Some thoughts on the current markets below. There are once in a generation (or even once in a lifetime) opportunities right now.
1. There was not enough "stuff" today before Ukraine and Russian sanctions with most commodities in major deficits
2. There is even less "stuff" in the future due to a decade of underinvestment in new capacity and exploration and a demand shock from the Green Energy Revolution
2. There is even less "stuff" in the future due to a decade of underinvestment in new capacity and exploration and a demand shock from the Green Energy Revolution
3. Russia is an autarky - they are self sufficient in energy, metals and food - and a major producer and exporter of many critical commodities
4. Russia is now and will be for years to come a pariah state - doing business there or trading with them will cripple your business
4. Russia is now and will be for years to come a pariah state - doing business there or trading with them will cripple your business
5. However... we should expect a lot of trade flows will be re-directed to China (probably)
6. This means less efficient and longer supply chains requiring more working capital of "stuff" in transit
7. This means bigger deficits, higher prices
6. This means less efficient and longer supply chains requiring more working capital of "stuff" in transit
7. This means bigger deficits, higher prices
8. Resource nationalism, hoarding, and securing supply chains will no longer be something that only the Chinese do - everyone needs to do this now to protect their own industries
9. This will drive commodity prices even higher
9. This will drive commodity prices even higher
10. Defence budgets will explode upwards - driving commodities heavily used in defence (#tungsten #Rhenium #molybedenum #titanium) to dizzying price levels
11. The median fund's allocation to commodities remains close to zero
12. Inflation is here, getting worse, not going away
13. Energy prices are going to sap household budgets, crater consumer spending, drive investment selling, and plunge the World into recession
12. Inflation is here, getting worse, not going away
13. Energy prices are going to sap household budgets, crater consumer spending, drive investment selling, and plunge the World into recession
14. Can the magic money tree keep printing money?No. Not with double digit inflation almost here already.
15. What if interest rates just normalise to 3% - 6% in order to fight inflation? A second household spending shock to go alongside energy prices as mortgage payments soar
15. What if interest rates just normalise to 3% - 6% in order to fight inflation? A second household spending shock to go alongside energy prices as mortgage payments soar
Conclusions:
1. STAGFLATION looks very, very likely
2. Commodities remain CHEAP with what is likely to happen.
3. Metal in the ground is the hedge against inflation.
I own only $MNO $AFM $TGA and $TUN giving me leverage to exploration, production and strategic metals.
1. STAGFLATION looks very, very likely
2. Commodities remain CHEAP with what is likely to happen.
3. Metal in the ground is the hedge against inflation.
I own only $MNO $AFM $TGA and $TUN giving me leverage to exploration, production and strategic metals.
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