Odd Lots

Ozan Tarman on What's Driving The Nonstop Rise in Gold and Tech

September 25, 2025

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  • The simultaneous rise of gold and US tech stocks, traditionally seen as inversely correlated, is driven by a complex interplay of declining confidence in US sovereign stability (boosting gold) and an intense fixation on the success of major US tech companies (driving tech stock bids). 
  • Despite concerns about potential bubbles and the sustainability of current valuations, the revenue and cash generation of leading tech companies like NVIDIA and the Magnificent 7 provide a fundamental basis for their continued strength, differentiating them from past speculative manias. 
  • Global investors are increasingly seeking exposure to high-performing US tech companies while simultaneously hedging against potential US sovereign risk, leading to a significant increase in hedged flows into these assets and contributing to a softer dollar. 

Segments

Gold and Tech Rally
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(00:01:48)
  • Key Takeaway: The simultaneous rise of gold and US tech stocks defies traditional market logic, signaling a complex investor sentiment driven by both fear and optimism.
  • Summary: The podcast opens by noting the unusual market phenomenon of both gold and US stocks consistently rising. This trend challenges the typical inverse relationship where gold acts as a safe haven during market downturns, while stocks rise on optimism. The hosts and guest explore the underlying drivers of this seemingly contradictory market behavior.
NVIDIA and US Economy
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(00:05:08)
  • Key Takeaway: NVIDIA’s significant investment and the broader AI capex spending are seen as crucial factors potentially preventing a US recession, though concerns about future sustainability and ‘circular’ financing exist.
  • Summary: The discussion highlights NVIDIA’s central role in the current market, with its investments in AI potentially propping up the US economy and averting a recession. However, questions are raised about the long-term viability of this AI-driven growth, particularly regarding the ‘circular’ nature of investments between companies like NVIDIA and OpenAI, and the potential for a future downturn.
Dollar Weakness and Hedging
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(00:15:23)
  • Key Takeaway: Despite strong performance from US tech giants, global investors are reducing dollar exposure and hedging their US asset purchases due to concerns about US sovereign risk, not corporate risk.
  • Summary: The conversation details the significant drop in the US dollar this year, even as US stocks rally. Investors are increasingly buying US assets, particularly tech stocks, but are hedging their currency exposure to avoid the downside risk associated with the dollar. This indicates a growing distrust in US sovereign stability rather than its corporate sector.
Fiscal Dominance and Fed Independence
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(00:20:02)
  • Key Takeaway: Nervousness around fiscal dominance and Federal Reserve independence is contributing to dollar weakness, yet bond market volatility remains surprisingly low, suggesting a belief in some level of Fed control.
  • Summary: The podcast explores the tension between concerns about the US government’s fiscal policies potentially overriding the Federal Reserve’s independence and the current state of the bond market. Despite the theoretical risks, the MOVE index (bond market volatility) has decreased, implying that investors may not fully price in a complete loss of Fed independence. This suggests a complex dynamic where theoretical risks are present but not fully reflected in market pricing.
US Sovereign Risk and Gold
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(00:25:04)
  • Key Takeaway: Growing global distrust in US policy and geopolitics is driving central banks to accumulate gold reserves, moving beyond traditional safe-haven logic.
  • Summary: The discussion links the rise in gold prices to increasing global anxiety about US political stability and policy. This uncertainty is prompting central banks, including Turkey’s, to increase their gold holdings as a hedge against dollar and fiat currency risks. The accumulation of gold is presented not just as a trade, but as a response to a deeper lack of trust in Western governments and their currencies.
Tariffs and Economic Impact
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(00:29:29)
  • Key Takeaway: Tariffs are viewed as a potential revenue generator for the US and a tool to manage inflation, but their impact on economic growth and supply chains remains a significant concern, especially with upcoming elections.
  • Summary: The conversation examines the dual nature of tariffs: they can boost US revenue and potentially curb inflation, but they also risk slowing economic growth and disrupting supply chains. The political calculus around tariffs, particularly in the context of upcoming US midterm elections, suggests a strategic approach to managing their economic effects. The long-term impact on inflation and growth is still being assessed.
US Economy and Asset Dependence
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(00:32:25)
  • Key Takeaway: The US economy’s growth prospects are increasingly dependent on the perpetual rise of asset values, creating a vulnerability to market downturns and a widening wealth gap.
  • Summary: The US economy’s reliance on a continuously rising market for consumption and investment demand is highlighted. This dependence on asset appreciation, coupled with a growing wealth gap where a small percentage of consumers drive a large portion of consumption, makes the economy susceptible to the bursting of asset bubbles. The concept of a ‘K-shaped’ economy, where different segments experience vastly different outcomes, is discussed.
China’s Global Role
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(00:37:15)
  • Key Takeaway: China’s increasing role as a gold storage hub and its currency’s appreciation are significant macro factors, alongside its export of cheap goods, impacting global inflation and central bank policies.
  • Summary: China’s growing influence is examined through its ambition to become a gold storage hub and the strengthening of its currency, the RMB. This is occurring while China exports deflationary goods globally, potentially influencing central bank decisions, particularly in Europe. The appreciation of the RMB is seen as having further potential, driven by global companies holding significant dollar reserves.