[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.

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

Aggregates such as Gross Domestic Product (GDP) and Consumer Price Index (CPI) always have been fatally flawed. For example, the GDP calculation treats a dollar of wasteful spending as if it were the same as a dollar of productive spending, and the concept that a single number (the CPI) could represent the economy-wide price of money has never made sense. However, over the past several years some of the highest-profile economic aggregates have become more misleading than ever, prompting economists and politicians to wonder: “Why is the average person so concerned about his/her financial situation when the economy is doing so well?”

In the US, the Bureau of Economic Analysis probably will report that real GDP grew at the annualised rate of 3%-4% during the third quarter of this year, which is suggestive of a strong economy. At the same time, however, President Trump’s approval rating on the economy is very low and measures of consumer confidence are in the dumps. For example, the following chart shows that US Consumer Sentiment as measured by the University of Michigan is near a 10-year low.

The discrepancy between the economic aggregates and the perception of the average person was explained in a recent FT article. Here’s an excerpt:

“The American economy is deeply split, with those at the top enjoying unparalleled prosperity and the rest of the country struggling to make ends meet. The top 10 per cent of earners now account for almost half of all spending, up from about a third in the 1990s. Many are feeling particularly flush as they enjoy the fruits of a strong stock market — the S&P is up more than 15 per cent this year, despite a few wobbles. For everyone else, the picture is gloomy. Lay-offs are surging, consumer sentiment has fallen by 30 per cent year on year to near-record lows, and three out of four Americans tell pollsters that the economy is in fair or poor shape.”

And:

“The share of Americans who describe themselves as middle class has dropped from 85 per cent a decade ago to 54 per cent. Over 40 per cent of Americans consider themselves lower or working class, suggesting that many of the finer things feel completely out of reach.”

In short, the aggregates reflect a large increase in spending on the part of the wealthy, while most people are struggling financially. This has political consequences and probably is the main reason for Trump’s success in November-2024 despite the strong — according to high-profile statistics — economy of the time. Moreover, the economic trends of 2022-2024 and their effects on the political realm have continued this year, with the recent election of Zohran Mamdani, a so-called “democratic socialist”, as the New York City Mayor being one of the consequences.

All economic trends affect the financial markets in some way and economic trends that bring about political upheaval tend to have big effects on the financial markets. Although the “inflation” resulting from simultaneously creating a supply shock and showering the populace with money during 2020-2021 is the main cause of the current malaise, it’s a good bet that additional inflationary policies will be part of the official solution to the problem. For example, Trump is talking about sending a $2,000 “tariff dividend check” to almost everyone next year and cutting income tax*, while the Federal Reserve almost certainly will be taking actions to ease monetary conditions. We expect that these policies will extend the gold bull market and fuel even bigger price gains within the ranks of industrial commodities.

*Trump is saying that the income tax cut will be funded by tariff revenue, but you only need rudimentary understanding of the size of the federal budget relative to projected tariff revenue to know that this is nonsense. Any significant cut in US income taxes will be funded by an increase in government indebtedness.