Transcription
Jeffrey, how are you?
I'm doing well. Very well. But yeah, not as busy as I was a few weeks ago.
Um, a few weeks. Oh, because the the wars eased up. Is that what you mean?
Yep. But I don't think I think it's it's premature, but um, you know, people's focus on the space has has diminished somewhat. I want to I want to bring up a conversation I had with someone yesterday. Um let me get his name. He's got his own show and u you might know him as well and he me he echoed something you've been telling me for a while. Philip Pilings Pilkington and he was telling me about how Mario, you know, the price of oil is being manipulated. Um now a lot of people throw this word around whenever something doesn't make sense, doesn't fit what they believe the price should be. But he went deep. He started explaining how first it's been going on for many years but he started explaining Mario like just the basics supply demand it does not make sense and he was also telling me something really interesting um is that the price of oil of the barrels coming out of the straight to hummus are significantly higher than the price the spot price in the markets and he g he there was a way to calculate it he gave it a term as well and he said the price is about 105 110 even up to $115 $1 a barrel. Um, can you tell me more about this because the the just the price the future prices of WTI is just ridiculous.
I think part of it is what he's referring to is the the transportation cost to move a barrel out of there is very expensive. But you assume that the barrels that they're getting at are on steep discounts which then allows the the the cost of transportation. But I do, you know, one thing we do know, most of that's leaving is coming out of the northern part, which is all Iranian. Probably Chinese boats with Chinese flags, Chinese insurance, Chinese payment systems going directly into China, which is also everybody's waiting for China to come back and buy. My bet is a lot of that is China, but he's absolutely right. You try to deliver one of these into a western market, you can't. um and which means that you know most of this stuff is directed into the east primarily China. Um so I that's where I think he's probably getting that. his point about manipulation I think just goes to a broader point whether if it was Biden or whether if it was Trump and you know many presidents before this administration um the single most important variable in getting reelected is inflationary pressures and the biggest driver of inflation whether if it's right or wrong is oil prices and gasoline you know I sat on Wall Street for three decades and I can tell you break even inflation is traded against oil and gasoline um so the correlation is almost perfect. So if you keep oil prices down, you keep inflation down and you make the electorate happy. In fact, only 2% of US electorate even cares a tiny bit about what happens to the outcome of um what happens in Iran. He could give away the farm and nobody cares. Um, but I can tell you 46% of the US electric care where the price of gasoline is because they care about inflation. Um, and so you can call it manipulated, but you know, they they release barrels, they re, you know, from strategic reserves, um, you know, they free up taxation that would normally be there. Let go. The only thing that's been done in this deal so far is they've gotten rid of the sanctions. Why? Because they want to keep oil prices low. Um, and when we think about the drop in oil prices, you I've been doing this three decades. I've never seen a 100 million barrels thrown on a market immediately like what just happened. So this is unique but when we look at all the other measures you know like gasoline prices and diesel prices they still remain extraordinarily elevated u which means you know it could take time and we don't know if this stuff is going to even end up in western markets. What is it going to do and how is it going to lead to lower prices at the pump? There's still a lot of big question marks that need to be answered.
Um, when you said 150 million barrels thrown into the market, you talking about strategic petroleum reserves just being
No, I'm talking about the in the last three weeks the glut well you unleashed there was a bunch of barrels that were trapped behind this the straight. They all came out like that immediately. Um, so you know I'm sitting there thinking back in time I can't think of another time. Then also not only do you do let's say 100 to 150 million barrels coming out of the straight but you also took out two or 300 million barrels along length. We went from you know a very long market to being modestly short. So you've had a huge d you know selling of dumping physical and paper barrels on this market all of a sudden by the front end of this thing crash. But the markets that don't have, you know, deep liquid paper markets like gasoline and diesel are still at very elevated prices. Um, and I think that ultimately if you go, hey, why do they want to, you know, push on prices to the downside. You know, I, you know, manipulation is probably a strong word. I probably use, you know, um something along the lines of, you know, helping the fundamentals along because ultimately they're not trying to, you know, to manipulate it in a traditional sense. But hey, they're doing everything they can to fundamentally support lower oil prices. But the problem is they don't have any levers to pull to be able to get gasoline and diesel prices. There's no magic um you know, strategic reserve of gasoline or diesel, and that's what ultimately really matters here.
All right. So, let let me go back to the word manipulation. So, the guest I referenced that I spoke to yesterday. So, his argument is that algorithmic trading made it easier to manipulate the markets. So, what Trump did in the last few weeks worked so well. Him putting out those tweets saying that a peace deal is imminent. Negotiations are are ongoing. Things are going great. And the purpose of doing that was because of these algorithms, the trading algorithms. all these different funds will use that information to be able to dictate what to do next and all that positive information while we understand this is Trump you know being Trump and trying to manipulate the markets algorithms won't be as won't be able to spot that as easily that's the argument he was making
I mean there is some truth that but the trend is I mean you look at us the the trend the CTAs these guys are all jumping on it um you know I'm very close to many of these algorithmic traders um so yeah, the The one thing that they don't like is volatility. Well, this thing is not. There's no volatility in this. It's just a one-way. It's a one-way trip. Actually, you look at when the one-way trip started, it started basically once um she once Trump left China when he had his his meeting with Shei. Um and it's been pretty much a one-way street since then. So, you know, whe if you're a trend follower, an algorithmic, you're short this market. That's why the shorts are so so so great. But I I I see his point that hey, you want to put some information into the system, they read it. You know, the the agentic traders that are, you know, you know, AI driven, they'll read whatever headline out there to do it. Yeah, you could argue that that's happening. But I think, you know, to say that there's not a big surplus of oil in this market, there's huge surplus that's hitting the market right now. Does that tell you anything about tomorrow? No. U because we don't know if you're going to have a follow-through. I bet almost all that oil ends up in Asia, most likely China. Um, which then begs the question, you know, what what what's going to happen to US inventories, European inventories in other parts of the world because um, you know, it's not clear any of these ships are bound to the west. They're all going east. Um, so I I, you know, I think, you know, so is the market in a surplus right now, this minute? Absolutely. Yes. It goes to my point. You know, normally production comes out at a very slow rate. I've never seen somebody just flood the market like that of 100 million barrels immediately. And so it's not it's no wonder the gasoline price is up here and the oil crushes down like that. So I don't think there's any magic to this in terms of why the pricing has been is extreme. Um, you know, is it given a hand to fundamentals? Yeah. Um I I would argue there's some you know some of that going on but you I think manipulation is a relatively um strong word. um because you know it's just done manipulation implies something that's you know against the market. All they did was use their helping hand where they could get the the the you know any type of inventory or supply and push it into the market. But I don't think it does any I mean the bigger question is will the straight re normalize? Um will we get through this next um you know what we have what 30 some odd 8 days or something left of this um um I guess it's 41 42 days left of this current ceasefire. What happens when we get to the other end of this? Um particularly doesn't look like there's a lot of movement that has been made. Um and then the question is can you turn this stuff into products? By the way, if anything you ask me what is this market looking like? It looks like it's trading like we're out of refining capacity. Uh because the gasoline price is going up here, crude is going down and we push too much. And why would we be out of refining capacity? Look at what um Ukraine has done to Russia.
And Russia has huge supply lines. That's why that's why am I shocked everybody, oh this thing's over with. No, it's never was just about Iran. It's about Ukraine and Russia. Um, and you know at this point right now we know that the Ukrainians have pushed really deep into Russia and Russia responded last night with a crushing blow on Kiev. Um, so you know the and you know if the thing about it is the one thing all those US administrations know how to do is how to control oil prices. The one thing they do not have a clue on how to do is control gasoline and diesel prices. This is a different ballgame. Um, and you think about, you know, China, China's still not flooding the world with refined products. You know, are we just shifting this thing from a problem, you know, we have a crude problem into a gasoline problem? And I think the these are serious questions that need to be asked because if you ask me, if I was an alien who came down on this planet Earth and I looked at this market, I'm going go, "Ha, you're out of refining capacity." Um, you're out of refining capacity. That's a lot worse than being out of crude. There's no magic pill to solve that problem. And what Ukrainians will probably go in there and blow up some more Russian refineries and over overnight. So, um I think this is a pretty serious issue.
Um I want to go back to the first thing you said about 150 million barrels flooding the market. Where'd you get that figure from? Where are those ships going? Either because through the straight of Hermuz, the number is still significantly lower than what it was pre-war. So why is that number so significant? Is it just despite it being less than pre-war?
Oh, because you dumped it. There was you you goose you had ships. This was going on before the remember they had their the the whatever that project was that they were doing. Yeah.
Yeah. I think that's what it was. So, they were doing it before the before the announcement of the the theou. But you put it together. I think actually, you know, I'm putting an extra 50 in there more recently, but I say it's like 80 to 100 is what most people would would say. Um, because you think about if you know they were pushing them out. So you were back to your normal flow. So of that 130 million barrel or 130 ships a day that were going through there before only somewhere around 40 of them were actually big oil tankers. Um, and you were getting up to 43 a day uh that time period. So you were getting the full 20 million barrels out for a week or so. But it was again stuff that was already loaded just sitting there waiting to leave. That's why I like to call it like a pimple being popped. um because it was just sitting there ready to go and you pushed it out and it it does you know they were very aware of what was going against. This is that point where you want to call it manipulation or whatever it want be is unleashing that trapped oil was going to be negative on oil prices. But the question is can it be negative to gasoline prices if we don't have refining capacity and all of those those marginal barrels that are leaving are making their way into the Asian market. Look, sorry if this sounds the question sounds too simple, but if you look at the amount of oil that did not go out of the straight of Hob um because of the war, you know, it's in the hundreds of millions of barrels. So why is it that 12und 120 million barrels? I understand it's a lot in the market all of a sudden, but it's very short-term thinking. Do you know what I mean? Like I'm thinking in the grand scheme of things that 120 million barrels, if you look at it over a one two day period, it's a lot. But if you look at it over what happened in the last four months,
it doesn't seem that significant.
That's the point. It's immaterial. It's a lot today, but it says nothing about tomorrow. We've done nothing to solve the the bigger problem.
Okay. So my simple question is a valid question.
Valid question. Very valid question. And I think it's it's spot on because ultimately, you know, let's say you've dumped, you know, globally, you know, it should be somewhere around, you know, a billion barrels that was lost. I think some estimates put around 1.2 to 1.3. You know, it's it doesn't really do anything in terms of recovering how much has already been lost on a global basis. And by the way, most of that loss is taking place in places like Asia, which is part of the reason why most of it's heading that direction. But you're absolutely 100% right. This is this is the point I'm saying. we've done nothing to solve the longerterm problem because ultimately, you know, you still don't, you know, I think the numbers yesterday whereas we got four big ships going into into the straight.
Um, you know, let's say they were all VLCC, that's 8 million barrels. That's not that's not solving the the the the bigger problem. We still, you know, we're not we're not bringing enough of them in there to get a full resumption back to normal yet.
All right. So, that that's goes to my next question. Um, the US needs to refill the strategic reserves it used up in the last few months. But if all that oil is heading to Asia, the limited oil that's coming out, which is less what what it was before the war, doesn't that mean there's an issue in the US when it comes to filling up the strategic reserves, plus if the strategic reserves are empty in the next 3 weeks? So, one of my guests was really worried. He's like, Mario, even with the low oil prices, all the oil coming out of the Persian Gulf is all going to Asia. And if the US runs out, as Trump said, let's say it's take it lasts longer, runs out by the end of this month, then what happens? Is that a concern? And I think one of the key points here is that oil in the US and Europe prices off commercial inventories. Part of the reason they didn't get explosive is that most of the draw down occurred in strategic reserves and the stuff that's measured by satellites that's floating. Um, and as a result um if you start to refill those strategic reserves with the commercial inventories that are on shore that means those other ones are going to go down. As the you know before it was the SPR was going down and preventing those from going down. Now the SPR goes up those go down and so that's going to put more upward pressure on prices. That's why I'm comfortable saying we're in a low point in oil right here. Um, but again, if you don't have refining capacity, oil is just a transfer price. It's it's a meaningless transfer price. Um, and so I that's why, you know, everybody's focused, oh, I think the economists had their big headline, we was wrong on oil. I think it's a little premature here. You know, yeah, you may have been wrong on crude oil. I was wrong on crude oil. I've never seen cracks like this. But my question is, how are you going to turn this stuff into gasoline? We're talking about being wrong wrong on crude oil. It's a bit too early to to say that you're talking about how there's no agreement. Not only is there no agreement in in terms of a deal after the MOU expires, but there are disagreements that are going on. Just yesterday, about 10 hours ago or so, so last night my time, um there was an offer made by the US by the Americans. Don't control the straight of homes for the Iranians. We'll unfreeze $6 billion. Obviously, the deal was rejected, but um from what you're seeing, there was another report by the Europeans saying that they're starting to accept a new reality where Iran will charge a fee. And what they're discussing now is not whether Iran will charge a fee. They're just asking Iran to please charge everyone equally. China, Russia, US treat us all the same. That's according to a Bloomberg report, Wall Street Journal, I think Bloomberg yesterday. and an Axio report two days ago um was making the point that was explaining America's position in all this and it was essentially saying the US is trying to offer Iran enough incentives to not control the state of home or something along the lines of hey you'll make a lot more money if we unfreeze the assets but if we lift the sanctions as well you'll make a lot more money 100 times more money then you're acting like a gangster and charging a fee at the shadow of hummus so that that is the carrot that the US is offering the Iranians not sure whether I first I don't know if it's feasible to pass it through Congress to remove all these different sanctions.
And number two is um whether Iran I don't know if they'll accept it. I think they would if it involves lifting all sanctions.
But what about the financial world? Is is Iran controlling the straight home reality or was too early to say that?
I I think if you're Iran, what is your biggest negotiating tool you've ever encountered in your entire career or you know 47 years of existence? it it was um controlling the strait. Even the nuclear weapon didn't do this. So, you know, are you going to let go of it? Absolutely not. Which is why they just, you know, your point, they refuse the six billion. I think it was one of the bands or something, you know, think big here, you know. Yeah, they're thinking big. They're not going to let go of it. Not in a million years are they going to let go of it. So, I think, you know, the your point about, you know, what does this thing look like in, you know, three weeks, in four weeks? I just don't see how anything changes. And you know, and by the way, the Russians and Chinese are blatantly reinforcing Iran. It's not like, you know, and also the other thing that is completely I don't know why everybody's not talking about this. Who is Iran's biggest ally? China. So, China now controls all the world's um molecules because it can throttle up and down um you know, 20 million barrels a day of molecules. Um, and then u, and by the way, you could build pipelines, but I'm sure that the the Iranians as they get reinforced with Russians and Chinese will take the some of these pipelines out. And now the Chinese control all the world's critical minerals. So they own the critical minerals. They control the molecules. And oh wait, they also can potentially control the chips through Taiwan. So what is left of anything that is physical and material that matters to the world? Um, you know, that's why I'm I'm kind of surprised everybody's just nonchalant. In fact, China over the last week cranked down in more rules around critical minerals exports. They're just slowly but churning turning the turning the dial. So, in fact, that's the way I like to describe what the the straight looks like. It's a dial open, close. You can figure out where you want to send it. And again, this stuff's not going into the west. um you know they got the oil price down but again going back to the point the other thing China controls the world's processing not only of critical minerals but of oil the refined products and they still haven't started exporting products um so what are they going to do take in all this oil hoard it all and then not export product and create a product shortage for the rest of the world I don't know but it just you know this level of of complacency on what is happening right now is very surprising given that um you uh the the situation with and again I'm going to go back Russia and China are blatantly re resupplying um with defense goods in into Iran. So what what happens in six weeks? You're talking about China. There was I was speaking to um Real Alloys. It's a rare earth company in the US and they were telling me Mario, we're actually the first company that uses no chemicals or equipment from China. I'm like okay why is that a big deal? every single rare earth refiner that the US is supporting right now. Um so obviously the US is losing the refining um of the rare earth to China. The whole world's losing it to China. They control the refining but also the countries that are trying or the companies trying to replace Chinese refining are using Chinese equipment in chemicals. They control hard assets are completely inside China's pocket. That's pretty terrifying.
Yes. And I don't understand why um why we don't see more of this um focus in because you know the level and by the way in general the Chinese strategy whether if it was in steel aluminium critical minerals oil refining control the world's processing and then you control the world's raw materials. By the way you can go get raw critical minerals of any kind. Go to Africa you can go get it. Good luck processing it. You'd have to send it back to China to process it. And whether if it's the equipment to process it, the manufactured chemicals, everything you need to process it, it's all made in China. And then similarly, if we're all out of refining product, who's the ones the marginal exporter of this stuff? It's it's it's China. Um, so, you know, it goes, you know, steel, um alley, even copper smelting, all this stuff sits inside China right now.
So, you're still not learning Mandarin? Just confirming if you start learning mandarin [laughter] as I start learning Mandarin.
Yeah, I know. But but ultimately it is you can build this stuff but you just you got to have the the will the willingness to do it. And part of it is the Americans and the Europeans didn't like this stuff because it's nasty. And that's the main reason we're in this predicament. And they then they go, "Oh, I don't want that stuff in my backyard. It's gross and it's n this stuff's really toxic." And
but the the argument sorry to interrupt you but just the entire argument you've made so far sounds like an argument I wouldn't say an argument for war but an argument that the war has not ended yet because you've just explained why the why the US and the west cannot afford to lose the straight home wars even if it means another year or two years of war. So why is the markets discounting the risk of war while I speak to political analysts and they're talking about it. Some of them saying it's inevitable it's just a matter of when. Others are kind of more in the middle somewhere, but no one is certain. You know, 90% 95% I'm probably one of the very few that think the war is over long long term. And even I'm not 90% 95% certain of that. I'd be more in the 70 80% range. Um, so why are the markets so so
you're in that camp? I didn't I didn't know you were in that camp.
I'm in the optimistic. Yeah, I think the wars I think the wars over at 70%. Uh, it was higher before, but I'd give it 65 70 even. The reason I just think it's too costly. I just think that militarily the US cannot afford it. But when I say the war is over, it's within what time frame? I think it's over under at least this year. When we start moving to next year and onwards, it gets a lot more uncertain. Um, but just seeing how catastrophic the war has gone. That's why but the return has to be high enough. And what you're convincing me and others like yourself are convincing me is not that the cost is lower than what it was and they can achieve more success. They can't. is that the return even if it's so costly the ROI on this war is is existential in a way for the US.
Yeah, I think the the but here's the thing that the political calculus it doesn't matter if it's Trump or whoever is sitting there go back is no American cares about Iran. They simply don't care. But they care about that pump price uh at the pump. So if they can keep that down, that's all they're going to focus on. They don't care about anything other than that. And also, they want interest rates low, affordability. Keep interest rates low, keep gasoline low, and you win that battle. And then you have a probability of getting reelected. You get those things out of control, you don't. Now, here's the part they're missing.
Thinking
it is. But here's here's where I think they they miss is is if you don't control those supply chains of the rest of that stuff, you know, things can start getting really ugly really quick in places like the US. And I don't think it's way too early to discount that then. So I agree with you that hey, you know, at least this immediate skirmish is is is likely over with, but let's remember it's very much tied to the one going on in Ukraine and that one just got turbocharged. Um, and so you know the and then if you know very much tied to that is the gasoline and diesel story which is then tied to what China is doing. So I don't think any of these things you know the current squirmish is gone. probably is not going to resurface in its, you know, current form. And I think that the only way that the, you know, but then again, you got to wonder if what do they go if they go on the onto the offensive? Um, you know, because if they get completely resupplied and they're fully re reinforced, who knows? But the because ultimately they're not getting anything. The question is, do you really think the US is going to give them the 300 billion and the 24 billion? You actually want an answer?
Yeah.
Yeah. [clears throat] Obviously not. In case you're waiting for an answer, obviously not.
Yeah. I don't And then they're going to go, "Why? Why did we do this?"
Yeah.
But I think But I don't know. I think there's just there I think the point is th this is just that that you know what's going on in Iran over the last three to four months is just one piece in that bigger global trade war. It's going on right now. The other thing too, the Chinese like the sanctions.
They don't like They don't like this. I mean, the whole
the sanctions on Iran, you mean?
Oh, yes. Sanctions in Iran or Russia were were the the biggest benefactor was China. And so, they don't they don't want to see those sanctions go away. In fact, those teapot refineries can't function um without those sanctions. Um, so, you need the sanctions to create the discount in those cruds. Um, so I you know, it's not the the old status quo was much more preferred by by many of those parties in the east than they are right now because ultimately China was planning on taking on um the US with the swift system through its sips and sips was dependent upon um, you know, the all those dark fleet as we call them as being the primary mechanisms to deliver commodities and so, you know, there I just the current environment is so unstable from every possible way you can think about it.
Talking about China, our last episode um I found fascinating where you can connecting the dots between the Trump meeting and trying to really understand why the China not buy um uh reduce their demand for oil or use their reserves allegedly use their reserves during the war and more importantly why are they still not buying? Why are they still out of the market if prices are so low? Do you do you have an answer yet?
You know, I I'm really be I sort of thought about this. We would never know. Um, there's a lot of oil leaving the go the the the straits right now. And there it's Chinese flag vessels. So China's not going to advertise. They're just at this point, they're not going to show anybody their their hand or what they're doing and how they're doing it. So will we have they entered the spot market for West African barrels or anything the Atlantic basin? Absolutely not. We would know just like that if they came in. There's no evidence they're coming in and buying, but are they just getting everything they possibly need out of the straits with their, you know, with their own insured beh without the transponders on
they could even have transponders. Well, we know where they're going. We know they're Chinese flagged. So,
but if they have their transponders on, we can easily track them, can't we?
We should be able to. So the only like for if China's buying oil without us knowing they would be buying it through ships going through without their transponders on.
Is that am I right assuming
but we won't but we won't know how much they're bringing in until put it this way actually from what I understand as of this morning there's a lot of ships that are sitting off the coast of China laden with oil.
So they've made it there. But I but to say that I have any understanding of what's going on, absolutely not. Because I would have made the argument once you got down to these $70 levels that you should see a big surge in Chinese demand to come in and restock. There's no evidence that that's happening. And they're not they're not returning to normal behavior. I don't know. I feel I said it to to my guest yesterday um when you when he was making the argument of why in trying to he's also perplexed at how oil prices are so low um and I was listening to him is like either he's on a completely different page or this is one of those Michael Bur moments where just it's just so obvious for even people that are not not deep into it but the markets are just saying something else and then people are like hey if the markets are saying that's the price then that's the price similar to the big It's like, you know, these assets, these assets, these securities should be collapsing. Um, but then, you know, house prices keep going up for whatever reason.
But, but I'm going to go back again. If I didn't know anything else and an alien came down to this earth and know something about economics and looked at this market, I'm just go you're out of refining capacity.
The main reason, but that's because mainly because of what's happening in Russia Ukraine or also what's happened in the Persian Gulf because of the damage done when But you know, you just barely because China's out. China's not exporting yet. Um, you've lost the Russian US and Europe have retired theirs for environmental reasons and don't have any flex left in the system. So, you know, you look at, you know, whether in Russia we, you know, it's it's millions of barrels per day that the that the Ukrainians have taken out. I mean, you got serious lines. So, they're not exporting they're not exporting the product and using their own refineries. They got more crude to export to the world right now than they do refined product because they usually export the refined product. So that's telling you there's more than enough crude out there. There's just not enough of the refined product and that's a that's a different ballgame. Yeah. Not enough people no one's really talking about this. But from what I understand, isn't um I read somewhere that Russia's importing um refined fuel because of the Ukrainian strikes. That's true, isn't it?
Yeah, but they have to be because they're out. So, because you know if they have they have serious shortages there um they can't they got their long oil but they're not they're short refining capacity. Interesting. Also explain, you know, why these things you just got tankers parked off the coast of of China is because we're now bumping up into real constraints there. And we don't know for sure. The Russians aren't going to tell you how much of that refining capacity is taken out. They don't want to tell the world that. And then they always lie about how long it takes to get come back online. By
July started importing gasoline from India by see
out of all places India.
Oh, that's that's that's telling you a lot right there. Importing from India.
So they send the crude from Russia down to India. This is wild.
This is wild.
So, so are we just sitting here all looking at Iran and at the time Russia is creating a much bigger problem that nobody's paying attention to
and the Iran problem is not even resolved.
Oh, so this is a Michael Bur moment.
Yes, [laughter] it has to be.
Um, in other news, um, I'd love to get your thoughts on the job numbers that came out. um they were pretty bleak and also gold uh doing pretty well recently as well.
Yeah. Um yeah, I I I personally took off my shorts on on gold, I think at this point it's time to be long gold. Um, because ultimately it was the threat of higher interest rates and with oil prices being down here, I'm not saying we're out of the woods. I'm just going the shift in sentiment around interest rates has been tremendous which is opening up the upside in the precious metal space again. Um, so I would I would really be focused on on on golding. You got all this geopolitical uncertainty going on and you have a labor market that is weakening. The K economy in in the US is is definitely a big concern here. Um, all of that points to more upside on on gold. Um, you know, before this all started, I spent all my time talking about um, gold, silver, copper, and all the the atoms, the the metals complex. And, you know, oil was kind of a side story. Uh, and I think what's going to happen here is, you know, un le unless these refined products become an absolute problem. You know, it's going to be, um, I think you're going to see a lot of emphasis on owning gold again, particularly if you have concerns over a recession. the the number one driver of a rally in gold is always at the very end of a business cycle when there's indications of a economic slowdown particularly in the labor market. So you've got all the the telltale signs of wanting to be gold, you know, long gold right now with a with a relatively weak um um jobs report. So I I I I definitely would advocate it's time to get back into gold. um I you know I' stepped back in because you got to watch what's going on these refined product numbers you know if you could be in a situation where we are back in with every single one of these commodities doing relatively well again, you know, it's not and I I I think the the I would say that the consensus view around commodities is the most bearish I've seen it this entire year right now but we look at the fundamental backdrop the energy markets is fundamentally tighter than it has been at any other point in time. The forward outlook on supplies is still very very uncertain at this point right now. Demand's holding in there. Don't tell me the demand's not there. We saw it came out LA last, you know, this last week in the data. Um, it was relatively strong. So you've got, you know, lots of uncertainty upside risk particularly at $70 a barrel and record refining margins. And then on on the metal side with China, you know, cutting back more critical minerals and you need, you know, your point before is there's only one producer of critical minerals who's not using using um, you know, Chinese equipment. Yeah. Yeah. One that's using it. So it means that you know the upside risk here across the board I think is quite high. So you know I I just you know I'm still you know a believer own the entire commodity complex. One thing I just want to make a step back. Everybody's going, "Oh, Jeeoff, did you liquidate your oil positions?" A rolling front month, the passive position on these commodities liquidate every single month. You you're you know, you've reset um you know, so that when those price spikes happened in oil back in um you know, back in April and May, you were banking those on the roll. when the price spikes in copper and silver and everything were happening back in January and February, you were banking them on the roll. Um, which is why I just want to own the broader basket across all these different commodities because that leadership is going to change over time. And if you think this hard asset, you know, halo, hard asset local um, operation story is behind us, you're missing the point. This is a decadel long story. you know, right now it's cooled off with what's going on in Iran. Um, it's going to resurface somewhere. Gold in the US, it's silver. Um, you know, is, you know, if you're out demanding solar panels, you know, people are putting targets on silver of up to 300. I'm not forecasting. I'm just telling you the upside across this entire space right now is quite high. I like to point out when you're in one of these super cycles, the type of of price increases is on average between five and 7x. Um, and so and it's just sequences of spikes. It's that's why you want to roll you be rolling into each one of those because you're capturing those those different spikes. There's not one of them. It's not like a nice trend in prices that are going to go up and stay up. It's just rolling sequences of price spikes and shortages here or there until you finally get prices high enough that people invest. But I can tell you right now, nobody's investing in this space right now. You couldn't give it away if you wanted to. In the current environment, everybody wanted it three months ago, but right now, um, it's not very, you know, right now the market is mostly short this space. It's crazy how volatile the emotions of traders and investors are when they're meant to be unemotional, meant to look at things objectively. One second, there's a PC deal. Ah, [ __ ] Hard ass. That's a lame. Let's go back to to Nvidia. Uh, then there's another strike on on Dubai. All right. [ __ ] [ __ ] Nvidia. [ __ ] the tech sector. We got oil again.
Yeah. Exactly what's going on.
And it's just wild no one's talking about Ukraine. No one's talking about what's happening in Ukraine, Russia.
Yeah. Yeah. And I think part of it is people really want, you know, that also what's so scary. You know, talking about a Michael Brewery moment. The market is so levered long right now. It's scary. They can't afford
um any of these bad things to happen and they just keep levering up there. In fact, there was a report yesterday, buy the dip. Buy the dip. And they're three and a half times levered. Um, I've been doing this 30 years. I wouldn't be three and a half times levered this market. Um, and yet you've got the average retail Joe out there. Three. Yeah.
Like the world is not as optimistic. I'm I'm usually the optimistic person. I would look at the world. I'm like, "All right, look, I'm optimistic guys on a from when I talk to other strategists and experts. I'm the optimistic one, but not that optimistic. Like the Russia Ukraine war, there's no end in sight." What? Like I was talking to a few experts. I'm like what is the solution if if Ukraine doesn't want to give up the four oblasts and some people are saying that even Russia now may not even accept the deal they had in Ankura and Alaska which the Ukrainians may not even accept and the Europeans don't want for whatever reason I still don't understand even though I've asked many people and the Americans just don't care and then on the Iran issue if the straight home is so important for the Americans Iran is not giving anything up not compromising in any way um and and there's even indications that the war in Iran hasn't ended it's just shifted fronts. That's what I've been arguing for the last few days. It shifted from the front line being Iran to the front line being Yemen, Lebanon, Syria, Iraq. These are the new front lines. So, moving to a proxy war instead. And you know that means
by the way the the one thing [snorts] I want to ask you know if anybody had any good comments this is outside of my realm is in you know pro speaking of proxy wars you have what 15 to 20 million Shiites going to the funeral of Kamini um you know it's like you have never seen and then in the US you have 250 year anniversary tomorrow with all everybody converging there you've never seen these are big seinal moments in both places at the same time and it's just like you know with and then Israel is like I'm not a part of thisou
and a report and a report came in let me creep you out more a report came out yesterday um that the Israelis were um on the verge of killing Galibah and Arachi during the negotiations in Pakistan. So the report the report was the Americans were worried the Israelis were going to kill Archin Galibbah and they were going to meet JD Vas and they couldn't stop the Israelis so they warned the Iranians through Qatar and Pakistan like hey careful they might kill you and then [laughter] on the way back the the plane that had Galibbah and I don't know if Arachi was on it as well or a separate plane after it went through so the Pakistanis escorted the the aircraft into Pakistani territory they escorted it back to Iran when it when it was in Iranian territory they there were fighter jets that were spotted Israeli fighter jets in Iraq uh going into Iran. So they did an emergency landing and drove eight hours to Dhran uh back worried that they will get killed. That report came out from New York Times yesterday. When I saw that report, I'm like, you know, I don't think the Israelis are crazy enough to kill Mushtab Kame at the funeral processions tomorrow, this weekend. Um, but I'm not going to discount it either, especially after I saw the report the Americans couldn't stop the Israelis um from um, you know, considering killing or even planning to kill. Maybe they were about to kill Galibah and Ararachi. So yeah, I think people are just way too complacent and that's coming too.
Yeah, I mean the bare minimum Israel is going to disrupt something, my guess, in the next 48 hours. [sighs]
But we'll see.
But hey, dream on on the video. [laughter]
Thanks, Jeffrey. I appreciate it.
You bet.
All right, guys. I'll be uh live again in 3 minutes and we've got a new guest. Um, you've seen the movie um what's the movie called? Um Citizen Vigilante. I'm sure you've seen it. It's been going viral. And I've got the director Ouie Bowl. Um Uvie Bowl I think on the show in 3 minutes to have a discussion about the movie. Um, because it's I've got a lot of questions for him. People are split. Some people are are considering it a kind of a call to violence against illegal immigration, a tipping point for for Europe. Um, and the movie could instigate more people to react violently to the to the to to crimes committed by immigrants. And others are saying it's just an a portrayal of something that's already there, the anger that's already, you know, been fueled in Europe because of the influx of illegal immigration. Um, and the movie just in is just a portrayal is a result of that rather than a movie that can cause more violence. Elon Musk posted it, made it go viral as number one or two on Apple or Netflix or or whatever uh a streaming service and it was even banned in Germany. So, I'm going to speak to Uve in in a couple of minutes. Um, so yeah, I'll see you there. Hope you enjoyed the conversation. Bye.