The McAlvany companies have long been characterized by innovation. When your primary product (for many years, at least) is a minimally adorned hunk of metal pulled out of the ground, you’d better be innovative or you’ll go the way of the dodo bird.
Many precious metals brokerage firms are opportunistic. They come into being during gold bull markets, flourish for a while, and then go bust when investors start looking for the next shiny object. Yet, over five decades after their founding, the McAlvany companies still thrive.
How? Well, during calm or down metals markets, they advocate things like dollar cost averaging, ratio trading, premium awareness, portfolio structuring using the Perspective Triangle (discussed on GRR this week), awareness of the Dow/gold ratio (discussed on MWC this week), discipline, long-term focus, and more. During bull markets these concepts remain applicable, but require awareness of the shifting relative value proposition.
Such powerful concepts, if adhered to with knowledge, awareness, discipline, and focus, make better investors of everyone. And they insure portfolios against downturns of any magnitude while they provide room to take advantage of opportunities of any magnitude. Safety, room to profit, quality-of-life enhancement: compelling attributes for a minimally adorned hunk of metal pulled out of the ground. Amazing what true, enduring value can accomplish…
Key Takeaways:
- Why the Dow/gold ratio matters
- The difficult straits the Strait has put us in
- It’s about wisdom, not timing
The McAlvany Weekly Commentary: Avoid Wall Street Consensus At All Costs
David and Kevin visit the past in a brief recounting of David’s initial skepticism and later embrace of his dad’s view of gold. David has never been an uncritical proponent of gold’s value proposition. Having now accepted it exclusively on its merits, he recounts an agitated endowment investment committee meeting where “conventional” Wall Street thinking dismissed gold as irrelevant and praised higher-beta alternatives like private credit and hedge funds instead. David pushes back on the logic, arguing that such platforms are often “people management” more than true risk management, glossing over macro factors, leverage, correlation breakdowns, and the infrastructure failures that show up when markets change speed. He grounds the discussion in relative-value framing, especially the Dow/gold ratio, recalling when they began buying gold near extreme readings (around 40-to-1), and explaining why they reduce or add as the ratio compresses toward 5-to-1, 3-to-1, or even 1-to-1. He also threads in gold’s momentum dynamics from COMEX positioning, highlights liquidity as the market’s fuel (with Fed/backdoor easing implied), and warns against crowded consensus trades—because mean reversion and “accidents” often arrive when nobody’s watching.
Morgan frames the past week’s Iran situation as a leverage and liquidity story wearing a “market optimism” mask. After Strait of Hormuz reopen talk was crushed when Iran re-closed it and the U.S. responded with a naval blockade, Trump extended a ceasefire deadline (via a Truth Social post) amid “virtual silence” from Iran and reported internal Iranian fractures over enrichment and uranium stockpiles. Morgan argues that if Hormuz stays closed longer than Wall Street consensus expects, the result could be a Covid-level supply-chain breakdown—higher energy and food costs, broader industrial input inflation, and eventually a bull-trap that tips into recession and a Western sovereign-debt stress spiral. He adds that inflationary supply shocks may also blunt the usual monetary policy “rate cuts and liquidity injections,” turning them into something like pouring gasoline on a fire. He then zooms out to operational constraints (U.S. munitions drawdowns, multi-year replacement timelines, and rare-earth magnet bottlenecks) and notes emerging cracks in dollar omnipotence via swap-line requests and the growing possibility of alternative currency settlement for oil.
Golden Rule Radio: Corrective Phase Continues
Tory, Miles, and Rob keep the message punchy and practical: there was a modest pullback in precious metals over the past week—gold down about 2% and silver a little over 3%—even as equities continued to rally toward fresh highs. The contrast is the point: when metals cool off, stocks can heat up, and that kind of cross-asset tug-of-war is often where investors get tempted to abandon discipline. The hosts also frame the backdrop as a market where concerns about liquidity conditions and volatility are rising, which makes “staying the course” less of a cliché and more of a survival skill. The hosts discuss fiat currencies and cryptocurrencies at length, stating that they are here to stay whether we like it or not. In such an environment, the strengths of gold become even more important. The theme running under the update is not doom-and-gloom, but steadiness: maintain a disciplined, rules-based portfolio approach while markets swing around on shifting liquidity and risk appetite. In short, it’s a reminder that modest corrections can happen right alongside optimistic equity tape—and the real edge is preparation, not prediction.
