Lukas Ekwueme
@ekwufinance • 37,890 subscribers
Geopolitics, macro & commodities. Newsletter coming soon ↓ https://t.co/fGvokQjNI5
Shorts
Videos
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 history tells a different story... 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. Do you think we're entering another 1970s-style precious metals bull market?
Lukas Ekwueme57,302 görüntüleme • 2 gün 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 Ekwueme94,995 görüntüleme • 9 gün önce
Rick Rule: The gold bull market is far from over. He thinks we are in the last third of a very long bull market that started in 2000. Historically, the last third of a bull market is the most exciting one, as that's where most gains are made. Let's take the 1970s as an example. Gold rose: - 1972-74: $35 -> $200 - 1974-75: $200 -> $100 - 1975-1980: $100 -> $850 The last move was the most explosive one. But those who weren't mentally prepared for a 50% pullback missed the most parabolic move of the entire cycle.
Lukas Ekwueme40,482 görüntüleme • 5 gün önce
Rick Rule: Politically, the Fed will ultimately have to lower interest rates. We have entered an inflationary era similar to the 70s, but the fiscal situation is vastly different. - Debt/GDP: ~30% then vs ~123% now - Interest expense: ~$50B then vs ~$1.2T now - Deficits: ~1–4% then vs ~6% now In fact, the government now pays more in annual interest expenses than the entire US debt was in the late 70s. But it’s not just the government that can’t afford higher rates. Markets will feel it too: - Private credit - Consumer durables - Real estate All are heavily impacted by higher interest rates. Sooner rather than later, political pressure will force the Fed to lower rates. Volcker was able to hike aggressively because debt/GDP had been inflated away after WW2. Today, debt/GDP is above WW2-era levels, which is why the US can’t fight inflation the same way it did in the early 80s. First you inflate the debt away to a more manageable level... Then you raise rates to kill inflation. Not the other way around.
Lukas Ekwueme54,131 görüntüleme • 7 gün 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 Ekwueme57,031 görüntüleme • 8 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 • 3 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 If you enjoyed this post, follow me for more.
Lukas Ekwueme41,640 görüntüleme • 10 gün önce
Jeffrey Currie: It's time to be long gold - Oil is below pre-war levels. - Sep rate hike expectations plunged from 100% to 55%. - The Current Economic Conditions Index is at a 70-year low. The No. 1 driver of gold is the end of a business cycle, when there are signs of an economic slowdown. - Aug 1999: Gold hits its low of ~$250. - Mar 2000: S&P peaks. - Jan 2001: Fed starts cutting rates. - Oct 2002: S&P down ~49%. - 1999-2011: Gold rallies ~650%. Gold bottomed as signs of economic weakness were beginning to emerge and accelerated higher as they became reality.
Lukas Ekwueme44,949 görüntüleme • 11 gün 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 • 5 ay önce
Rick Rule: In a secular bull market, cyclical declines and volatility are normal. From 1971-74: - Gold rose from $35 to $200. - Inflation increased from 3.3% to 12%. To put an end to the inflationary cycle, Burns raised rates from 3.3% in 1972 to 13% in 1974.... Inflation declined and so did gold, falling 50% to $100. But it wasn't just inflation that came down. The entire economy rolled over: - Unemployment: ~9% - S&P 500: -50% - Housing: -50% By 1975, Burns could no longer withstand the political pressure and cut rates from 13% to ~6%. That set the stage for the next inflationary wave and the resumption of the gold bull market. Over the next five years, gold surged from $100 to $850 and those who lost faith in gold missed the greatest move in its history. - Back then, debt-to-GDP was ~30%. - Today it's around 120%. Even if we get a rate hike, sooner rather than later the pain associated with higher rates will become worse than inflation. This gold bull market isn't over yet.
Lukas Ekwueme43,516 görüntüleme • 12 gün 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 Ekwueme399,692 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 Ekwueme96,880 görüntüleme • 1 ay 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 Ekwueme334,057 görüntüleme • 5 ay önce
Rick Rule: Very soon we will see oil shortages. Rich countries will outbid poor countries... the rich will pay higher prices, the poor will have to deal with shortages. But this doesn't mean rich countries won't face problems. - Higher oil prices are a tax, driving liquidity out of markets - Combine that with higher interest rates and you get a recipe for disaster In this kind of market environment, having excess liquidity lets you sleep at night and gives you the opportunity to take advantage of a market correction.
Lukas Ekwueme69,655 görüntüleme • 1 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 Ekwueme104,697 görüntüleme • 2 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 Ekwueme141,144 görüntüleme • 3 ay önce
Rick Rule: The world has systematically underinvested in oil. - The oil industry is underinvesting in sustaining capital by >$1B/day - This underinvestment will reduce future oil production Oil is a cyclical industry, and a sustained period of underinvestment will lead to lower production in the future... we are still in the underinvestment period despite high prices. In addition to the massive underinvestment: - The industry has to fix oil infrastructure impacted by the Iran war - The world will have to refill their SPRs - Countries will expand their SPRs Hormuz or no Hormuz, the supply/demand picture for oil is favorable over the long term.
Lukas Ekwueme42,413 görüntüleme • 1 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 Ekwueme128,856 görüntüleme • 3 ay önce