Before diving into your question, I think it's important to share a bit of background. Back in 2019 and 2020, I got deep into commodities. At one point, my personal portfolio (separate from my professional stock investments) was split evenly into mining stocks, gold, and a synthetic commodities ETF (https://fundcentres.lgim.com/en/es/institutional/fund-centre/ETF/All-Commodities/). I was really inspired by Tavi Costa from Crescat - so much so that I even set up a live chat with him for the grad business school I was attending (https://e.cglink.me/2kb/r300050755).
With all this in mind, commodities DO NOT generate cash flows, so holding commodities falls under the category of speculation. Mining companies, especially microcaps (those focused on exploration or early production), require a ton of specialized knowledge—often you need a top-notch geologist to really tell what's what.
I'm not a macro expert, but when it comes to commodity prices, you’ve got two big forces at play: technology tends to push prices down (deflationary), while governments printing money does the opposite (inflationary). If you can predict either of these, you might do well in the sector. But since macro predictions aren’t my forte, and most mining ventures are a bit too murky for my taste, I generally pass unless it's crystal clear and extremely compelling.
I realize that most commodities are not good long-term investments. But they can outperform in the short-term. I use technical analysis to enter the top mining companies and buy synthetic covered calls to benefit from time decay.
I don’t think that technology can solve the commodity supply-demand deficits easily this time. World governments are creating currency and adding debt exponentially.
Meanwhile, ore grades are falling and supply growth is slowing.
The new tech is going to require unsustainable amounts of energy. Electric vehicles, batteries, and solar will require more copper and silver. That’s why I like uranium, copper, and oil.
For gold and silver, I like the top royalty companies that generally keep up with the stocks market, but outperform in gold and silver bull markets.
Tech stocks are currently overvalued relative to commodities. I plan to swap when that reverses.
I'm not particularly focused on thematic investing or using macroeconomic factors, so you're definitely more knowledgeable in that area. I can't really add anything of value to your comments.
My approach typically involves looking at companies that are out of favor or highly disliked by the market, and it's centered around assessing their viability as a business individually and within their sector/geography.
Next week, you'll get a guest post from a fellow writer about $EMX. Should be interesting ;D
Awaiting to see more!
What do you think about gold and commodities in this environment?
Before diving into your question, I think it's important to share a bit of background. Back in 2019 and 2020, I got deep into commodities. At one point, my personal portfolio (separate from my professional stock investments) was split evenly into mining stocks, gold, and a synthetic commodities ETF (https://fundcentres.lgim.com/en/es/institutional/fund-centre/ETF/All-Commodities/). I was really inspired by Tavi Costa from Crescat - so much so that I even set up a live chat with him for the grad business school I was attending (https://e.cglink.me/2kb/r300050755).
With all this in mind, commodities DO NOT generate cash flows, so holding commodities falls under the category of speculation. Mining companies, especially microcaps (those focused on exploration or early production), require a ton of specialized knowledge—often you need a top-notch geologist to really tell what's what.
I'm not a macro expert, but when it comes to commodity prices, you’ve got two big forces at play: technology tends to push prices down (deflationary), while governments printing money does the opposite (inflationary). If you can predict either of these, you might do well in the sector. But since macro predictions aren’t my forte, and most mining ventures are a bit too murky for my taste, I generally pass unless it's crystal clear and extremely compelling.
I realize that most commodities are not good long-term investments. But they can outperform in the short-term. I use technical analysis to enter the top mining companies and buy synthetic covered calls to benefit from time decay.
I don’t think that technology can solve the commodity supply-demand deficits easily this time. World governments are creating currency and adding debt exponentially.
Meanwhile, ore grades are falling and supply growth is slowing.
The new tech is going to require unsustainable amounts of energy. Electric vehicles, batteries, and solar will require more copper and silver. That’s why I like uranium, copper, and oil.
For gold and silver, I like the top royalty companies that generally keep up with the stocks market, but outperform in gold and silver bull markets.
Tech stocks are currently overvalued relative to commodities. I plan to swap when that reverses.
I'm not particularly focused on thematic investing or using macroeconomic factors, so you're definitely more knowledgeable in that area. I can't really add anything of value to your comments.
My approach typically involves looking at companies that are out of favor or highly disliked by the market, and it's centered around assessing their viability as a business individually and within their sector/geography.
Next week, you'll get a guest post from a fellow writer about $EMX. Should be interesting ;D
P.S. I recently shared a useful framework in this post on how I measure business quality: https://hrmt.substack.com/i/146627718/ending-note-business-quality
That’s exactly why I value your work, it’s different than mine! Cool, I like EMX, as well.