Lukas Ekwueme
@ekwufinance • 56,023 subscribers
Geopolitics, macro & commodities. Newsletter coming soon ↓ https://t.co/fGvokQjNI5
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We were promised Venezuelan oil would flood the market... Where is it? We need to refill the SPR.
Lukas Ekwueme328,290 görüntüleme • 4 gün önce
This is a perfect illustration of how we perceive the Hormuz risk. Everyone is seeing the avalanche coming, yet everyone thinks that somehow it is under control... it isn’t. There is no plan. No alternative routes that can scale fast enough... Hormuz opened or closed is all that matters. The current avalanche is so big and dangerous that markets think this will resolve quickly due to the heavy economic costs... it won’t. One month in, we hear reports that this operation might take from a few weeks to six months, to years... the avalanche will hit much earlier Within a few weeks: - Taiwan runs out of LNG -> no AI - Fertilizer supplies are getting decimated -> no food - Japan, Europe, Australia run out of diesel The only thing keeping markets afloat is an unreasonably high amount of hopium... once it's gone, expect a violent rerating
Lukas Ekwueme675,606 görüntüleme • 7 ay önce
Jeffrey Currie: I can see $10,000 gold and $300 silver. The main driver is the debasement trade. The war has fooled us into believing that inflation is bearish for gold and silver because of the fear of higher interest rates. But Bessent's/Warsh's actions proved what I have been saying for quite some time... The US can't afford higher rates. In fact, they need to suppress them.... and they already are Deeply negative real rates are incredibly bullish for precious metals. The last time rates were deeply negative was 2021-2022... gold exploded 3x afterwards Before that was during the inflationary 1970s: - Gold: ~24x - Silver: ~29x Wars are inherently inflationary, and inflation benefits hard assets like gold and silver. US money supply is rising at the fastest pace since Covid... and we all know what happened to inflation after that. Currencies will continue to debase against gold and silver, pushing precious metals higher. As gold rises, central banks holding large gold reserves become more credible, while those with relatively small reserves are increasingly forced to buy more. Silver has an additional structural tailwind: solar demand. - 2016: 81.6 moz - 2024: 198 moz - 2030: 321-450 moz By 2030, more than 50% of global silver mine production could be used by the solar industry alone. And those projections were made before the Iran war. With energy security becoming an even bigger priority, solar deployment could exceed current forecasts. Like Jeffrey Currie, I'm extremely bullish on both gold and silver.
Lukas Ekwueme195,557 görüntüleme • 2 ay önce
Rick Rule: There is nothing we can do to prevent copper prices to rise over the next five years. - The industry needs to invest ~$250B just to maintain current production. - Current production is already failing to meet demand. - The industry is investing only ~$150B. In other words, the copper industry isn't even investing enough to maintain today's supply... while demand continues to grow 2–3% annually. It's projected that by 2040: - the world needs an additional 14Mt of annual copper supply - ~50% more than today’s output - projected deficits alone approach ~10Mt To put that into perspective: - Humanity has mined ~700 Mt of copper in total history - Over the next 14 years, we must mine ~525Mt more - That's equivalent of adding 10 of the world biggest copper mine Higher copper prices are a mathematical certainty
Lukas Ekwueme89,103 görüntüleme • 29 gün önce
China is trying to pop the US AI bubble. Xi just announced China will provide 30 countries with 5,000 AI training and seminar opportunities while building international AI application cooperation centers. China and the US have a different definition of "winning" the AI race. The US strategy: Spend trillions building and controlling the AI infrastructure the world will depend on through a proprietary ecosystem. China is taking the opposite approach: Build cheaper open-source models with similar performance and encourage the world to build on top of them. The bet is simple: The winner of AI will not necessarily be whoever owns the infrastructure. .... It will be whoever builds the best companies on top of it. Just like in the post-dot-com era... The biggest winners were companies like Amazon, Google, and Microsoft that built businesses on top of open infrastructure.
Lukas Ekwueme197,614 görüntüleme • 2 ay önce
Rick Rule: We’re in a bull market - don’t waste it. - In the 1970s, the gold price fell 3 times by 30% or more - 1971-1975: Gold increased 6x, from $35 to $200 - In 1975, gold fell from $200 to $100 Everyone shaken out at $100 missed the move to $850 by 1980 “You have to prepare yourself financially and psychologically for 20-50% pullbacks.” “You need to know your portfolio well enough that you have the conviction where price declines are opportunities instead of risks. The converse of that, is that when you see price spike up, you need to harvest gains.” “You have not made the money until you have taken the money.”
Lukas Ekwueme597,621 görüntüleme • 8 ay önce
Australia is preparing a fuel rationing scheme - 90% of Australia’s fuel comes from Asia, which gets it from the Middle East - 42 stations have no fuel at all - 107 have run out of diesel Meanwhile, the war is escalating... this is quickly getting out of control.
Lukas Ekwueme399,827 görüntüleme • 7 ay önce
Warsh wants to be seen as a hawk... So did Powell. Before becoming Fed Chair he wanted to shrink the balance sheet. - Inherited: ~$4.5T - Target: ~$2.5-3T - Reality: ~$9T When push came to shove, he did whatever it took to stabilize the bond market. Warsh talks tough on inflation today. The hard part isn't talking tough... it's keeping interest rates higher for longer with ~$40T of debt. Just like Powell, he'll do what he has to do... And that means cutting interest rates long before inflation is truly under control. We don't own enough gold for what's coming
Lukas Ekwueme11,562 görüntüleme • 5 gün önce
Rick Rule: On why he sold 80% of his physical silver. - He bought silver because it was hated - Now that it is no longer hated, he sold it When the reason for owning an asset goes away, the asset has to go away. - He sold physical silver to buy silver mining stocks - Silver miners are discounting $40 silver In other words, even if silver corrects, miners should outperform. Silver miners are, at this point, a superior speculation.
Lukas Ekwueme334,370 görüntüleme • 9 ay önce
This is still the perfect illustration of how we perceive the Hormuz risk. Everyone sees the avalanche coming, yet everyone thinks that somehow it's under control... it isn't. People believe the economic cost is too high for this conflict to continue... yet here we are 7 months later, with no progress being made. There is no plan. No alternative routes that can scale fast enough... Hormuz open or closed is all that matters. For all parties involved, this is existential... so don't expect a quick resolution. And it's not just about oil. - Fertilizer - Sulfur - LNG The building blocks of our modern society all flow through this narrow choke point. The only thing keeping markets afloat is an unreasonably high amount of hopium... once it's gone, expect a violent rerating.
Lukas Ekwueme41,902 görüntüleme • 29 gün önce
Prominent US monetary economist Charles Calomiris warned in 2023 that the US fiscal path was already unsustainable. He said that surging debt and deficits would eventually lead to investors becoming unwilling to finance this madness, forcing the Fed to step in and print the difference. “There is no interest rate where we could sustain these deficits going forward.” Fast forward to today, and the whole situation has gotten way worse. Debt is approaching $40T, deficits are running around $2T, interest expenses are exploding and foreign demand for USTs is weakening. Trump said it best: “Inflation can pay down debt very rapidly.” He is right... The US has reached a point where inflation isn't just the problem anymore. Inflation is becoming the cure to overindebtedness. You either allow inflation to erode the real value of the debt, or you fight inflation with higher rates and make the fiscal situation even worse. We don't own enough hard assets for what's coming.
Lukas Ekwueme30,788 görüntüleme • 21 gün önce
This is still the perfect illustration of how we perceive the Hormuz risk. Everyone is seeing the avalanche coming, yet everyone thinks that somehow it is under control... it isn't. There is no plan. No alternative routes that can scale fast enough... Hormuz open or closed is all that matters. For all parties involved, this is existential... so don't expect a quick resolution. So far, IEA releases and China's oil demand reduction have bought us time... but that is reversing. - China's oil imports are rebounding sharply - IEA releases run out within weeks And it's not just about oil. - Fertilizer - Sulfur - LNG The building blocks of our modern society all flow through this narrow choke point. The only thing keeping markets afloat is an unreasonably high amount of hopium... once it's gone, expect a violent rerating.
Lukas Ekwueme101,107 görüntüleme • 3 ay önce
Eric Sprott: There will be a shortage of gold. - China imported 163t of gold in May. - We mine ~3,600 and recycle ~1,400t annually. Annualized, China's May imports alone amount to roughly 2,000t... That's ~40% of annual global mine + recycled supply. And that's before considering that China produces another 400-500t annually, virtually none of which leaves the country. China isn't just buying gold...it's building a financial system around it With the introduction of interest-bearing gold accounts, accessible through online banking and paying roughly 1% in gold, China is beginning to eliminate one of gold's biggest historical disadvantages: "Gold pays no interest." At the same time, China is gradually opening international trade through gold. Trade can be settled in yuan, while surplus balances can ultimately be converted into physical gold. China is even building gold vaults abroad, allowing bullion to be stored in friendly jurisdictions rather than Western financial centers. So is basically saying use our currency and if you don't trust us change it to gold and store it locally In a world where trust is declining, China is using gold's 5,000-year monetary history to gradually increase the international role of the yuan.
Lukas Ekwueme95,875 görüntüleme • 3 ay önce
Rick Rule: This energy crisis will be widely bullish for uranium in the long run The Japanese nuclear fleet, the 2nd largest in the world, was constructed as a result of the painful experience of the Arab oil embargo in 1973. Currently, they run 15 of their 41 reactors, expect the reactivation schedule to increase. The current energy crisis will have a similar effect, as uranium’s extremely high energy density allows countries to store years’ worth of energy supply with relative ease - making it the best strategic energy source - Japan runs 15 of their 41 reactors – expect increased reactivations - Uranium is already in deficit - Available supplies at cheap prices are quickly running out - The pace of new plant construction will be red hot Uranium is the winner of the current energy crisis
Lukas Ekwueme141,617 görüntüleme • 6 ay önce
Rick Rule: Gold is stupidly underowned. Today, almost nobody owns gold. - Rick Rule: ~0.5% of US financial assets are in gold. - Goldman Sachs: ~0.18%. Goldman estimates that every additional 0.01% allocation to gold would increase its price by roughly 1.4%. For perspective, the 40-year average allocation is roughly 4%. Historically, gold performs best when purchasing power is being destroyed. Meanwhile, inflationary pressures continue to build: - US M2 money supply is growing at the fastest pace in 5 years. - The war in Iran is escalating. - Governments around the world run massive deficits. - Debt across the developed world continues to grow. Yet gold remains one of the most underowned assets in the world. Gold isn't something you buy because you're certain a crisis will happen tomorrow. Gold is insurance... And you buy insurance before there's an accident.
Lukas Ekwueme72,039 görüntüleme • 3 ay önce
Rick Rule: Gold will do well over the long term, but expect short-term volatility. In the short term, as a consequence of the Iran war: - Countries have to sell gold to fund domestic needs - Higher interest rates make the USD more attractive vs gold In the long term: - The US can't afford high rates - Debt-to-GDP is too high - Deficits are surging Which will result in massive money printing and a severe loss of purchasing power for the USD in the coming years, reminiscent of the 70s, which will be bullish for gold and other hard assets. Short term pain, long term gain
Lukas Ekwueme97,429 görüntüleme • 4 ay önce
Robert Friedland: If you think we have enough copper you’re dreaming - In human history, we have mined ~700 Mt of copper - In the next 18 yrs, we need to mine the same amount as in the last 10k yrs - And that’s without factoring in renewables, data centers or wars We have all these fancy ideas: renewables, data centers, and EVs… just electrify everything and assume copper will be available. The reality? We haven’t invested in copper for >10 years, meanwhile it is getting harder and harder to find and mine copper. - Since 1900, energy required to produce copper is up 16x - Water consumption is up 2x - Mines are deeper and smaller - Grades are declining We now need more resources to produce the same amount of copper. - 6 Tier-1 copper mines must come online every year for the next 24 yrs - The last major copper mine came online in 2021 - Major copper discoveries are down ~80% over the past 2 decades That’s a long way of saying copper prices must rise to incentivize new production.
Lukas Ekwueme106,030 görüntüleme • 5 ay önce
Rick Rule: We’re in a bull market - don’t waste it. Nothing goes up in a straight line - volatility is part of the game - In the 1970s, the gold price fell 3 times by 30% or more - 1971-1975: Gold increased 6x, from $35 to $200 - In 1975, gold fell from $200 to $100 Everyone shaken out at $100 missed the move to $850 by 1980 “You have to prepare yourself financially and psychologically for 20-50% pullbacks.” “You need to know your portfolio well enough that you have the conviction where price declines are opportunities instead of risks. The converse of that, is that when you see price spike up, you need to harvest gains.” “You have not made the money until you have taken the money.” A timely reminder
Lukas Ekwueme129,460 görüntüleme • 7 ay önce
Rick Rule: Oil surged in anticipation of a shortage...By 2029, we will experience a structural shortage. - The oil industry is underinvesting by ~$1B/day - The only supply growth, US shale, is peaking - Damaged oil infrastructure will take time to repair This will impact future oil production. Meanwhile: - Oil demand is growing by ~1mbpd annually - SPRs and inventories have to be refilled In other words, we have a perfect storm of lower future supply and higher future demand. This will set the stage for a prolonged oil bull market.
Lukas Ekwueme57,412 görüntüleme • 3 ay önce