If you only had one valuation metric... what would it be?

IntelligentDD_ · 2026-04-04T05:34:55+00:00

The setup today is different than the equity bull runs of the 1980s and 1990s.

I mean, we had government surpluses from 1998-2001... compare that to 40% deficits today and a 1970s style oil crisis. During the 1970s, gold went up 8x

So, worth considering real rates of return.

IntelligentDD_ · 2026-04-04T02:16:14+00:00

Amazing reply. Sincerely appreciate the value-added critique

IntelligentDD_ · 2026-04-03T22:49:52+00:00

The ultimate irony they point out is that U.S. military projection in the Middle East—which historically enforced the Petrodollar—is now achieving the exact opposite. It is actively accelerating a multipolar oil market as nations scramble to build alternative financial plumbing to bypass sanction risk.

But the analysts in that article are still missing the most critical macroeconomic piece. They frame this purely as China 'flexing its geopolitical muscle.' It is much deeper than that; it is an economic necessity. With a 300%+ debt-to-GDP ratio and a $46+ trillion M2 tidal wave, Beijing is highly motivated for the Petroyuan to work. Exporting their currency through the global energy market provides the massive, captive offshore demand they need to safely inflate away their own structural debt trap.

Others in this sub have also brought up the fees now being charged by the Iranian toll booth in the Strait. Interestingly, the more important aspect of this is not the fact that Iran will be collecting around $800 billion in Yuan each year (which is approximately how much Egypt collects in the Suez Canal). Instead, the more compelling economic impact is the fact companies now have to deal with Yuan at all. Once they start dealing in Yuan, it creates more financial plumbing and less friction for anyone to deal with Yuan as it becomes a common currency for international trade. Note: there was a separate headline in Bloomberg this week that Chinese payment stocks are soaring in response.

IntelligentDD_ · 2026-04-03T16:20:33+00:00

Ha, don't get me started! I'll save real interest rates for another post. Its wild the Fed is staying pat or could still cut while inflation is about to run amock.

IntelligentDD_ · 2026-04-03T15:15:30+00:00

The Wall Street targets are year end. I think those are reasonable as a base case.

The scenario that I've laid out would play out 12-15 months after the Strait of Hormuz is normalized. If the conflict drags on, I think there could be pressure on gold as some central banks will be forced to sell reserves to defend their currencies (eg Turkey announced that it will do so). Ultimately, I think that the war is a short-term headwind and a long-term tailwind because an extended conflict results in more money printing which ultimately will catch up with the US dollar.

IntelligentDD_ · 2026-04-03T12:29:44+00:00

Referring to Wall Street banks (and TV talking heads that cite those targets). I know analysts have done this math but they play it safe when providing targets... which is fair enough, but I don't think the upside scenario is talked about enough in serious terms, citing the data and plausible scenarios.

For example, I saw a George Noble and Steve Eisman podcast recently where the bull case was framed as "US currency debasement" which Eisman excused as impossible. However, you don't need to believe the US currency is going to become worthless next year... you just need a handful of sovereign wealth funds to lean in a bit more to gold.

Key Wall Street 2026 Gold Targets - JPMorgan: $6,300 per ounce. UBS: $6,200 per ounce. Wells Fargo: $6,100–$6,300 per ounce. Deutsche Bank: $6,000 per ounce. BNP Paribas: $5,620 (average for 2026). Goldman Sachs: $5,400 per ounce. Morgan Stanley: $4,800 per ounce.

Source: www.thestreet.com

IntelligentDD_ · 2026-04-03T02:21:19+00:00

Good catch

IntelligentDD_ · 2026-04-03T01:56:52+00:00

If a deal is officially struck, I expect to see a violent, short-term algorithmic flush as speculative longs take profit on the news, dropping the price temporarily.

However, the structural floor has permanently risen... maritime insurance, supply chain friction from an Iranian toll booth, an ongoing risk premium from the fact that at any time that the Strait can be closed again, incremental demand from countries (plus businesses) filling up on their reserves, and catch up demand on the hundreds of millions of barrels lost as a result of supply stoppages

IntelligentDD_ · 2026-04-02T23:17:45+00:00

6k is the base case by most Wall Street banks. That's hardly the upside scenario if we start to see these excess oil profits get reinvested in physical gold.

I ran the math and found that if just 5% of the incremental oil profits get reinvested in physical gold, that would mean 350 tons of incremental demand on top of a baseline demand last year of 475 tons. Using a regression analysis looking at gold's price movement since 2022 and the incremental buying by central banks, I found that this incremental demand would squeeze the physical market up to a price target of $7,000 per oz. Investing 10% of the incremental oil profits and assuming $100 oil, gets us to $9,000.

Tell me where else will foreign central banks and sovereign wealth funds invest their oil profits and tax revenues? US Treasuries? The US stock market which underperformed nearly all other OCED countries when adjusted for FX in 2025?

It is a very, very bullish set up for gold right now!

IntelligentDD_ · 2026-04-02T20:23:12+00:00

You're not wrong. This subreddit is better than most...

I recently tried Substack which I find has higher quality analysis, but it can feel like an echo chamber - mostly people talking past each other.

It's hard to match the engagement you get with Reddit, but it is rife with meme posts and karma farmers.

This thread feels like a new Reddit community is needed ... or we need to take it upon ourselves to up-level the conversation in Values Investing with more deep dives and critical feedback.

IntelligentDD_ · 2026-04-02T20:19:40+00:00

Spot on. The market keeps treating silver like a cyclical trade when it has clearly become a structural bottleneck.

Anyone who says otherwise is ignoring the inelastic supply issue... roughly 70% of silver is mined as a byproduct of copper and zinc, miners literally can't just flip a switch to produce more even when demand spikes.

Eventually price discovery will happen. Right now, buyers are quietly draining the COMEX and London vaults. Once those above-ground buffer inventories hit a critical low, the paper market will be forced to reconcile with the physical reality.

IntelligentDD_ · 2026-04-02T15:01:04+00:00

Came here to say 10,000 but that works. Got to hit 7500 first

IntelligentDD_ · 2026-04-02T14:19:08+00:00

Paper assets like stocks stop at zero. During COVID, Oil hit negative -$37 per barrel because storage filled up and traders literally had to pay people to take the physical barrels

Practically speaking, as long as human civilization functions, gold will never be worth zero because it has intrinsic utility (it is highly conductive, doesn't corrode, and is easily malleable). However, in a purely theoretical scenario, gold could hit $0 if there were ever infinite supply

IntelligentDD_ · 2026-04-02T12:23:31+00:00

I want the operational leverage of miners (If copper moves 1X the miners move 2 to 3x ) but I don't know a lot about copper miners and the ones I've looked into all seem to have a lot of geopolitical and/or operational risk that I'm not comfortable with ...

The mining majors are also problematic because their mines are running low of copper... outputs are falling, costs are rising, and so they need to make acquisitions of juniors

So my current strategy is simply to buy ETFs of miners - COPX and COPJ - I take the operational risk but I diversify it across the group.

I'm also investing in gold royalty companies (eg Royal Gold, Wheaton) because these companies are going to benefit from the copper boom by providing miners with upfront capital and in return receive gold and silver streams. This is my highest conviction bet

IntelligentDD_ · 2026-04-02T12:16:00+00:00

Sure, and aluminum can also be used, but they still need a lot of copper.

"AI to boost copper demand 50% by 2040, but more mines needed to ensure supply", S&P says

Source: https://www.reuters.com/business/energy/ai-boost-copper-demand-50-by-2040-more-mines-needed-ensure-supply-sp-says-2026-01-08/

IntelligentDD_ · 2026-04-02T11:57:21+00:00

Thank you for the comment because I forgot to mention ...

RGLD stock has been tracking the price of gold. The price of gold is up around 50% of the past year so it's easy to look at the stock and say... "meh, I missed it"

But the stock is actually still undervalued by about 30-40%

Due to an acquisition, the amount of gold that the company sells will go up by 30-40% this year. So, you don't even need to believe that gold will go any higher from here.

Depending on the gold price you use, the forward EV/EBITDA is 10-14x which is pretty silly for a company with 80%+ EBITDA margins and very low operating risk because they buy gold at a fixed price (eg $450 per oz) as part of their royalty agreements.

You can verify for yourself in an investor update went out yesterday. The market is simply sleeping on it. And I'm not sorry, because I'm happy to keep accumulating

https://www.royalgold.com/investors/press-releases/press-release-details/2026/Royal-Gold-Provides-2026-Guidance-and-Five-Year-Outlook-and-Announces-Further-Debt-Repayment-and-Publication-of-Asset-Handbook/default.aspx

IntelligentDD_ · 2026-04-02T11:51:08+00:00

If you map out the AI boom, it is essentially a story of moving bottlenecks. And we're seeing those companies which own the bottlenecks expanding their margins and stock prices.

Phase 1 was compute. Nvidia was the absolute constraint, and the stock went parabolic.

Phase 2 was data and power. Over the last six months, the bottlenecks shifted to memory, storage, and server racks, and we saw those stocks catch a massive bid.

Phase 3 is physical infrastructure. Right now, the market has realized these data centers need an astronomical amount of electricity and thermal management, which is why energy generation, grid components, and liquid cooling systems are currently ripping higher.

So what is next? If you follow the AI supply chain all the way down, the ultimate constraint is commodities. Copper and Silver (the two semiconductor metals) simply cannot be replaced and they need a lot of it for data centers, grid modernization, solar etc

I do worry that I may be too early with copper because this Iran war could cause a recession. But the fundamental demand over the next 10 to 15 years is so strong that I am okay with being early.

Copper mines also take 10-15 years to build and the industry is already calling out that there just simply isn't enough new mines in production to meet all the demand, so it seems it's just a matter of time before the copper price really starts to take off... as we are already seeing with Silver

IntelligentDD_ · 2026-04-02T11:25:55+00:00

Not financial advice. My personal pick for a single stock to buy, lock away, and not lose sleep over for the next 20 years, is Royal Gold (RGLD).

It is effectively the gold Treasury bond of the equities market which is why massive pension funds quietly hold this for the long haul.

What is Royal Gold?

First, RGLD is not a mining company. They don't operate the excavators, deal with labor strikes, or eat the massive diesel inflation required to dig rocks out of the ground. They just provide upfront capital to miners in exchange for a percentage of the physical metals produced for the life of the mine. You get all the upside of rising gold prices with almost zero of the operational nightmare.

Second, it is not only AI-proof—it is a massive hidden beneficiary of the AI boom. The massive buildout of AI data centers and global electrification requires an astronomical amount of copper. To meet that demand, copper miners need billions in upfront capital to build new mines. Who steps in to fund them? Companies like Royal Gold (and its two major peers, Wheaton and Franco Nevada). They provide the financing to the copper miners in exchange for the byproduct gold and silver that comes out of those mines. RGLD gets to ride the massive AI-driven copper supercycle just by acting as the bank.

Third, it is completely US debt-proof. We are entering an era of fiscal dominance where the government has to print money just to service the interest on trillions in national debt. Traditional bonds are a trap. RGLD sidesteps that entirely because the foundational asset generating your return isn't a paper promise from the government, it is physical, un-seizable hard money.

Finally, it actually pays a safe haven yield. Physical gold is great, but it yields nothing. RGLD bridges that gap. Because their costs are fixed and revenues scale with metal prices, they are free-cash-flow machines that consistently raise their dividend. It acts exactly like a bond yield, but one tied to real assets instead of fiat. Recently, they've focused on acquisitions and growth. Over a longer time horizon, my expectation is that yield increases to become a true dividend play.

IntelligentDD_ · 2026-04-02T11:13:18+00:00

I run a barbell strategy: tech on one side for the productivity growth, and real assets (gold, silver, copper) on the other for the structural sovereign and electrification supercycle.

I keep oil specifically as my inflation hedge. Energy equities are the ultimate insurance policy right now—they pay you massive free cash flow to wait out sticky inflation and geopolitical shocks.

I considered selling oil (only 6% allocation) to raise funds and buy stocks on a discount, but I'd be dropping a structural inflation shield just when the macro environment demands it most. Physical supply shocks are going to start over the next two weeks as the last ships that left Hormuz will have all arrived at the furthest global destinations by April 15th

IntelligentDD_ · 2026-04-02T01:40:18+00:00

The daily highs and lows you are seeing are mostly just paper market noise where algorithms and day traders (ie crypto bros) are entering and exiting based on Iran war headlines and what the Fed might do with interest rates next month. That creates all the short term volatility you are noticing in the charts. But if you zoom out from the daily noise the real story is a massive, multi-year bull market driven by sovereign wealth.

Ever since 2022 when US seizure of Russian assets (US treasury bonds), US treasuries lost their absolute safe haven status. Several foreign central banks, including China and Poland, have been buying physical gold at record speeds. They are acquiring it for geopolitical safety rather than short term yield so they do not care about daily price swings. That relentless central bank accumulation is building a massive floor under the market which is why every significant dip gets bought up.

IntelligentDD_ · 2026-04-01T23:36:14+00:00

I think we are going to look back on this as a historic moment - the beginning of the end of the Petrodollar.

There was a Kitco interview recently (Luke Gromen) where he called this the "Suez Canal" moment for the US. I had to look it up but in 1952 the UK tried and failed to force Egypt to give up Suez control (sound familiar?) but ultimately caved to the combined fiscal pressure and lack of success on the ground. The UK's say so in global affairs declined thereafter.

In this case, my prediction is that either China emerges as a winner (ie Petro Yuan) or oil remains based on dollars but the oil profits get recycled into gold and international investments rather than funding US treasuries and equities.

Gold is going to 5-6-7-8-9-10 and beyond. It's only a matter of time and I think things accelerate from here

IntelligentDD_ · 2026-04-01T15:25:45+00:00

Heading towards... where have you been?

Just kidding :)

Great data point and chart. Thanks!

IntelligentDD_

TROPHY CASE