The Compound
Inside the Gold and Silver Mania | TCAF 213
10/17/2025, 1:01:43 PM
Economic Summary
- Private credit proliferation: an estimated large number of private funds (stat cited ~19,000) is pushing competition to originate loans, risking looser covenants, lower underwriting standards, and potential liquidity stress if redemptions occur.
- Precious metals dynamics: London physical-backed silver ETF inflows are converting investment demand into physical demand, lifting silver above prior ceilings and reaching inflation-adjusted highs; this supports mining equities like Newmont (NEM) and Barrick (GOLD).
- Earnings-driven market: S&P earnings growth (~11% year-over-year cited) is the primary driver of recent gains while P/E expansion is modest (~1%), implying fundamentals, not just multiple expansion, underpin the rally.
- Financials and credit signal risk: XLF relative to SPY is breaking down recently, and isolated loan write-offs / alleged fraud cases in regional/private credit have amplified concerns about bank/regional exposure and contagion potential.
- Policy and rate backdrop: A perceived Fed pivot (September 17 cut) has fueled risk appetite—small caps and precious metals outperformed—while political pressure on the Fed (mentions of Trump stacking the Fed) introduces uncertainty about future rate policy and its market impact.
Bullish
- Physical demand and London-backed silver ETFs are driving silver to inflation-adjusted highs.
- Earnings are doing the heavy lifting for the market—S&P earnings growth outpacing modest P/E expansion.
- Select AI and megacap names still show strong fundamentals and could lead a Q4 rally.
- Gold and silver rally creates potential multi-year commodity cycle, aiding mining stocks' cash flow.
- Utilities showing surprisingly strong earnings growth, offering ballast and defensive exposure.
Bearish
- Private credit growth raises liquidity and underwriting concerns; too many funds chasing loans could lead to weaker covenants and fraud.
- Regional bank and financial-sector weakness: XLF underperforming SPY, signaling potential sector-specific downturn.
- Single-stock retail mania and equity-finance dilution risk leading to overpriced, fundamentally untethered names.
- Copper faces structural chart damage after a sharp tariff-related drop; heavy overhead supply may cap near-term upside.
- High put-call imbalances and crowded option positioning could cap rallies and amplify downside whooshes.
Bullish tickers
NEMGOLDNVDAMUGOOGLAVGOAMZNNEE
Bearish tickers
XLFWALOWLJPMGS
XLF
Bullish
Could recover if regional loan stress abates and macro stability returns, providing value in beaten-up banks.
Bearish
Financials ETF is breaking down vs the S&P; indicates banks/financials vulnerability amid credit blowups.
WAL
Bullish
Would benefit from resumed deposit growth and normalization of credit spreads if headlines fade.
Bearish
Western Alliance and similar regionals facing loan write-offs and reputational hits amid credit/fraud headlines.
OWL
Bullish
If well-capitalized, large managers could pick up assets on distressed terms and outperform longer term.
Bearish
Private-credit firms face scrutiny as blowups raise questions on underwriting and liquidity across the sector.
JPM
Bullish
Solid earnings and capital strength could see JPM outperform if credit worries remain isolated.
Bearish
Large banks could be impacted indirectly by private-credit stress and regional exposure, weighing on relative performance.
GS
Bullish
Strong earnings seasons typically lift GS; trading and investment banking strength could drive upside.
Bearish
Goldman may see near-term volatility as markets reassess financial-sector risk premium post credit incidents.
NEM
Bullish
Higher gold prices and lower input costs (e.g., energy) boost free cash flow and support longer-cycle gains.
Bearish
Mining equities are cyclical and can give back gains if metals prices correct or input costs rise.
GOLD
Bullish
Rising gold prices, physical ETF demand, and improving margins make Barrick a beneficiary of the metals rally.
Bearish
Barrick and peers are exposed to operational and input-cost risks despite higher metal prices.
NVDA
Bullish
Long-term secular AI demand and earnings growth make NVIDIA a core growth holding in many portfolios.
Bearish
Crowded AI exposure could amplify downside in broad market weakness due to concentration risks.
MU
2 price targets
220240
Bullish
DRAM cycle recovery and high-bandwidth memory adoption could trigger a material repricing to $220–$240 targets.
Bearish
Micron trades like a commodity and can be punished by cyclical DRAM price swings and missed upgrades.
GOOGL
Bullish
Cloud and AI initiatives support durable earnings growth, making Alphabet a potential leader into Q4.
Bearish
Exposure to ad cycles and macro could pressure near-term results if spending moderates.
AVGO
Bullish
Broadcom stands to benefit from AI infrastructure spending and secular demand for silicon solutions.
Bearish
Semiconductor demand volatility could impact Broadcom given its exposure to enterprise spend cycles.
AMZN
Bullish
If AWS/cloud execution and guidance improve, Amazon could see a meaningful re-rating into year-end.
Bearish
Cloud communication missteps can hurt sentiment; stock underperformance implies elevated expectations.
TSLA
Bullish
Strong long-term demand and delivery execution could sustain upside despite near-term cyclical headwinds.
Bearish
High expectations baked in; limited near-term catalyst for substantially better fundamentals could lead to volatility.
F
Bullish
If Ford transitions to less cyclical, higher-margin business lines, valuation expansion is possible.
Bearish
Valued like a commodity; cyclical auto demand and margin pressure could keep multiples low.
NEE
Bullish
Robust expected earnings growth and utility demand dynamics make NextEra a defensive growth candidate.
Bearish
Utilities now trade with growth narratives; a macro selloff could hurt momentum-driven flows.
People mentioned
Bill BaruchMichaelJoshDan WhitePhil StrebelOliver SlopePaul Tudor JonesJamie DimonMarc LipschultzEric JacksonJack BogleDuncanJohnDrakeJuliana RancicBill RancicDonald TrumpJerome Powell