Controversial: True Winners In The Middle East | Doomberg
Summary
Market Overview: The podcast discusses the current state of the "everything bubble," with rising prices in gold, silver, bonds, and the S&P 500, contrasting with a struggling oil market due to geopolitical developments in the Middle East.
Middle East Geopolitics: The recent peace between Israel and Gaza is highlighted as positive news, with discussions on the geopolitical implications, including Iran's perceived victory in a recent conflict and the potential for a reduced risk of renewed war.
Oil Market Dynamics: Oil prices remain low despite geopolitical tensions, attributed to an oversupply and shifts in energy consumption patterns, such as China's coal-to-liquid conversions and increased use of natural gas and electric vehicles.
European Union's Role: The EU is described as becoming increasingly irrelevant on the global stage due to its energy dependency and lack of industrial and military power, with internal political challenges further complicating its influence.
Gold's Role in Global Trade: Gold is gaining prominence as a neutral reserve asset for international trade settlements, replacing US Treasuries, with implications for the global financial system and potential risks of conflict.
China's Strategic Moves: China's recent actions in the trade war, including restrictions on rare earth exports, are seen as asserting its dominance, challenging US influence, and prompting a global realignment of supply chains.
Investment Strategy: The discussion suggests caution in investing directly in commodities due to their long-term deflationary trends, with a focus on understanding geopolitical risks and market dynamics.
Transcript
We are in the middle of an everything bubble. Gold is going up, silver is going up, bond market is going up, the S&P 500 is going up. Like I'm I'm running out of superlatives here. But one market that's not doing so well is the oil market. And it has to do with the peace in the Middle East. And I've invited a fantastic guest to help us stay sec. Um I'm personally I'm super excited that this is happening, but we have to discuss the economic fallout. What does it mean? It's not always pleasant when we have to dissect that, but it is what it is. And uh I've invited Doomberg back on the channel. We always talk oil and geopolitics. We always try to put it together. And whenever I invite him, like there's something happening in the Middle East. It's always interesting. Our timing is always spoton. Despite scheduling these interviews weeks in advance, there's always something happening that is worth discussing. So, I'm really looking forward to this. But before I switch over to my guest, hit that like and subscribe button. Helps us out tremendously and we much much appreciate it. Thank you so much. Now, Duneberg, it's great to welcome you back on the program. It's good to see you again, >> Kai. It's great to see you. As you said, you know, nothing much going on in the world, but figured we'd get together and chat anyway. >> Exactly. Right. Uh, you know, what are we going to fill the next 30 minutes with? But uh um no, it's uh it's insane what's going on out there. It's just too much. Uh we should host three, four, five hour long podcasts, but that's of course not feasible. So, we got to pick some topics. And since you're always on when there's something happening in the Middle East, we got to talk about what's happening there, but also some of the economic fallout. Um, we have to look at it from an economic angle, of course. But first, maybe what's what's your impression? What's happening in the Middle East? Israel, Gaza making peace. What are your thoughts? >> Yeah, I mean, it goes without saying, but it should be said upfront that this is unabashedly good news. Um we are very much anti-war here for a lot of reasons and anytime wars are stopped or even paused for an extended period of time um that is something we would applaud and also obviously the release of the hostages and the and the prisoners on the Palestinian side um which they would call hostages as well um is also unabashedly good news and I think President Trump deserves credit. his special envoy Steve Wickoff deserves credit. Um, and let's hope that the ceasefire eventually becomes an extended peace and that a suitable resolution to what has been a you know almost 80 90year um controversy slashwar slashbattle slashdisruption in the Middle East can uh finally u manifest. we remain cautious. Um but at the same time it is just unabashedly um good news. Um we have a slightly different view on on how we got here which is kind of controversial but um this close from the 12-day war between Israel and Iran. We think that Iran won that war and we think that um Israel needed this piece um for military reasons as well as um you know just the the global political pressure that's being put on Israel as well. Um and so I think that explains why oil is sort of where it is. Um because the prospect of renewed war between Israel and Iran we think is lower than perhaps some believe. We note with interest um that apparently Benjamin Netanyahu and Vladimir Putin had a phone call where Netanyahu asked Putin to relay to the Iranians that they have no intent to embark down a war path with them. The fact that Putin said this publicly means that Netanyahu was comfortable with him saying it publicly. Um Iran has received that news but is still remaining skeptical of course because in the last war that I just mentioned there was a a decapitation strike against Iranian leaders just as negotiations were occurring. So, lots going on. Um, lots to talk about. Happy to take it in any direction that you think would be interesting. >> No, absolutely. No, lots of interesting developments. Um, I I wanted to talk oil, but you you just threw me a curveball talking about Iran won the war. I think we need to dissect that just a little bit because it is a controversial take because here in the west, we don't seem we don't see it that way. Um, or at least it's not being reported that way. So, let's dissect that a little bit. Where are you coming from with that angle? So, we wrote a piece last October called October Surprise where we noted with interest that Iranian ballistic missiles with targeting capabilities seem to be penetrating Israel's fonted um air defense system. And in that piece, we laid out four axioms as to why we thought war wouldn't happen. Um, and it was based around the analysis that all of Israel's electricity comes from basically five power plants and and most of Israel's drinking water comes from five desalination plants and all of Israel's natural gas comes from two uh offshore fields. And this is a a small list of well-known targets. The the sort of geolocations of these facilities are well known. And if Iran has ballistic missiles with targeting capabilities that Israel can't stop, then we have reached a mutually assured destruction phase. Okay, so that was the genesis of our belief. Fast forward to Israel's surprise decapitation strike against Iran. And the first thing we should say, which we said in the follow-up piece, um, that we were wrong. We we didn't think war would happen because we thought the fourth of those axioms was that Israel's leaders understood they were in a situation of mutually assured destruction and would act accordingly. Uh they clearly did not. They either were not or did not act accordingly. And so when the war broke out, we said to ourselves, "Wow, um if this isn't over in two or three days, Israel's in a very bad spot." And it wasn't over in two or three days. Um I believe on the third day that the HA refinery the the large basically the only large refinery in in Israel was severely damaged. Um videos online showing Iranian missiles destroying large parts of that facility. And then on day three and day four and day five we're seeing videos of missiles getting through. And then it becomes a war of attrition which Israel cannot win. And on around the fifth or sixth day, Israel implemented a severe crackdown on information um censorship. Um you know, journalists were were not allowed to report on the ground and that was a big clue for us as well. The war went on. Um we started to see in open source intelligence checks that we do missiles still getting through and um we just came to the conclusion that Israel needed this ceasefire. And then the moment that um Trump's nuclear strike uh on Iran was um published, it was at late on Saturday night, which was a strong clue for us. We call it the Saturday Night Live missile strike. That's like the deadest of dead TV times and Trump sort of just needed a face- saving way out, we think. Um and suddenly there was peace, you know, um after that strike and the markets nailed it. The oil markets nailed it. Um that was a backup source of information for us. So in our view um the US is chronically short air missiles uh air defense missiles and the US provides Israel with 80% of its air defense missiles and we subsequently learned that the US burned through 20% of its missiles you know air defense missiles in just 12 days. The war could not go on. Um Iran is a very large country with a huge stockpile of missiles. It survived the knockout blow and the war had become a war of attrition and that's not a war that Israel could win. And so we think Israel needed um peace and Trump was able to deliver it although not in the way that everybody thinks. >> Interesting. No, it's a it's an interesting debate because it throws like the whole Iran situation throws other parties into the mix as well. Russia, China as well and the US was even negotiating on be or with Russia um together uh in in that situation which was very surprising that the two sworn enemies trying to make peace here or have a have a common denominator trying to make peace and even throwing in China as a security guarantor as well which would have broadened the whole um situation even further if that were to escalate which I thought was really interesting like do you have any any thoughts on that as well? Again, if Israel was on the cusp of destroying Iran and getting regime change and truly taking out their nuclear capabilities, would they have agreed to a ceasefire? Of course not. >> Um, again, one of the things, so by the way, there'll be prepare for nasty comments and all this stuff just by me expressing this opinion. You can't, there's some subjects you just can't talk about without generating an enormous amount of uh controversy. We come at our our beliefs sincerely. Um, we express them politely and we're happy to defend them and if we're wrong, we'll change our opinions. But uh so far that mental model has worked very well. Um and and I think that Israel is just not in a position to have a renewed war with Iran. Um and by the way, it's not just Iran anymore. It's it's Iran, Russia, and China. >> Um Russia just signed a major um strategic treaty of cooperation with Iran. Um China has huge uh huge interest in in what happens in Iran. Iran is a major supplier of Chinese oil which China desperately needs. So the air defense of of Iran will be, you know, rebuilt in partnership with Russia. Who knows what missiles China's supplying to Iran? Look, we're in World War II. Um Iran just joined bricks. Iran is close to Russia and China. Russia and China are at war with the US predominantly. And so um we have to view that through the through the proper lens. you know, yes, Israel has nuclear weapons, but if Iran can make Israel unlivable with a dozen strikes, um, then I think we have mutually shared destruction. >> Yeah. Let's hope it doesn't come to that. It seems like we're far further away from it than we used to be. So, um, >> Amen. Yeah. No, sincerely, like we we are anti-war and, um, a war between another war between Israel and Iran would be catastrophic for both sides, not just one. >> Absolutely. Um, Dumer, we we briefly chatted before hitting the record button like, but there's two directions I could take this conversation to, but I might want to link it to one of your read latest articles. It's about the EU and one group we haven't talked about in all of this is the the involvement of the European Union. They're not involved in anything u when it comes to those discussions, at least not what we're hearing, maybe the UK to a degree, but that's pretty much it. Um, what what do you make of that? like maybe zooming out just a little bit. The role of the EU globally in general, it feels like we're just being passed over. Uh probably rightly so. What are your thoughts? >> Yeah, the UK is not an EU, of course. Um and so if we isolate our analysis to the 27 member states of the European Union, I just think the EU is sliding into irrelevancy. >> Um Brussels strangle hold over the sovereign nations that make up the EU is uh reaching a breaking point. that we think that the EU as it exists is unsustainable and it it it's going to have it's going to result in significant political change and we're seeing this across Europe today. Um we wrote that piece was kind of again another controversial piece but if you just look at what the EU has been doing um they have been suppressing authentic populist uprisings um across the continent using all manner of dirty tricks um and their total control over the media and propaganda to put down uh the the political grievances of those who have been negatively affected by the European Commission's an utter mismanagement uh of many many situations, not the least of which is their energy situation. Um Europe is irrelevant. It it's not nobody consults Europe on anything. It produces no energy. Um it's de-industrializing. Um it has a huge opinion of itself. Brussels and and particularly MRO in France and Starmer in the UK and Mertz in Germany. Um they keep asking to be seated at the negotiation table. if you had any power, you wouldn't have to be asked. You'd just be there. Um it it's it's a shame. We have many friends and subscribers in Europe and Europe can be um great again someday, but not on the current trajectory. Um when you don't produce your own energy, and therefore you don't have heavy industry, and therefore you don't have much in the way of military power, you just don't matter. And um nobody's listening to Kai Kalis on anything of consequence. I think most diplomats around the world think she's rather clownish. Um, same with Ursula Vanderland. Just look how she's treated when she goes to China. Um, you know, the the E3 is trying to insert itself in in various situations. And, you know, other than a couple of seats at the UN Security Council that are holdovers from World War II, what what does what does Europe even have? And I it's again, I take no pleasure in saying that. It's objectively true. Europe is irrelevant. >> Yeah. I'm sitting here in Germany and I'm witnessing it on a daily basis. Like we're not being involved in any conversations whether it's about the Ukraine, whether it's uh the discussions that are happening about the Middle East or with Israel and Gaza there. Like it's absolutely irrelevant and I'm trying to figure out like how can we get back to relevancy without uh you know getting involved in a physical in a physical war here. And I don't want to use that term lightly of course but how do we become relevant again? Like Germany lifted the debt break. Okay, interesting. Great. But we're more more investing into our own infrastructure here. Uh what do you see like is there a pathway back to relevancy? >> Sure. It's not going to happen. But the pathway back to to relevancy is to start drilling for your own energy and to restart your nuclear power plants and to negotiate um you know to to accept what is occurring on the battlefield um and to find a way out of the war without escalating. Um and the window to do that is closing. Many would argue it's already closed. This was should have been done in 2022 with the Istanbul agreement. Um Boris Johnson's infamous visit to Kiev. Um scuttled that I know with interest some of the stories that have been breaking in the UK over the weekend. Not sure if you saw them about you know Boris Johnson's ties to weapons manufacturers who happened to accompany him on the famous visit to Kiev and put a million pounds in one of his um you know private LLC's. It's a very sorted tale um controversial made the news in in Britain over the weekend. You know, when the full history of these past 5 years is written, I I suspect it's going to be uh quite shocking to compare the the settled history versus how things were described in contemporary media. >> No, absolutely. Like I just Googled here Boris Johnson, the million pound man. >> Yeah. >> Um re really interesting. But the third article is actually also interesting and you know trying way too many topics together, but I went too far too fast on net zero. Um, which sort of ties into the discussion. We focus too much on the wrong thing here in Europe perhaps. >> Of course. Yes. Look, I mean, we we've quoted these numbers before, but I'll I'll I'll repeat them here. The statistical review of world energy is sort of the energy bible for statistics. It comes out every June. And um the 2024 version of it was just published in June of 25. And conveniently, it now separates out the European Union as its own line item. So you can just see collectively how the European Union is doing. So here's some shocking numbers for you. The European Union consumes 38 exigles of hydrocarbons, coal, natural gas, and oil. It produces like five. Okay. And so it must import 33 exit each year. That's roughly the size of the entire US natural gas production in 2024, which I think is 37 exogles. just to give you a framework. Um, and when you import hydrocarbons, every commercial entity from the exploration company to the drilling company to the midstreamers to the, you know, uh, in in the case of natural gas, the LG export facility, the the LG cargo ship, the LG reacification facility, the pipeline owners that gets it from there to your power plant, you have to pay the cost of capital of every player in the chain before you get to consume that energy. And and when you import your own energy, when you import all your energy like that, you're also susceptible to supply shocks. Um and so look, if you just look around the world, like energy is life. Energy is the is the food of manufacturing. Heavy manufacturing is the is is the genesis of military might. Um China might be short oil, but it burns an awful lot of coal, and that coal is awfully cheap. US is a natural gas superpower. Russia is an oil and gas superpower. There's no not surprising to us that it's winning on the battlefield. Um Europe doesn't produce energy. So Europe can't be back integrated to heavy industry. It used to circumvent that by having direct access to cheap Russian natural gas via pipelines. That's gone. Um and so the old model of Germany was cheap natural gas, cheap labor from Eastern Europe, and um a healthy market to export to and China. And all three of those now are being undercut. And so what's the path out? And of course fracking is banned and the solution is solar and the green new deal and you know we're going like Europe can't be a power in AI. It doesn't have energy. It doesn't have the jewels. It literally does not have the jewels to rearm. And so it when when unless you physics just just isn't defeatable. Like physics is just real. You can't have steel if you don't have cheap energy. If you don't have steel it's hard to make tanks. And so I it's one of the great mysteries of our time, Kai, is is it's so plainly obvious, yet nobody talks about it. It's never talked about in this language, which I guess is good for us, but >> No, abs. Absolutely. Like the only thing we have in Europe is regulation. We got the best AI regulation, but we have no AI. >> Correct. Well, you need cheap power for AI. I mean, AI is ultimately comput and comput is all about power. Um and and so look, the US is going to be cranking out off-grid uh natural gas powered AI facilities. Uh we note with interest the announcement uh by Bloom Energy today. Um or yeah, I guess was this morning with Brookfield. Um Bloom Energy makes um natural gas powered fuel cells, which means that they can produce electricity circumventing the turbine shortage from the abundant natural gas in the US. Look, as we're talking, natural gas in the Perian Basin um closed last week at minus $3 a million BTU. They were paying people $3 a million BTU to take natural gas. It's insane. >> Crazy. I can't I can't imagine that happening here. I don't know what my energy bill is these days, but it's around 35 36 cents a kilowatt hour. That's just not competitive. Even if you add industrial discounts, it just doesn't make any sense. So, >> well, where do those discounts come from? somebody somebody's paying the subsidy, right? I mean, so >> yeah. No. Um, let's stay on the energy side, but let's come back to oil. Um, because we always talk about either geopolitics or oil or both. And, uh, as we speak, oil is rebounding just a little bit, 2.75% in the in the green here, crude oil that is, uh, scratching or touching $60 a barrel again. Um, tell us a bit more like your price developments here in oil. What's affecting the price of oil dominantly here? >> Look, $60 a barrel oil is incredibly cheap. Don't forget you're quoting, you know, u a price in dollars as though the dollar hasn't weakened. If you really want to blow your mind, um plot a chart that tells you how many um barrels of oil an ounce of gold will buy you and and plotted over 50 years. Oil has never been cheaper in gold terms. Um and even just in inflation adjusted terms, oil is is remarkably cheap. Um $6 oil today is not the same as $60 oil in the year 2000. You take 25 years of inflation, what the $60 a barrel mean right now? Um, oil is incredibly cheap because the world has way too much of it. Um, not only is does the world have way too much of it, the definition of oil is undergoing a a chemical semantic shift. China is is if we took all of the coal that China uses to convert into the liquids, diesel and other liquids. Um the amount that China uses to do that, the amount of coal China uses to do that would make it the second largest coal consuming country in the world behind China, right? It it is producing an enormous amount of diesel just from coal. Um natural gas is is being, you know, uh the engines are being switched to run on clean burning natural gas. um they're displacing their demand for gasoline with electric vehicles. There's there's a shift going on and and so when you have dirt cheap natural gas and relatively cheap coal with a high a moderate degree of fungibility with oil, the the long-term price of oil is is lower. And um the oil and gas companies are deflationary machines. They're technological powerhouses. Um, it's incredible that oil is $60 a barrel today with gold at $4,100 an ounce. It it's it's insane. >> Ju just zooming out maybe here a little bit as well, like oil used to be a massive geopolitical factor as well. How how relevant is oil still in that global discussion? China trying to you know enhance trade with Saudi Arabia for example, but what role does oil still play here terms of petro gold for example come to mind here? >> Yeah, it's still a huge central role in geopolitics. energy is is plays a central role in geopolitics period because energy is life. Lack of energy is death as Europe is proving and China would not like to find out. Um and so it's still central. But I'm just saying like because energy is so important so much treasure will be invested to find more of it for cheaper. which is why we don't invest in commodities directly and why we don't invest in companies that produce commodities because the long-term price the long-term real price of all commodities is lower which is something people don't quite understand and I I'll I'll explain why. Every once in a while the world runs short of oil or natural gas or coal or pick your favorite commodity and you see a super spike in the price. That's very seductive to investors who are gamblers, right? They're gambling. And so anytime geopolitics heats up, people buy calls and they get ready for the big spike in oil. Um that's like buying volatility in our mind. Um you're just going to decay away your premium uh over time. It's far better to fade super specs because they always crash than it is to try to time them. But because there's an occasional big leap as a crisis evolves uh in the price of oil or in the price of gas, um people get seduced into getting along them because they think um you know long term the price of oil has to go up. Well, no it doesn't. And a century of data proves it. >> No, it's you know the relevancy of the petro gold I think is an interesting like term because China is offering or start opening vaults in in Saudi Arabia to trade uh gold with Saudi Arabia and use gold more as a currency here as well. Maybe just the segue now to talk about the spike in gold that we've seen here. Duneberg. Um what what what do you make of the recent spike? Is it just an an everything bubble or is there more to it? Should we be taking gold maybe separately from uh the other asset classes here? >> To answer your question, I need to make a an important correction to what you just said, which is gold is not being used as a currency. Gold is being used as a neutral reserve asset for the settlement of imbalances in international trade, including the oil trade. And the asset that it's replacing is US treasuries. Um the US treasuries used to be the neutral reserve asset that central banks would park their excess um uh profits in while they were waiting to deploy them or to do something else uh with them. before sort of the end of the world second world war gold played that role and then after the US got off the gold window the US treasuries played that role and China and Russia have been trying to change the system back to gold since the global financial crisis and we think World War II started when Putin sold his treasuries and started buying gold by the way I haven't done the math yet but I'm curious to see the change in value of Russia's gold holdings since the war in Ukraine started and I would that that it far exceeds the value of the frozen assets that um are still uh uh you know much talked about. Um another way to look at the gold spike is that gold is what's stable and and it's you know the US dollar that's going down. Um in gold terms uh if gold is stable, how many US dollars does it take to buy an ounce says more about the US dollar than it does about the ounce. Um, and so one of the things that's kind of unsettling is historically when the the sort of the nominal price of gold as measured in the global reserve currency doubles in 18 months, that's typically not good. That typically implies huge changes to the financial system and it typically implies significant risk of war. And I think we're seeing both of those. And so if gold is going to reassert itself even if just for the global south as the neutral reserve asset for the settlement of imbalances in international trade um that says a lot about the US dollar system and I think China last week was a very important week we're writing a piece on again we have a different view than most um we think China holds all the cards and Trump had to back down and we posted as much on notes you know substax notes over the weekend um China basically hit the economic nuclear button last week and asserted itself as the dominant player in the negotiation, the trade war with the US. Trump does not have escalation dominance over Xi and China told the world that we're done letting the US push us around. And if you're tired of the US pushing you around, you should join us. And I think those outside the G7 will be surprised to see the length of the line joining um Xi in his campaign against Trump. Doomberg, maybe just to catch everybody up like what happened last week, just to get so we're all on the same page. It's not just a blocking rare earth exports, is it? >> No, they went much further than that. They they declared that uh anybody who is reexporting anything that has even a trace amount of rare earth in them needs to apply with China to get an export license. And the biggest potential victim in all this amongst the biggest potential victims is a company like ASML who makes the highest end lithography machines. while those machines are filled with magnets from Chinese wear. And if China says, "Nope, you can't um export that machine to Taiwan or you can't export that machine to the US," um ASML has no alternatives. And so, right now, the world is going to have to decide between whether they want continued friction-free access to the US dollar system or continued friction-free assets to the necessary commodities that make their economies run. Um they they threw down a severe gauntlet and it took about 48 hours I think for the Trump administration to internalize what happened. And then of course Trump posted this famous um uh what do you call a truth social post I guess. Um he posted he posted a very long um quite strange I would say um um missive on on truth social um declaring 100% tariff on China and all this other stuff. And we we posted a media like that Trump does not have escalation dominance here. The world needs Chinese commodities more than it needs US treasuries um or access to the US banking system. And so the the forcing function of the trade war is going to cause countries to choose sides. And I think people in the west are very much comfortable with the US always being the victor in such confrontations. China China is a whole different animal. Well, the US is also investing billions of dollars back into the supply chain which they should have done like 20 years ago and not just today, which is a whole different discussion. Um, >> but the the question now arises and it's a bit puzzling to me like on social media. I keep reading that the US shouldn't do the same thing that China has done, meaning maybe invest into companies, in invest into the private sector to to get access to those critical raw materials. I'm curious what your take on that is, Doomberg. Should the US be so proactive in in securing raw materials or should we let the free market do its thing? So >> uh >> no the free market has failed definitively the free market has failed to properly price geopolitical risk and environmental degradation which China took advantage of. We wrote a piece two and a half years ago called geopolitical warfare where we laid all this out because China was willing to degrade its environment in ways that the west would find intolerable. it came to monopolize critical supply chains at the very front end of the economy which gave them enormous leverage which they're now using. Um, China is in total control of like it's think about like you know if you you're missing sort of critical vitamins and stuff in your diet um critical metals that are only present in small quantities but in their complete absence you know you you would die. It's the same thing for the economy. And so yes, Trump is 100% correct to be urgently working with, you know, Western manufacturers and friendly nations to accelerate the reshoring of the supply chains that were so foolishly lost. But as you also said correctly, the US needs time before it starts bluffing and demanding um China, you know, uh do A, B, or C. And trying to choke China off of AI semiconductors um was a mistake. We believe it was it is only forcing China to uh to to invent its own supply chains. Their actions last week might imply that they're further along in the semiconductor race than most in the west think. Something we've been flagging a warning about as well. And the last thing I'll say to get like five years ahead of it, um there's going to be a gluten and rare earths because all shortages are followed by gluts. There's going to be a worldwide massive scramble to build every rare earth facility possible. And one day we'll wake up and there'll just be way more rare earth than anybody needs. And therefore, China having used this weapon um will have um degraded its utility. But for now, they hold the cards. Um and so, you know, just just wanted to put that prediction out there because all shortages are followed by gluts even when um the shortages are artificially created in the way that China is threatening to do with rare earths. And by the way, whether or not they actually withhold them, the threat that they made is what really matters because it's going to cause the reactions that I just described. Absolutely. No, it's it's an interesting topic. We've seen that back in 2016 um on the on the graphite and rare earth side as well. So I think history will just repeat itself when it comes to that. So >> yeah. >> Um fantastic Doomberg. This is all we have time for. What a wonderful conversation. It's always fun to chat with you. Um we've touched on very many angles actually today. Usually we just talk about two. This time I think we touch like five, six different topics. Really appreciate your time. Um if people still don't know where to find more of your work, where can we send them? Yeah, I'd like to plug another project we're doing too if you don't mind because I think you'd find it pretty interesting. But um to your first question, you can find all our work at duneberg.com. But um one of the Duneberg founders and its editor-inchief just started a substack called Classics Read Aloud. Classics read aloud.substack.com. It's wildly different than what Duneberg is, of course, and the name sort of would imply u what it's all about. It's it's wonderful literature um brilliantly read and produced um with the same sort of brand and commitment to excellence that Doomberg has and it's it's gone over very well. People who have signed up have liked it already well over 2,000 subscribers. Um so if if you're looking for something different or maybe a break from the news cycle um you can go to classicsaloud.substacks.com and then if you are interested in our work just go to duneberg.com and find everything there. Thanks Kai. Always a pleasure and like we said, nothing nothing uh no no shortage of topics to talk about anytime I come on. That's for sure. >> Absolutely. It doesn't get boring. Uh and being a podcast host is uh a challenge these days. So I've said it before, but it doesn't get easier. Um so really appreciate it, Dune. Thank you so much for coming on. Everybody else, thanks so much for watching. What an insightful conversation here with Doomberg. Make sure to check out his dubstack duneberg.com and also check out classics read read aloud. Some looks looks really interesting. I've got it bookmarked already over here. I'll definitely check that out as I'll be traveling here this week. So, I'll definitely have something to listen to here. Thank you so much for tuning in. If you haven't done so, hit that like and subscribe button and leave a comment. What do you think is happening? Did Israel lose the war to Iran? A controversial topic. Let us know. We do want to hear from you and we will include it in the next conversation we have at Doomberg. So, make sure you use that. Thank you so much for tuning in. We'll be back with more. Take care out there. [Music]
Controversial: True Winners In The Middle East | Doomberg
Summary
Transcript
We are in the middle of an everything bubble. Gold is going up, silver is going up, bond market is going up, the S&P 500 is going up. Like I'm I'm running out of superlatives here. But one market that's not doing so well is the oil market. And it has to do with the peace in the Middle East. And I've invited a fantastic guest to help us stay sec. Um I'm personally I'm super excited that this is happening, but we have to discuss the economic fallout. What does it mean? It's not always pleasant when we have to dissect that, but it is what it is. And uh I've invited Doomberg back on the channel. We always talk oil and geopolitics. We always try to put it together. And whenever I invite him, like there's something happening in the Middle East. It's always interesting. Our timing is always spoton. Despite scheduling these interviews weeks in advance, there's always something happening that is worth discussing. So, I'm really looking forward to this. But before I switch over to my guest, hit that like and subscribe button. Helps us out tremendously and we much much appreciate it. Thank you so much. Now, Duneberg, it's great to welcome you back on the program. It's good to see you again, >> Kai. It's great to see you. As you said, you know, nothing much going on in the world, but figured we'd get together and chat anyway. >> Exactly. Right. Uh, you know, what are we going to fill the next 30 minutes with? But uh um no, it's uh it's insane what's going on out there. It's just too much. Uh we should host three, four, five hour long podcasts, but that's of course not feasible. So, we got to pick some topics. And since you're always on when there's something happening in the Middle East, we got to talk about what's happening there, but also some of the economic fallout. Um, we have to look at it from an economic angle, of course. But first, maybe what's what's your impression? What's happening in the Middle East? Israel, Gaza making peace. What are your thoughts? >> Yeah, I mean, it goes without saying, but it should be said upfront that this is unabashedly good news. Um we are very much anti-war here for a lot of reasons and anytime wars are stopped or even paused for an extended period of time um that is something we would applaud and also obviously the release of the hostages and the and the prisoners on the Palestinian side um which they would call hostages as well um is also unabashedly good news and I think President Trump deserves credit. his special envoy Steve Wickoff deserves credit. Um, and let's hope that the ceasefire eventually becomes an extended peace and that a suitable resolution to what has been a you know almost 80 90year um controversy slashwar slashbattle slashdisruption in the Middle East can uh finally u manifest. we remain cautious. Um but at the same time it is just unabashedly um good news. Um we have a slightly different view on on how we got here which is kind of controversial but um this close from the 12-day war between Israel and Iran. We think that Iran won that war and we think that um Israel needed this piece um for military reasons as well as um you know just the the global political pressure that's being put on Israel as well. Um and so I think that explains why oil is sort of where it is. Um because the prospect of renewed war between Israel and Iran we think is lower than perhaps some believe. We note with interest um that apparently Benjamin Netanyahu and Vladimir Putin had a phone call where Netanyahu asked Putin to relay to the Iranians that they have no intent to embark down a war path with them. The fact that Putin said this publicly means that Netanyahu was comfortable with him saying it publicly. Um Iran has received that news but is still remaining skeptical of course because in the last war that I just mentioned there was a a decapitation strike against Iranian leaders just as negotiations were occurring. So, lots going on. Um, lots to talk about. Happy to take it in any direction that you think would be interesting. >> No, absolutely. No, lots of interesting developments. Um, I I wanted to talk oil, but you you just threw me a curveball talking about Iran won the war. I think we need to dissect that just a little bit because it is a controversial take because here in the west, we don't seem we don't see it that way. Um, or at least it's not being reported that way. So, let's dissect that a little bit. Where are you coming from with that angle? So, we wrote a piece last October called October Surprise where we noted with interest that Iranian ballistic missiles with targeting capabilities seem to be penetrating Israel's fonted um air defense system. And in that piece, we laid out four axioms as to why we thought war wouldn't happen. Um, and it was based around the analysis that all of Israel's electricity comes from basically five power plants and and most of Israel's drinking water comes from five desalination plants and all of Israel's natural gas comes from two uh offshore fields. And this is a a small list of well-known targets. The the sort of geolocations of these facilities are well known. And if Iran has ballistic missiles with targeting capabilities that Israel can't stop, then we have reached a mutually assured destruction phase. Okay, so that was the genesis of our belief. Fast forward to Israel's surprise decapitation strike against Iran. And the first thing we should say, which we said in the follow-up piece, um, that we were wrong. We we didn't think war would happen because we thought the fourth of those axioms was that Israel's leaders understood they were in a situation of mutually assured destruction and would act accordingly. Uh they clearly did not. They either were not or did not act accordingly. And so when the war broke out, we said to ourselves, "Wow, um if this isn't over in two or three days, Israel's in a very bad spot." And it wasn't over in two or three days. Um I believe on the third day that the HA refinery the the large basically the only large refinery in in Israel was severely damaged. Um videos online showing Iranian missiles destroying large parts of that facility. And then on day three and day four and day five we're seeing videos of missiles getting through. And then it becomes a war of attrition which Israel cannot win. And on around the fifth or sixth day, Israel implemented a severe crackdown on information um censorship. Um you know, journalists were were not allowed to report on the ground and that was a big clue for us as well. The war went on. Um we started to see in open source intelligence checks that we do missiles still getting through and um we just came to the conclusion that Israel needed this ceasefire. And then the moment that um Trump's nuclear strike uh on Iran was um published, it was at late on Saturday night, which was a strong clue for us. We call it the Saturday Night Live missile strike. That's like the deadest of dead TV times and Trump sort of just needed a face- saving way out, we think. Um and suddenly there was peace, you know, um after that strike and the markets nailed it. The oil markets nailed it. Um that was a backup source of information for us. So in our view um the US is chronically short air missiles uh air defense missiles and the US provides Israel with 80% of its air defense missiles and we subsequently learned that the US burned through 20% of its missiles you know air defense missiles in just 12 days. The war could not go on. Um Iran is a very large country with a huge stockpile of missiles. It survived the knockout blow and the war had become a war of attrition and that's not a war that Israel could win. And so we think Israel needed um peace and Trump was able to deliver it although not in the way that everybody thinks. >> Interesting. No, it's a it's an interesting debate because it throws like the whole Iran situation throws other parties into the mix as well. Russia, China as well and the US was even negotiating on be or with Russia um together uh in in that situation which was very surprising that the two sworn enemies trying to make peace here or have a have a common denominator trying to make peace and even throwing in China as a security guarantor as well which would have broadened the whole um situation even further if that were to escalate which I thought was really interesting like do you have any any thoughts on that as well? Again, if Israel was on the cusp of destroying Iran and getting regime change and truly taking out their nuclear capabilities, would they have agreed to a ceasefire? Of course not. >> Um, again, one of the things, so by the way, there'll be prepare for nasty comments and all this stuff just by me expressing this opinion. You can't, there's some subjects you just can't talk about without generating an enormous amount of uh controversy. We come at our our beliefs sincerely. Um, we express them politely and we're happy to defend them and if we're wrong, we'll change our opinions. But uh so far that mental model has worked very well. Um and and I think that Israel is just not in a position to have a renewed war with Iran. Um and by the way, it's not just Iran anymore. It's it's Iran, Russia, and China. >> Um Russia just signed a major um strategic treaty of cooperation with Iran. Um China has huge uh huge interest in in what happens in Iran. Iran is a major supplier of Chinese oil which China desperately needs. So the air defense of of Iran will be, you know, rebuilt in partnership with Russia. Who knows what missiles China's supplying to Iran? Look, we're in World War II. Um Iran just joined bricks. Iran is close to Russia and China. Russia and China are at war with the US predominantly. And so um we have to view that through the through the proper lens. you know, yes, Israel has nuclear weapons, but if Iran can make Israel unlivable with a dozen strikes, um, then I think we have mutually shared destruction. >> Yeah. Let's hope it doesn't come to that. It seems like we're far further away from it than we used to be. So, um, >> Amen. Yeah. No, sincerely, like we we are anti-war and, um, a war between another war between Israel and Iran would be catastrophic for both sides, not just one. >> Absolutely. Um, Dumer, we we briefly chatted before hitting the record button like, but there's two directions I could take this conversation to, but I might want to link it to one of your read latest articles. It's about the EU and one group we haven't talked about in all of this is the the involvement of the European Union. They're not involved in anything u when it comes to those discussions, at least not what we're hearing, maybe the UK to a degree, but that's pretty much it. Um, what what do you make of that? like maybe zooming out just a little bit. The role of the EU globally in general, it feels like we're just being passed over. Uh probably rightly so. What are your thoughts? >> Yeah, the UK is not an EU, of course. Um and so if we isolate our analysis to the 27 member states of the European Union, I just think the EU is sliding into irrelevancy. >> Um Brussels strangle hold over the sovereign nations that make up the EU is uh reaching a breaking point. that we think that the EU as it exists is unsustainable and it it it's going to have it's going to result in significant political change and we're seeing this across Europe today. Um we wrote that piece was kind of again another controversial piece but if you just look at what the EU has been doing um they have been suppressing authentic populist uprisings um across the continent using all manner of dirty tricks um and their total control over the media and propaganda to put down uh the the political grievances of those who have been negatively affected by the European Commission's an utter mismanagement uh of many many situations, not the least of which is their energy situation. Um Europe is irrelevant. It it's not nobody consults Europe on anything. It produces no energy. Um it's de-industrializing. Um it has a huge opinion of itself. Brussels and and particularly MRO in France and Starmer in the UK and Mertz in Germany. Um they keep asking to be seated at the negotiation table. if you had any power, you wouldn't have to be asked. You'd just be there. Um it it's it's a shame. We have many friends and subscribers in Europe and Europe can be um great again someday, but not on the current trajectory. Um when you don't produce your own energy, and therefore you don't have heavy industry, and therefore you don't have much in the way of military power, you just don't matter. And um nobody's listening to Kai Kalis on anything of consequence. I think most diplomats around the world think she's rather clownish. Um, same with Ursula Vanderland. Just look how she's treated when she goes to China. Um, you know, the the E3 is trying to insert itself in in various situations. And, you know, other than a couple of seats at the UN Security Council that are holdovers from World War II, what what does what does Europe even have? And I it's again, I take no pleasure in saying that. It's objectively true. Europe is irrelevant. >> Yeah. I'm sitting here in Germany and I'm witnessing it on a daily basis. Like we're not being involved in any conversations whether it's about the Ukraine, whether it's uh the discussions that are happening about the Middle East or with Israel and Gaza there. Like it's absolutely irrelevant and I'm trying to figure out like how can we get back to relevancy without uh you know getting involved in a physical in a physical war here. And I don't want to use that term lightly of course but how do we become relevant again? Like Germany lifted the debt break. Okay, interesting. Great. But we're more more investing into our own infrastructure here. Uh what do you see like is there a pathway back to relevancy? >> Sure. It's not going to happen. But the pathway back to to relevancy is to start drilling for your own energy and to restart your nuclear power plants and to negotiate um you know to to accept what is occurring on the battlefield um and to find a way out of the war without escalating. Um and the window to do that is closing. Many would argue it's already closed. This was should have been done in 2022 with the Istanbul agreement. Um Boris Johnson's infamous visit to Kiev. Um scuttled that I know with interest some of the stories that have been breaking in the UK over the weekend. Not sure if you saw them about you know Boris Johnson's ties to weapons manufacturers who happened to accompany him on the famous visit to Kiev and put a million pounds in one of his um you know private LLC's. It's a very sorted tale um controversial made the news in in Britain over the weekend. You know, when the full history of these past 5 years is written, I I suspect it's going to be uh quite shocking to compare the the settled history versus how things were described in contemporary media. >> No, absolutely. Like I just Googled here Boris Johnson, the million pound man. >> Yeah. >> Um re really interesting. But the third article is actually also interesting and you know trying way too many topics together, but I went too far too fast on net zero. Um, which sort of ties into the discussion. We focus too much on the wrong thing here in Europe perhaps. >> Of course. Yes. Look, I mean, we we've quoted these numbers before, but I'll I'll I'll repeat them here. The statistical review of world energy is sort of the energy bible for statistics. It comes out every June. And um the 2024 version of it was just published in June of 25. And conveniently, it now separates out the European Union as its own line item. So you can just see collectively how the European Union is doing. So here's some shocking numbers for you. The European Union consumes 38 exigles of hydrocarbons, coal, natural gas, and oil. It produces like five. Okay. And so it must import 33 exit each year. That's roughly the size of the entire US natural gas production in 2024, which I think is 37 exogles. just to give you a framework. Um, and when you import hydrocarbons, every commercial entity from the exploration company to the drilling company to the midstreamers to the, you know, uh, in in the case of natural gas, the LG export facility, the the LG cargo ship, the LG reacification facility, the pipeline owners that gets it from there to your power plant, you have to pay the cost of capital of every player in the chain before you get to consume that energy. And and when you import your own energy, when you import all your energy like that, you're also susceptible to supply shocks. Um and so look, if you just look around the world, like energy is life. Energy is the is the food of manufacturing. Heavy manufacturing is the is is the genesis of military might. Um China might be short oil, but it burns an awful lot of coal, and that coal is awfully cheap. US is a natural gas superpower. Russia is an oil and gas superpower. There's no not surprising to us that it's winning on the battlefield. Um Europe doesn't produce energy. So Europe can't be back integrated to heavy industry. It used to circumvent that by having direct access to cheap Russian natural gas via pipelines. That's gone. Um and so the old model of Germany was cheap natural gas, cheap labor from Eastern Europe, and um a healthy market to export to and China. And all three of those now are being undercut. And so what's the path out? And of course fracking is banned and the solution is solar and the green new deal and you know we're going like Europe can't be a power in AI. It doesn't have energy. It doesn't have the jewels. It literally does not have the jewels to rearm. And so it when when unless you physics just just isn't defeatable. Like physics is just real. You can't have steel if you don't have cheap energy. If you don't have steel it's hard to make tanks. And so I it's one of the great mysteries of our time, Kai, is is it's so plainly obvious, yet nobody talks about it. It's never talked about in this language, which I guess is good for us, but >> No, abs. Absolutely. Like the only thing we have in Europe is regulation. We got the best AI regulation, but we have no AI. >> Correct. Well, you need cheap power for AI. I mean, AI is ultimately comput and comput is all about power. Um and and so look, the US is going to be cranking out off-grid uh natural gas powered AI facilities. Uh we note with interest the announcement uh by Bloom Energy today. Um or yeah, I guess was this morning with Brookfield. Um Bloom Energy makes um natural gas powered fuel cells, which means that they can produce electricity circumventing the turbine shortage from the abundant natural gas in the US. Look, as we're talking, natural gas in the Perian Basin um closed last week at minus $3 a million BTU. They were paying people $3 a million BTU to take natural gas. It's insane. >> Crazy. I can't I can't imagine that happening here. I don't know what my energy bill is these days, but it's around 35 36 cents a kilowatt hour. That's just not competitive. Even if you add industrial discounts, it just doesn't make any sense. So, >> well, where do those discounts come from? somebody somebody's paying the subsidy, right? I mean, so >> yeah. No. Um, let's stay on the energy side, but let's come back to oil. Um, because we always talk about either geopolitics or oil or both. And, uh, as we speak, oil is rebounding just a little bit, 2.75% in the in the green here, crude oil that is, uh, scratching or touching $60 a barrel again. Um, tell us a bit more like your price developments here in oil. What's affecting the price of oil dominantly here? >> Look, $60 a barrel oil is incredibly cheap. Don't forget you're quoting, you know, u a price in dollars as though the dollar hasn't weakened. If you really want to blow your mind, um plot a chart that tells you how many um barrels of oil an ounce of gold will buy you and and plotted over 50 years. Oil has never been cheaper in gold terms. Um and even just in inflation adjusted terms, oil is is remarkably cheap. Um $6 oil today is not the same as $60 oil in the year 2000. You take 25 years of inflation, what the $60 a barrel mean right now? Um, oil is incredibly cheap because the world has way too much of it. Um, not only is does the world have way too much of it, the definition of oil is undergoing a a chemical semantic shift. China is is if we took all of the coal that China uses to convert into the liquids, diesel and other liquids. Um the amount that China uses to do that, the amount of coal China uses to do that would make it the second largest coal consuming country in the world behind China, right? It it is producing an enormous amount of diesel just from coal. Um natural gas is is being, you know, uh the engines are being switched to run on clean burning natural gas. um they're displacing their demand for gasoline with electric vehicles. There's there's a shift going on and and so when you have dirt cheap natural gas and relatively cheap coal with a high a moderate degree of fungibility with oil, the the long-term price of oil is is lower. And um the oil and gas companies are deflationary machines. They're technological powerhouses. Um, it's incredible that oil is $60 a barrel today with gold at $4,100 an ounce. It it's it's insane. >> Ju just zooming out maybe here a little bit as well, like oil used to be a massive geopolitical factor as well. How how relevant is oil still in that global discussion? China trying to you know enhance trade with Saudi Arabia for example, but what role does oil still play here terms of petro gold for example come to mind here? >> Yeah, it's still a huge central role in geopolitics. energy is is plays a central role in geopolitics period because energy is life. Lack of energy is death as Europe is proving and China would not like to find out. Um and so it's still central. But I'm just saying like because energy is so important so much treasure will be invested to find more of it for cheaper. which is why we don't invest in commodities directly and why we don't invest in companies that produce commodities because the long-term price the long-term real price of all commodities is lower which is something people don't quite understand and I I'll I'll explain why. Every once in a while the world runs short of oil or natural gas or coal or pick your favorite commodity and you see a super spike in the price. That's very seductive to investors who are gamblers, right? They're gambling. And so anytime geopolitics heats up, people buy calls and they get ready for the big spike in oil. Um that's like buying volatility in our mind. Um you're just going to decay away your premium uh over time. It's far better to fade super specs because they always crash than it is to try to time them. But because there's an occasional big leap as a crisis evolves uh in the price of oil or in the price of gas, um people get seduced into getting along them because they think um you know long term the price of oil has to go up. Well, no it doesn't. And a century of data proves it. >> No, it's you know the relevancy of the petro gold I think is an interesting like term because China is offering or start opening vaults in in Saudi Arabia to trade uh gold with Saudi Arabia and use gold more as a currency here as well. Maybe just the segue now to talk about the spike in gold that we've seen here. Duneberg. Um what what what do you make of the recent spike? Is it just an an everything bubble or is there more to it? Should we be taking gold maybe separately from uh the other asset classes here? >> To answer your question, I need to make a an important correction to what you just said, which is gold is not being used as a currency. Gold is being used as a neutral reserve asset for the settlement of imbalances in international trade, including the oil trade. And the asset that it's replacing is US treasuries. Um the US treasuries used to be the neutral reserve asset that central banks would park their excess um uh profits in while they were waiting to deploy them or to do something else uh with them. before sort of the end of the world second world war gold played that role and then after the US got off the gold window the US treasuries played that role and China and Russia have been trying to change the system back to gold since the global financial crisis and we think World War II started when Putin sold his treasuries and started buying gold by the way I haven't done the math yet but I'm curious to see the change in value of Russia's gold holdings since the war in Ukraine started and I would that that it far exceeds the value of the frozen assets that um are still uh uh you know much talked about. Um another way to look at the gold spike is that gold is what's stable and and it's you know the US dollar that's going down. Um in gold terms uh if gold is stable, how many US dollars does it take to buy an ounce says more about the US dollar than it does about the ounce. Um, and so one of the things that's kind of unsettling is historically when the the sort of the nominal price of gold as measured in the global reserve currency doubles in 18 months, that's typically not good. That typically implies huge changes to the financial system and it typically implies significant risk of war. And I think we're seeing both of those. And so if gold is going to reassert itself even if just for the global south as the neutral reserve asset for the settlement of imbalances in international trade um that says a lot about the US dollar system and I think China last week was a very important week we're writing a piece on again we have a different view than most um we think China holds all the cards and Trump had to back down and we posted as much on notes you know substax notes over the weekend um China basically hit the economic nuclear button last week and asserted itself as the dominant player in the negotiation, the trade war with the US. Trump does not have escalation dominance over Xi and China told the world that we're done letting the US push us around. And if you're tired of the US pushing you around, you should join us. And I think those outside the G7 will be surprised to see the length of the line joining um Xi in his campaign against Trump. Doomberg, maybe just to catch everybody up like what happened last week, just to get so we're all on the same page. It's not just a blocking rare earth exports, is it? >> No, they went much further than that. They they declared that uh anybody who is reexporting anything that has even a trace amount of rare earth in them needs to apply with China to get an export license. And the biggest potential victim in all this amongst the biggest potential victims is a company like ASML who makes the highest end lithography machines. while those machines are filled with magnets from Chinese wear. And if China says, "Nope, you can't um export that machine to Taiwan or you can't export that machine to the US," um ASML has no alternatives. And so, right now, the world is going to have to decide between whether they want continued friction-free access to the US dollar system or continued friction-free assets to the necessary commodities that make their economies run. Um they they threw down a severe gauntlet and it took about 48 hours I think for the Trump administration to internalize what happened. And then of course Trump posted this famous um uh what do you call a truth social post I guess. Um he posted he posted a very long um quite strange I would say um um missive on on truth social um declaring 100% tariff on China and all this other stuff. And we we posted a media like that Trump does not have escalation dominance here. The world needs Chinese commodities more than it needs US treasuries um or access to the US banking system. And so the the forcing function of the trade war is going to cause countries to choose sides. And I think people in the west are very much comfortable with the US always being the victor in such confrontations. China China is a whole different animal. Well, the US is also investing billions of dollars back into the supply chain which they should have done like 20 years ago and not just today, which is a whole different discussion. Um, >> but the the question now arises and it's a bit puzzling to me like on social media. I keep reading that the US shouldn't do the same thing that China has done, meaning maybe invest into companies, in invest into the private sector to to get access to those critical raw materials. I'm curious what your take on that is, Doomberg. Should the US be so proactive in in securing raw materials or should we let the free market do its thing? So >> uh >> no the free market has failed definitively the free market has failed to properly price geopolitical risk and environmental degradation which China took advantage of. We wrote a piece two and a half years ago called geopolitical warfare where we laid all this out because China was willing to degrade its environment in ways that the west would find intolerable. it came to monopolize critical supply chains at the very front end of the economy which gave them enormous leverage which they're now using. Um, China is in total control of like it's think about like you know if you you're missing sort of critical vitamins and stuff in your diet um critical metals that are only present in small quantities but in their complete absence you know you you would die. It's the same thing for the economy. And so yes, Trump is 100% correct to be urgently working with, you know, Western manufacturers and friendly nations to accelerate the reshoring of the supply chains that were so foolishly lost. But as you also said correctly, the US needs time before it starts bluffing and demanding um China, you know, uh do A, B, or C. And trying to choke China off of AI semiconductors um was a mistake. We believe it was it is only forcing China to uh to to invent its own supply chains. Their actions last week might imply that they're further along in the semiconductor race than most in the west think. Something we've been flagging a warning about as well. And the last thing I'll say to get like five years ahead of it, um there's going to be a gluten and rare earths because all shortages are followed by gluts. There's going to be a worldwide massive scramble to build every rare earth facility possible. And one day we'll wake up and there'll just be way more rare earth than anybody needs. And therefore, China having used this weapon um will have um degraded its utility. But for now, they hold the cards. Um and so, you know, just just wanted to put that prediction out there because all shortages are followed by gluts even when um the shortages are artificially created in the way that China is threatening to do with rare earths. And by the way, whether or not they actually withhold them, the threat that they made is what really matters because it's going to cause the reactions that I just described. Absolutely. No, it's it's an interesting topic. We've seen that back in 2016 um on the on the graphite and rare earth side as well. So I think history will just repeat itself when it comes to that. So >> yeah. >> Um fantastic Doomberg. This is all we have time for. What a wonderful conversation. It's always fun to chat with you. Um we've touched on very many angles actually today. Usually we just talk about two. This time I think we touch like five, six different topics. Really appreciate your time. Um if people still don't know where to find more of your work, where can we send them? Yeah, I'd like to plug another project we're doing too if you don't mind because I think you'd find it pretty interesting. But um to your first question, you can find all our work at duneberg.com. But um one of the Duneberg founders and its editor-inchief just started a substack called Classics Read Aloud. Classics read aloud.substack.com. It's wildly different than what Duneberg is, of course, and the name sort of would imply u what it's all about. It's it's wonderful literature um brilliantly read and produced um with the same sort of brand and commitment to excellence that Doomberg has and it's it's gone over very well. People who have signed up have liked it already well over 2,000 subscribers. Um so if if you're looking for something different or maybe a break from the news cycle um you can go to classicsaloud.substacks.com and then if you are interested in our work just go to duneberg.com and find everything there. Thanks Kai. Always a pleasure and like we said, nothing nothing uh no no shortage of topics to talk about anytime I come on. That's for sure. >> Absolutely. It doesn't get boring. Uh and being a podcast host is uh a challenge these days. So I've said it before, but it doesn't get easier. Um so really appreciate it, Dune. Thank you so much for coming on. Everybody else, thanks so much for watching. What an insightful conversation here with Doomberg. Make sure to check out his dubstack duneberg.com and also check out classics read read aloud. Some looks looks really interesting. I've got it bookmarked already over here. I'll definitely check that out as I'll be traveling here this week. So, I'll definitely have something to listen to here. Thank you so much for tuning in. If you haven't done so, hit that like and subscribe button and leave a comment. What do you think is happening? Did Israel lose the war to Iran? A controversial topic. Let us know. We do want to hear from you and we will include it in the next conversation we have at Doomberg. So, make sure you use that. Thank you so much for tuning in. We'll be back with more. Take care out there. [Music]