The Sunday Drive - 06/22/2025 Edition [#168]
Musings and Meanderings of a Financial Provocateur
👋🏼 Hello friends! Let’s enjoy a leisurely Sunday Drive around the internet.
🎶 Vibin'
This weekend was kicked off by the Summer Solstice on Friday, and the end of the school year approaches this week. This means that Saratoga Summer is about to kick into high gear. So this week, I’m vibin’ to the unofficial anthem of the season, Alice Cooper’s classic, School’s Out.
💭 Quote of the Week
“The difficulty lies not so much in developing new ideas as in escaping from old ones.“ — John Maynard Keynes
BONUS QUOTE
”If it your calling, it will keep calling.” — Anonymous
📈 Chart of the Week
This week’s Chart comes to us courtesy of my friend and former Eaton Vance colleague, Henry Peabody and his firm, Riverhead Research.
Precious vs Industrial: A Tale of Two Metals
The performance of precious metals relative to industrial metals has exploded to levels that exceed even the stagflationary episodes of the late 1970s and early 1980s. If history is any guide, markets are trying to tell us something, namely that investors are again seeking refuge from inflation, government largesse, and geopolitical chaos.
Precious metals like gold and silver have always been the go-to hedge against instability. They don’t throw off cash flow, but they do something arguably more important in periods like this: they hold trust. Trust when fiat currencies are being diluted. Trust when policymakers lean too far into fiscal expansion. And trust when the global chessboard starts to shake.
Riverhead Research nailed this shift in their June 7th piece from which we borrowed this week’s Chart. They note that gold’s outperformance relative to industrial metals “is mind-blowing,” and that even in China, a nation not typically prone to western-style doomsaying, retail savers are hoarding gold amid crashing real estate and declining trust in financial institutions .
Industrial metals, by contrast, live or die by economic growth. Copper, nickel, aluminum are pro-cyclical and demand driven. They rise with factory orders and housing starts. So when we see the ratio of precious to industrial metals spike, it’s not just about the price of gold going up—it’s a macro signal that global growth may be decelerating while inflation remains sticky.
To put a finer point on it: precious metals hedge against, industrial metals bet on. One is defensive, the other offensive.
This bifurcation underscores a critical portfolio construction insight: true diversification means allocating across economic regimes, not just asset classes. When forward returns from traditional risk assets look meager and policymakers are fumbling with tools that have lost their edge, holding some “trust capital” in precious metals looks less like a hedge and more like a necessity.
🚙 Interesting Drive-By's 🚙
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💡 Why Retirement Confuses Knowledge Workers
🤔 The Ultimate Metric as We Age Isn’t Productivity, It’s Presence
💯 The Personalization of Software
👋🏼 Parting Thought
If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.
Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.
I hope you have a relaxing weekend and a great week ahead. See you next Sunday...
Your faithful financial provocateur,
-Mike
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