitely still 00:09:12.360 --> 00:09:14.559 there for global investors. You know, reading 00:09:14.559 --> 00:09:17.340 through the analysis, many are saying quite openly 00:09:17.340 --> 00:09:20.360 that the feeling of investor anxiety right now, 00:09:20.399 --> 00:09:23.139 the kind of fear driving gold higher, it feels 00:09:23.139 --> 00:09:25.919 uncomfortably similar to the lead up to the 2000s. 00:09:25.419 --> 00:09:28.820 crisis. Even if the specific causes are different 00:09:28.820 --> 00:09:32.220 this time, you've got that mix again. High valuations 00:09:32.220 --> 00:09:35.120 meeting systemic distrust. That comparison 2008 00:09:35.120 --> 00:09:38.039 levels of anxiety mixed with dot -com level valuations, 00:09:38.679 --> 00:09:40.940 that's precisely why this moment feels so unique, 00:09:41.179 --> 00:09:43.190 historically speaking. We're seeing these two 00:09:43.190 --> 00:09:45.750 completely conflicting realities being priced 00:09:45.750 --> 00:09:47.669 into the market at the same time. Which brings 00:09:47.669 --> 00:09:51.230 us back to the core lesson from modern portfolio 00:09:51.230 --> 00:09:53.309 theory. It's just more critical now than ever. 00:09:53.629 --> 00:09:56.309 This environment absolutely demands robust risk 00:09:56.309 --> 00:09:58.750 management. OK, so let's synthesize this for 00:09:58.750 --> 00:10:01.370 you listening. Given everything we've discussed, 00:10:01.730 --> 00:10:04.190 the extreme valuation warnings in stocks, the 00:10:04.190 --> 00:10:08.070 huge institutional shift into gold, what's the 00:10:08.070 --> 00:10:10.669 practical takeaway? How should you be thinking 00:10:10.669 --> 00:10:13.809 about risk management right now? I think the 00:10:13.809 --> 00:10:16.149 key application is about balancing your bets. 00:10:19.559 --> 00:10:22.100 big systemic shocks, especially because of that 00:10:22.100 --> 00:10:24.600 negative correlation during stress periods. But 00:10:24.600 --> 00:10:26.500 real diversification isn't just about owning 00:10:26.500 --> 00:10:28.500 stocks and gold. It's about internalizing the 00:10:28.500 --> 00:10:30.639 lesson that market leadership rotates constantly. 00:10:31.360 --> 00:10:33.179 This extreme divergence we're seeing should be 00:10:33.179 --> 00:10:35.419 a stark reminder that just riding one asset class, 00:10:35.440 --> 00:10:37.799 assuming it'll lead forever, is really dangerous. 00:10:38.159 --> 00:10:40.299 You benefit most from intelligently allocating 00:10:40.299 --> 00:10:43.139 across multiple, ideally non -correlated, asset 00:10:43.139 --> 00:10:45.740 classes, things like real estate, other commodities, 00:10:45.899 --> 00:10:48.100 maybe different types of fixed income, alongside 00:10:48.100 --> 00:10:50.559 your equities and You have to recognize that 00:10:50.559 --> 00:10:52.600 the environment changes, and yesterday's winter 00:10:52.600 --> 00:10:55.299 can be tomorrow's laggard for a surprisingly 00:10:55.299 --> 00:10:58.759 long time. Yeah. This really feels like a historic 00:10:58.759 --> 00:11:02.320 moment. The simultaneous rise of gold and stocks 00:11:02.320 --> 00:11:05.480 combined with those CAPE ratios screaming warnings 00:11:05.480 --> 00:11:08.840 above 40, it forces a fundamental rethink about 00:11:08.840 --> 00:11:11.120 how you even define risk in your portfolio. It 00:11:11.120 --> 00:11:13.200 really does. It demands shifting focus maybe 00:11:13.200 --> 00:11:15.720 away from just chasing those headline returns 00:11:15.720 --> 00:11:18.500 and more towards building genuine resilience, 00:11:18.899 --> 00:11:21.659 genuine insulation into your portfolio. Enough 00:11:21.659 --> 00:11:24.259 to withstand these big structural shifts, not 00:11:24.259 --> 00:11:26.830 just, you know, the next quarterly or surprise. 00:11:27.269 --> 00:11:29.649 Exactly. We've seen that recovery measured in 00:11:29.649 --> 00:11:32.389 gold can take decades. This divergence suggests 00:11:32.389 --> 00:11:34.710 we might be in the middle of another major leadership 00:11:34.710 --> 00:11:37.909 rotation. So if these market cycles do persist, 00:11:38.190 --> 00:11:40.070 and history suggests they do, that leaves us 00:11:40.070 --> 00:11:41.929 with a final provocative thought for you to mull 00:11:41.929 --> 00:11:44.500 over. Considering the specific dynamics we've 00:11:44.500 --> 00:11:47.200 discussed today, the inflation fears, the institutional 00:11:47.200 --> 00:11:49.200 hedging against the dollar, which historical 00:11:49.200 --> 00:11:51.279 period of asset leadership rotation do you think 00:11:51.279 --> 00:11:53.120 best mirrors what we're seeing right now? Is 00:11:53.120 --> 00:11:56.240 it the 1970s? Is it the post -2000 commodity 00:11:56.240 --> 00:11:58.539 supercycle? Or maybe something else entirely? 00:11:59.059 --> 00:12:00.980 Keep digging into those long -term cycles. We'll 00:12:00.980 --> 00:12:02.179 see you on the next Deep Dive.