Juggling Dynamite

Investment sales Hoorang can be hard to resist, but self-preservation requires that we do. Never more than amid today’s everything bubble, where mania has ballooned the pricing of many assets all at once, from stocks to high-yield credit, private equity, credit funds, real estate, crypto, and precious metals.

I have long said that people should hold bullion if it makes them sleep better, but to keep the amount as a set ratio of other assets and remember that it’s a bet against the value of everything else we own. I offered all of my thoughts on the topic in this 2011 article: A Word to the Gold Bugs. And the points remain relevant today.

Humans have been vulnerable to outbreaks of precious metals fever throughout history, and we should never forget that those selling us the story are taking our (worthless?) cash in exchange.

Many, critical of central banks and their myopic foresight, have been simultaneously touting the idea that central banks adding to their gold reserves is a reason for individuals to do the same. Blindly follow the blind? Those aware of history will know that a similar notion helped fuel the gold rush of 1979-80, before prices collapsed.

In the latest iteration, belief in dollar debasement has helped propel bullion and related share prices in a self-fulfilling loop, where higher prices increase the perceived allocation, even though volume allocations have changed little.

Believers rarely let facts get in the way or see any reason to cash out wins. Still, Real Investment Advice principal Michael Lebowitz offers sober analysis for those who are open to it in Dollar Debasement: Reality or Dangerous Narrative? Here’s Michael:

Another popular but misleading argument is that foreign central banks’ reserves in gold are increasing rapidly. That is true. However, as we share, central banks have barely added physical gold to their gold reserves. Instead, gold, as a percentage of reserves, has grown significantly because its price increases the value of the gold compared to other reserves.

Epic speculative fever is further evidenced in record levered bets in the space:

The chart below is courtesy of @SubuTrade. It shows that the volume of gold calls exceeds that of puts by the widest margin in the past 15 years. Call buyers are speculative traders who tend to follow narratives rather than fundamentals. The record call buying reflects the highly speculative enthusiasm in the gold market. 

We are always at risk of losing our collective heads before coming to our senses one at a time. It’s wise to keep in mind the timeless quote attributed to Mark Twain:

“It ain’t what you don’t know that gets you into trouble.
It’s what you know for sure that just ain’t so.”

The financial system is sending out a major distress signal. While stocks hover near all-time highs, former Federal Reserve insider Danielle DiMartino Booth warns that a systemic liquidity crisis is already here, and it will force the Fed to abandon its inflation fight. In this interview, the CEO of QI Research tells Kitco News’ Jeremy Szafron that the violent 5% sell-off in gold is a “repeat of March 2020″—a forced liquidation event signaling that the “dash for cash” has begun. She breaks down why “prime borrower” delinquencies are the new canary in the coal mine and explains how banks are using “extend and pretend” tactics to hide a brewing credit event she says will unleash “more cockroaches” into the public markets. Is the Federal Reserve trapped? Booth lays out the final indicator that will prove the system has broken and the Fed has lost control. Here is a direct video link,

Most retirement accounts and investment portfolios are designed to track broad stock indices like the S&P 500, but under the hood, there’s much less diversification than imagined.

One chip company, Nvidia, accounts for 7.3% of the S&P 500 market capitalization; the three most expensive companies—Nvidia, Microsoft, and Apple—comprise an unprecedented 21% of the index (chart below since 1980, courtesy of @CharlieBilello), while the top nine most expensive companies—all tech—presently account for 34%.

On top of today’s record company and sector concentration, leveraged equity funds that magnify volatility and downside risk have exploded in popularity (shown below since 2011), reducing market stability for all participants.
Furthermore, margin debt, borrowing against portfolios for spending and other asset buying, has increased more than 40% year-over-year–the fourth such euphoric spike since 1998 (shown below, via Deutsche Bank and ISABELNET.COM).
Kamikaze-style, the stock exposure of US households, pensions, insurance and investment funds has topped 65% of total assets, the highest on record since 1952 (dark blue line below), and surpassing the previous tech bubble top in 2000. 
Overall, US equity markets account for more than 50% of the global equity market capitalization (shown below as of February 2025, via thevisualcapitalist.com). This ensures that when US markets implode, losses and liquidation selling go global.

Andrew Ross Sorkin is making the media rounds promoting his new book on the 1929 crash and notes striking similarities with present sentiment, actors, and behaviours.

It was the moment that sent the U.S. into a panic and drew the Roaring 20s to a close. The 1929 Wall Street crash, which led to the Great Depression, was the most devastating financial collapse in history. Andrew Ross Sorkin’s new book focuses on this disaster. The author joins the show to discuss what led to the financial shipwreck and what we can learn from it nearly a century later. Here is a direct video link.