Copper and industrial metals are getting quite crowded, similar to gold at the end of last year. So I am taking them all down. I prefer the Agricultural space. I can see gold coming back to life, but not yet, feels like a bit more liquidation is needed. But gold feels safer to me than copper, agree with the thesis.
What do you make of Bitcoin and its seeming break in relationship with Software? I assume that relationship broadly still holds and Software is about to "catch-down".
Today is the first day in markets since the first "peace" statement where we are back to how things were in Q1, quite serious de-risking going on under the surface in Europe.
Hard to judge crowdedness in copper... Bitcoin is interesting - only now seeing selling from IBIT... if we get some short interest building, then it could be interesting.
Private equity under stress - as they need rate cuts.
Strategy has $125m in dividends to fund per month, $1.5bn per year, plus $8.2bn in Convertibles due 28-30, and $900m in cash. The cash runs out in January. Their break even is $75,700. So right now losing $10k per Bitcoin on a total stash of 843k. Certainly fuel for the bear case to build...
There are 4 preferred equity instruments requiring dividends. Of the $1.5bn annual payout, only $140m can be walked away from. The rest accrue and compound, with some over time compounding up to 18% pa, others up to 20% pa. The compounding element seems to be scary enough for them to sell some Bitcoin this week to fund the payments...
reading the latest Goehring & Rozencwajg (G&R) note, it seems that copper will be in oversupply in coming quarters/years while silver/gold remains in deficit as no big mines developed in last years, demand > supply for gold/silver once CBs start buying again, and warsh fulfilling DJT dreams and wishes, hurraj!
What I find most compelling in this framing is the distinction between what backward-looking models say and what the political economy implies. The copper/gold ratio and the 10-year yield were highly correlated precisely when markets trusted that central banks would respond rationally to economic signals.
That correlation broke down when gold started pricing something different: not economic activity, but institutional credibility. The 2022 Russian reserves freeze changed what gold means as an asset, and that change is structural, not cyclical. Industrial metals are a bet on the global growth cycle and free capital flows. Gold, increasingly, is a bet against the reliability of the system those flows depend on.
In a world of tariffs, industrial policy, and fiscal dominance, those two bets point in different directions more often than backward-looking models suggest. In my view, copper at 10% on the 30-year is an open question precisely because that yield level would reflect exactly the kind of central bank credibility loss that gold is pricing.
The two assets are not competing for the same trade. They are pricing different risks, and both could be right simultaneously.
I wrote about that rotation a month ago and it makes sense on multiple levels. Against the USD, copper broke out on the monthly chart of a channel that held price for almost two decades, and against gold, the RSI triggered a rare bullish signal that only happens every 5 to 7 years with previous moves resulting in gains of 134%, 63% and 107% against gold. We are at 30% now. The fundamental story backs it up too, as copper remains one of the most critical materials in AI data center construction and power distribution infrastructure.
Where does lithium fit into this thinking? I know copper is a massive industrial commodity however China seems to be building an industry on the back of batteries and given their record of subsidy and support this industry could grow at gear or two above copper. I am super biased though.
I have always understood the risk to copper being underestimated recycled stock supply.
Can lithium become a hedge in the future? I don't know
So true, "always surprised how much people write and say very little"
I get a lot of street research but find it difficult to read too much of it.
FWIW, Even the venerable bond bull Lacy Hunt has joined the dark side.
https://hoisington.com/pdf/HIM2026Q1.pdf
Why does it have to be one or the other? Why not just add copper to the long side of the trade?
Valid question. I guess i prefer gold as it should also get central bank buying... while copper needs industrial activity
Copper and industrial metals are getting quite crowded, similar to gold at the end of last year. So I am taking them all down. I prefer the Agricultural space. I can see gold coming back to life, but not yet, feels like a bit more liquidation is needed. But gold feels safer to me than copper, agree with the thesis.
What do you make of Bitcoin and its seeming break in relationship with Software? I assume that relationship broadly still holds and Software is about to "catch-down".
Today is the first day in markets since the first "peace" statement where we are back to how things were in Q1, quite serious de-risking going on under the surface in Europe.
Hard to judge crowdedness in copper... Bitcoin is interesting - only now seeing selling from IBIT... if we get some short interest building, then it could be interesting.
Private equity under stress - as they need rate cuts.
Strategy has $125m in dividends to fund per month, $1.5bn per year, plus $8.2bn in Convertibles due 28-30, and $900m in cash. The cash runs out in January. Their break even is $75,700. So right now losing $10k per Bitcoin on a total stash of 843k. Certainly fuel for the bear case to build...
I thought the dividend were largely optional....
There are 4 preferred equity instruments requiring dividends. Of the $1.5bn annual payout, only $140m can be walked away from. The rest accrue and compound, with some over time compounding up to 18% pa, others up to 20% pa. The compounding element seems to be scary enough for them to sell some Bitcoin this week to fund the payments...
That is.bearish!
reading the latest Goehring & Rozencwajg (G&R) note, it seems that copper will be in oversupply in coming quarters/years while silver/gold remains in deficit as no big mines developed in last years, demand > supply for gold/silver once CBs start buying again, and warsh fulfilling DJT dreams and wishes, hurraj!
I agree. The Chinese have a tendency to hoard the metal. I wouldn't be suprised if it dropped 30% in a 3 week period soon.
What I find most compelling in this framing is the distinction between what backward-looking models say and what the political economy implies. The copper/gold ratio and the 10-year yield were highly correlated precisely when markets trusted that central banks would respond rationally to economic signals.
That correlation broke down when gold started pricing something different: not economic activity, but institutional credibility. The 2022 Russian reserves freeze changed what gold means as an asset, and that change is structural, not cyclical. Industrial metals are a bet on the global growth cycle and free capital flows. Gold, increasingly, is a bet against the reliability of the system those flows depend on.
In a world of tariffs, industrial policy, and fiscal dominance, those two bets point in different directions more often than backward-looking models suggest. In my view, copper at 10% on the 30-year is an open question precisely because that yield level would reflect exactly the kind of central bank credibility loss that gold is pricing.
The two assets are not competing for the same trade. They are pricing different risks, and both could be right simultaneously.
I wrote about that rotation a month ago and it makes sense on multiple levels. Against the USD, copper broke out on the monthly chart of a channel that held price for almost two decades, and against gold, the RSI triggered a rare bullish signal that only happens every 5 to 7 years with previous moves resulting in gains of 134%, 63% and 107% against gold. We are at 30% now. The fundamental story backs it up too, as copper remains one of the most critical materials in AI data center construction and power distribution infrastructure.
Where does lithium fit into this thinking? I know copper is a massive industrial commodity however China seems to be building an industry on the back of batteries and given their record of subsidy and support this industry could grow at gear or two above copper. I am super biased though.
I have always understood the risk to copper being underestimated recycled stock supply.
Can lithium become a hedge in the future? I don't know