UNDERVALUED ASSETS
- Anonymous
- Nov 18, 2025
- 5 min read
Updated: Nov 19, 2025
GOLD & SILVER
Gold and Silver have stood the test of time for thousands of years. The U.S. dollar itself was only considered valuable because it could once be redeemed for physical gold. But in 1971, President Nixon removed the dollar from the gold standard, turning it into a fiat currency — money backed by nothing except the confidence in the government that issues it.
They have both made monstrous moves up YTD and, in my opinion, this is only the beginning. Here are a few charts that support my hypothesis.
Silver is undervalued when compared to the Dow & S&P 500. This is partially to do with the historic overvaluation of U.S. stocks & partially to do with the cheap price of Silver. Both ways, I think Silver will catch up through inflation while the U.S. equities crash in real terms. I think a deflationary scenario is possible only temporarily. The U.S. would default in an extended period of deflation. Deflation is not bad like mainstream economists would lead you to believe but with the incredible amount of debt that U.S. taxpayers and the government hold, it's highly unlikely the U.S. government goes any other way than devaluing the dollar to take care of its debt obligations.
Above is a comparative ratio between the monetary base (the amount of currency in circulation) and the price of Gold. As the money supply has been manipulated, debt monetized by the Federal Reserve, rates artificially lowered, and persistent budget deficits have tanked the value of the dollar, the amount of dollars in circulation has skyrocketed over the last two decades and while Gold has appreciated in price, it's still far too undervalued compared to the underestimated deterioration of the U.S. economy and the oversupply of dollars.
Central banks have stored their wealth in Gold for thousands of years and it's of my belief (and actually evident) that countries will divest from dollars and store their reserves in hard assets. It's beginning and has a long way to go. These geopolitical power shifts play out over a long period of time. It's not just a bull market; It's a shift in the global allocation of resources.
ENERGY
Above is a link to the historical ratio of Gold to Oil. With data dating back to 1943, the Gold to Oil ratio is currently at the second highest figure ever! Only the price comparison of 2020 is larger and that's when oil went negative. The debasement trade along with central banks buying up a bunch of gold is indicative of underlying issues and a pessimistic outlook of the future of the U.S. dollar. It's helpful to combine many ratios together to see how the apparatus stacks up. This sole metric indicates that either Gold is heavily overvalued, or Oil is extremely undervalued. I'm betting on the latter.
The energy sector is a defensive sector. In inflationary times companies can raise their prices without fear of losing many customers. Who is going to cut off their electricity or their heat when they have to pinch pennies? They'll cut out their Starbucks and new clothes long before they touch utilities or oil and gas companies. In deflationary or recessionary times, it's still companies that produce what is needed most in the world - energy.
There are plenty of bets you can make and with my investment style, I prefer ETFs to individual stocks because I'm a macro investor. I enjoy the investing game, but I do not sit around reading annual reports for pleasure like Warren Buffett. I certainly have and I will continue to do so with companies I'm interested in, but that's just not going to be me. I make broad bets on industries and sectors more than individual companies.
I mix my allocation to energy in a few different ETFs for exposure into different energy subsectors across the value chain. Here's a few examples:
IXC: Global Oil & Gas
XLE: U.S. Oil & Gas
JXI: Global Utilities & Power
XLU: U.S. Grid & Electricity
ICLN: Global Renewable Energy
URA: Global Nuclear & Uranium
I have increased my allocation to the Energy sector in the last few days and am comfortable with where my capital is being allocated. It's crucial to civilization and I like investments that people need rather than want. You can cut out wants; you can't cut out necessities.
GOLD & SILVER MINING STOCKS
The only thing cheaper than Gold and Silver right now are the companies that mine them. Miners are basically printing money—pulling hard assets out of the ground at a fraction of what they can sell them for. Owning the metals above ground is smart, but owning the companies with the rights to the metal in the ground is how you get leveraged upside.
As the dollar continues its long, slow devaluation, the price of real assets has only one direction over time: up. When paper currencies fall, hard assets rise. And when hard assets rise, the businesses controlling those reserves become the real transfer points of wealth.
What’s crazy is this: people have piled into Gold and Silver after the recent spike, but they’ve left the mining companies trading cheaper than before the spike! The metals ran but the miners didn’t. That disconnect is where the opportunity is.
FOREIGN STOCKS & EMERGING MARKETS
While the U.S. stock market trades at nosebleed levels, foreign equities are reasonably priced, and dirt cheap compared to America's indices.
This chart shows the ebb and flow of valuations between U.S. and foreign equities over the last 30 years. After the dot-com collapse, and running straight through the years leading into the Global Financial Crisis (2002–2007), foreign equities dominated. That run came to an abrupt halt when the United States opened the monetary floodgates to dig itself out of the 2008 crisis.
Since then, the money supply has exploded, interest rates were held near zero for over a decade, the Fed backstopped the entire banking system, and the country inflated a debt bubble larger than the one that detonated in 2008. Pair that with the innovations in Silicon Valley—cloud, mobile, social, and AI—and capital poured into the United States at a pace the rest of the world simply couldn’t match. For almost 15 years straight, U.S. equities have been the main event. The outperformance has been undeniable.
But now the picture is changing. The S&P 500’s price-to-book ratio is sitting above its late-90s/early-2000s levels. The Shiller P/E is hovering near dot-com-era extremes. Valuations are stretched, concentration risk is unprecedented, and the U.S. is fighting structural problems it can’t print away—fiscal dominance, massive deficits, rising real rates, and geopolitical overextension.
At these levels, being heavily concentrated in U.S. equities isn’t just optimistic—it’s reckless. If I had to rank risk across asset classes, I’d say this plainly: I’m most bearish on U.S. Treasuries and U.S. equities going forward. The setup is fragile, the pricing is rich, and the margin for error is thin.
S&P 500 P/B: S&P 500 Price to Book Value - Multpl
S&P 500 Schiller P/E: Shiller PE Ratio - Multpl
When looking at cycles, there have been four snapshots in history of current price levels in the Dow to Gold ratio. The Dow Jones used to be the standard of index funds. The S&P has gained the notoriety of index funds due to their extraordinary performance over time but it’s still important to consider. The Dow Jones is concentrated. It holds 30 blue-chip U.S. stocks.
In the Dow to Gold chart, the previous four cycles have been ‘99-’01 (bust), 1929 (bust), a 10 year period of hanging around our present day number from ‘61-’71 which resulted in a steep decline. The fourth is the present day - I imagine the results are the same.
There it is.
The most undervalued asset classes / sectors are foreign equities, the energy sector, precious metals, and the companies that mine the precious metals.
None of this is financial advice. The views expressed are strictly meant to share my opinion on where the market is over and undervalued.
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