The valuations we’ve seen in stocks, and in AI stocks in particular should be a major warning signal for investors.
We’re now seeing a significant pullback in tech stocks, and the broader stock market for reasons I’ve been discussing for the past month or so.
Too much market value was tied up in too few individual companies, after way too much money flowed into heavily indebted AI stocks.
We can see this general trend on a long term chart plotting the Nasdaq:S&P 500 ratio, in chart #1:
We’re now off the absolute highs of this ratio, which was only briefly higher in 2020 (right before Covid) and was actually slightly lower right before the 2000 dot-com bust.
The bet on AI for most of the past year was that yes, AI stocks would continue to skyrocket higher, even though they were already making up 50% of the S&P 500’s market value.
It also meant that any dip in AI stocks would have an outsized effect on the stock market in general.
And that’s what we’re just starting to see in the broad market, in chart #2:
But that small dip down from all time highs is not the likely endpoint for this correction.
Some people are quick to dismiss this latest AI/market correction as another news-driven, temporary event.
In the future, (and already today) people may blame Nvidia CEO Jensen Huang and his mistresses for deflating the AI bubble, but that’s backwards. The sector was over inflated. The world of finance and economics is not full of smooth edges. Eventually, an overinflated asset finds a pin. Sometimes it’s a mistress (or three).
While The Nasdaq Fell 78%… These Stocks Soared.
When the Dot-Com Bubble burst, the Nasdaq eventually lost 78%. But four gold miners subsequently delivered measured gains of 50X, 53X, 252X and 362X over their respective runs. Past performance can’t promise a repeat. But CFA Garrett Goggin believes the history of past market corrections exposes an overlooked truth: when a mania in growth/tech stocks ends, a bull market begins in gold miners.
Go here to see where Garrett believes money is headed after AI.
That brings me to chart #3:
Gold is also paying a price, falling down to below $3,900/oz – the lowest price we’ve seen since early October 2025.
This fall from highs earlier this year correctly concerns gold stock investors. The questions that matter for your gold stocks: are they able to profit from $3900/oz gold? What about $3k gold?
Many investors are glad to buy companies that can promise profits at $5500/oz gold. But the successful investor buys gold stocks that can profit under $3k/oz.
That’s part of my entire thesis as a gold stock analyst: you can make money from gold stocks in any market. Higher prices are great for the solid businesses I cover. They’re also pretty good at lower prices.
I’ve made a career of buying profitable gold stocks even in the middle of a bear market in gold.
And I’m not saying we’ll see gold at $3k/oz.
I’m saying: the best companies CAN profit at those price levels. They build their business for the worst case, not the best case, and they gush cash at almost any likely gold price.
You don’t want to own a company that can eke out a profit at $5500 gold when there are dozens of companies prepared to profit at $3k, or lower.
In fact, almost all of the businesses I cover in my paid services build their mines assuming $2500 gold, or lower. When gold goes to $5500 or higher, you want to own the business with the bigger margins anyway.
Don’t make this endeavor harder than it has to be. Buy quality gold stocks at the right valuation, and you’ll do great – even if gold prices move lower in the short term.
Have a great weekend.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio
