Title: Jeff Currie: The abundance illusion. SPR oil releases work until they run out. AIA Weekly 6.13.26 Show: Action Bull Intelligence (AIA Weekly) — weekly market update Guest: (none — solo) John Polomny Date: 2026-JUN-13 URL: https://youtu.be/n28isGcngwY Length: ~57 min Note: fillers (um/uh/you know/I mean/right?) removed and stutters collapsed; wording otherwise verbatim. (mm:ss) cue lines kept exactly. Obvious auto-transcript garbles corrected to the intended entities: "John Pauly"=John Polomny, "Dave Colum"=David Collum, "Jeff Curry"=Jeff Currie, "Birkshshire"=Berkshire, "Bob Morardi"=Bob Moriarty, "Tavi Costa"=Tavi Costa, "Schlumbumberge"=Schlumberger, "Wear"=Weimar, "Ray Dallio"=Ray Dalio, "John Husman/Husmann"=John Hussman, "Bessinet"=Bessent, "Landbridge"=LandBridge, "Don Cox"=Don Coxe, "Munger"=Charlie Munger, "John Bogle"=Jack Bogle.
00:02 Hey guys, John Polomny here, Action Bull Intelligence. Today is Saturday, June 13th, and this is the weekly market update. The disclaimer, anything that you hear or see on this podcast or video is not to be taken as investment advice. Please do your own due diligence. It's your money. It's your responsibility.
00:26 Okay, let's get started. So obviously we had the SpaceX IPO yesterday dominated the news for the last couple weeks and yesterday I got the YouTube TV so I could watch some of the World Cup games and I happened to bring CNBC as part of the package and so I put it on just cuz I wanted to hear it.
00:57 I was just reminded of just how the corporate financial media is just it was such a shill. It was so over-the-top ridiculous. Anybody that listens to this and thinks it's like real news or you're going to get anything edifying out of that as a investor, you simply aren't. It's set up to do one thing, which is support the financial industry, which exists to do one thing.
01:30 Get as many assets under management and then cream off as much fees and money as possible. And this is another example. I don't really need to go into it too much. I didn't read the whole S1. I read articles of some other people that have went through it completely. This is something I would never buy. I'm not going to criticize you.
01:55 If you bought it, this is not investing in my view. This is totally opposite of what I do. Allah be with you. If you bought it and I think it popped, I don't know, 25 or 30%. It's not a real business that's going to make money long term. That's my view. I understand Mars and the moon and the universe is one person said the universe is limitless so the stock price is limitless.
02:24 What was said on TV on supposed financial media and these people run money that said this it wasn't just some goofball, somebody that has assets under management and this is what no other side of this thing because all these firms that all the advertising from the different financial firms that goes into CNBC it's all it reminds me of the story of the Big Short when the bomb and one of his guys, Vinnie, I think, go to S&P and talk to the woman at S&P about how, why, and how
03:05 did they label this subprime junk as investment grade? And it's just like, well, if we didn't do it, Moody up the street would do it. So it just goes back. I had a conversation. I was on a video interview this week, panel, if you will, with David Collum and Ben Kellerin.
03:31 And this goes back to my whole theory. Getting off the soap box a little bit. All of these institutions in the United States are just set up to strip mine the average person of their money. Whether it's the government with their taxes and fees and their stupidity and their dumb regulations, the medical industry, I saw something today.
03:54 I didn't put it on here, but there's a tweet that medical insurance is going to go up by 22% this year. Some of these people are going to be paying $30,000 a year for medical insurance with a $25,000. It's just crazy, man. You just go down the line, the pharmaceutical industry, the food industry, the whole shebang.
04:13 It's just set up to beat you down and treat you as a cow to be milked. Okay. And this is just another example. The shiky Mickey going on about putting it into the index. Even if you don't want to own this thing, I told somebody the other day, they said, "Well, I'm not sure I want to buy it.
04:37 " I said, "You're going to I said, "Are you do you have a 401k?" "Yes." And this person was like in the target. They didn't even know. They finally figured out like they're in these target funds. If you're like 30, you're in a target you target 2055 fund or something somewhere whenever you turn 65 and they're investing your money.
04:56 Well, all of these things are buying these things. They're just buying the index. And so you're owning all this stuff whether you know it or like it or not. This is why I advocate for becoming an individual investor. But in order to be an individual investor, you have to do work.
05:14 And what the financial industry have sold people is that you can put 288 a month in and not look at it and in 50 years you'll be a millionaire. But valuations do matter. Jack Bogle, who started the whole passive investing thing at Vanguard, I think that he's probably rolling over in his grave, seeing what it's turned into.
05:37 But anyways, here's just Dave Stockman. He was in the Reagan administration. I think he was the charge of the budget office. And this is just interesting comment on X. I just wanted to put this up here. People are in a get-rich-quick society with investment return expectations that are skewed because of all the cryptocurrency and all the things that go on in these markets that everybody thinks that hey I can just buy something
06:11 it'll go up 5 10 times. We don't have to do financial analysis. None of this stuff matters. Long-term investing stay poor boomer that's what you hear. Not going to make it all this stuff. And I think I've been proven right over time. The slow and steady rational buying undervaluation, selling overvaluation in the long term beats the hype.
06:38 It's provable. But that's not what people want. People, as Munger said, the problem with most people and why big reason why they're unsuccessful is because they want to get rich quick. So here's what Stockman says. He says, "Well, here's some math. Starlink is a profitable business with about 11 billion of sales and 3 billion of free cash flow." Yeah, that's true.
07:03 It might be worth 75 billion at a frisky multiple of 25 times cash flow. Well, I wouldn't even give it that cuz if you actually understand the business, it's not in a business that's going to expand over time. But I'm not going to get into that. There's people that have written about that. I didn't understand Starlink exactly how it worked.
07:22 as broadband goes further as cellular technology goes from 5G to 6G wherever it's going. Once a one of these satellites comes over an area can't for example have unlimited bandwidth. You get to like the first thousand people on it works for rural areas and places with inaccessibility it doesn't work for being over like New York City or LA gets overwhelmed and it can't handle the traffic.
07:54 So it's not a replacement for it's not going to the bottom line is it has a total addressable market that is fixed. So anyways that's why I wouldn't even give it a 25 times cash flow. It's a melting ice cube over time in my view because of technology says the space launch business and the AI data centers in space fantasy has 7 billion of sales and negative 17 billion of free cash flow.
08:22 So why is it worth anything unless you are pricing a dream peddled by the side hustlers? Well, that's my view. In short, after trading up to $2 trillion based on 75 billion of tangible Starlink value, where's the remaining 1.925 trillion of it? This isn't just the classical mania of the crowds.
08:44 This is mass insanity in a casino that has been given a lobotomy by three decades of money printing madness at the Fed and fellow traveling central banks around the planet. Well, that's a big part of it in my view. And Musk being the ultimate salesman, he's very good at selling the dream. It was really, you really had to watch, shades of 1999 2000 on CNBC the other day just listening to how this thing was hyped up.
09:18 I find it fascinating. Musk, if you're going to ride with Musk, you're going to ride with Musk and die with Musk. If we get a for example, I'm very grateful for what he's done with X. He saved maybe I'm not going to say he saved free speech in the US, but he created a platform where people could say what they wanted to say and he paid 44 billion for it and he did that.
09:41 He deserves accolades for that. But he made a lot of enemies. And he says a lot of things that makes enemies and eventually the Democrats are going to come back into power. Majority of the space launch revenue is a lot of its government. What's that going to do? What are they going to do? You don't think they're going to come after Musk? You don't think they're going to come after X? And people say, well, it's kind of locked in because they have so much of the government space launch
10:12 business. Look, these people that are ideologues that are going possibly come back into power at some point, they don't care about facts. They don't care. They would bash the space economy against the rocks just to destroy Musk, just to destroy a political opponent. Look at California. They have the highest energy prices or if not the highest energy prices of any state in the union.
10:39 They're doing absolutely nothing to rectify it. Because ideology trumps everything. And so this idea, explain to me how putting a base on the moon is going to how do you monetize that or solar panels in space? This is all more of Musk storytelling. And people like the story, people like Musk. He's the perfect guy for this.
11:03 Okay, I get it. This is not an investment. Then you look at the lockups. I had big bunch of articles here. I live down by where the spaceport is down here, whatever they call Starbase. And it's a big deal down here. And there were articles, not only in local papers, but national publications about the good thing that happened was a lot of just working type people.
11:28 There's like a welder out there. He didn't even know what SpaceX did when he started working out there. And everybody got stock or options and things like that, even like cafeteria workers and janitors. And so you have this thing where there's a lot of on paper millionaires created. Will these people be savvy enough once the lockups come to sell? How much of this stock is going to come to the market? This is a company that's just going to continue to burn cash.
11:57 So where are they going to get the cash? At what point does the launch business become profitable and cash flow and what's the value of that cash flow? Well, John, you don't understand because space is infinite. No, you don't understand. At some point, you have to cash flow positively and make money with these endeavors or you're going to cease to exist.
12:20 And the AI business, the Grok thing doesn't have it has like 3% market share. It's a non-event as compared to the other AI companies which that's a whole another you're putting a valuation on that it has no value it's it's an also-ran. It's one of these search engines during the internet bubble that nobody even talks about anymore does anybody use Yahoo search I can't even remember the other ones So, it's a hype train.
12:58 It's indicative of a bubble. If people, I told people if you want to play this and flip it, but it's not investing. And I don't do that and I don't encourage people, especially people that are inexperienced because it gives you a false sense of how the markets work. The markets are very good for creating wealth long term. They're great engines.
13:20 They can be okay stock market and things like that to create wealth and for you to take your excess capital and grow it over time. They're excellent for that. But it's a tool and if it's used correctly, it can work mightily for you. If you treat it as pitching pennies or baseball cards or whatever, flipping stuff with this gambling mentality, then you're just going to create a mindset that if you have early success, then you think you're doing something.
13:52 And this is why I don't encourage people to do it. Again, you're going to see people that make a ton of money on it. You're going to see this is for the insiders. I think the total capital that was put in through all the series raises was something like $10 billion or something like that.
14:08 And so these people now have got taken this thing public. Those people can now start exiting, cashing out. That's what this whole thing is for, for them, for you as a retail investor and you and your index funds because it's being rules are being changed a little bit so they can get into the index so that they can offload this onto retail, offload this into people's 401ks.
14:32 Again, just more of the strip mining and stealing and taking advantage of the average person. I'm totally against it, but nobody cares what I think. So, hey, if you did well, Allah be with you. Take the money and run, I guess. But this isn't investing, make no mistake. So, this is going to continue because we have other things coming to market too. Anthropic at some point, OpenAI, other things, these things are all overvalued relative to historical norm. And again, I don't
15:11 buy overvalued assets on a fight. I buy cash flow. I buy businesses. I buy managements that know what they're doing. I buy things that are undervalued that have a chance or have some type of catalyst that's going to change the perception of them in the market and revalue them higher.
15:33 That's what I do. And that's not fun. And that's work. And that's boring. And that's not exciting. And so this other stuff is more exciting. So this is where we're at in this market. 51% of the S&P 500's market cap is in stocks trading above 10 times sales. I saw this was put on Twitter and this is like really skewed.
15:56 This goes back to previous bubbles. And then of course there's always the other side. Well, what does that mean? That doesn't mean anything. What if the margins are high or what if the profits are high? Okay. We can look at whatever you'd like to look at. And people can make the case.
16:14 People will always people can always make the case on either side of an argument for their position. I'm just telling you that in the history of the markets, buying things at these high valuations doesn't usually end up very rarely if ever ends up down the road being higher. It ends up being lower. Things are overvalued.
16:39 It's just that simple. People don't want to accept that because there's a bias now that's been created. People are in the FOMO. People are getting rich. They're feeling good. They're on a rush. They're on a heater and they don't want to come off it. It feels good. I've been there. I know what it is.
16:59 And so anybody that puts up any kind of information that may be contrary to that, well, you're a hater, you're a boomer, you're not going to make it. Well, my methodology and the methodology of the greatest investors works long term. And the way you become wealthy and grow the goal is to grow capital consistently.
17:17 And the way you do that is not somebody asked me the other day, well, I got this whatever few hundred bucks. What should I do? Go play the lotto. I don't know what to tell you. You'll probably have more fun doing a bunch of scratchoffs. You're not going to compound capital.
17:36 You might get a quick hit and get lucky and get out, but that's not how you compound capital, buying overvalued securities. I'm sorry. So, we have lots of new supply coming. This is the uh this is net equity issuance of US non-financial corporations. This is without the SpaceX. So, you were already at recent highs.
18:01 New supply is coming to market. Where's the liquidity for all this? This is why a lot of other things are not going up. People were selling other things to buy stuff, buy into this IPO, to buy into the hype, to get that quick flip. This is not investing. So, valuations leading to issuance also lead to higher Berkshire cash.
18:28 You can see at the prior time that Berkshire had a lot of cash. You can see it coincided around times of issuance of stock as a percentage of the S&P market cap. Usually around tops. Usually around tops. We haven't seen cash is way up. Where is issuance going to go? Well we have a lot of stuff coming to market now.
18:54 And so this hasn't moved yet but expect this to move a lot higher. Goes back to what I said before. Price is what you pay, value is what you get. I kind of like this chart. Luke Gromen, a lot of people like to bag on him. But I like this. I'm not suggesting that we're going to have a Weimar type hyperinflation.
19:18 More than likely, even if we were to have one, it would be a long way out. But I like the fact that as the Weimar inflation took place, gold protected people. There's a quote on here about gold not being a store of value. That was somebody was quoted during the Weimar hyperinflation.
19:48 It says, "Gold is too volatile to be considered a store of value. It goes down by 150 Reichmarks on Wednesday on rumors that reparations relief from the allies has been agreed to. Then it goes back up 80 Reichmarks on Thursday when the deal falls through. Look, we know historical narrative example after example that gold does protect you from what I've said before.
20:17 One of the reasons why I like gold and I think people can hold a certain amount of gold or gold stocks what have you select gold stocks capital appreciation is because of the lack of responsibility that the central banks have. They are in inflation. They are engines of inflation. They exist to do one thing and one thing only.
20:39 Create more currency units. And that's what they do. They're there to support the banking system and support the government so the governments can deficit finance. That's what they exist for. It's interesting. I pointed this out many times. If we were sitting here and we had a balanced budget and we weren't able to deficit finance like this because of the Fed and these central banking schemes and you wanted to have a war with Iran and you would actually have to pay for it and you would have to go to
21:10 the American people and make the case and say well you're spending your savings needs to go down to pay for this. Nobody would be willing to do it. There would be some neocons and stuff, but majority of people like, "No, I'm not. How are you going to make the case? But with this deficit spending, you can have it all.
21:34 It's corrupt. It's corrupt. And at some point, it's coming to a head. And I said it before, I kind of aped onto the Ray Dalio thing, but what I've always said, gold protects you from central banking and government malfeasance. That's what it is. So, this is a Jeff Currie article, The Abundance Illusion.
22:02 Talking about the current oil market. Look, I think a lot of people are surprised and kind of wondering why oil hasn't responded the way they thought it would. It did have an initial push up into above 100 during this war, but then I think that Currie's article, which I'll put a link to in the show notes, is kind of instructive in explaining what's going on.
22:31 And the mistake, political mistake that other people have made in the past, this administration is trying not to make. The problem is that well let's talk about what Jeff Currie says. A lot of people like to bag on him. Well he's been wrong. Anybody that's making prognostications or analyzing markets or making prognostications about the future is going to be wrong about half the time.
23:02 You just have to understand that we're basing this thing on probabilities. What's probable based on the current information we have and based on what we've seen in the past as guides to what may happen in the future because we have to allocate capital. And so, I'll put a link to this article. I think it's worth reading.
23:21 I'm kind of a Jeff Currie fan. I like I think he does a good job. But anyways, he talks a couple blurbs from the article says, "When Carter, talking about Jimmy Carter, when Carter told Americans the energy shortage was a crisis, the admission was honest and politically fatal. His political successors drew the obvious conclusion.
23:40 " And thus, the abundance illusion was born. Never admit to scarcity. Fear may drive policy, but greed is what gets the votes. And thus the template became reassure markets with words and hundreds of millions of barrels from strategic reserves and hope that talking down prices would bridge the gap until supply returned and the problem quietly resolved itself.
24:01 I believe the narrative of American energy dominance completing the rebalancing is equally misleading. Total US crude exports have surged from 3.9 to 6 million barrels per day, up roughly 2 million barrels per day since the war started. Super tankers that once loaded in Ras Tanura and Basra are queuing in the Gulf of Mexico.
24:23 On the surface, this looks like the energy dominance thesis working as advertised. Look beneath the surface and the picture is entirely different. Yes. So I think first of all the first mistake we can't make in anything ever is that we just say we're at position A. We think position B which is higher is linear.
24:49 We're just going to have this linear straight line because we had this you would think okay well how come the markets aren't pricing this in? And there's several reasons why the release of there's a lot there was a lot of excess oil in storage and on tankers that's been exhausted at least the ones in the tankers and onshore is now being depleted.
25:15 There's a limit to how far you can go. Now you can argue about what that is. There's a lot of discussion about that. I'm not expert enough to do that. And so not only that, I've listened to some people that are experts in the crude oil market and they've talked about the liquidity is not there, the amount of open interest.
25:41 So if you want to take a long position, the way that things are being done, I'm not suggesting necessarily, I don't have the evidence, but the way Bessent and some of these other people are with the jawbone and the tweets, you can get wiped out. And so because liquidity is not there.
25:59 And so we know that there's a difference between what you see in the futures market what's touted oil now prices down in the 80s now what you actually pay in Singapore at a refinery is well above 100 and so we're drawing down our SPR and this is exactly what the game is here.
26:22 This is why you have this talk about another memorandum of understanding. We're going to open the Gulf. We may or may not sign. Pakistani said this. I've lost interest in this. I look at it this way. Every day that goes by, these reserves, which are finite, are being drawn down. At some point in the relatively near future, we're talking weeks or a couple months, we're going to be in a situation where you're not going to be able to hide it.
26:50 You're going to have actual shortages, okay? At current consumption. Therefore, price will have to rise to ration. The administration knows this, too. You could see it in Trump's body language, way he talks. He wants to get out of this thing. He knows what's going to happen. They know what's going to happen. They're not stupid people.
27:10 Contrary to what a lot of people think. People around him, at least Bessent, all these people. They know. They know all of this. So, they got to get out of this thing. And so this is what Currie said here. To go back to his quote and thus the template became reassure markets with words and hundreds of millions of barrels from strategic reserves and hope that talking down prices would bridge the gap until supply returned and problem quietly resolved itself.
27:40 So that's the bet. Get the strait back open, get the oil flowing, pump it up, and this thing will resolve itself and everything will go back to normal as we post into the midterms. We won't have record high oil prices in a damaged economy. However, you have to consider what the other side is trying to do. The problem is we don't know what the conditions are with the IRGC.
28:08 We don't know how bad things are in Iran. We don't know how much they've been able to get around the sanctions through the Caspian corridor or shipping things to China or from China. We just don't know. We do know that this is their one game plan. And even though what they've said, I look at what people do. I've encouraged this since day one. Go on.
28:30 In the meantime, the Iranians were launching drones overnight at tankers in the a tanker in the Gulf. So I think for Iran to give some concessions to means full US capitulation which the US can't do. This is unresolvable. Plus again at the way things are currently and in the meantime you know that I don't want to get involved in every true social post every nonsensical thing.
29:03 Pakistani guy said this the the Iranians and the US people don't even talk together. They need to sit down and actually talk together and you have to give there was a news report that the UAE gave Iran at least $10 billion of frozen funds so that or I think it was UAE to try to get consideration from Iran not to attack their attack them anymore.
29:31 Again, neither party can be seen as losing face. Again, we're back to kind of the dilemma in Ukraine, with the Europeans. Or the US is in this situation. How do you lose without losing? Can Trump get some kind of deal that he can spin to the American people that's a success?
29:57 So this memorandum of understanding is just an agreement to have further discussions. I just don't think it's going to hold. And so tick tock tick tock every day the draw go down. And eventually we're going to get to a position where there's no more ability to reassure the markets and give this illusion will dissipate as reality asserts itself.
30:23 Now I could be very wrong. Maybe the market has it right. Most of the time, let's not forget the market does have things right, but there are cases when it doesn't. I believe this is one of those cases. I believe this is a case like in the stock market. It's overvalued. It's been overvalued for years. John Hussman has been wrong.
30:41 He's been putting out all this data. He's exactly right in what he says. It doesn't matter. The market keeps going up. Until it doesn't. And so I think my perspective on the oil market is I'm invested in oil field services not necessarily the main that you say that mean people go well I'm going to buy Transocean or Schlumberger there's a whole universe of companies that are overlooked that trade like in Singapore and Norway that are doing tremendously
31:18 well and are going to continue to do well regardless of what happens with the oil price. Because offshore oil exploration is in a cycle now. These are long projects and you have to have oil go down to like 40 or 50 and stay there for a year before people would start pulling back.
31:40 And I don't think that's going to happen. I in fact think oil is going to move higher over time because the underinvestment is clear. And so that's my view. And could we get into a situation where they can't, the information vacuum, fog of war, it's to buy like oil futures. You just can't be in that market.
32:11 I would say that a lot of the oil companies that I have stakes in, they're doing tremendously well cash flowing. If oil stays at 80 or 90 or even 75, there's companies that I can tell you that are going to have tremendous cash flows. And so, I think it's investable. But again with all of this news and hype, people are just, this almost has the thing of an upside the head moment, that's coming.
32:46 And there's so many things pulling in different directions, whether it's the Israeli lobby, the neocons, the military-industrial complex, the hawks in the Congress, evangelical support Israel. The impending crisis of the midterms that's coming, the economic situation that higher oil prices causes, how it spills over into so many other things with the Gulf being closed.
33:16 Inflation now is back is rising. This is just not good. And how do you get out of this? How do you lose without losing? That's basically where you're at. And so another thing here from the Currie article, the United States is cashing out its insurance policy in order to maintain the illusion of abundance.
33:40 The SPR has fallen from above 450 million barrels in March to approximately 357 million today on a trajectory reaching operational minimums by early autumn. Cushing has declined from 33 to roughly 24.5 million barrels, weeks from nearing the floor below which the future settlement mechanism begins to break down. Commercial crude inventories have erased their entire 2026 build in 5 weeks.
34:07 Gasoline stocks have drawn for 15 consecutive weeks. Diesel stocks are near critical levels before the summer driving season. This is not supply responding to price. It is inventory responding to price. And inventory unlike production has a floor. So there you have it. I would suggest you read the article. Other people have other views that are more optimistic that we're close to a deal and Iran has needs a deal and we need to get out of this too.
34:38 But again, this is the last shot. The IR, this cartoon thing that you're dealing with irrational people that are crazy. That's not the case. You can see by the way that they've responded and how they've planned for this for decades has played out exactly. This is the game.
35:00 This is the do or die. You either my view is that Iran's in a situation and remember they're going to you're dealing with people at bargain, and pull out of deals and do things to get hopes up and then rug-pull deal. We're not party to what really is going on and the media has no clue what's really going on.
35:25 So I'm going on this from theory that what would I do if I was them and knowing that this is like a strategic all-in you probably won't get another shot at this because event you know we've already seen that a lot of the oil producers in the Middle East are going you know economics works there's going to be workarounds pipelines going to be put in to go around the Gulf all of these things are going to start happening people are going to do whatever they can to not be in this situation. And so the Iran, I think, has
35:57 to inflict so much economic pain on the world. And everybody will then focus on the United States and Israel who attacked Iran to make it clear that this cannot happen again. Because if they were just to agree to a bunch of stuff, the US is just going to rearm and Israel is going to rearm.
36:20 and we're going to be right back in this in a couple years. There's no guarantee. And so it has to be so painful and so punishing that no one will ever people would say we're not ever going to do that again and we're not going to support you. The United States you become a pariah. And even the the experience of the American people, it has not been painful enough for the American people.
36:42 Most people are just going about their hot dogs and baseball games and the World Cup is rolling now. No one's even thinking about this. And so think people in the Iranian leadership that's running things now if you go with the cartoon team America puppet show that they're just dancing around and they're just kamikazes.
37:05 If that was the case they would have already demonstrated a nuclear weapon and used it. They're not. That's not what's going on here. That's what I would advocate for if I was in the IRGC. But they would have already done that. And people say well they don't have the capability. They have the capability.
37:26 Believe me if they wanted to do it they could do it. So this is it. And so are you going to let Donald Trump and the US administration off the hook going into a midterm when you know that if you can just keep this going for a couple more months guys sunk in the midterms he's going to get impeached.
37:45 He probably if they don't get this resolved and we have energy prices continue to move higher, he will be removed from office, his own party will remove him, and they'll put all of the blame. They'll put it all on him. Take all the trash, dump it on him and say, "He did it. He chose to do this. Blah blah blah. Get them out of here.
38:07 " and we can go back to status quo which is stay there to get unearned power and steal money for our own benefit that I'm talking about these Congress people and the bureaucracy and things like that. So there's a lot of interests that don't have the the only person that wants to resolve this is Donald Trump and his hangers-on.
38:26 Why would the Iranians want to resolve it? Where's the Republican party? They don't even want to pass the act. And so this stuff does tie together and a lot of people don't find these things interesting, but they do affect economics and they do affect the markets.
38:49 Right now we're on a sugar rush. Gas is 425 or 450 a gallon. So what? Yeah, inflation is up. It's irritating. It's up a little bit. So what? I can live with it. We need real economic pain to so people say never again. Ever again. And I believe the Iranians know this and I believe that's what they're going to do. Now, I may have it wrong. We'll see.
39:13 Maybe they're so desperate for a deal, they're ready to collapse and there's a lot of infighting going on and we don't, who knows. But I would suggest to you that they've absorbed everything the US military could throw at them, that the hegemon could throw at them and they're still there.
39:32 And I just don't think there's going to be an invasion of Iraq with ground troops or Iran with ground troops and remove the IRGC. That simply isn't going to happen. Time is on the side of the Iranians, not Trump administration. So, here's showing you the global strategic stock draws by source, March through August.
40:00 Obviously, we're in June now. These are forecasts out here, but it's forecast to really drop off by July. But a lot of this has just been pushed forward. A lot of this is based on the US SPR. You see like just even in May, it started to drop the South Koreans released a lot. They as people release more and more oil, their ability to you get near the bottom.
40:28 I looked at Japan going into July. They have released a lot of oil from their SPR that is like almost like straight down. It's getting near its bottoms. You just see going forward, there's only going to be a couple of countries as we go further into the summer that have the ability.
40:47 And so you have to replace if you drop off from June releases, which we're halfway through June now, by 2/3, where's that oil going to come from? And so this has to get resolved and get So if some analysts have already said, irregardless if you got a deal and everything went back to normal, which I don't think we're ever going to go back to normal at this point.
41:15 You're never going to go back to the way it was, February 27th where you had 20 25 million barrels, whatever it was transiting the Gulf and all the other things. It's just not going to go back to that. So that's my view. And so I think we're going to have higher oil prices over the next 3 to 5 years.
41:34 Yes, it's very volatile. It's hard to forecast, but this is telling me what I need to know. Again, you could say, "Well, they've been saying this for months and nothing's happened. The oil prices dropped." Okay, well, we'll see what happens. I thought this was an interesting chart. It's hard to see the dates here, but this goes back to like the entirety of the oil goes back to like the late 1800s up to modern times.
42:04 And you see that gold, silver, and oil are kind of tied together. And you see gold and silver have really launched in the last year. Oil's kind of held back. I do know there's a correlation between I think oil lags gold by so many months. I can't remember, but I do think oil prices are going substantially higher over time.
42:31 I just, growth is re, as I said in my June article for the actionable intelligence alert. It's undisputable that the world runs on fossil fuels and a lot of that is oil and natural gas. Most of it is. And so in order for economic growth to happen, you need increasingly amount of energy inputs. Just the fact if you energy inputs decline, economic growth declines.
43:06 This is what we've seen in Europe. This is why one of the main reasons Europe has stagnated is because they've taken they've went from dense energy sources to less dense and made it more expensive. That's one of the reasons they've stagnated. Not only that, there's a whole bunch of other reasons, but that's a big factor.
43:25 China, look at what they've done. They've built all of they've done everything. Coal plants, wind, solar, nuclear, the whole shebang. Across the board, have as much energy as possible from all forms of energy. And so this is one of my core thesis. My core investing concepts. Sell overvaluation, buy undervaluation.
43:49 Energy is everything. That's number two. Everything is based on energy. So this is good. Central banks resume gold buying. We've had a real big pullback in gold. All the tourists have left. The tides went out. People have moved on. We did have because of this situation with the oil markets.
44:15 We've had countries, it's been in the news, selling gold. Turkey, some other countries, people have reduced their gold buying. That's reversed now. Why were people doing that? to support their currencies and hard currency for you sell what you can sell when you need money you need to pay higher costs for energy it looks like it's reversed now other things are going against gold now let me speak to this we were you I haven't talked about it in a while but I'll talk about it now we were in a situation
44:45 where central banks around the world were synchronized in cutting rates that's now reversing we're seeing rate increases around the world now and so liquidity is tightening. Liquidity is tightening around the world. Real rates are starting to go up as inflation goes up. People are raising rates.
45:04 This can be detrimental to the gold price. Rates are moving up in the US. Dollar is strengthening. Because of that lower liquidity, higher rates. If you can get if rates go up on the short-term returns for money, people are going to go into cash and get those guaranteed 4% or whatever and not mess around with gold.
45:30 You need gold to be a long-term move. You need negative real rates where the inflation rate is higher than the 10-year Treasury, for example. And it's not necessarily where it's at. It's the trend. It's the trend. If you can go look at a chart that's on long-term charts, I probably should have brought it up.
45:52 I'll put it in the weekly email. Trend when the trend in real rates is really the thing that correlates a lot to the gold price. And so you have a lot of things conspiring around gold, but it still held up relatively well, respective of all these things. And so am I ready to call a bottom? Not necessarily.
46:17 I'm bullish on gold long term because all of the fundamental things that drive gold higher are still in place and not going away. Again, we go through periods where things get overbought, they pull back, what have you. intermarket relationships, but the long-term trend on gold and precious metals and all hard assets is from the lower left to the upper right.
46:40 And so being able to trim positions or take profits when things are overbought is the whole key to this thing. And then recognizing, well, I'm not going to be able to call the exact top or exact bottom. Can I capture that 70 to 80% of the move inside of that? And so this is one of the things we're moving back to a positive.
47:04 Here's China. China central bank gold purchases. For a period of like almost two years they've kind of not been that great but now they're starting to pick up again. Why? Because they're value buyers. The gold price drops. They start converting more dollars to gold. They don't sell but they reduce their buying when the gold price was getting crazy that's what good value investors do and so your goal is I want to accumulate more gold I don't need to
47:36 be buying it at all-time highs I can wait for it to pull back wait for the currents to leave and then start buying again I thought this was interesting this is the gold miners bullish percent index and I've seen like Richard Russell use this, Bob Moriarty talks about this. This was on Twitter. This reached zero.
48:02 At least on this chart that goes back to 2016, it's never reached zero. Typically, when this thing gets real low like this, like below 20, I can't remember what Richard Russell said. He was a famous market prognosticator. He worked into his 90s. He died like over a decade ago I think.
48:25 But Bob Moriarty talks about this too. This can really tell you when things are over. There's zero bullishness in gold miners and yet they remain good businesses even at this current gold price. A lot of the gold stocks have got clipped. Especially a lot of the juniors. And I added a junior to my to my portfolio of the actionable intelligence alert newsletter.
48:52 I'm reviewing several other juniors. I said probably over the last 6 months that I was looking down from the majors. I think Agnico Eagle's off 40%. You could just buy that. One of the best gold miners in the world. But I think there's a lot of opportunity in small and mid-tier market caps here, especially when there's basically no one's bullish on these things.
49:15 No one cares about them now. And this is what we like to see. Again, I'm long-term bullish over several years. I think we're going to make new all-time highs eventually. I can't put a timing on it. It's impossible. But this is what I would look for to say, yeah, that's I want to buy when everybody else doesn't want it.
49:36 and we're down to I've never even seen this before. I haven't seen it low. When it gets down into the teens, there's usually a good buying opportunity. So, anyways, something to consider. And here's a chart from Tavi Costa. Gold miners prices versus cash flow. The fundamentals again are still good.
49:57 The cash flows are still good. They're going to pull back. The fourth quarter of 2026 is probably the high water mark for the near future. Q2 will be down. Why? Gold prices are down, detail prices are up, but there's still going to be very good margins in my view. And so again, if you think the gold price is going to go down for even further, you might not want to buy.
50:21 Again, I can't time these things. I know what I know and I think that gold is going to move higher over time for the reasons I've talked about before. And so when nobody wants it, I think that's probably a good time to be looking. And there's so many companies out there that I think are undervalued just on the current cash flows. So something to consider.
50:45 Wanted to show this. This is another thing that we're seeing a real big backlash in these data centers. Where I live down here, they were wanting to put in a big data center outside of town and they kind of put a moratorium on it for right now. the city council I think tried to sneak it through and there was a big uproar due to water and power prices.
51:06 But this is something I predicted would happen. There's not enough not enough electrons. Not enough water. And so this is another reason why I like TPL and why I like LandBridge and things like that because you can dump these things in West Texas in the middle of nowhere where there's plenty of water, there's plenty of natural gas, it's stranded, there's plenty of nobody's going to complain because nobody lives out there.
51:30 Loving County has like 100 people or something like this. So that's why I like companies like that. But you can see prices were around oh I don't know back in 2021 between 13 and 14 cents. Now they've went up to 20 cents. Well this is mostly because of the data centers. So you're up by a what 50% almost? Yeah, almost 50% in five years and mostly this is because of data centers and this is why one of the reasons why people are putting back.
52:09 People don't want these things around them. And again this data center buildout went faster than the creaky old grid in power production. This is why I think the Trump administration was telling people if you're going to build a data center you have to build the power. So, I still think there's going to be a tremendous amount of opportunity.
52:35 I'm looking at companies that I just bought one the other day. No one talks about it, and it's in Arizona, and it's just it's kind of like a TPL situation, but like a generation behind, but people that are running it, I think, get it. And they have a huge land package outside of Phoenix and they're allowing wind and solar on it and it's just a whole bunch of other things going on.
53:03 I don't want to get into it. But this is an opportunity in my view. And this is also going to be a political thing. It's a big deal in Pennsylvania right now. Power prices because of the stupid data centers everybody's putting in. It's just a free-for-all. wanted to show this.
53:25 I like to show these things. This doesn't mean, I did buy some Alcoa for my personal account a while back. We're near 5-year highs in aluminum prices, and they're actually higher in the US in many areas because I've seen prices as high as like $5,000 a ton. So yeah, there's just things like this all over the market that have been exacerbated. They were already bullish.
53:52 This was already moving higher way before we had this thing in the Gulf that has kind of supercharged it. To a higher level because you're shutting capacity that was in the Gulf. So interesting. And of course sulfur prices have doubled. This is crazy. It's interesting and one of the companies that I have in the portfolio is a copper miner.
54:16 It has a smelting operation and it produces a lot of sulfur as a byproduct and they don't need sulfuric acid for their process. And so they're able to sell the sulfur that they create from their smelting process to other people that are short of it to create sulfuric acid that they need for their processes. And it's so lucrative. I believe the company's making basically around a million dollars a day just from sulfuric acid or sulfur sales.
54:46 Okay, byproduct sales. And so it's another example of you take a position in a company that you like that's a good company and you put yourself in a situation to get lucky. So it was an unanticipated bonus. Notwithstanding the fact that the mining operations are recovering from some issues and doing well with current copper prices above $6 a pound.
55:11 So I just like to point this out because this is a direct result of the closure of the strait of Hormuz due to all the sulfur that was being produced there as a byproduct of the oil refining process. Especially a lot of these crudes have a lot of sulfur. You have a desulfurization unit takes the sulfur out and now this what was just piling up.
55:39 A lot of the world was dependent on this I think 20% 25% of the sulfur 30% something like that. And so people have to scramble then to get these so you have to really pay attention to in some cases this can be a a boon for some people and then it could be a disaster for others. Again, it's not just oil and gas. It's a whole bunch of other things.
56:03 And this is kind of what we do at AIA actionable intelligence is look for these things that most people are not looking for. Second and third tier effect that have not that are not obvious. That are not page one story. As Don Coxe said, look for the page 16 or page 20 story. That's moving to page one. ▶ Page 1 ▶ Page 16 ▶ Page 20
56:25 That's the investment opportunity. Okay, I think that's it. Yeah, that's it for this week. Appreciate you guys following. Appreciate we're in a very volatile times, but volatility and chaos create opportunity. So I encourage you to subscribe to the actionable intelligence alert newsletter. Our portfolio is beating the S&P still this year.
56:49 Notwithstanding the fact that yes, people are making money on Nvidia on individual stocks or to crush me. But let's see what they do over five or 10 years. That's what I'm interested in seeing. Okay guys, that's it for this week. We'll talk to you next week. Thank you.