[This blog post is an excerpt from a commentary published about two weeks ago at www.speculative-investor.com]

During February-March of last year there was talk of the US government revaluing the gold bullion that currently is an asset on the balance sheet of the Fed. The asset was being valued at $11B, or only US$42.22/ounce, whereas the market value of the asset at that time was around US$770B. The situation today is that the asset is still being valued at only US$11B, whereas its market value is now around US$1.2 trillion. This means that bringing the asset’s official valuation in line with its market value would now result in the addition of more than $1 trillion to the Treasury’s account at the Fed (the Treasury General Account, or TGA). Is this likely to happen anytime soon?

When we addressed this topic in February of last year, our answer to the above question was “no”. The reason, in a nutshell, was that while the monetary injection would give the economy a short-term boost, it would have longer-term negative effects including higher price inflation. We concluded that due to the short-term nature of any positive effect on the economy, from a purely political perspective it would make more sense to implement the revaluation during the final year of the Presidential term than during the first year.

Due to the looming importance to Trump of the November-2026 mid-term elections, we now think that the revaluation could happen within the next few months.

If the mid-term elections result in the Democratic Party gaining control of the House, the path ahead for Trump would become far more difficult. Not only would it be harder for him to pursue his policy agenda, but also he probably would be impeached for a third time. Creating the impression that the economy was strong or at least improving during the months leading up to the election would reduce the risk of this happening. In this respect, we can’t think of anything realistic that would be as effective as a $1 trillion monetary injection that did not have to be financed via debt.

Adding a trillion new dollars to the TGA would be short-term bullish for almost everything except the US$. It would be bullish for the stock market, gold, commodities, bitcoin, and economic statistics such as GDP. It even would be bullish for the Treasury market, because it would enable the US government to spend a lot of money without issuing new debt. In fact, it’s possible that some of the money would be used to repurchase existing Treasury debt, thus lowering interest rates across the economy for a while.

Beyond the short-term it would be bullish for gold and commodities, but very bearish for Treasury bonds and the economy. However, that would be a 2027 story.

[This blog post is an excerpt from a recent commentary at www.speculative-investor.com]

Whether it is war or accidents at major mines or weather or trade disputes or political upheaval or power shortages, every large rise in the price of any commodity will have its own unique drivers. However, there are periods when many commodities experience large price rises. Even though each of these price rises will have its own fundamental reasons and will seem special when viewed in isolation, a broader view will indicate that they are related.

One reason for the existence of periods during which many commodities experience large price rises, each for a seemingly unique reason, is that long periods of under-investment in commodity production due to low prices make the markets far more vulnerable to supply disruptions. Consequently, an issue (for example, a drought, a mine collapse, a civil war) in one part of the world that during some periods would be taken in stride and result in a relatively small rise in the international price, can lead to a globally important shortage and a huge price rise.

A second reason is the macroeconomic/monetary backdrop and a feedback loop involving commodities and conflict. Monetary inflation eventually leads to economic hardship by raising the cost of living and getting in the way of economic progress. As the inflation problem becomes more obvious, commodities are hoarded both for insurance and speculation purposes, putting additional upward pressure on prices throughout the economy and exacerbating the hardship. This leads to conflict within countries and between countries. If the conflict involves countries that are important in the global supply chain for any commodity, which it often does, then the price of that commodity will rise in dramatic fashion.

The current situation in the tin market is a relevant example. Over the past year there have been supply disruptions due to decisions to curtail production in Myanmar, where 10%-15% of the world’s tin supply originates, and conflict between government and rebel forces in the Democratic Republic of the Congo (DRC), where about 6% of the world’s tin supply originates. These supply issues have led to the price surge illustrated below. While a short-term price peak probably will be set soon, this market will remain acutely vulnerable to supply disruptions due to the combination of additional demand from the building of datacentres and long-term under-investment in mining.

There have been several dramatic price rises in commodity markets over the past six months and we expect to see many more over the next two years. Each will have its own unique drivers, but almost all of them will be related to the underlying influences outlined above.

[This blog post is an excerpt from a recent commentary at www.speculative-investor.com]

The broad rally in the world of metals has continued during the first full week of 2026. During December the upward price momentum in the white metals (silver and the PGMs) became extreme, but now we are seeing dramatic upward price acceleration elsewhere. In particular, the rises in the prices of copper and lithium have become parabolic.

During the first half of this week the copper price in the US traded above US$6/pound for the first time ever, and the following chart shows that the price of copper on the London Metal Exchange (LME), which is less affected by tariff stupidity than the price in the US, is now above US$13,000/tonne. Prior to the past two months it had never been above US$11,000/tonne.

For its part, lithium carbonate priced in Chinese Yuan per tonne (CNY/t) has gained about 120% since June-2025 and about 45% over just the past month. Refer to the following chart for the details. Furthermore, since the Yuan has strengthened relative to the US$ the performance in US$ terms has been even better.

We wrote numerous times over the past two years that the gold bull market would broaden to encompass almost all commodities, starting with the white metals and then moving to other industrial metals and lastly to oil. We noted soon after it happened that the tariff-related panic in April-2025 had marked a turning point for the white metals relative to gold, while industrial metals in general have been strengthening relative to gold since October-2025. Therefore, it is fair to say that the broad strength that we are seeing across the metals markets was anticipated.

At this point in the cycle, it’s very unlikely that industrial metals such as copper and lithium are close to major price tops. On the contrary, the rallies from last year’s lows probably are just the initial rallies — the first of two or three bull-market legs. However, like the price action in silver and the PGMs, the price action in the copper and lithium markets is setting the stage for multi-month corrections. It also will be increasing costs in many industries, which is a related issue because there will be demand destruction if prices continue to rise rapidly. For example, in response to the huge recent price rise in silver, solar cell manufacturers, the largest industrial consumers of silver, are finding ways to substitute base metals for silver in their products.

So, don’t forget to take some profits!

[This blog post is an excerpt from a commentary published at www.speculative-investor.com within the past fortnight]

It has become clear to many analysts that the amount of money being poured into AI-related investment doesn’t make sense. The numbers just don’t add up, meaning that there appears to be little chance that many of the individual investments will achieve reasonable returns and no chance that the investment, in the aggregate, will achieve a reasonable return. This is true, but the rapid rate of spending probably will continue. Fortunately, there is a way to profit that doesn’t involve trying to pick winners in the technology race and doesn’t rely on the AI-related spending being profitable for the companies making the investments.

The rapid rate of spending on AI probably will continue, for two main reasons. The first is that although concerns regarding the magnitude of capital spending by formerly capital-light companies such as Oracle (ORCL) are beginning to appear in both the stock market and the bond market, it’s likely that the senior managers of the mega-cap tech companies view falling behind in the AI race as an existential threat. In other words, the current rate of spending creates a big risk, but failing to spend enough and thus falling behind one’s competitors could be an even bigger risk.

The second is that political leaders in both the US and China clearly believe that for both military and economic purposes, AI-related development in their country must at least keep up with the AI-related development in the country perceived to be their main adversary. Therefore, it’s reasonable to expect that there will be government pressure and incentives to ensure that the private sector continues to invest massive sums in AI and the associated infrastructure.

We think that the safest way to participate in this on-going investment boom is to own the shares of the companies that produce the raw materials that are needed to 1) build datacentres and the equipment that goes into them, and 2) build and fuel the systems that supply power to datacentres. Examples include the producers of natural gas, uranium, copper, tin, REEs and lithium.

The strategy of owning the stocks of companies that produce the raw materials required for the AI boom has worked well for us over the past 12 months and probably will work well for at least another 1-2 years, with — naturally — the occasional gut-wrenching correction along the way. Moreover, this strategy not only obviates any need to pick the AI winners, but also meshes with the fact that we have entered the phase of the economic cycle in which industrial commodities would likely perform well even without the additional impetus provided by the AI spending binge.

A final related point is that while the commodities mentioned above probably have all commenced cyclical bull markets, they tend to rally and correct at different times within these overarching cyclical upward trends. For example, the stocks of REE- and uranium-focussed companies were star performers during the second and third quarters of this year, but during September-November the focus shifted to lithium stocks and over the past few weeks the focus shifted again — to natural gas stocks. This means that it is not uncommon for a short-term selling opportunity in the stocks of companies focussed on one commodity to coincide with a short-term buying opportunity in the stocks of companies focussed on a different commodity.