Supercycle Incoming? Why a New Monetary Era Means Commodities Will SKYROCKET

Hello everybody, and welcome to VRIC Media, your most trusted voice in metals and mining. My name is Jesse Day. We are, of course, bringing the VRIC to you each and every week with our series of expert online panels. We have another great one lined up for you today.

We've got Lee Garing and Adam Rosenwag of Garing and Rosenwagen investment firm, dedicated to researching and investing in the natural resource industry. They have 46 years of combined experience, which we will be drawing on today to discuss the commodities markets. We're going to talk about gold, silver, uranium, and more. Gentlemen, it is great to have you back on the program.

Yes, Jesse, and thanks very much for having us back. I think, over the years, I think this must be like the fourth time we've appeared on your your podcast, so it's something we really enjoy very much doing.

Yeah, happy to be here and happy to continue the conversation.

Yes, definitely. Well, let's kick things off with the gold market because you've mentioned in your research that commodities bull markets often begin with a monetary regime change. Do you think we're on the precipice of a fundamental change in the global monetary system? Could it involve gold? And what are your thoughts on where we are in this current gold bull market? Adam, I'll go to you for this one.

Sure. I think not only could we be on the verge and not only could gold play a role, but I think it we're in the midst of just such a regime change. I think gold is playing a role. In fact, gold has been the canary in the coal mine, so to speak. Not to mix commodities too much. Um, and it, you know, the strong outperformance of gold over the last 12 to 18 months, I think has preaged this monetary regime change. I think we're in the midst of it right now.

So you're right. You know, we have gone back and studied big long commodity cycles going back, you know, 150 years. And what we've noticed is that they share a lot of commonalities and similarities. And one of the things that's always a commonality is that commodities become really, really cheap. Money flows out of the space, usually flows into tech. And that was true in the in the 20s as much the 1920s as much as the 2020s. Uh, and then eventually the pendulum swings back and typically, uh, for reasons that we certainly can get into, but typically, uh, the catalyst to really start the new bull market in real assets and commodities and inflation protection what have you has always been a change in how we conduct global monetary systems, a change in the plumbing, a monetary regime change.

And so we've been saying for a few years, you know, it doesn't matter when you buy these things because they're so cheap that they always, in hindsight, you know, will will represent a good investment at even if it bounces along the bottom for a while. But you really want to start to tactically get involved when that monetary regime change is on the horizon. And as recently as 2023, we would have thought it was coming from some of these BRICS countries like Brazil, Russia, India, China, then all of their bluster and talk about starting an alternative currency to the US dollar to settle trade and things like that. And we were watching that space very closely to see if it was starting to seemed like it was starting to get some traction. But now, particularly since November and certainly since the beginning of this year, I think that the change in the monetary regime is going to actually come from the US itself. It's going to be a a red dollarization, not a ddollarization. And, you know, people like the Treasury Secretary and the chairman of the Council of Economic Advisers have all been, you know, talking fairly explicitly about how the current system is unsustainable and we need something new. And I think that's exactly what we're seeing.

So I think the one area where, you know, we didn't maybe fully articulate, maybe even didn't think it through enough ourselves, uh, I don't think it'll matter in retrospect, we spent all this time talking about monetary systems and monetary regimes, but if you know, you know any first-year accounting student knows you don't have one side of the general ledger, there's two sides to every transaction, the monetary side is effectively the um means of payment for goods and services, right, you don't just send money around the world for nothing. You send it around the world for stuff or services or bonds, I suppose, as well. And so, if you're going to have a monetary regime change, you're likely going to need a big trade regime change. And so, I think what we're seeing, you know, with with obviously Trump's, you know, massive tariff announcements that occurred in early April, uh, is the beginning of just such a monetary regime change. And I'm not talking whether the trade tariffs will work, whether they won't, whether they'll even resemble what we were put forward in the beginning uh of April, but what I do think is happening is that we're in this period of history for change. Things are not looking like they did 6, 8, n months ago. And instead of kind of having the announcements come first from the monetary side of things, I think we're seeing the announcements coming, you know, fast and furious from the trade side of things. But I think it's two sides to the same coin. Two sides to the same regime change. And I think likely that explains why resources and gold in particular have actually done quite well this year in the face of a fairly choppy broader market. Um, which which is a bit of a surprise given most people think of commodities as so economically sensitive. Uh, and yet here we are and resources are beginning to kind of fulfill their role in the early stages of that monetary regime change in the sense they're leading. And so I don't think it's any coincidence. So yes, could it happen? I think it is happening. Uh, will it involve gold? I think it is involving gold. You know, gold is making new highs uh with with quite strong regularity. Uh, and I think it's telling you that the new system is not going to resemble the old system at all.

Very interesting. I want to talk about silver as well here because whereas gold held up quite strongly in the face of liberation day, the aftermath of the tariff announcements and then proceeded to go on and make new all-time highs in nominal terms. Silver got fairly beaten down. It was hovering around the $35 mark pre-liberation day. It got smacked down under 30, now attempting to stage a recovery hovering around $33. Um, getting back to previous all-time highs at this point would require triple-digit silver prices, is that something you expect to happen? And how do you see the overall setup for silver? Lee, I'll go to you on this one.

Yeah, Jesse, you bring up a lot of very interesting points about silver and I'll talk about it because there's a lot of misconceptions among investors about silver and silver's performance and what does it mean? And I'm going to tell you something you probably would would expect to hear is that silver's underperformance that we're seeing today is uh is a necessary ingredient of letting us know that the gold bull market is alive and well. And like why do I say that? Well, if you go all the way back to when metals first became gold at least became freely traded, which was back in, you know, uh, 1971, in every bull market that gold has had since then, it's been a very obvious characteristic that has reappeared over and over again. And that is silver has lagged the gold bull market. It did it between 1970 to 7071 to 73. It did it from 1977 to 1980. It did it from like 2002 all the way to 201101 and it did it from uh 20 thou uh January 2016 when gold bottomed at 1,50 to when it peaked in um summer of 2020.

Now why that happens, that's an interesting question, you know, and it goes against the common wisdom that a lot of people have said, oh, you can't have a a strong gold bull market unless silver leads and that just historically is incorrect. But what does happen is that silver lags and lags and lags and then it it stages a massive catch-up furious rally and not only makes up up all the underperformance that experienced over the previous years but then overshoots to the upside. And what's so interesting about that episode when it happens is that's the signal to a gold investor that it's time to get out of your gold investments. It it that flashed a sell signal back in 1973. Silver staged that furious catch-up rally. It it it lashed a major sell signal in December and January of two 1979 1980 when silver staged a furious catch-up rally this time driven by the Hunt Brothers silver short squeeze uh quarter market and uh and again in uh 2010 2011 where silver staged a uh furious uh rally and again in the summer of 2020. Each one of those periods, silver caught up all its underperformance to the point where it actually did outperform for the beginning of the the the gold bull market move. But it was a signal that the the the gold bull market was either going to take a uh a serious pause or have a serious correction or enter into a full-fledged bare market. And like I said, the last time this happened was back in summer of 2020. And you know, we wrote about it. We may even talked about it on this show that it was, you know, we were neutral to slightly bearish on gold because of that sell signal and the fact that silver is underperforming and a lot of people are frustrating. I know we I you know, I get a lot of questions like what what's wrong with silver? What's wrong with silver? And I'm saying it's acting just like it's supposed to. And the thing is is that is that it's it's okay. There's there's nothing wrong in the silver market. It's just doing what it's always done.

So now, as far as a long-term investor in silver, it's going to be fine because it will lag and it will lag and it will lag and it will stage this furious catch-up rally, which my gut feel is that, see, I think we're repeating the 1970s. My gut feel is that somebody's going to try to come in and corner the silver market just like the Hunt brothers did back in the end of 1979. And you we've already, you know, it's interesting, you know, the Reddit crowd tried to tried to squeeze the the silver market back in uh was it January of 2021, you know, following the the big rumor that JP Morgan has this multi-billion ounce uh short position in silver and that, you know, that that it's that it's it's a position that was ripe to be squeezed just like you squeeze GameStop and AMC theaters and things like that. And of course, you know, we never believed that theory that that JP Morgan was short that silver. And we had great confidence that short squeeze is going to fail. But it's in people's DNA to try to squeeze the silver market. And when this bull market in gold is over, I convinced that that uh somebody's going to try to to corner the silver market just the Hunt brothers did back in 1979 in 1980. And you're right, that's your when that catch-up rally happens, that's when you you return to like, you know, the the gold silver ratio now silver to gold ratio is like over 100. I I wouldn't be surprised. You know, it it's kind of interesting here. Um, you know, Alexander Hamilton set the ratio at 14 to 1 back in the monetary uh, you know, the US monetary mint standard in I don't know, 1789, I think it was 1792, one of those years. Um, and uh in the Hunt Brothers Hunt brothers uh short squeeze they almost got that ratio back to 14 to 1. So could could we get back to a 14 to 1 ratio of silver gold? It's possible. It's possible. But it's it's going to lag. Every be frustrated. But if you're a long-term holder, you could hold silver because it's going to it's going to do better than gold eventually. But it's all going to come in the end.

Excellent breakdown. Uranium, uh, the uranium spot price does appear to be coming off a bottom potentially. Now, most investors watch and respond to the spot price most of all, despite the fact that it accounts for only 10 to 20% on average of total transacted volume each year. Term prices are also difficult to get a handle on because there's non-disclosure agreements attached to a lot of long-term contracts. There's a futures market that is essentially broken. It doesn't really work. Um, how do you gauge the real value of uranium? How do you track it? And how do you see the the uranium market continuing to develop up ahead, Adam?

Well, I think you're exactly right that there's been a huge divergence between the spot price and the term contract price. And yes, look, people have always uh lamented the uranium industry and sector because it's more opaque than other commodity sectors. And there's a lot of truth to that. But just because something's more opaque doesn't mean that it lacks its own fundamentals and that it has its own trends and things like that. And and by and large, despite all the opacity and all the um, you know, I suppose confusion sometimes in the market, the spot price and the term price have usually always moved in lock step with one another. And frankly, that's why so many people do look to the spot price to get the indication uh to where the uranium market is trending because, you know, we can pull it up on Bloomberg. I'm looking at it right now, 69.40, up $245 this past week. And you could go back and look at that for 20, 25, 30 years. And sure enough, when eventually the term price gets uh published sort of, you know, three or four weeks later on a monthly basis with a lag, it usually reflects the spot price really, really well. But that has broken down in the last two years. And so I think that's leading to a lot of confusion because a lot of folks do look at the spot price and think that's the same as the term price. In fact, most uranium equities have a very strong correlation to the spot price even though that spot price, like you said, has not resembled at all the term price. uh for basically two and a half years uh both in direction and and in and in magnitudes. Um, and and as you talked about the term contract is like 90% of the market. So you know the tails wagging the dog a little bit with all these equities which frankly determine whether they'll you know ever go forward as future projects hinging on a spot price that's largely irrelevant.

So how did we get here and what does it really mean going forward? So, first off, if you look at the term price for the last 5 years, coming off the bottom, uh, it's been up and to the right. You know, it's kind of plateaued here a little bit, but it's within a dollar of its highs. And I suspect, uh, given the strength in the spot market. When we get this month's print, maybe it'll have made a new high. Who knows? We'll have to wait and see. But, you know, it's certainly not not broken down at all. And the fundamentals have only gotten better and better and better. So, if all I gave you is the term price contract and all these news clippings of China announcing 10 new reactors and, you know, Norway committing new private equity funds to the uranium space and life extensions throughout the US and Europe and delays likely occurring in some junior new uranium supply and Capco and Kazataprom both feeling the age of their assets. You would look at that, you look at the term price and you say, "Man, that's a good call and it continues to get better and the spot price maybe is consol or contract price is consolidating, but looks good to me." If I then showed you the chart of the spot market, you'd see something entirely different and the equities, you'd say, "Okay, well that, you know, that bubble's burst, let's say. So, which is true and where do we go going forward?" Obviously, to skip to the end, we think that the fundamentals are telling the true picture, that the term market, 90% of where uranium gets transacted, is telling the true story. And what has happened to the spot market that has gotten it so out of whack? Well, basically in 2023, the hedge funds really got involved in the uranium trade and they had um maybe scheme is too strong of a word, but they had a trade on and it was it was a little bit of a feedback loop. Uh, hedge funds love to get involved in feedback loops where their own trades push the stock in a certain direction and then it can then just feeds on itself until it can't anymore and it becomes exhausted and they press a trend. And in this case, the feedback loop kind of went like this. Um, there's a vehicle, there's a few, but the most notable is the Sprott Physical Uranium Trust up in Toronto and they buy, it's a closed-end fund. It buys and holds uranium and that vehicle if it's trading at or above its net asset value has an at the market equity uh mechanism where it can issue shares uh and it can go out and effectively take the proceeds to buy new uranium. So that directly connects not only does not only should the value of that vehicle reflect the spot price of uranium because that's what deres the net asset value but bullishness into the spat physical can actually have an impact on the spot market because if you get a lot of interest into that vehicle it trades at a premium. It goes out and it buys spot material and immobilizes it. Puts it in a warehouse. And that happened throughout 2023. And so what these hedge funds started to do is they started to buy a lot of the speculative junior uranium names and then they would start to buy the spot physical. They would bid it up to a premium against its NAV. It would issue new shares. It would use the shares to use the proceeds to buy spot uranium. uh that would in turn drive the spot price higher and that would make their junior companies rally and because they were junior and speculative they would rally with a beta, you know, high high beta and um they would make more money, you know, on that side of the trade than they were bowling up spot physical and then the whole thing worked quite nicely and that attracted a lot of money into it. You could see it into different, you know, shares of the different uranium stock, ETFs, what have you. And that culminated at the end of 2023 with a lot of prominent hedge fund managers, you know, out on the tape talking about how they were sort of new uranium or not new, they made it sound like they were legacy uranium experts having studied the space for years and years and years. Nothing could have been further from the truth.

So in 2024 that started to unwind. uh all that money came rushing back out and at its peak, you know, the spot price of uranium was trading at like a 30% premium to the term price, you know, really big if you go back and chart those two the term and the spot price you never got deviation like that and that started to work in reverse beginning in 2024 and by the mid part of 2024, you know, you could see or sort of third quarter you could see the spot price and the term price converge again, you know, as a as a really back of the envelope kind of calculation. You can say, "Okay, fine. I guess a lot of that hot money is maybe back out kind of is at neutral." But then it didn't stop there. The hedge funds then continued to press that trade and eventually uh accumulated massive short positions across a lot of uranium juniors to the point that today uh you know some of the Australian uranium companies in particular are amongst the most shorted companies on the Australian stock exchange. So, you know, they've gone a complete 180 from being, you know, massively long uh and kind of, you know, using the spat to to bull up the uh equities and now they've sort of reversed that trade. And the SPAT physical no longer trades at a premium. It trades at a discount. So, they're largely shut out of acquire um issuing new shares and uh and and using it to buy spot material. And in fact, now a rumor has developed in the other direction saying that look, you know, if SPAT can't get up to NAV again. Maybe they never will. Maybe, you know, maybe this is the new normal. And if they can't get back up to NAV, they won't be able to issue new equity. And if they don't do that, they won't have any money to pay their warehousing fees and pay their own salaries and things like that. And then, you know, is there a worry that some of that immobilized material that they have uh could could come back into the market? And and so that's been sort of the persistent fear and rumor. Now, I think that's really an overblown concern just given how tight the spot physical market really is. Um, but that's the concern that's out there that's caused the hedge funds to now be, you know, largely short a lot of these names. And I suspect that that will end uh in in in pain as as you get, you know, move higher. Um, because the fundamentals remain really good. If the fundamentals were bad, if they were neutral, yeah, you could press whatever trade you want, but to to to put on exposure like that in the face of really, really strong and improving fundamentals, I think is is probably a pretty dangerous strategy.

Yeah, Jesse, I just want to add one little uh piece of color on that whole thing. You know, back in January of 2024 where spot peaked at about 106, the term price at the time was about $70 per pound. So there was a huge difference between the two prices. And of course, since then spot the spot price has gone from 106 and I think it bottomed at like 64 about two weeks ago. And during the same time that the term price crept up from 70 to 80. So which is the right price? which is reflective of the true underlying health of the the the global uranium market. And I think it's interesting since that $106 price was reached back in uh January of 2024, there has been an unbelievable number of positive announcements that happened in the entire nuclear power generation uranium space. One is that, you know, Adam made referenced a couple. China just announced they're going to build 10 10 new actors onto the the 50 that they've already got planned. Uh that um that constellation in partnership with Microsoft is going to reopen Three-Mile Island, one of the most controversial nuclear power problems in the whole world. um that Scattera, which own the two big uh AP Westinghouse 1000 reactors in South Carolina, is talking about reopening those two reactors with which are now mothball. Um there there's been a huge number of positive announcements including the fact that these these data set center setter companies realize that their future is they need they need reliable cheap power and the way to do it is through small modular reactors which of course we're beginning to understand that we're on the verge of a huge technological revolution. It's not really a technological revolution. It's the adopt adoption of a superior technology that was pushed aside 60 years ago and is now going to be adopted. that is the molten-based salt reactor and that we have all these positive announcements. the the you know if you were to go back and model our demand for uranium you know back that we did in 2018 and that only incorporates some of what I said is that we have our demand estimate for uranium by 2030 is now 40 pounds 40 million pounds higher than what our original 2018 demand assumptions were and is getting better and better and better and then we have to talk about the supply side because there's huge problems developing on the supply side so there is a there is massive second leg to this uranium bull market. And it's fascinating as Adam pointed out that the hedge fund community, which was erroneously super bullish at the top, now has become wildly pessimistic uh at the bottom. And for speculators, I recommend I suspect there's going to be a huge short squeeze that develops in the uranium junior uh uranium stocks because like Adam mentioned, they are the most shorted stocks on the Australian shock exchange. there's going to be a short squeeze there. So for enterprising investors, I I recommend some exposure there, but it's there's one huge leg left. Uh we can make a very strong fundamental case for it and everybody the skills of money is not bearish but almost wildly bearish. It's a great setup.

Yeah. Yeah. Completely agree with everything both of you said. Um, energy stocks have been taking an absolute

Beating recently alongside the WTI crude price seems to be maintaining, you know, a sub-$60 price range. Why do you think we've seen this type of price action? Obviously, the liberation day announcement and tariffs, uh, were one of the drivers it seemed that sent the oil price lower. However, we're getting to a level here where a lot of these big producers are not going to be able to be profitable. So, I would imagine that that price action is temporary. Um, what are your thoughts and lay out your current thesis on both oil and natural gas for us? Uh, Lee.

Okay. There's a lot of very interesting data points that have emerged in the global—I'll talk about both oil and natural gas, but I'll talk about oil first. It, uh, that convince us that the bare market in oil prices has finally, finally come. And we admit we've been early. You know, we thought that the oil bare market ended back in the early part of last decade. Then we thought that it ended at, you know, after the COVID, uh, period. And it—that bare market keeps dragging on and on and on, which often happens with bare markets. But we believe that today, right, is is the bottom. And there's a couple interesting data points that emerge that sort of confirm that. What is it that oil? We like to—we like to look at how—how oil is priced relative to gold. It's the method by which you can get a rough idea of how cheap is oil. And based upon that ratio today, oil is—is has only had one reading ever that's been higher than today's reading. An ounce of gold today buys 58 barrels of oil. We have—we have this data series going back all the way to 1850 where we can actually see what is the ratio—how many ounces—how many barrels of oil does an ounce of gold buy going back that far, and it's very, very seldom that you ever get the ratio above 30—that is an ounce of gold buying about 30 barrels of oil. It's—there's only been—there has only been three observations ever with the ratio above 40. Uh, we almost hit it back in, uh, the beginning part of 1933, and the ratio hit 39. That was right at the bottom of the Great Depression. Um, the second time was back in January of 2016 when the ratio hit 47, which coincided with the very ending of the OPEC-solled price market share war that the Saudis started in 2014. Uh, the COVID—the COVID crisis where oil prices actually went negative. If you—if you use rent prices, the ratio actually hit 80. So that's the all-time ever high. And, uh, today we sit at 58. So it is the—it is the second highest cheapest reading that we've ever had of oil relative to gold. And we believe it's telling you that the oil bare market is very, very—is very, very close to being an end. And I should point out this is just the opposite where we were back in the early 2000s. Back then it was gold that was ridiculously cheap. In fact, there were—you know, there was a reason for it. You know, oil is cheap today because we've all adopted the narrative that global oil demand will never grow again because of EVs. Supply is going to grow, and it's just—oil market is going to be structurally imbalanced forever. Back then, the asset class that everyone hated was gold. Why? Because all the European banks were tripping over themselves—who could sell their gold first. To the point where gold was radically undervalued. In fact, there were multiple times between 2000 and 2004 where an ounce of gold only bought six barrels of oil. Now, it turns out if you go back, what should you have owned back in any one of those periods between 2000 and 2004, say the average gold price was 350, it's up 10-fold. What is the oil price? It's up, you know, twofold. Things like that. So, gold is the place to be. I'm going to make the case, you know, I'm bullish on gold. You know, Adam talked about the bullish fundamentals, but I'm going to make the case that oil is going to radically outperform gold. They're both going to go up, but oil will outperform gold between now and 2030.

Now, that's—that's the valuation story. The underlying fundamental story is this. Uh, on the supply side, we are radically overestimating what's going to happen to non-OPEC oil supply between now and 2030. You know, the—the IEA says that non-OPEC oil supply is going to grow by—by 10 million barrels between now and then. Uh, and we believe based upon our modeling that non-OPEC oil supply growth is going to actually—could very well go to zero multiple times between now and 20—2030. And remember why is that important? Because the biggest competitor to OPEC oil is non-OPEC oil. And when the supply of non-OPEC oil slows, OPEC gets pricing power and—gets pricing power, market share and pricing power. And we believe that is about to happen. You know, this has happened before in our collective investment lifetime. This—this whole process started back 2023, which was again a—a period of maximum bearishness on global oil markets. And what happened was is that between 2023 and 2028 non-OPEC oil supply radically disappointed and demand grew because of China. OPEC gained market share, and oil prices went from $25 a barrel to $145 a barrel. And the same thing is going to happen now. You know that rapid slowing of non-OPEC oil supply 2020—2003 to 2008 occurred because the rollover of the North Sea and the rollover of the Cantarell oil field in Mexico—which no one predicted except I like to say I did because I was in Barron's talking about this back in January of 2004. And the same thing is now going to happen with the US shales. Back then, uh, n 65% of all non-OPEC oil supply growth between '95 and 2003 came from the North Sea and the Cantarell field in Mexico. Today, between 2010 and today, 90% of all non-OPEC supplies come from the US shales. And the US shales are going to do just what the North Sea did. They are plateauing right now, and they are on the verge of rolling over. So we're going to get huge disappointments in non-OPEC oil supply growth starting right today. And don't believe the I—you know, the—the IEA, which everyone follows, says that total oil demand between now and 2030 is not going to grow—is only going to grow by 1 and a half million barrels a day—not 1 and a half million barrels per day per year—1 and a half million barrels per day total, which is absolutely ridiculous. And, you know, we believe that demand is going to surprise the upside, which it did last year again and the year before versus expectation, and that demand growth is going to be pretty good as you slow down non-OPEC oil supply. OPEC is going to get pricing power. And I think it's really interesting. You know, there's all this talk on Bloomberg on Sunday that OPEC was going to increase production by 400,000 barrels. This was to be the start of a new market share war. You know, you're going to punish the non—the OPEC plus providers that are cheating, all this type of thing. And oil finished down 50 cents. And I—and I—and I think that the bottom has been reached. Oil is cheap. You have a fundamental story that is switched tremendously, and no one is even bothering to—to—to look at it—like, for example, you know, ask anyone—have the US oil shales stopped growing, and everyone said, "Oh, no, they're going to grow a million and a half barrels per year"—but if—if anyone ever went to the EIA website and checked out how, you know, they—they—they—they have the—the monthly production numbers from all the tight oil shale plays in the US, you'll see that it's on a year-over-year basis. It's—it's basically gone to zero, but no one has bothered to do that. So, it's going to take everyone by surprise. So, I think oil is going to—it's going to—we're still bullish on—on gold, but I think oil is going to do better than gold only because that it's so cheap relative to gold. Um, and I think oil investment is going to be great.

Natural gas is—is—is same underlying fundamental story. You know, 100%—well over 100% of all natural gas supply growth in the US since 2010 has come from the US gas shales. And every one of those shales except for associated gas out of the Permian, all the shales have now either rolled over or are plateauing right now as we speak. And natural gas supply—which there were many years from like 2012 all the way to 201—23 that natural gas supply grew at like 5 to 6 BCF per year—huge growth—and, you know, it was that growth that allowed the US to become—go from an LNG importer to an LNG exporter—in fact, we're now the world's largest LNG exporter by a factor of 30%. Percent—and we're going to add even more LNG export capacity this year. We could do that because we had six—six BCF per—per year—per—per day—per year growth. We have zero now. So what's going to happen? We're going to wind up—we're going to wind up drawing down inventories to the point where, uh, traders are going to worry about being able to keep storage filled in the winter or drawing it too far down in the summer. And we're going to converge the US—the—the global natural gas price, which today is about $11.50, and here we are in the US at $3.50. So we believe that trade is coming this year. And you know what's interesting? We've been—again, we've been early on this trade. We've been talking about it forever. And the bears will say, "Oh, Gary and Rosenb doesn't know what they're talking about. Supply is growing. They've missed the whole thing." No. Bears have lucked out. Why have bears lucked out? They would admit this. The winter of 2022–23 and 23–24 were—were both abnormally warm. In fact, they were almost record warm. So warm weather bailed you out. So the gas bears got bailed out by weather. However, weather was much more normalized this winter. Inventories are more normalized, and this convergence trade based upon our supply-demand analysis is in our future. Whether it happens after a super hot streak of weather in the summertime, which could happen, or does it happen sometime early winter when we're too low, we got a cold snap in the end of November to December. It—we're set up for it. So, we're very, very bullish on gas. And we love natural gas in, you know, pure natural gas equities because no—no one—you know, it's interesting—you know, everyone has agreed that natural gas is—is this bridge fuel that's going to supply all the electricity needed for the AI revolution, and we agree with that completely—however, everyone says, "Oh, like, oh, hedge funds are going and buying pipelines—hedge funds are going and buying, uh, combined cycle plants—you know, private equity firms are, you know, getting in the electricity generating business"—when is somebody going to wake up and say, "I'm buying the molecule in the ground. I'm—I'm going to take Range Resources private." You know, that's coming. And—and we're so far away from that. People are now interested in investing in the asset class that's going to get hurt tremendously by the scenario I just outlined. They're going to be short gas, and they're going to have to buy it. Instead of going upstream and buying the gas itself, you want to own the molecule if—if our scenario is correct. We have great—we have great faith that it is. So, I'm bullish on gas. I'm bullish on oil, bullish on gas. The—the gas trade could happen. It's a function of weather again, but it could happen in the next six months. So, it's—it's short term.

Well, let's end with discussing some other commodities that you're both researching at the moment that you think present a potential opportunity up ahead. Um, I know you cover a lot of things, so maybe one or two that are top of mind at the moment. Uh, Adam, sure. Um, and Lee can jump in here as well because I know he'll have a few thoughts on—on the matter, but you know, one area that we've become quite excited about has been the platinum group metals markets. And, you know, in a lot of ways, the PGMs fit all of our—all of our requirements for markets we like to get involved with. So what—what do I mean by that? Well, we love areas that have been completely left for dead, starved for capital, are cheap, are cheap on a relative basis or cheap on an absolute basis, meaning the industry can't really sustain itself at the current commodity prices. And, uh, the fundamentals are about to shift. So let's talk about PGMs and how it really meets all of those criterias. You know, platinum today, I just pulled it up on my Bloomberg. Platinum's trading at, you know, a—a rich price of $990 per ounce compared to gold with a $3500 handle on it. And, you know, historically the price of platinum has traded at times, you know, at—at a discount of, you know, less than $100. At times, it's, you know, popped above at a small premium. So platinum prices are lagging dramatically below gold prices, which is highly—highly unusual on a long-term, uh, basis. We're at a point now where most of the platinum and PGM miners around the world are struggling to make any money at all, which might sound like an area you want to stay away from, but for us that's actually quite the opposite. That's where you like to get involved. You know, I can tell you when we put on all of our uranium trades at $18 a pound, $20 a pound, you couldn't make money mining uranium at $20 a pound. And that's why we liked it. We said, "If you want a uranium industry, you're going to need a higher price. And then that'll flow to the bottom line of the stocks." And so, sure enough, that's what happened. The same's going to be true in the—in the PGMs. You can't run a platinum industry at $990 platinum prices. Um, investors have certainly left it for dead. I mean, nobody—when's the last time you heard anyone talk about, you know, owning a South African platinum deposit? And certainly there's some country risk there and geopolitical risk—you know, South Africa is not—not—not the same as owning assets in West Africa, but there's a lot of, uh, uncertainty still in the country—a lot of problems in the country—um, and—and so unfortunately most of the assets are consolidated there—that—that means that we probably won't hold a PGM weight at the sector level as high as we would for, you know, something that we'd have the similar conviction for, but where we could diversify those assets around the world, uh, in a little bit of a better way. Um, so that gets to the fundamentals. Why are PGM prices so cheap, and why do we think they might be improving? Well, the main reason that they've been so cheap is that there's been, you know, it's been a sort of a knock-on trade, uh, from EVs. So, the idea has been that, you know, a huge demand for—for platinum group metals has been in auto catalysts—uh, catalytic converters for automobiles. Uh, they use PGMs to, uh, effectively help clean the tailpipe emissions—um, from internal combustion vehicles—not so much CO2, but more particulate matter. And they've done a really good job over the years with different emissions mandates at effectively scrubbing all of, you know, the vast majority of particulate matter out of car exhaust. That's why, you know, you can't even see car exhaust half the time because all that particulate matter has been—has been taken out. Um, there was a view in recent years that as EVs were going to come to displace internal combustion engines, we effectively could recycle the—the, uh, PGMs out of existing ICE fleets and that you wouldn't need anymore effectively, and so that demand would—would—would plummet. We haven't seen that happen yet, and we don't think it's going to. Quite the opposite. In fact, we think that PGM demand for automobiles is set to surge, uh, and not because, uh, of a massive resurgence in—in ICE vehicles—although I think, you know, they'll continue to be the dominant form of transportation—but what we think is really a viable and extraordinary, uh, potential, uh, are hybrid vehicles. You know, hybrid vehicles, uh, have always worked, uh, they—it was the biggest—I think the biggest downside to this EV push in recent years was how much of the wind it took out of the sales from hybrid vehicles. So why do we think that—what are we even talking about? What we measure in any form of either energy production or energy consumption, uh, is we look at energy efficiency. So how—how much do you get—effectively we consider energy to be a scarce resource, and we consider whether it's transportation, whether it's manufacturing, whether it's actual energy production itself, uh, a—as con—both consuming energy and providing a good—and so how efficiently can it make that conversion? And what we've noticed over time—and going back thousands of years, frankly—we have never had a situation where—um—we've never had a situation where—um—a new form of technology has displaced an old form of technology with inferior efficiencies, inferior energetics. And so when you look at an EV, people will talk about how unbelievably efficient they are, and that's true, but it's only true at the car level. An electric motor is by definition almost more efficient than an internal combustion engine. And it has to do with things like entropy that I won't get into here. However, the—the rub comes from two things. First, it's producing the electricity itself. That's the inefficient part. Yeah. So when you convert, let's say, natural gas or coal into electricity, uh, you have only like a 30 or 40% efficiency of—of the BTUs captured from the fuel source into the electricity output. The rest is lost to waste heat. And what you get is very efficient electricity which is then put in an electric vehicle and used to run the car. All people are capturing is the car-level efficiency, and they're neglecting the upstream inefficiency. An automobile effectively does both parts together in the engine. You know, it combusts the fuel. It loses again 50–60% of the energy contained in the gasoline, and what's left goes to the powertrain and gets driven. But they call that whole blended efficiency 40%, and they call the EV's efficiency 97%. It's because the inefficient parts are happening, you know, offstage and not being counted. Um, similarly, you know, if you say, "Well, what about renewables?" The problem with renewables is they're terribly energy inefficient to produce that power in the first place. It takes, you know, 30% of the energy that gets generated over the life of a windmill or solar panel to actually, um, produce the power in the first place. And so the ultimate efficiency of that electricity in and of itself, uh, is very, very, very poor. So when you look—you start with, you know, 100 kilowatt hours of primary energy, and you say how far can you move a car—you've factored all these different processes—the internal combustion engine wins hands down, and that's why EVs are having a difficult time penetrating outside of either, you know, very, very wealthy people that are looking to virtue signal or, uh, on the back of high government subsidies. Hybrids are totally different. Hybrids have very small batteries—in some cases, the hybrid I prefer is not the plug-in hybrid, the traditional hybrid. It has a battery that might be only one or 2% as large as the Tesla battery, which means it's hugely less energy intensive and cheaper to manufacture because it's just so much smaller. And secondly, you don't have to carry around all that weight. You know, 60% of the weight of the vehicle in a—in a Tesla is its own battery, and you're—you're lugging that around to ensure that you have 300-mile range for the one time you need it. Even though more likely than not, if you're going to go on a long road trip to visit colleges up and down the east coast, you're going to take, you know, your second car, your SUV for that trip. You're never—So, you're lugging around this battery to give you range that you're never going to need. In a hybrid, what you do is you have this one or two kilowatt-hour battery, very, very small, gives you a couple miles range. And what it does is it helps the internal combustion engine be more efficient. And you can get anywhere between a 30 and a 40% improvement in the mileage of that vehicle, uh, by putting in a 2% or 2 kWh battery pack, and—and it's light and it's cheap to manufacture both in energy terms and in dollar terms. So the hybrid wins hands down, and we've always said that. We've always said, you know, the whole world should move to hybrids. Um, now hybrids do consume PGMs. In fact, the hybrid has more PGMs than a traditional internal combustion engine for a whole variety of technical reasons, but the loadings are higher. And I think that that's ultimately going to win between this sort of, you know, three-way race between hybrids, traditional IC and electric vehicles. And that's starting to come to the four now. And hybrid vehicles—it's amazing if you look at the sales trends of hybrid vehicles, particularly outside of China, where they have a whole bunch of different motivations for wanting to go electric. Namely, they want to end their dependence on foreign crude. But if you look at everywhere else in the world, hybrids have been outpacing electric vehicles, and they've been doing it with no subsidies. You know, you don't get paid a subsidy to buy a standard hybrid. Plug-in hybrids are different. Sometimes they do, sometimes they don't. But traditional hybrids typically offer no government incentives, and they're holding their own, uh, very, very well—outpacing both IC and—and—and EVs in terms of growth. So I think that's going to continue. It's actually going to accelerate, uh, and that means that the fundamental story against PGMs is now gone. It's turned—it's turned bullish, in fact—again. So valuations are cheap. Stocks have been underinvested in. No one loves them. Companies can barely break even. What a great market to get involved in.

Fantastic. Lee, is there another commodity that you'd like to bring to our attention that you're bullish on at present?

Yeah, I'm—I—my commodity—we've been adding to these stocks is—is anything that has to do with agriculture. You know, agricultural crop prices, they peaked back in—I think it was May of 2022, right after the Russia's invasion of Ukraine, uh, everything—fertilizer prices, crop prices—uh, except for things like cocoa—uh, have been in a severe bare market ever since, and I believe that bare market ended, uh, at the end of last summer. Uh, the underlying fundamentals in the grain market have improved tremendously, uh, from the—the record level of bearishness we saw last summer, which was produced by erroneous USDA data. The USDA was overestimating both the 2024—the 2024 corn and soybean yields by—get this—by 30%. And it took them months after the harvest win. But they finally reduced both those crop yields by 30% in January, which took the ending stock—ending stock inventory, which is what carries us over into 2025, from near-record levels to slightly below average, uh, levels over the last 30 years. So the grain market—the inventory that was projected to develop just didn't because the USDA was overestimating crop yields. And we've started the 2025 north, uh, hemisphere crop growing season in very, very dry conditions, very similar to what we started last year's, uh, crop growing season with. Now, last year we did have beneficial rains a couple times during the summer, which really helped the—pushed the crop over the edge into the—you know, so we got an okay yield, but like I said, the USDA was—did not properly estimate those yields, and they were off by 30%. We—if we don't get those rains this year, we're starting off very dry like we did last year. And, you know, even—you know, the general weather forecast—like go to ACUE weather—ACUE weather, which they're good—if—if you want your—your—your best generic private weather forecasting firm. I think no one does it better than ACUE weather. And they're calling for drought conditions this summer and a very hot summer. So the—the thing is is that we're set up for a huge bull market in grains. The fertilizer stocks all fell almost 70% from their May 2020—22 peaks. They're cheap, and fertilizer prices have already started to tick up as well as grain prices. So I think this is going to be a huge bull market in which no one has any exposure. So I recommend stocks like, you know, Nutrien is just the simplest one. It's, you know, of super high quality, and, uh, it will be a great participant in this upcoming bull market that I foresee.

Yes, absolutely agree with you there, too.

And nobody's talking about these fertilizer stocks. It's the conversation isn't out there. You go on Twitter; you've got your uranium Twitter, you've got even coal Twitter, you've got even oil tankers people are talking about. It's crickets on, on even these big fertilizer stocks, Mosaic, Nutrient, etc. So definitely concur with you there.

Well, gentlemen, this has been a fantastic conversation packed with insights as always. Um, Lee, could you tell us about Garing and Rosen swag, both the research you do and the investments you do as well?

Yes. Uh, obviously, Jesse, uh, Gary and Rosenw is a firm that I set up with Adam back at the uh, beginning, very beginnings of 2016, as a firm that was dedicated to uh, researching and investing in global commodity and natural resource markets. We are very, very well known for our research. But I should point out to people that's not what we really do. We're investors. You know, we we're an SEC registered firm. We have a the Garry and Roses Y resources fund, which is a 1940s act mutual fund which is available to the public. Uh, we we have a USITS, which is the equivalent of a mutual fund for all international investors, and we manage multiple separate accounts for large endowments and and uh, sovereign wealth funds. So it it's what we really do is and we're investors and we have a very distinctive investment style. It's, you know, we're we're deep value investors, and we find the best time to find value in any natural resource market. Commodity market is when that commodity is priced is depressed. Investors are pessimistic. It's the commodity is often in a grinding huge bare market. Everyone has given up, and we that's at that point we like to roll up our sleeves and do a huge amount of research on that market, try to identify turning points that other people have missing that are missing and then buying the equities that are in that space which are trading at absolutely ridiculous, often only in retrospect, multiples and where you get your tremendous value.

So Adam talked about the PGMs; there is no market that better fits everything we do than the PGM space today, and the platinum group metal stocks are at rock-bottom valuations. No one likes them. They're down 80% of their their highs reached three and four years ago, and they represent huge value, and you have a very positive story there as Adam very well outlined. So it it's an explanation of what we do. It's it's something we investing process that we've been able to repeat over and over again for the last 35 years, and it's produced stupendous results for our investors. So uh, that's that what we what we do. And for those that like to access our research, just go uh, onto our website, www.gorosen.com. All our research there. You can download it for free. It's all available to you.

Yeah, some of the best research out there. Um, I'll put a link in the description below to the Garing and Rosen Swag website so people can check that out. Thank you once again for coming on the show. It's been a real blast.

Okay. Very good, Jesse. Thank you so much for having us. We really both enjoy it. Thank you.