The Treasury’s Gold Revaluation Play | Lyn Alden

OpenAI

Across the shows: 24 speakers in other episodes, 10 bullish and 19 bearish calls, past 30 days

• Lyn Alden · Lyn Alden Investment StrategyBearish

  OpenAI's trillion-plus valuation is hard to justify while it is unprofitable and barely ahead of copiers.

  Alden says a lot of venture capital went into the frontier model companies, including OpenAI and Anthropic. She argues that a trillion-plus or $2 trillion valuation is very hard to justify for a company that is aggressively unprofitable and only months ahead of closest copiers. Open-weight models are chasing them closely. She expects a large drawdown at certain points, while still seeing the broader buildout as having room to run.

  “It's very hard to justify a trillion or $2,000,000,000,000 valuation when you're aggressively unprofitable and you're only months ahead of your closest copiers.”at 14:50

Anthropic

Across the shows: 61 speakers in other episodes, 48 bullish and 43 bearish calls, past 30 days

• Lyn Alden · Lyn Alden Investment StrategyBearish

  Anthropic's trillion-plus valuation is hard to justify while it is unprofitable and barely ahead of copiers.

  Alden groups Anthropic with OpenAI as frontier model labs that absorbed large amounts of venture capital. She says a trillion-plus or $2 trillion valuation is very hard to justify for a company that is aggressively unprofitable and only months ahead of closest copiers, which are being pursued by open-weight models. She expects a large drawdown at certain points, while still seeing the broader buildout as having room to run.

  “It's very hard to justify a trillion or $2,000,000,000,000 valuation when you're aggressively unprofitable and you're only months ahead of your closest copiers.”at 14:50

Berkshire Hathaway

Across the shows: 1 speaker in other episodes, 1 bullish and 0 bearish calls, past 30 days

• Lyn Alden · Lyn Alden Investment StrategyBullish

  Berkshire's insurance float gives it the lowest cost of capital, the advantage of permanent capital.

  Alden cites Berkshire Hathaway as the most famous permanent capital vehicle, which buys companies and holds them for decades. She argues that a permanent capital company needs a kicker to make the long-term strategy work. For Berkshire, that kicker is insurance, which gives it what she describes as the lowest cost of capital in the world, more or less, and a very stable source of capital. This gives it a large advantage over competitors.

  “For Berkshire Hathaway, it's insurance. Berkshire Hathaway base has the lowest cost of capital in the world, more or less, the most stable source of capital.”at 42:41

Bitcoin

Across the shows: 12 speakers in other episodes, 8 bullish and 3 bearish calls, past 30 days

• Lyn Alden · Lyn Alden Investment StrategyBullish

  Holding Bitcoin on a company balance sheet can be rocket fuel if managed well.

  Alden argues that Bitcoin on a company's balance sheet can be rocket fuel as long as it is managed appropriately. She describes Bitcoin as volatile but unable to be debased, so it helps a company build a fortress of assets. Her firm, Orange Juice, uses this synergy with its acquisition strategy, and she says the combination of owning businesses and holding Bitcoin is interesting. She notes that a market exists for business owners who like Bitcoin and prefer to sell to a permanent holder.

  “having Bitcoin on the balance sheet can be rocket fuel as long as you manage it appropriately, and it helps you build up a a kind of a fortress of assets that are volatile but can't be debased.”at 43:02

Strategy

• Lyn Alden · Lyn Alden Investment StrategyBearish

  Pure Bitcoin treasury companies like Strategy buy Bitcoin procyclically, buying high and stalling in bear markets.

  Alden contrasts pure Bitcoin treasury companies like Strategy with her firm's approach. Investors tend to give these companies more capital during Bitcoin bull markets, so they buy more Bitcoin when it is high. In a Bitcoin bear market, capital pulls away and the company cannot buy as much, which leads to procyclical accumulation. Her firm instead focuses mainly on acquiring cash-flow-producing businesses, and treats Bitcoin as a second avenue for deploying capital that can be used countercyclically.

  “Investors tend to wanna give them more capital during Bitcoin bull markets, so they go out and buy more Bitcoin when it's high. And then when Bitcoin's in a bear market, all the capital pulls away, and then the company can't buy as much Bitcoin. So they end up often having procyclical accumulation.”at 46:26

AI infrastructure & data centers

• Lyn Alden · Lyn Alden Investment Strategy

  AI financing risk is a longer-term concern, but we're only in early to mid innings.

  Alden says the concern about the AI buildout's off-balance-sheet contractual obligations is valid, but she does not yet see systemic risk. She is more concerned about longer-term risk. Hyperscalers are taking on rising long-term lease obligations to secure tenants for data centers. Chipmakers are also providing vendor financing and backstopping funding for data centers and chip purchases, which creates circular complexity. She says this is less catastrophic than subprime because it sits outside the banking system.

  “Longer term, potentially. I don't think we're there yet. I think the people are right to bring that up. I just think we're still kind of in early to mid innings of this.”at 13:39

• Lyn Alden · Lyn Alden Investment Strategy

  AI spending keeps rising despite pullbacks; the buildout is still early with semiconductor bottlenecks.

  Alden says her key indicator is whether businesses are spending more or less on AI than they were months earlier. Headlines about firms pulling back keep appearing, but overall AI spending keeps rising. She describes the current phase as the zero-to-one moment when companies move from not using a new technology to a baseline of using it. She says we are still in the buildout phase, with massive bottlenecks in semiconductors, so the cycle has room to run despite concerns about vendor financing, capex, lease obligations and GPU depreciation.

  “I think we're we're still in the build out phase. We still have massive bottlenecks in semiconductors.”at 15:08

• Lyn Alden · Lyn Alden Investment Strategy

  Current AI capex surge is a temporary step-change after a technology unlock, not a permanent rate of spending.

  Alden separates the current rapid wave of AI capex from the broader trend. Her argument is that whenever a new technology unlock happens, there is a surge of resources into that area, but the rate of spending does not continue indefinitely. She compares it to aviation, where the combination of aluminum and hydrocarbons opened the field after thousands of years of little progress, producing a heavy temporary investment period that eventually levels out once the benefits of the unlock are captured. She says hardware and software have now become good enough for a new unlock, which creates a massive but temporary reorganization of where resources go.

  “I would separate the current kind of rapid wave of AI CapEx, from other things, because whenever you have a new technology unlock, naturally, there's a surge toward that area. It doesn't mean that that rate is gonna continue forever.”at 36:28

Gold & precious metals

• Lyn Alden · Lyn Alden Investment Strategy

  Gold's bull market got ahead of itself short term but remains on track over the longer term.

  Alden says she has been bullish on gold, which she sees as a competing store of value to Treasuries. She concedes the bull market got ahead of itself for a period but says it is still on track over the longer term. She adds that silver, platinum, copper and energy assets should benefit from the same trends. She also argues that capital is rotating from non-resource assets toward resource assets, which she expects to persist for a long time. Her view is that gold rose from about $2,000 to $5,000 so quickly that a pause is needed, but the trend holds. She says she has also been bullish on equities, and that gold has outperformed the S&P 500 over long periods, with the S&P 500 to gold ratio in a fourth major bear market over the past century.

  “That's somewhat separate from commodities because that's more of like a competing store of value with the treasury primarily. But I think that that bull market is... I mean, I think it got ahead of its skis for a period of time, but I think it's still, over the longer term, on track.”at 1:03

• Lyn Alden · Lyn Alden Investment Strategy

  A Treasury gold revaluation would be inflationary, lifting gold and asset holders while hurting wage earners.

  Alden treats a revaluation of US official gold holdings as one of the government's few ways to create new money without issuing debt. The revalued gold would fill the Treasury General Account with cash that can be spent without bond issuance. She calls it mostly an accounting change at first and a pro-liquidity move. She says it would be inflationary, comparable to COVID-era stimulus, and could push money into scarce assets such as gold, which would lift gold prices. She expects the effect to be good for asset holders and bad for wage earners, and says the net effect depends on the wider fiscal mix. As a gold holder, she says she would welcome such a move.

  “The government can create new money without creating an associated amount of debt. So if they increase... the official holdings of gold, it basically fills up their treasury general account with cash, which they can then spend, which is kind of an interesting effect in the economy. Now that would be inflationary.”at 8:58

International equities

• Lyn Alden · Lyn Alden Investment Strategy

  Owning Brazil's biggest bank has been her favorite trade, outperforming the local index.

  Alden says she invests in Brazil. She calls owning the country's biggest bank one of her favorite trades there and says it has outperformed the index. She presents this as part of a broader rotation from non-resource to resource-linked capital, with the bank as an adjacent way to play that trend. She gives no detailed valuation or fundamental case for the bank.

  “And sometimes it's not even a commodity trade. It's like, you know, one of the best... Like, my favorite trade in Brazil has been owning their biggest bank, and it it outperforms the index.”at 1:39

US deficit & government debt

• Lyn Alden · Lyn Alden Investment Strategy

  US is in fiscal dominance: deficits now outweigh bank lending in new money, blunting Fed tools.

  Alden argues the Fed's main tools, interest rates and the balance sheet, work by changing bank lending. That channel matters much less now because structural deficits are the bigger source of new money. She says annual net new Treasury issuance is now bigger than the sum of net new bank loans and net new corporate bond issuance, so the Fed cannot control inflation by targeting bank lending. Higher rates also raise deficits because interest income flows to cash holders and interest costs flow to the government. She says the Fed's tools are not geared to this kind of inflation, and the problem is structural fiscal deficits rather than monetary policy.

  “I don't think they should abandon it, but I think the challenge is that the Fed's tools are just not geared toward this type of inflation. And so, I mean, the point that I've made a lot in macro is that we're we're in fiscal dominance now, not monetary dominance.”at 2:47

US inflation

• Lyn Alden · Lyn Alden Investment Strategy

  Lower energy prices would only mildly ease inflation; structural fiscal deficits are the bigger driver.

  Alden accepts that ending the war and easing transport and refinery bottlenecks would lower energy prices and mildly reduce inflation. She says that is only one factor among many. Inflation was already above target and the economy was already two-speed before the war, and the war added a layer on top. She also cites AI buildout competing for resources such as homebuilding, which keeps home prices high despite higher rates. Her main point is that structural fiscal deficits drive inflation and will not be addressed on any investable time horizon.

  “so it is absolutely true that if if, you know, if if the war is over and if refineries stop being hit and all the all the transportation bottlenecks ease, ... that will contribute to lower energy prices, which then can contribute to to mildly lower inflation. ... The problem is that's that's one factor among many.”at 7:00

Enterprise AI adoption & AI software

• Lyn Alden · Lyn Alden Investment Strategy

  Companies adopting AI more heavily win share and can grow headcount.

  Alden cites many studies showing that companies adopting AI more heavily tend to win market share from peers that adopt less. She argues the zero-sum framing is wrong. AI can make each employee more productive, which lets firms run on better margins and pricing, take share, and grow headcount despite using more AI.

  “there are tons of studies that show, for example, that just companies that are just higher adopters of AI, tend to be winning and taking market share versus ones in their field that are not, and ironically, to increase headcount.”at 15:53

Commodities (broad)

• Lyn Alden · Lyn Alden Investment Strategy

  AI is a marginal commodity demand driver; defense spending matters more, while China's oversupply weighs.

  Alden says AI is still a very small share of global commodity consumption. Unlike 2010s internet companies, AI compute has large physical costs, such as power and compute materials, so it adds demand at the margin. Defense spending adds commodity demand, with Europe spending more and a proposed US defense budget of $1.5 trillion. China's slowdown, peak demographics and oversupply of buildings and manufacturing capacity are among the biggest weights on commodities. Macro commodity arguments must weigh these competing drivers.

  “In terms of just global commodity consumption, AI is still a very small share.”at 17:56

US stock market outlook

• Lyn Alden · Lyn Alden Investment Strategy

  Long-term equity bull: bearish stock calls amount to bullish fiat bets.

  Alden says she fades equity bears because the US is running deficits of about 7% of GDP. In that setting, betting that stocks fall is effectively a bet that they will fall relative to fiat. She acknowledges stocks are volatile and can fall, as in 2022, and can get over their skis. She still prefers to own both stocks and gold, and says she has been a long-term equity bull despite concerns, and that stocks have been a good place to hold in a hot environment where hard assets have won.

  “And that's why I keep fading the equity bears, which is to say, when we're running 7% of GDP deficits as far as the eye can see, ... being bearish on stocks basically means you're bullish on fiat.”at 21:49

US Treasuries & yields

• Lyn Alden · Lyn Alden Investment Strategy

  The long bond bear market is probably mostly over after the 10-year rose to 5%.

  Alden describes the recent multi-decade stretch as one of the worst for holding bonds, with a massive bear market in nominal and especially real terms. She argues that much of that move is now over, because the 10-year yield went from near zero to about 5%. She says the fiscal dominance backdrop is still in place and continues to fuel equities.

  “It's been a massive bond bear market, both in nominal terms and then especially in real terms. And, you know, I think that the degree of that's probably over.”at 23:16

Emerging markets

• Lyn Alden · Lyn Alden Investment Strategy

  EM stocks often rise in local-currency terms during currency crises, even as dollar returns fall.

  Alden says that anyone who studies emerging markets will see that during a currency crisis, stocks often rise in local-currency terms. They may fall in dollar or gold terms. She cites this as part of why she has been a bull on equities alongside gold, since local-currency equity gains can offset currency losses in foreign-currency terms.

  “anyone who studies emerging markets, for example, when they have a currency crisis, I mean, their stocks go up in their local currency terms. They might go down in dollar terms.”at 23:46

Open-source AI models

• Lyn Alden · Lyn Alden Investment Strategy

  Open-weight models are here to stay; banning them to protect closed labs is a losing game.

  Alden separates two questions: whether a company should keep its own model closed, and whether it should seek government bans on open competitors to protect a closed model. She says the second is where some companies have gone and is more problematic. She argues the long-term arc is a losing game because open-weight models already exist and suppressing them is like whack-a-mole. Open-weight models let more than a few companies control the technology and let people customise and run models locally and privately, which she considers valuable.

  “I think the long term arc here is it's a losing game. I think just open weight models exist, and trying to put out those fires is just kinda like slowing down the inevitable.”at 27:16

US entitlements

• Lyn Alden · Lyn Alden Investment Strategy

  Aging demographics create major looming challenges for US Social Security and Medicare.

  Alden says systems such as Social Security and Medicare were designed on the assumption that each generation would be bigger than the one before. She argues that this stopped, and the world is now in the paying-for-it stage. The ratio of workers per retiree matters, since six workers per retiree is far easier to support than three. She sees Social Security and Medicare as very real challenges in the US, and says Japan, Europe and China face the same issue.

  “And, you know, when that stopped happening and then decades passed, we're kind of in the the the paying for it moment now. So we have we have really big challenges ahead of, like, Social Security, Medicare in The US”at 28:18

US consumer

• Lyn Alden · Lyn Alden Investment Strategy

  Deficit spending has created a two-speed economy: asset holders gain while others pay higher rates.

  Alden says structural deficits create recipients and others who indirectly pay the cost, through higher rates that make a first home harder to buy. She points to record-high stock prices alongside record-low consumer sentiment as evidence of a large divide between asset holders and non-asset holders. She says the divide remains unusually large even though sentiment has recovered from its lows.

  “there are recipients on some sides of them, And then there are others that are not on recipients, but they're kind of paying the cost. For example, higher rates and a new family looking to to buy their first home.”at 29:40

Big Tech platforms & digital ads

• Lyn Alden · Lyn Alden Investment Strategy

  A few platforms' tunable algorithms shape discourse, driven by profit rather than truth.

  Alden says a handful of large platforms control algorithms that can be tuned, and their incentives are not necessarily to promote virtue or truth. They may aim to maximise profit or act as a funnel for adjacent commercial interests. She cites Jack Dorsey's argument that the issue is not only censorship but what the algorithm shows people in the first place. She has seen people gradually fall into unhealthy rabbit holes. She sees the centralised algorithm as one of the most powerful forces in society.

  “There's a handful of really big platforms, and they have algorithms, and they can tune how those algorithms work. And their incentives are not necessarily to promote virtue among society or promote truth among society. They're either to profit maximize”at 33:30

AI & jobs

• Lyn Alden · Lyn Alden Investment Strategy

  AI lets very small teams do far more, making now the best time to start a small business.

  Alden argues that most employment is disproportionately in smaller and medium-sized businesses, and that AI tools have made it easier to start one. Founders no longer need to ask someone else for capital to do many things, and the amount of resources a very small team can deploy has never been better. Some businesses still need capital, but she sees AI as an equalizer that rewards people who use the tools well and avoid their drawbacks, such as over-reliance that stops people from thinking.

  “in some ways, it's never been a[n] easier time or better time to start a small business because instead of asking someone else for capital... the amount of resources and things you can do with a very small team has never been better.”at 38:01

Private equity

• Lyn Alden · Lyn Alden Investment Strategy

  Private equity's leveraged buy-and-flip model has a high failure rate and is unsuited to the end of falling rates.

  Alden describes the PE playbook as buying a business, levering it up on ever-cheaper debt during roughly forty years of declining interest rates, cutting staff, and flipping the company within a few years. This maximizes near-term profit but pulls profits forward and leaves the business weaker ten or twenty years later. She uses veterinary clinics as an example, where cross-selling, service cuts and price increases follow acquisition. She says the falling-rate era that made this work is now over, and that PE companies have a larger than average failure rate because they are loaded with debt and lose their core quality. She attributes this to incentive structures built around a roughly ten-year fund life rather than to bad faith.

  “a lot of private equity businesses have that outcome, whereas it's geared more toward the spreadsheet. And private equity companies have a larger than average failure rate, because they get loaded up with debt and have some of their kind of soul ripped out.”at 40:59