Delays in underground mining as well as some deferred open-pit metal production have caused an increase in estimated incremental funding requirement to $3.6 billion from the $2.4 billion expected in July. mining.com/turquoise-hill…
“Total costs for the move underground is now approaching $8 billion, up from the Rio’s original budget of $5.3 billion set in 2016.”
I promise you many #uranium projects are gonna do this as well but be much more extreme. By the time many of our beloved little uranium companies actually update feasibility studies and update costs 2-3 more times along the road to production we will see capex 2-3x
There is simply no fucking way capex estimates developed prior to 2020 will hold up even close. I think best plan for 2x at least this cycle. Every single input is going to be up dramatically plus time delays.
That’s why I often go big into companies like $lot that have historical production and infrastructure and the ability to ramp up to 3mln lbs per year. With out a huge spend. I’m not a geologist or mining engineer but I’ve made shit loads in mining
It’s cause I was raised to be skeptical and barely believe what any promoters tell me. Or even early estimates by trusted experts. I did well by timing the cycle and often buying someone’s fuck up / blow up from the last cycle at pennies on the dollar
Projects with historical spends of $1bln+ trading at $100mm or less. Buying infrastructure at pennies on the dollar and being able to look back at the historical opex cost is something I’ve often put my faith in.
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Thread on #AI #bubble and my thoughts on how things will play out and the parallels to other bubbles like #y2k / dotcom / #internet bubble.
Back in the late 90’s I was working in tech with my main focus on upgrading firms to Microsoft desktops and servers Helping them go fully digital and for some it was the first time they got email address and websites. It was the exciting dawn of the Internet age. I learned a lot and eventually what I learned caused me to flip careers and go into investing/trading and I never looked back.
From the very early on it was crystal clear that the Internet was going to explode in popularity and everyone would be using it for business and personal needs. It was a massive wave to ride and leading up to y2k it was a crazy gravy train for anyone working in the field
All tech stocks at that time exploded higher and higher creating the historic bubble we now look back on and everyone gets what happened in hindsight but some actually saw it forming and correctly invested in it going up and shorted it going down. The question is what did those people see that others didn’t at the time ?
Ya know what is pretty funny… some people actual think they can trust what governments say.
As if #China is gonna announce that they are working towards selling all their USD bonds and tbills cause they finally realize the USA economy is a debt financed Ponzi scheme and the Federal reserve is 100% destined to print trillions upon trillions of dollars over the coming years!
As if we should expect foreign holders of USD reserves to announce that they are going to be seeking to exit foreign currency holdings while avoiding trade imbalances and settling up and imbalances with precious metal reserves.
But the signs are all there…. The trend is there
But most importantly if you use your brain and analyze the situation the path forward becomes clear.
Theirs been a 99% loss in purchasing power of the USD over the past 100 years and we should if anything expect the next 100 years to be worse. Why? Because the gold reserves have been encumbered and the silver reserves mostly sold off. Likely all reserves have been lent out and sold into the market. ‘Deep storage’, SDR’s, promises to foreign govs that their gold is available. The preponderance of evidence is that these governments all lie, obfuscate and cheat.
In the mid 2000’s I went to Bejing and met with the then head of CITIC Bank.
I questioned why they thought it was a good idea to be producing so many goods, and then load them on boats and send them to the USA in exchange for money that was being created out of thin air?
After lengthy exchanges on the subject along with some laughs it became clear to me that there was a few reasons for the accumulation.
1. USD was the global reserve currency and they had a goal of owning more US treasuries than Japan in part for the message it would send to the rest of the world, also to just have more than Japan for their collective egos but also to be able to have influence over the USA. (I saw this is the power from having the ability to threaten to dump the treasuries and mess with the Dollar and the USA economy, clearly a position of power)
2. They also made it clear that for the time being it served there purpose and it cleared did from a strategic point of view as some people (self included saw the long game). Nearly every single business was opening manufacturing facilities and the transfer of knowledge and economies of scale was modernizing China at an extremely rapid rate. And as many predicted China became excellent at copying but also has evolved to innovate well. Just like Japan and Korea did.
Even back then they were ramping up there domestic car industry with knock offs.
Now they are able to make phones better than Apple. They are no longer dependent at all. But Apple and others are dependent on them.
#silver and #gold are running because the entire world knows that the USA is not going to get its deficit spending under control and even Yellen is now saying clearly that higher interest rates make it more difficult to pay down the debt. The goverment needs interest rates lowered and money debts monitized
They’ve been acknowledging this for sometime. Here’s what she said last October…
The Treasury on Friday reported a $1.7 trillion federal budget deficit for fiscal 2023, the largest outside the COVID-19 pandemic years as revenues fell and outlays for Social Security, Medicare and interest costs rose sharply.
Yellen said that the U.S. debt servicing burden would be a "bigger challenge if the interest rate path stays higher."
Fact is interest payments on the debt are becoming the nations largest expense.
As the economy slows (which it is) the deficit will explode. $2t plus. When we get a real hard recession (which we will) it will explode to $4t plus.
Even just to stay the course $1.7T of freshly printed money is hot money that is going to keep driving commodity inflation
Another thing I will touch on in the near future is the developing thoughts around assembly theory and evolution.
Darwin’s natural selection with random mutations missed the mark. It doesn’t take enough account for intentional evolution nature.com/articles/s4158…
Turns out, Lamarckism who theorized a more complex intention related evolution (before Darwin) will likely be proven to be more correct.
Interestingly this relates to #epigenetics and the theory is also applicable to the #economj and the #markets and I’ll outline this in my upcoming book.
I think this also relates to market forces and economic theory. Free markets are not the pure survival of the fittest efficient creation systems for the best economies. They are often corrupted as short term desires are outbalanced and prioritized ahead of better longer term solutions.
As I watch #gold and #silver stocks threatening to break out to new highs for this move, I’m also writing away on my #investment #book.
Here’s a little tidbit I was noodling on today….
The average #investor is out to lunch on what’s coming down the pipe as far as fiat currencies vs precious metals.
In the USA especially most people are completely oblivious to how spoiled they’ve become with their global reserve currency status.
They spend money like spoiled brats. Creating money at will. Zero fiscal discipline. Nearly no one willing to pay more taxes but most everyone bitter about the taxes they pay and the quality of services they receive. No context to the ‘greatest generation’ and how hard they had to work, the huge taxes they paid to lift the nation out of the Great Depression and build much of the glorious infrastructure across North America
In the background it seems to me like the major commodity produces and even manufacturers of the world are gearing up to move off using the US dollar as a reserve.
The inflation will be rampant when the world stops funding the USA trade deficit.
I see the USA increasingly getting cut out of trade relationships as China, India, Brazil, Japan focus on sending finish goods / manufactured products to emerging markets in exchange for getting raw materials shipped back.
The more inflation comes to the USA the more undesirable it will be to hold USA bonds. Selling of USA bonds will push rates up and hurt the leveraged consumer and the economy.
This will create larger deficits and also hurt profits and lower tax revenue of all types. Deficits cycle up. Creating the need for more printing. Which will cause more foreign central banks to want to exit treasuries or at least not accumulate more.
This is why the Fed is in a box now. Rate increases will increase budget deficits as they will slow the economy and increase the interest burden.
Growing deficits as far as the eye can see will just keep increasing bond investor unease and cycle up inflation. The more the Fed is forced to monetize to try to keep rates down the more the USA will be exposed as having a ponzi economy.
The more inflation / holding rates higher will hurt profits and slow growth. All combined to make investors demand lower P/E ratios. Capital gains profit turn to capital losses and goverment revenues fall cycling things all to the worse. A negative fly wheel effect on the economy and the USA dollar.
Meanwhile, China and India will continue ramping up their domestic economy. Their trade with emerging markets will result in economic growth outside the USA and global competition for raw material will just keep increasing as everyone is looking to build out electrical grid for EV’a and AI.
The more USA gets cut out of the trade flow the worse it will get for the USA consumer and the economy
The saying used to be “when the USA catches a cold the rest of the world get sick”. Not so much anymore…
China and Japan used to really support the US trade deficit and help finance the USA consumer to keep their own manufacturing and exports strong. Recessions in the USA really hurt thier economies 20 years ago.
But now exports are not nearly as important to China.
In 2004 trade was ~60% of China’s gdp.
In 2024 it will be around 34-35%.
Over those 20 years USA has gone from 20% of chinas trade to 15%
That equates to ~12% of China’s economy then o ~3.4% of China’s economy now.
72% drop in the USA significance/influence on Chinas economy. When a huge drop in trade due to a USA recession might only have a 1% effect on Chinas gdp now and can easily be made up with China engaging in its own domestic spending stimulus.
The result is, China is no longer very reliant at all on usa’s economy. But the USA is perhaps even more so dependent on China now for many imports like rare earths and many finished goods/parts for manufacturing in the USA.
Bottom line here is what we are seeing right now in the global financial markets is looking like the start of a soon to be rapid exodus from USA focused trade and US dollar denominated transactions.
Foreign central banks see the writing on the wall.. the USA will not be getting its financial house in order. They debts accumulated will not be paid back with taxes, hard work and the production of goods and services required to under pin value in the USA dollar.
Instead it’s another story of broken promises and lost faith in the USA and its currency. At the end of the roaring 20’s bubble market the USA broke its promise to its own citizens by ended the convertibility of its currency to gold and they confiscated gold and devalued the currency vs gold.
At the start of the 70’s they broke the promise to foreign central banks to ending their ability to convert their US dollar holdings to gold. Both of these times they did so cause they were forced to. It become understood that they didn’t have the gold reserves to meet obligations. So they defaulted.
In the 70’s gold went from $35 to over $800. ~25x. Before it settled back in for a couple decades before the run of the 2000’s to now where excessive deficits and money creation have seen it rise nearly 10x from mid $200’s in to well into the $2000’s of late.
But we are reaching another inflection point where a major default in about to be recognized.