Ask The Compound – Episode Summary

Podcast: Ask The Compound
Episode: Why Is Gold Outperforming the Stock Market?
Date: October 8, 2025
Host: Ben Carlson
Co-Host: Duncan Hill
Special Guest: Jurrien Timmer, Director of Global Macro at Fidelity Investments

Overview

In this episode, Ben Carlson, Duncan Hill, and guest Jurrien Timmer tackle a series of listener questions—with a particular focus on a surprising phenomenon: why is gold, often seen as an old-world asset, booming during a period of technological exuberance driven by AI and mega-cap tech stocks? Along the way, they discuss S&P 500 concentration, the stock market’s apparent indifference to a cooling labor market, why international stocks are outperforming in 2025, and how to recognize real asset bubbles.

The conversation is rich with data-driven insights, historical perspective, and a dash of humor, making complex market mechanics accessible for all listeners.

Key Discussion Points & Insights

1. S&P 500 Market Concentration: Is This the New Normal?

• Current Situation: The “Mag 7” stocks (the largest technology companies) comprise 36% of the S&P 500.
  • Jurrien Timmer: “These companies have gigantic moats and networks. Unless they get regulated away, it’s likely that they're going to stay really big. ... This kind of concentration can persist for decades, literally.” (03:14)
• Historical Context: Market concentration was also high during the ‘Nifty 50’ era in the 60s/70s and the tech bubble era, but can be a persistent feature, not always resulting in sharp corrections.
• Indexing Effect: The rise of index funds and ETFs exacerbates concentration effects.
  • Ben Carlson: “If seven stocks, 36% go down, the index is going to go down. Even if 70% of the S&P were going up, the index would still go down.” (03:14)

2. Stock Market vs. Labor Market: No Recession in Sight?

• Disconnect Noted: Even as the labor market cools (fewer job openings, hiring slows), stock prices climb.
• COVID as an Outlier: The tight post-pandemic job market (more openings than seekers) was a historical anomaly.
  • Jurrien Timmer: “You had two job openings for every job seeker. ... That needed to moderate, which is one of the reasons the Fed was raising rates.” (09:28)
• Current Balance: Labor market appears balanced now, with no sign of recession; markets are “ignoring the soft jobs numbers because the economy is fine and labor market statistics generally are backward looking.” (09:28)
• Fed’s Role: The softening jobs market contributed to rate cuts and easing bias by the Federal Reserve.

3. International Stocks' Outperformance in 2025

• Strong Returns: Emerging markets up 30%, developed international up ~28% year-to-date.
• Not Just the Dollar: While weaker USD helps, local-currency returns are similarly strong—indicating improved fundamentals overseas.
• Shareholder-Friendliness Abroad:
  • Jurrien Timmer: “In the last couple of years, even though growth is still sluggish in Europe and Japan, companies have become much more savvy at unlocking shareholder value. ... The payout has grown more in the last five years than it has in the U.S.” (17:23)
• Valuation Gap: International developed equities have similar payout ratios and earnings growth as the U.S., but trade at significantly lower PE multiples (16x vs. 25x).
  • Ben Carlson: “International stocks I’ve looked at are straight up and the PE is like 15.” (24:05)

4. Why Is Gold Booming During a Tech Bubble?

• Historic Performance: Gold up 50% this year, outperforming even AI-driven tech stocks since late 2022.
• Not a Zero-Sum Game: Unlike past cycles, gold and equities are both surging.
  • Ben Carlson: “We’ve never had a decade like this... since we broke the gold peg, where gold and the stock market boom at the same time.” (25:10)
• Core Drivers:
  • Central Bank Buying: Especially in response to geopolitical shifts (e.g., freezing of Russian assets).
  • Reduced Dollar Dominance: Dollar’s share of global reserves falling, leading to “hard money” assets gaining appeal.
  • Fiscal Dominance and Financial Repression: Chronic U.S. budget deficits and expectations for lower (even artificially suppressed) interest rates bolster gold’s case.
    • Jurrien Timmer: “When soft money grows faster than hard money, hard money will take share from fiat. ... That’s what we've been seeing since COVID.” (28:53)

Notable Quote

• On Gold and Bitcoin:
  • Jurrien Timmer: “I see gold and bitcoin as different players on the same team. ... Bitcoin had a huge run, and now gold is having its moment. ... Maybe this is just mean reversion of gold catching up to bitcoin rather than bitcoin catching up to gold.” (32:41)

5. Are We in an AI Bubble? How Do You Spot a Bubble, Anyway?

• Difficulty of Real-Time Identification:
  • Asset bubbles are hard to spot without hindsight, as mega-trends (like the internet in the ‘90s) often achieve their promises eventually.
  • Jurrien Timmer: “These bubbles always go much longer than people think. ... Right now, I don’t think we’re in a bubble yet—we may go there, maybe we won’t.” (35:39)
• Valuations Not Extreme: MAG7 trades at high, but not absurd, multiples (35x vs. market's 25x). Previous bubbles saw even starker gaps.
• Key Bubble Signals To Watch:
  • Fundamental detachment
  • Excessive circular vendor financing
  • Explosive gains in speculative, unprofitable “story” stocks (“non-profitable tech” index coming back to life is a potential early warning).
• Possible Endings:
  • Not all booms crash: the bull market of the 50s/60s “ended with a whimper, not a thud,” mainly killed by inflation.

6. The Fun—and Challenge—of This Market Environment

• Ben Carlson: “Are you having fun in the current market environment? ... I think if you can step back from it, it’s a lot of fun.” (40:34)
• Jurrien Timmer: “Markets are always a four dimensional puzzle that can never be solved. ... It’s a great challenge to find the interplay between interest rates, monetary policy, the next big thing like AI, geopolitics.” (40:48)

Notable Quotes & Memorable Moments

• On S&P concentration:
  “Unless [mega cap tech stocks] get regulated away, it’s likely that they're going to stay really big. Unless just the world changes and the AI boom maybe turns to a bubble and then it disappears. But even then, it’s probably not going to disappear. So we may have to get used to this.” — Jurrien Timmer (03:14)

• On gold & fiscal dominance:
  “Gold is just reading the tea leaf ... in order for this fiscal dominance to take place, you need financial repression. You need lower rates than are warranted by economic conditions ... Real yields will come down and hard assets will steal the show. ... That’s what both gold and bitcoin are saying here.” — Jurrien Timmer (28:53)

• On how decades can end:
  “The secular bull market that ended in the late 60s ended with a whimper, it was inflation that essentially killed the excessive valuations, if they were even excessive. Inflation is the valuation killer for any asset.” — Jurrien Timmer (39:38)

Timestamps for Key Segments

• Market concentration & Mag 7 discussion: 02:20–08:16
• Labor market vs. stock market: 08:43–15:46
• International stocks outperformance & U.S. dollar: 15:53–24:41
• Gold’s rally examined: 24:42–33:54
• What is a bubble? Are we in one?: 33:57–40:34
• Host reflections and how to follow Jurrien: 40:34–42:35

Tone & Style

The conversation is analytical yet accessible—blending Wall Street rigor with plain-English explanations and a touch of humor. Hosts are transparent about the complexity of the investing environment, candid about what they know and don’t know, and frequently weave in historical parallels and personal anecdotes.

Conclusion

If you’re wondering why gold has taken off alongside AI stocks, whether U.S. or international markets offer the better bargain, or how to spot a bubble before it pops, this episode offers clear, engaging answers rooted in data, history, and on-the-ground investor experience.