DFCF, LLC
Drulard Family Capital Fund (DFCF, LLC)
No Silver Lining
Drulard Family Capital Fund
Fortnightly Macro View
JD Straight Up:
S&P 500 at 6972 – up 1% from 6940 two weeks ago
VIX at 17 – up 6% from 16 two weeks ago
10yr Treasury yielding 4.23% (up 2% from 4.16% two weeks ago)
Agg (US Aggregate Bond Index) at 99.68 – flat from 100.05 two weeks ago
Gold at 4726 per oz (up 3% from 4588 two weeks ago) - down 16% from 5602 four days ago
Silver at 78.76 per ounce (down 14% from 91.69 two weeks ago) - down 35% from 121.50 four days ago
Crude Oil (WTI) at 62 per barrel (up 6% from 59 two weeks ago)
Bitcoin at 79k (down 16% from 93k two weeks ago)
JPM shares at 306 (down 2% from 313 two weeks ago)
Deutsche Bank shares at 39.62 (up 2% from 38.88 two weeks ago)
Truist shares at 52.43 (up 5% from 49.99 two weeks ago)
Blackstone shares at 141.51 (down 14% from 163.50 two weeks ago)
Magnificent 7 Index at 426 (up 2% from 418 two weeks ago)
US unemployment: at 209,000 in latest claims – up 6% from 198,000 two weeks ago
EUR at 1.18 USD (up 1% from 1.17 two weeks ago)
GBP at 1.36 USD (up 2% from 1.34 two weeks ago)
Macro Environment
US inflation persists at 2.7% with food and shelter leading gains at 3.1% and 3.2%, respectively. EU inflation is at 2.3%. War continues in Ukraine and ceasefire remains in place in Gaza. Gold and silver prices experience extreme volatility. Pressure continues on USD. US identifies its next central bank head. Protests and unrest roil Iran while US and Iran engage to negotiate nuclear deal.
Macro View
Precious metals have historically been used as a hedge in uncertain times when monetary or geopolitical policy causes concern in key assets or currencies. The spike in the price of gold and silver to all time highs while in negative correlation to the strength of the USD and to yields on UST gave rise to a sense of pending doom.
Gold Silver
Constant reminders about the ever-compounding $38trn US debt and a US budget deficit nearing $2trn per annum drove this narrative. Further fear of inflationary impacts from tariffs added to the concern. Yet equity markets and the Mag7 continued to eclipse all-time highs and US GDP growth continued to outperform while unemployment remained at historic lows. The question then arises as to whether precious metals are still a hedge or are now just another asset in the everything rally. The severe volatility to hit gold and silver in the last week brought more questions than answers. Were they being used to hedge or to speculate? Was the extreme run-up because of a short squeeze, industrial demand, a move away from dollars, or some other cause or a collection of many in a perfect storm? Yes, silver is needed for solar energy production and for AI infrastructure, but is that sufficient to drive it from $50/oz to $120/oz in under a year? Did industrial silver consumers happen to discover their need in late 2025 and concurrently realize they lacked inventory and were unhedged? It is hard to believe and looks more like a momentum trade where silver merely became the latest meme stock.
All of that said, does concern remain about the scale of AI capex, the US in empire mode, the future of the dollar as reserve currency, the impact of crypto on money flows, disparity of wealth, debt to GDP ratios out of whack, and a flood of other canaries in the global productivity and stability coalmine? Certainly.
Relevance
If you have been stuffing pillow cases full of silver coins into closets and under beds in your doom prepping, perhaps silver is not the steady and conservative store of value that it appeared to be for the last number of decades. Or maybe you just bought it because every time you drove past the coin seller shop on the high street you saw a bigger number in the window and figured it only went in one direction. The key point is that we are entering a period of inexplicable volatility. That is not to say that every prognosticator and his uncle will cease to attempt to explain it. They will continue and some of them might even turn out to have been right in hindsight. The likelihood of any of us mere mortals actually comprehending the causality and connectedness of this increasingly complex environment is very low, so remain skeptical.
Head Scratchers
1 - How much is the advent of ETFs responsible for inexplicable run-ups in particular asset prices? Is the ease and simplicity of buying a levered silver ETF on Robinhood driving retail participation in speculative markets? Is there additional leverage applied in the funds or through option strategies and via margin that was not universally available in the last speculative markets? What would happen if this leverage were to be curtailed or if momentum turned in a downward direction?
Drulard Family Capital Fund
Drulard Family Charitable Fund
#35 - 2Feb26