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  5. AEM: Ross Healy, who typically does not make sensational statements lightly, spooked me yesterday during a podcast interview with Amber Kanwar. [Agnico Eagle Mines Limited]
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Q: Ross Healy, who typically does not make sensational statements lightly, spooked me yesterday during a podcast interview with Amber Kanwar. He sees tech stocks dropping 60% which will invariably pull other types of stocks down for the ride. He suggests moving to gold... could you suggest a couple gold stocks with strong balance sheets? A mix of large, mid and small caps would be great. Thanks!
Asked by Samira on June 17, 2025
5i Research Answer:

In Ross' interview, he refers to several traditional valuation metrics that he likes to use (Buffett indicator, P/E, and some others), and while we find these interesting, the problem is that many of them have been suggesting we're 'overvalued' for several years (with the Buffett indicator suggesting overvaluation for two decades). As a rough estimate, an investor that exited the markets two decades ago when the indicator signaled 'overvalued' would require an 80% decline in the S&P 500 today to get back to the point at which they sold. 

Ross referred to the overvaluations of the Magnificent 7, the sky-high P/E of the broader markets, and his 50%+ correction call came from the S&P 500s price-to-book being 2.5X in the 2020 pandemic flash crash compared to 5X today. Ross suggested we could revisit a 2.5X price-to-book again. What we find interesting about this thesis is that the S&P 500s price-to-book has been expanding from 1.5X in the 2009 trough to 5X today. For example, an investor in 2015, when the P/B was 3X and was hoping to buy in at 2009 price-to-book trough levels (1.5X) would still be waiting today. 

We think some of these indicators are useful, but the markets are rapidly evolving, and we have seen market P/Es expand gradually over the past four decades as bond yields have become less attractive and as tech companies demand a higher premium due to their scalability and exponential tech. Overall, we would be highly cautious on statements made regarding mid-double digit declines in the broader markets.  

For gold stocks, we like AEM, WPM, FNV.