In a recent ION Influencers Fireside Chats, Saurabh Rathi, Chief Investment Officer of single-family office Carbon Graphite, delivered a sobering analysis of the global macro landscape and its imminent impact on private capital. Moving from a deep-seated skepticism to a staunch advocacy for precious metals, Rathi outlined a strategy of extreme caution, predicting a historic reckoning for overvalued private markets.

Here are the critical topics and urgent warnings from his must-listen interview.

1. A Macroeconomic “Wake-Up Call”: The End of Dollar Dominance

Rathi, a self-proclaimed former US dollar bull, revealed a profound shift in his worldview triggered by the Russia-Ukraine war. The swift freezing of Russian assets by the US and Switzerland served as a “wake-up call” on the weaponization of the dollar system. His conclusion: “The loser of this war is going to be the US dollar.”
This geopolitical shift, combined with the “mind-boggling” $40 trillion US debt pile, forms the core of his macro thesis. He argues the market is already signaling distress, with long-term bond yields refusing to fall despite anticipated Fed cuts, indicating investors demand higher premiums to fund US debt.

2. The Private Market “Steroid” Injection is Ending

Rathi presented a devastating critique of the private equity and private credit boom, labeling the massive capital inflow as a “shot of steroids” that has artificially inflated asset prices for a decade.

• Alarming Statistics: He highlighted that $6 trillion has been deployed in private markets in the last five years alone, and over $12 trillion in the last decade.

• The Liquidity Crisis: He contends this steroid is now wearing off. Traditional sources of liquidity (institutions, family offices) are drying up, forcing giant firms like KKR and Apollo to tap into 401(k) retirement funds to keep the “music playing.”

• A Dire Warning: He issued a blunt caution to retail investors: “Please don’t use your retirement money for that… don’t lock up for five, ten years into these kind of funds.”

3. Predicting a “Tsunami” of Secondary Sales and a Scam of “Continuation Funds”

The most dramatic prediction was a looming liquidity crisis for institutional investors over-allocated to private capital.

• “Everybody is a Seller”: Rathi shared an anecdote of a New York-based family office desperately trying to offload private equity stakes, stating, “everybody is a seller.”

• A Fire Sale is Coming: He forecasts a “tsunami of secondary sales” by the end of 2024, with investors forced to exit at “20, 30, 40, 50 percent discounts” to stated net asset values (NAVs).

• Continuation Funds are a “Scam”: In a fiery critique, he lambasted continuation funds—where GPs move assets from one fund to another—as a deceptive tactic to hide poor performance, calling them a “scam” that changes the rules of the game for LPs.

4. The Precious Metals Pivot: From Skeptic to Advocate

This macro outlook has radically changed Rathi’s portfolio construction. Once opposed to precious metals, he is now a significant accumulator of gold and silver.

• The “Least Crowded Trade”: His initial thesis was simple: it was the least crowded trade with virtually no US hedge fund or retail participation.

• A Currency Play, Not a Commodity Play: He frames it not as buying gold, but as “selling dollar.” He points to massive central bank buying from China and India as validation of this de-dollarization trend.

• A Key Portfolio Hedge: For family offices and investors today, his advice is to “sit on cash” and increase allocation to precious metals as a hedge against systemic risk.

5. A Talent Crisis: A Generation Unprepared for a Real Crash

Rathi ended with a worrying observation on market talent. He noted that anyone under forty years old has never experienced a true, prolonged market crisis like 2008.

• The ETF Effect: The proliferation of ETFs has, in his view, dulled active management skills.

• A “Rude Shock” Ahead: A generation of investors and managers who have only known “buying the dip” is in for a “very rude shock” when the market falls 30% and doesn’t immediately bounce back. This lack of experienced stewardship could exacerbate the coming downturn.

Key timestamps:

00:07 Introduction to the Fireside Chats
02:37 Managing Different Types of Capital
05:18 The Impact of Macroeconomic Trends
07:00 Investment Strategies in Precious Metals
10:03 Reviewing Investment Outlooks
14:14 The State of Private Capital Investments
17:00 Challenges Facing Institutional Investors
18:23 The Future of Secondary Markets
19:06 Changing the Rules of the Game
19:53 Options for Family Offices
20:34 Waiting for Opportunities
21:27 Investment Strategies in Turbulent Times
22:22 Challenges in Finding Talent
22:57 Historical Context of Market Crises
23:47 The Illusion of Easy Money