MacroVoices #503 Adam Rozencwajg: Gold, Oil & Uranium
Summary
Commodities Focus: The podcast featured Adam Rozencwajg discussing the current trends and future outlook for gold, oil, and uranium, highlighting their recent market performances and potential investment opportunities.
Gold Market Analysis: Despite recent volatility and a significant price drop, Rozencwajg believes the gold bull market is not over, driven by central bank purchases and geopolitical factors, although he acknowledges gold's current valuation is mixed depending on the metric used.
Oil Market Insights: Rozencwajg argues that oil is currently undervalued and misunderstood, with shale production peaking and demand underestimated, suggesting a potential bullish outlook for oil prices in the medium to long term.
Uranium Market Dynamics: The uranium market is in a primary deficit, with mine supply unable to meet reactor demand, and Rozencwajg sees significant upside potential as new mines are unlikely to come online before 2030.
Natural Gas Opportunity: The podcast highlighted natural gas as a potential beneficiary of the AI-driven power demand surge, with the suggestion to consider investment through the 12-month natural gas fund (UNL) to mitigate futures market volatility.
Macro Themes: The discussion touched on potential major shifts in the global monetary system, with implications for commodities, driven by geopolitical tensions and the evolving role of currencies like the US dollar and gold.
Investment Strategy: Rozencwajg emphasizes the importance of having a differentiated view on commodities and suggests that while gold remains a solid investment, there may be deeper value opportunities in other commodities like oil and uranium.
Transcript
[Music] This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is. Bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Serezna. Macrovoic's episode 503 was produced on October 23rd, 2025. I'm Eric Townsend. Commodities guru Adam Rosenwag returns as this week's feature interview guest. I suggested to Adam off the air that we should include discussion of gold, crude oil, and uranium since those markets have been so hot recently. Then I asked him what else he wanted to cover. He laughed and assured me that he could easily fill the entire interview with deep dives on those three commodities alone. So that's exactly what we're going to do in today's feature interview. But at one point in the interview, we strayed into why Adam thinks that it will actually be natural gas rather than uranium that will benefit most from the AI boom. So, be sure to stay tuned after the feature interview for this week's trade of the week segment when Patrick will translate Adam's view on Natty into an actionable trading strategy. And I'm Patrick Sesna with the macro scoreboard week overweek as of the close of Wednesday, October 22nd, 2025. The S&P 500 index up 42 basis points, trading at 66.99. Market back toward the highs of the week, begging the question as to if the correction is already over. We'll take a closer look at that chart and the key technical levels to watch in the postgame segment. The US dollar index up 22 basis points trading at 98.88. The December WTI crude oil contract up 39 basis points trading at 5850. This week bounced off its year-to-ate lows. The December Arbob gasoline up 169 basis points trading at 181. The December gold contract down 324 basis points trading at 4065. This summary doesn't tell the full story of the intraweek drop that we just witnessed as a peakto trough $378 swing occurred in just 2 days. The December copper contract down 40 basis points to 499. The uranium down 396 basis points trading to 7640. and the US 10-year Treasury yield down three basis points, trading at 399 as it continues to make new year-to-ate lows. The key news to watch is the FOMC, ECB, and Bank of Japan monetary policy statements and press conferences. We'll also continue to watch the ongoing government shutdown and its impacts on the release of key economic data. This week's feature interview guest is Adam Rosenwag, managing partner and portfolio manager of Goring and Rosen Swag. Eric and Adam discuss gold, oil, uranium, and long-term commodity investing. Eric's interview with Adam Rosenwag is coming up as macrovoices continues right here at macrovoices.com. [Music] And now with this week's special guest, here's your host, Eric Townsend. Joining me now is Garing and Rosen Schwag founder, Adam Rosenwag. Adam, it's great to get you back on the show. It's been way too long. I I think we got to start with gold because it's on everybody's mind. Boy, I don't know what Tuesday was. I think it was the biggest down day in in the history of gold for the last several years. Is it uh time to panic? Is it all over or is this just a hiccup? >> Well, no. Wonderful to be back. Nice to chat with you again. That is certainly the question on everybody's mind. Right now, it's Wednesday, October 22nd, and we had a second down day after yesterday's large correction. And I'm staring at the screen right now with gold at $4,098 from a high of $4350 only a couple days ago. So down about 260 bucks in the last 2 days, fielding certainly a lot of questions. And look, the gold market is has been a super interesting one. I mean, obviously we all know gold has been a absolute rocket investment the last couple years. gold equities this year playing a big catchup after having uh underperformed last year and the year before. Uh and then so the big question is, you know, are we in a correction? Is this just a natural pause? And I'm going to kind of disappoint people. The truth of the matter is I don't know what tomorrow or the next day is going to bring. But I do think that we're still in a larger bull trend in gold. I don't think that the gold bull market is over. And there's a couple reasons for that. You know the first is when I whenever I think of gold I try to think of it in two terms. It's a little bit of a unique commodity. It's different than let's say oil. And the reason it's different than oil is the following. You know imagine oil. We have 100 and 145 million barrels a day of supply every day and 104 105 million barrels of demand and then about 4 billion barrels of inventory. So if you think of a bathtub, your your faucet's bringing in 100 a day. Your drain is letting out 100 a day, give or take. And the size of your bathtub, the level, the inventory is is about 4 billion. You have about 40 days of inventory cover in that market. So what really matters in oil markets and indeed most commodity markets is the marginal cost of the production. you know, have you hit a level where people are going to stop drilling new wells and declines are going to take hold and what is the price to squeeze out the incremental unit of of demand? It's really all about the faucet rate coming in and the drain rate going out. Uh if you compare that to the gold market, gold mine supply, which is effectively the faucet, right, your new production coming in, that's about 1% of all of the available gold in the above ground stocks in the world. So instead of 40 days of cover, you can think of your inventory levels as 100 years of cover. And realistically, the gold trade where price is set happens by people buying and selling units in that inventory back and forth to each other. Yes, of course, you have mine companies coming in and you have true demand that takes gold out of the market, I suppose, is infantestally small. Most of the gold that's ever been mined is still available somewhere above ground. So really what you're talking about is the price elasticity of your buyer and your seller. That's really what matters in the gold market because you're trading ounces in that inventory pool, the bathtub water as opposed to the faucet or the drain. And when I look at that, you know, the big buyer in the last two years has been the central banks. It's been China, it's been India, Brazil, it's been Poland. uh it's been all the countries that effectively have watched what happened following Russia's invasion of Ukraine because what happened then is the United States pressed a button on their computer terminal in Washington and they froze all the Russian Treasury assets which are cleared through the Swift system. Now, I'm not here to debate the ethics of that or the real politic of that. You know, maybe a country like the United States should stand up uh and and impose uh what it thinks is right or wrong. I don't That's a topic for another day. All I'm telling you is it's happened and there's countries around the world that say, "Look, you know, the bulk of our reserves backing our currency, our treasuries, and they're susceptible to Washington pressing a button uh and freezing those assets, and perhaps we should diversify that into something that they can't quite as easily reclaim." And that's been the appeal of gold. So those buyers, first of all, I think that trend is continuing. I don't see any thing in the geopolitics to suggest central banks you particularly emerging market central banks uh have bought enough gold uh to reach sort of western standards if you will. Uh so I think that's going to continue and that's completely price inelastic. I mean they don't care what the price of gold is. What they're trying to do is get dollar denominated assets out of the swift system and into something that's immune from that. And I think that's certainly going to continue. The other thing that I think is quite crucial when you look at those marginal elasticities of supply and demand is that we have not seen a huge buildup in western speculative investment interest in and I think that's really crucial and it shocks a lot of people. Yes, it's hooked up a little bit, but it's nowhere near what the Western speculators or investors have accumulated in past cycles. And that's a really finicky source of supply and demand because that's something it's really a momentum driven player in the market. When gold prices rise, we see Western investors become more interested. When you get a pullback, you start to see them sell. We all know that if gold were to hit $6,000 next week, we would see more interest from Western fund managers, not less interest. And conversely, if it fell back down to $2,000, which I don't expect it will, uh we would see widespread selling on the part of fund managers that that do hold gold. Uh so since they haven't accumulated this massive stockpile like they have in past cycles, I don't think that's a finicky source of supply that can come back into the market. One day it will be and that's something to worry about, but I don't think it's something to worry about just yet. Who is doing the buying and the selling then? Who is effectively selling the gold to the central banks? All indications suggest that it's a little bit of Indian retail. It's some recycling and it's mine supply. Now mine supply is falling for seven years in a row. And both Indian supply and recycled gold are very price sensitive. They need higher prices to bring more material into the market. So you have price sensitive sellers and completely beholden price insensitive buyers. And I think in general that's a good recipe for a bull market in gold. That's the micro structure. The next thing you have to look at in gold is the valuation of gold. Is gold expensive? And of course, the question becomes relative to what it we could look at. Is it expensive relative to housing? What's the median housing price in ounces of gold? Is it expensive relative to a basket of goods like the basket that they use for the GDP deflator? And if you look at the price of gold today per ounce relative to the median house in the US or relative to the GDP basket, uh then gold does seem expensive. It's not at a record high, but not far off and and it does seem a little bit expensive. If you look at it on the other hand, relative to let's say all the gold that's ever been mined, the value of that relative to all the stocks in the world today, all the common equity or all the debt, sovereign and commercial, then gold is awfully cheap. You know, we've seen in past cycles, a really simple measure, you divide the Dow by the gold price. And we've seen in past cycles where where stocks are cheap and gold's expensive, that ratio can get down to 2:1 or 1:1. And just to put that in perspective, you know, today with gold at $4,98 and the Dow is well in excess of 45,000. Today, in fact, it is $46,590. So one one would mean you'd bring gold to 46,000. Maybe that would happen with the Dow selling off. Fine. So maybe you take gold to 30,000, 20,000 or even 10,000 if you hit the 2:1 ratio. So when you look at it relative to stocks or financial assets in general or the monetary base, let's say, it doesn't look very expensive. It looks a little bit cheap. So that I would call a neutral. I would say that you can't really make the case. It depends what you look at whether it's expensive or whether it's cheap. Uh the micro structure is telling you that you probably will continue to see gold rally from here. So, I don't think that the gold bull market is over. I think that gold prices by the end of this cycle will hit extreme levels. I wouldn't characterize them as extreme. Uh, but gold realistically no longer represents the cheapest commodity that I look at. It doesn't represent the most out of favor commodity that I look at. And probably with incremental dollars that I had to invest, I might be able to find deeper value and deeper contrarian investments elsewhere in the market. So, that's where we stand today. We're holding our gold investments. we might trim them a little bit. Um not necessarily, you know, taking big exposures off the table, but in recent weeks with oil doing poorly and gold doing very very well, you know, our our exposure to gold has obviously increased and our exposure to other areas has decreased. So we might consider doing some rebalancing on the margin and maybe even a little bit more than that, but I still think that gold ultimately has legs to run. Adam, you described primarily a central bank buying as a result of the experience of the US freezing Russian assets. Other central banks are afraid, hey, wait a minute. What if they froze my assets next? I agree with that personally. But I've also heard quite a few different pundits say, "No, no, no, wait a minute. That's everybody's talking about that, but that's not really the story. This is about secular inflation. This is about the market recognizing that financial repression is the only way out of the US uh fiscal circumstance with with just way too much debt. That's really what it's about. Then other people say, "No, no, no. It's none of those things. It's really all about China. This is about China posturing in order to get ready to in some kind of partnership with Russia to try to intentionally replace the US dollar globally as reserve currency as an overt act of I don't know what you want to call it, financial warfare or something. Okay. If any of those other explanations turn out to be right, then the signals that we should be watching for would be different than just the central bank signals. What do you think of those other arguments? Do they carry weight? Do or do you feel convinced that it's the central bank doing the buying? >> No. Listen, I think I think it's all of the above. And I'm going to maybe uh sidestep the question a little bit or answer it in a little bit of a different way. We've spent a lot of time studying commodity cycles going back 150 years. And one of our observations was that big commodity bare markets usually end with massive shifts and shocks to the global monetary system, the way that we conduct our monetary affairs. And what's interesting, which we did not articulate nearly as well, cuz we've written about that, you go back all the way to the summer of 2000 and you remember summer of 2000 was the depths of the COVID lockdowns and I was invited to Switzerland to give a speech and so I decided to go. I was having a little bit of wander lust being locked up for a couple months and so I got on a plane. And I was the only person on a plane and I delivered this speech in Zurich and I talked about how from an observational perspective, if you want to know the catalyst that's going to end the commodity bare market and begin a new robust bull market, look for cracks or changes or shifts in the global monetary system. And I said at the time, look, I don't really know where that's going to come from exactly or not even exactly. I don't have enough hubris to even say what direction that might come from, but that's the area that I think you should watch and pay attention to. And remember at the time that was really the beginnings of this idea of China trying to implement trade settlement outside of the dollar in remi and maybe have that be backed by gold or convertible into gold so they didn't have to directly open up their their their current account and things like that. Since then, you know, we've gone through a few iterations. We've had the Marilago Accords, uh, which which has been an attempt to red dollarize or double down on a dollar standard and bring people into this sort of coalition of the West, if you will, where if you're on Team USA, you enjoy much lower trade tariffs, you enjoy uh, reciprocal defense agreements and lots of Fed swap lines, which like the likes of which we're seeing in Argentina right now. Otherwise, you're sort of on the periphery and the cost for doing that is is effectively to come in and double down on the dollar as a reserve currency. And Treasury Secretary Bessant and Steven Mirren, etc., have all talked about these Marilago accords in one way or another. And they've talked about wanting to have a very dominant, if not strong, because I don't think they want a strong dollar, but they want a dominant US dollar. uh and you're seeing some really radical shifts being being proposed by those white papers. So, I'm not sure the exact direction it's taking, but I do think that you're in what we call the right zip code or the right neighborhood for a fairly major monetary regime change. And how big could that be? Well, look, I'll put it into perspective. The bare market in commodities through the 20s ended right around the same time as Britain officially left the preWorld War I gold standard. They were trying desperately to get back on gold post World War I. They they suspended the standard during the war, which many countries did. Germany went through its hyperinflation. Britain tried to rightsize its economy to get back on gold at the preworld war exchange rate. They tried desperately through the 20s. They finally abandoned it in 28. The market peaked a couple months later and all of a sudden about a year later, and then all of a sudden you had the stock market collapsed, the depression. And what people don't realize in such an economically horrible time, that was actually a great time to be a commodity investor. Commodities and commodity stocks doubled in the next 10 years. You had a really strong bull market in the 1970s. That obviously came at the end of Brenton Woods, which was put in place post World War II and lasted all the way up to, I would say, 68. Most people say 71 when Nixon shut the gold window. I'd say ' 68 when Johnson took away the requirement to back the dollar by gold. It took another 2 or 3 years before you finally did run out of gold effectively and closed the window. And that brought in place this massive new bull market and inflation of the 1970s. And in the 1990s there was the Asian currency crisis, you know, and that completely changed how we conduct monetary systems. And it brought into being what we have today, which is most of the global south pegging their currency below market rates to the dollar to help spur exports and recycle excess dollars into treasuries. So you've had these three huge monetary shifts and each of them was a catalyst to devalue the dollar relative to gold and to bring assets away from hyperlong duration growth stocks and assets bonds too back into real assets and I think this time will be exactly the same. So look, when you look at what the United States is proposing to do, either on the Marilaago accord side of things or on the stable coin treasury side of things and in the other side of the world, you have China threatening to bring back a new goldbacked currency for global commodity trade settlement. This is nothing if not a major monetary regime change. This is the period of monetary regime changes. It tends to end what I call this carry bubble that we're in right now, which is emblematic of the everything bubble and the AI bubble and everything growth. The fact that GDP or the equity markets to GDP is about 240%. That's a huge anomaly that usually comes along with these carry bubbles. And I think a monetary regime change is going to be the catalyst to bring that back in line. And I think that's what gold's telling you. So, is it inflation? Yeah, it's related to inflation for sure. Is it China trying to dethrone the dollar? I think that's definitely part of it. Is it the US fighting back? Absolutely. Do I really care which way it goes? I mean, obviously, as a human being, I have some preferences. Uh, as a commodity investor, I think what this is proving to be is the catalyst to bring back a big strong resources bull market. I want to move on to a commodity that's not getting a whole lot of sunshine right now, which is oil. Our mutual friend Dr. Anna Alhaji and yourself are the only two voices I've heard recently saying, "Hey, wait a minute, everybody. They're missing the story. It's actually a bull story, not a bear story." Why do you think that? >> Well, you know, I respect his work quite a bit. I enjoy his readings. Uh, and so if I'm going to have only one person on my team, that's a good one to have. I think that right now before we get into the supply and demand and before we get into the underlying market forces, oil is the most hated asset class in the world today. We got oil and gas down to 1.8% of the S&P and today it's about I don't know 2.3 hardly above that. Long-term average about 12 to 14% and bull markets end at 30%. So we're nearly down to COVID level sentiments in energy markets, in oil markets. In many cases, I find that oil today reminds me a lot of gold back in 1999, notably because of this term, the barbarous relic. So you remember you go back to the '9s. Actually, I guess you really have to go back to the 70s. We ended the Brettonwood Standard in ' 71, and we tried our hand at fiat currencies. By 1980, it really wasn't clear that fiat currencies. So, most central banks just kind of held on to their gold. They really didn't know what to do. It's uncharted territory. By 1980, Vulkar comes in, breaks the back of inflation. 10 or 12 years later, this fiat currency thing looks like it has legs and it looks like it's here to stay. So, all the central banks in the world said, "Well, what do we do with all this gold? We've had it for thousands of years trying to prop up our currencies and back our currencies. uh but we don't really seem to need it anymore and it doesn't yield anything. I could buy bonds with this and and be much better off. So what am I doing? And they all got together and they agreed how much they could each sell and dump into the market every year. And it was became known as the barbarous relic. It was a barbarous relic of the past. It's how we used to conduct our monetary affairs and it had no use going forward. And in that environment, you could make the case that it was kind of worthless. you know, what would you pay for a gold mine to produce a metal that used to be used as money? You know, it was basically worthless. And the only problem with that was that by 1999, so much pessimism had baked itself into the gold market that you got gold prices down to about $280 an ounce below the cash cost of extraction. And it went on to become the best performing asset class not just of the next decade, but of the next quarter century. And actually my partner Lee had an article in Forbes magazine around that time in the summer of 2000 saying that gold would go up 10fold and be the best performing asset class of the coming decade. And from I wasn't working with him at the time but from what I heard when credential which is where he's working saw the article published they'd expected him to talk about oil and how he thought oil might be up 5 to 10% next year. And instead he said gold which had fallen 80% over 20 years would be a 10bagger in the next decade. They almost lost their lunch because it was this barbarous relic of the past with no use going forward. Except that it wasn't. You know, the narrative was wrong. And today, I feel like oil's a little bit of the same. Everyone today has this hyper bearish view on crude predicated on the fact that it's this barbarous relic of the past. It's how we used to get around. It's how we used to transport ourselves, but it effectively has no use going forward. And what would you pay for a longived oil asset today? Probably nothing, right? because it has no place. And why does it have no place? Well, cuz we're moving. We're electrifying everything. The problem is that that narrative is completely wrong. And the IEA, the International Energy Agency, is the one really promoting this view. You know, according to their data, we're now in a surplus market in excess of a million and a half barrels per day. Now, the global oil market's 105 million barrels a day. So a million and a half might not sound like a lot, but the oil market's all set on that marginal unit of supply and demand. So a million and a half surplus is about as bad as I've ever seen it. It's as bad as it was during CO. Now, it certainly doesn't feel to me or most oil traders, if they're being honest with themselves, that oil balances today are as bearish as they were during CO. It just doesn't feel like that at all. In fact, if the oil market can be very complicated and nuanced, but sometimes it's simple. If you pump a barrel of oil out of the ground, it has two places it can go. A refinery or a storage tank. And so, according to the IEA, we're pumping out a million and a half more barrels every day out of the ground than it need to go to the refinery. So, they should be going to storage tanks, right? Except they're not. Storage is actually flat for the year. What's going on? the surplus that everyone's talking about is not showing up in the numbers. And I would argue that whenever that happens, nine times out of 10, if not more, what it is is it's understated demand. It's that demand is actually running hotter than the IEA anticipates. And I think that's exactly the case today. So this kind of debunks a little bit of the big broader narrative that most of the market has which says last year was a balanced market. The first half of this year was a terrible surplus. The second half's an even worse surplus. And then following that trend, what does next year look like? Well, it must be a disaster. And sure enough, that's what they're predicting. But if all of a sudden the true data that's coming in shows that last year was balanced, the first quarter was balanced, the second quarter was balanced, and the third quarter is balanced, then you begin to question that narrative entirely. The oil price today is about as bad as I've seen it. It's not low. It's not an all-time low in nominal dollars. As of today, we're talking about a WTI price. It's up today a little bit. So 58 bucks. But in real dollars compared to kind of the monthly lows during CO of 25, it's not far off from that. When you look at it priced in ounces of gold, oil's never been cheaper. Never in history. 76 barrels to the ounce. To put it in context, in 1999, a single ounce could only buy seven barrels. That's when gold was the hated asset class. Today, oil's the hated asset class, and it's you can buy 10 times as much of it as you with the same ounce of gold. And I think it's this capitulation low pricing on a narrative that just doesn't exist. So if the market's kind of balanced today, what does that mean for next year? Well, first of all, it means demand is running stronger than they expect, which means next year it'll probably run stronger than they expect, too. The second thing which is probably maybe I'm burying the lead here is probably the most important is that the only source of nonopc oil supply growth for the last 15 years the only source has been the shales and it's now rolled over and we're a bit of a broken record on this because we've been saying that this was going to happen since 2019 and before people come out and say well that's ridiculous that's 6 years ago we didn't say it would happen In 2019, go back and listen to our podcasts and watch our read our letters. We said that 2025 would be the year that shale and total US production rolls over. And on a monthly basis, it was actually October of 24. That was the month that total shale production and the Perian, including the Perian, rolled over. And since then, we're down modest about 100,000 barrels. But I think we have enough data now, 10 or 11 months worth of data that shows that that was not a blip. It wasn't just one bad monthly read, which can happen in the oil markets, but rather it's the beginning of a sustained trend. And our models have been predicting this because of very, very standard geological features. We have run out of the best areas of the shells. The shells have been huge. And I don't blame anyone for thinking while we were on the ascendancy side of the shelf boom that they were infinite. But immense is not the same thing as infinite. And we've now gotten to the point where we've drilled out our best wells. We're drilling lower and lower quality wells and production's about to roll over. That's only happened twice before. The first was conventional US production in 1970. It brought about a huge bull market in crude. The second was the North Sea and Gulf of Mexico rolling over in 2003 brought about a huge bull market and I think that this time will as well. So I think the market's very very misunderstood here. I couldn't agree more, Adam. I mean, one of the things that's been reassuring to me because I've shared your bullish view has been the term structure. And I've I've always made the argument that for people who have the experience to interpret the term structure chart, it tells you a lot more than the flat price trend. And what I saw was more than six months of backwardation beyond the front month telling me that the storage ARB guys that that are just gaming how much available storage exists in Oklahoma and so forth, they think that there is a shortage despite the flat price. You've still got that backwardation. Well, guess what? That backwardation has almost come completely out of the market. But we've got a month or two of backwardation and it's much softer than it was much much less backwardation than it was a few months ago. Does that concern you at all? Cuz it looks like we're about to flip into a complete structural contango which would normally be a bearish sign. Yeah. And and you know that that's a very very good point. You know, I I'm astonished at how many oil market watchers, many of whom should really know better, treat the term structure of crude, which is to say the futures prices, as some sort of a voting mechanism or predictor as to where investors think that oil will be in a year or two from now or five or six. And in reality, you know, you and I both know that it's nothing of this sort. It's it's an arbitrage. So, if you wanted to take a long oil futures position for 5 years from now, just to really kind of draw out the term structure, someone's going to sell you that and they're going to have to offload that exposure by buying physical crude. Now, maybe they don't. Maybe they pair it with another futures contract. But somewhere down the chain, right, if you're long, someone's going to be short and they have to hedge that with a physical barrel. So, what do they do? Well, they buy the physical barrel, they pay for it, and they store it for 5 years and they deliver it back to you. So what price are they going to give you 5 years from now? It's not going to be the spot price. It's going to be the spot price plus the cost of storage plus the cost of capital. And that's why in normal conditions, the term structure of crude is always upward sloping. When you get a shortage, people tend to think of the long end of the curve as being lower. But it's not so much that. It's that people are willing to pay a premium for prompter delivery because they're worried about physical scarcity right now. And so the front end gets pulled way up because you have a what they call convenience premium. And at the same time, if there's not a lot of oil in storage, the cost of storage becomes very very benign. So that's not an upward force on the futures price the same as it is when storage is full. So you're right that a backwardated market or backwardized market tends to occur when inventories are low. And that has always been a little bit of the fly in the ointment for the oil bears for the last couple years. So now you're in a position, you're right, you have two months of backwardation, uh I guess four months, you know, the the backwardation hits its extreme at 2 months and then it's actually contangoed relative to the spot at 5 months, I think. And from there on out, uh it's an upward sloping contango. And that suggests that inventories are more ample. And indeed, look, we see that inventories have ticked up a little bit in the last two months or so, mainly as a result of some of these OPEC plus barrels flowing in to the market. And so, I do think that inventories are slightly higher than they were. And that's why I'm not one to say that the market today is in a big sharp deficit. I would call it largely balanced. and maybe it's loosened a touch and that's probably why uh you flip from a backwardation into a contango. However, here's the caution that I would make because you know Lee and I used to have this debate all the time and and you could go from the theory which says that a backwardated market is more bullish or you could go by the observation which is that big sharp contangos in the market tend to be a really good predictor of future price. Why? Well, a big contango means that inventories are ample. Inventories ample means that prices are low, which means you don't invest enough, which means production begins to roll over and that's what drives things. So, I think if you're looking at the term structure today, it reflects the oil market today, which is basically balanced to ever so slightly in surplus. Uh, but when I look forward into next year and particularly the middle part and end of next year, I see a very very tight market. So I suspect that the market next year at this time when we speak uh will be in backwardation and people who have bought oil equities uh will be in really good spot. If you buy oil futures in a contango today and you get a backwardation later you might have given some of that up but I think people that buy the equities will be in a really good position because I think the spot price is going to be a lot higher. You can't balance the market at today's price. You just can't do it. The thing that worries me about the term structure is a lot of traders, there's a whole group of people in the market whose rationale is look, there's a backwardated market. I'm getting paid a roll premium. Even if the flat price stays the same, I still make that that yield because I'm buying the next contract at a cheaper price. As soon as you have the state transition from a prompt backwardation into a prompt contango, all those guys say, "Okay, that trade's not working anymore. I'm out of here." So, the question is, how big is that group of traders compared to the rest of the market? It looks to me like we're only a month or two away from that tra state transition happening. If so, how concerned are you about those guys bailing? >> I think it's possible. You know, that's always the tough part of the oil markets is that the paper trade is much bigger than the physical trade. It's underpinned a little bit by the physical reality that when it's all said and done, the crude market is a physical market and we need to deliver 105 million barrels of oil day in and day out to a global integrated refining network to get gasoline in our cars. Right? So, it there's a lot of paper churning about and it can absolutely distort markets on a short-term or sometimes even a medium-term basis. But the oil market maybe more than any other single market in the world is rooted at the end of the day in fundamentals because it we're so reliant upon it uh day in uh and day out. So, will there be noise in the oil market? Almost assuredly. Uh does that mean that you can't invest? I think it just means you probably have to have a good strong courage of your conviction here. You know, the other thing that I worry about in the oil markets is that it's quite clear that the administration would like to see lower oil prices, particularly between now and the midterm uh elections. I don't really know how many levers they have to pull. I can't think of too many. The natural one to think about would be to release oil from the SPR. But given how politically intolerable that would be, you remember Trump went after Biden vehemently for having squandered our strategic petroleum reserves. So I don't know how you're going to go about doing that. I think the way the administration has chosen to date, they had hoped that they could get the industry to produce more, but as we said starting about a year ago, we said, look, this is a geological problem. It's not a political problem. And so a geological problem can't be can't be fixed from the lectctor and it can't be fixed from uh the podium. And I think we're beginning to see that. So you recall that the administration tried to run on a three arrows policy. One of which was boosting domestic supply by 3 million barrels per day. We never thought that would be possible. Incidentally, Nixon in the early '7s, in the first year when the US production stagnated, then came up with Project Independence to try to boost US production. At least in that plan, his intention was to raise the oil price to incentivize drillers. In this plan, it was to lower the oil price and somehow that was going to elicit a big supply boom. I'm not sure how that was going to happen, but it's not. Uh, and so now you've seen a little bit of a pivot looking towards our OPEC. uh I'm saying maybe between air quotes our OPEC allies because we don't usually think of OPEC as being allied with the West uh but our OPEC allies notably Saudi Arabia to increase quotas and increase production uh they've done that you know you've seen about a million barrels increase come out of Saudi it's not clear to me that they have much spare capacity from here and what's that done to the oil market I mean not much inventories have moved up a touch and you've taken out a $2 backradation and made it into a $2 contango. But this is not a market that has a high level of inventory in it today. And it's not a market that's in a sharp surplus. And it is a market that's going to have to contend with the only source of nonopc growth, the shales turning negative year by the end of this year. I think October of this year is my estimate for crude oil production and then continuing negative into next year. So I think you're I think it's a very very very bullish outlook for the next 5 to 10 years until you recapitalize this industry. >> Adam, let's move on to uranium, a commodity I'm very passionate about these days. What's your outlook and what do you think the major drivers are in this market? >> The uranium market is absolutely fascinating and we got involved all the way back in 2019 2018 when it was about 20 bucks a pound and you could buy Camo for $5 a share. compared to, you know, 90 bucks where it is today. It's probably off a little bit in the last couple days with the sell-off. 84 as of today. That's the US line. I think it still has room to run. And here's the reason why. There's lots of talk about SMRs and the new nuclear revolution and things like that. And I know the SMR companies very very well. In particularly I in particular I know Terrap Power very well, but I know Ollo is also I know New Scale. for those publicly listed ones today. I I really struggle with with their valuations. They've been unbelievable performers. Good on them. Uh but I have a tough time with those valuations. But leave that aside. I think that will be a huge story in the 2030s. But realistically for most investors, they're investing between now and the end of the decade. And that's probably on the generous side. And when I look at over that time frame, the market is in deficit today. And that deficit is only going to get worse. And that's what I don't think people understand. I get a lot of questions, how many nukes do we have to build to really put this market into a tight situation. It's in a tight situation. It's been in a tight situation for 4 years. What happened was that after Fukushima, Japan continued to take delivery of all of its contracted uranium supply even though it had no reactors turning. And so they built up a huge stockpile beginning in about 2018 2019 with some new reactors coming online in China and Korea as well as Kamico and Kazataprom curtailing their mine supply. The market shifted into a primary deficit. What does that mean? Mine supply was not meeting reactor demand. It was a deficit in the primary sense of the word. And what kept what made ends meet? What kept that market together was a sustained liquidation of the Japanese stockpiles. And that's what allowed mine supply to run below reactor demand for so many years. And those stockpiles are now gone. They've all been depleted. And you're in a much more heads up situation between mine supply and reactor demand. And that's a very, very tight market as a result. So people say to me, what has to change? Nothing. Just time has to change. And that started to change and really come to the four in late 22. In 2023, the hedge funds became very involved in the uranium space and their preferred vehicle was to buy the uranium junior miners and then to go and bull up the spat physical uranium trust, get it to trade at a premium. it would go out into the market, issue shares, and buy spot uranium. And that drove up the uranium price, which helped out the junior miners with a big levered beta. And so these guys could just roll that trade over and over again. And it worked incredibly well in 2024. Spot prices lifted about 25 bucks above term price. And that reflected, I think, the speculative fever in the market. We were invested that whole time. We decided to stick with it because we saw a tight underlying market. We debated whether we should sell at the beginning of 24. We didn't. I wish we had. Uh because in 24 those hedge funds unwound everything. They unwound everything. And in fact, they had started to go really net short. By the first quarter of this year, you could find Australian juniors with 30 days to cover and 35% of their float sold short. And it was the trade working in reverse. The idea was to keep the spat physical below NAV, spread a rumor that they would be unable to pay their bills and they'd have to liquidate their uranium holdings and that put downward pressure on the juniors which they made uh up for in their shorts. That's all done now. SPAT was able to come to market. They were able to raise money. They put that rumor to bed. It's all behind us. And the hedge funds for the most part are now out of the market. Did they make money? Did they lose money? I have absolutely no idea. I suppose when it was all said and done, they probably broke even. Uh but now they're out of the market. They're no longer distorting things and we're seeing a nice gradual increase back in the uranium price. So I don't see that changing until you bring on more mines and we will not bring on more mines till the end of the decade. I just don't see it. NextG will be the one to go first. It's not going to be before 2030. So how high can prices go in the interim? Well, that's where things get really exciting because once you have a nuclear reactor built, and remember, you don't need to build anything more to make this a tight bull market. So, just on what we have already built, you will pay almost anything for your fuel. All of the cost of that reactor is the capex. Once it's built, you feed the beast. And so, would you put two, three, four, $500 uranium? Today, it's about 85 bucks. Would you put 500 in your model and still make it work? I mean, you wouldn't want to do that as a fuel buyer, but you could. In fact, you would prefer to do that than shut down your mind. So, I don't see where you squeeze out demand. And supply, I guarantee you that the end of this bull market will come because of too much mind supply. Uranium is not the rarest thing in the world, but it is impossible to bring it on quickly because it's radioactive. There's a lot of permitting involved. There's a lot of civic engagement and discussions you have to have with the communities. you're not going to balance this market until at least 2030 and then it'll become a tug-of-war between the SMR, new demand, and new mine supply. But that I will defer to another day. >> I couldn't agree more. I I very much echo your extremely bullish views. I am very long and very bullish. But our job as professional investors is to think about what can go wrong. What can go completely wrong that would turn that would reverse this uranium bull market? I is it another Fukushima sized accident? Is it what are the things we need to think about that could completely derail this? Maybe the AI trend getting unwound probably is contributing a lot to the nuclear demand. >> Yeah, look again, you know, I don't think that you need this big AI data center buildout to acrue to new nuclear demand. In fact, you know, it takes a long time to build a uranium mine, but it also takes a long time to build a reactor. So, in reality, the AI demand in the next 5 years will be met through natural gas. And so, I think that's the biggest beneficiary short term. And I think potentially that's the biggest detriment. I suppose if all that falls apart, that could be a headwind, but it's gonna be more in gas. It's not going to be, you know, uranium for to power AI is 2030 and beyond. it can help with the speculative fever in the market and vice versa it can deflate that a bit right and so I think that you could definitely see sell-offs related to AI and certainly uranium stocks have a degree of momentum factor in them right now uh are they trading in and alongside the AI baskets I'm sure that they are uh but fundamentally I think that that should be largely immune in the next several years obviously another Fukushima style incident would would deliver could deliver a major blow to the uranium industry. I mean look ultimately many people died in Fukushima from the tsunami and from the ravishes of that. Uh when you look at the people that died from the nuclear incident, it was zero. Uh including all those guys that they sent into the reactors to contain certain parts of that damaged reactor. I think the first gentleman in that group in that cohort just passed this last year. And you know, I think the actuarial tables say that in a group of eight guys in their 40s and 50s, you know, 10 years or 15 years on, uh, the likelihood that one of them passes, although tragic, is is not zero. Uh, and I think it's right in line with that table. So, so you could really make the case that that nobody died in that and that it was as bad as a incident as it was. It was completely manageable particularly if you think that nuclear is going to alleviate global warming which is obviously a much bigger concern for a lot of people but nevertheless if something were to happen uh certainly I think that would from a sentiment perspective deal a big blow to the uranium trade. Um, the other thing, you know, is, and I'm not so sure that this is a a bearish thing of what could go wrong so much as it could signal the top one day. You know, one thing that I do think about quite a bit is that the Sprat Physical Uranium Trust, and I know those guys quite well, and I like what they do. I think they're very smart and shrewd that they set up that vehicle. But, you know, there's a lot of material in that, and there's always been this fear that they're going to sell pounds back into the market. I don't agree with that. I don't think that they'll sell pounds back into the market. I think they will stop at nothing to uh avoid doing that. But I also can envision a world where we're so tight uranium. And to think of a company in Canada sitting on a large stockpile of uranium when actual reactors can't get their hands on materials to be able to spin and provide uh electricity and risk impairing all the capital that went into that. That does not seem like what they call an economic, you know, Pareto optimal outcome. There's a situation that's better for everybody. I don't think again I don't think that the team at SPAT is looking to sell pounds under any circumstance, but I do wonder if at some point we get such a bull market going that someone doesn't just make a bid and acquire the entire Sprat physical uranium trust in order to get access to those stockpiles. And I kind of feel like if there's a bell to be rung at the top, you know, we like to think about what ends the bull market. I could see psychologically that ending the bull market when that happens. Uh but we're a long way away from that and I suspect there'll be a lot of fireworks between here and there. Yeah, I couldn't agree more. I think that is a very important signal. I'm very curious if you'd agree with me on this point because a lot of people in the uranium market seem to fear, desperately fear, oh my gosh, what if they try to confiscate sput? And my answer to that is that's an excellent goal that we as uranium investors should hope for. We'll be thanked for having created essentially a strategic uranium reserve that serves humanity well when the when spat correctly insists on behalf of those of us who are shareholders in it. Yeah, of course. If it's the right thing for the world, uh we'll be happy to liquidate the entire trust at a 25% premium to spot uh in order to help save the world. pay us off and there's no reason not to pay them off. There's no reason to expect a big political objection to that. So I don't see why anybody is fearing the force majour which I think is probably coming someday where sprat where sput is forced to liquidate entirely for the good of the world to make that uranium available. That seems to me like a wonderful outcome. What do you think? >> It's hard to speculate on on things like that in the future. You know, just the other day, we own a small position in the company Trilogy Metals, and now we have a large shareholder on the registry next to us, which is the Department of War, you know, which made a direct equity investment into that project. Would I ever think that I would see the Department of War alongside me on what can really only be described as like sort of copper junior, pre-production copper junior in Canada? No, not really. But, but here we are. So, certainly anything can happen. I'm of the opinion that the most likely buyer, at least as it stands right now, because when we used to say, look, someone's going to buy it and that material, there's no way that if that material has better use in the public market, then the spot price is indicating uh then there's going to be a situation where there's just benefit for everyone uh to put that material back in in into a useful form, right, into fuel rods and stuff like that. And while the government could do it, people often would say to me, "Yeah, the utilities would never do that. That's a super aggressive move." And that's true. But you know who would do that? The hyperscalers would do that. You know, the the risk capital involved in these large tech companies that have now committed to large nuclear buildouts to power their AI data centers. A and we can talk all about the AI bubble if you want. And I I suspect that the hyperscalers in five years from now don't look like they do today in any capacity. In fact, I think they'll be in a lot worse shape. However, you could begin to see that risk capital say, "Look, you know, we're going to just own a huge in uh uranium inventory to power the AI data centers to be fully integrated." Uh, I could certainly see that happening or if not them directly, then them funding a consortium that does that for their own benefit. So, I think eventually that material does make its way into the market. I don't think, like you, I don't think that's bad for uranium investors. I do suspect however that when it happens from a just a psychological perspective that we might look back and say in retrospect just like Glen Core going public in 2011 right before the commodity markets fell apart or these these weird psychological events that take place that in retrospect you realized that was the top that could be but it's not going to be a direct uh negative event for the uranium markets. >> Adam, I can't thank you enough for a terrific interview. But before I let you go, wait a minute. This is a little awkward. Normally my job here as the host is to say pitch your services. What are you selling in terms of your institutional research in this market? You guys are a little bit weird. You are selling or you are providing institutional quality research on commodities, but you insist on giving it away for free and not charging anything for it. What gives? What's what's the catch? >> All I ask is some some nice conversation and uh and good friends to talk to about this. Look, we're an investment firm. We invest in resource equity markets. Uh we have funds and different rappers uh for uh distribution in the US and abroad. We have a USITS fund and a US mutual fund. We're long only and easy to own. Uh and our research, you know, one of the things that we do do that's quite different uh is that we spend a lot of time uh researching. We spend a lot of time on the top down because I think to be a good resource investor, you have to have a good differentiated view on the commodity and we put it in the public domain so that people can follow us and audit us and understand the decisions that we've made and decide whether they agree with them or not because inevitably these markets take longer to play out sometimes or move against you and you can be right but still have your stocks go down. And so we've always felt that our partners and our clients and just the general public for that matter, uh we want to be very transparent in the research that we do. So everything's on our website, Go Rosen, Garing and Rosenwag is the name of the firm. Go Rosen is the website. Uh we put up all of our letters. We keep all of our old letters up so you can see all of our spectacular failures in years past as well as our good calls and uh and and we're just very very passionate about the space. So please, if you have any any interest, definitely go to our website and check it out. And I very strongly encourage everyone to do that. That is excellent institutional quality research that is free because you're basically it's the same way that I started Macrovoices. You're you're in the asset management business and you're promoting yourself by giving away free research. And I applaud you for doing so. Patrick Szna and I will be back as macrovoices continues right here at macrovoices.com. Now back to your hosts, Eric Townsend and Patrick Serzna. Eric, it was great to have Adam back on the show. Now listeners, you're going to find the download link for the postgame trade of the week in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoices.com. Just go to our homepage macrovoices.com and click on the red button over Adam's picture saying looking for the downloads. Patrick Adam made a key point in this interview that almost nobody is talking about. AIdriven power demand over the next 5 years, probably the next 10 years is going to be met primarily by natural gas, not nuclear. And yes, nuclear is the right solution long term, but it takes a long time to bring new nuclear capacity online. That's a big insight that the market is not pricing yet. So, where's the trade here? And please be sure to explain why Natty has the reputation as the widowmaker contract in the futures markets. Well, Eric, right now, natural gas is trading near decade lows. On page two of the slide deck, I've included a continuous futures chart that really illustrates how depressed pricing has become. Gas has quietly been left for dead, while uranium and other long-term energy plays have captured all of the attention. But the setup here is starting to look asymmetric. US gas prices have been compressed back toward marginal production costs just as new LG export capacity ramps up into 2026 layered on with an AIdriven surge in electricity demand which will rely on gas as the swing fuel and you've got yourself now the early stages of a tightening market that almost no one is positioned for. Now, trading natural gas futures directly is not for the faint of heart. It's a market defined by extreme seasonality with a term structure that can whip violently on small changes in weather or storage forecasts. That's why the front contracts have earned their infamous nickname, the widow maker. So, trading natty futures directly can be a big mistake unless you're really an expert on term structure, seasonality, storage, and logistical costs. So rather than trying to time the volatility through the futures, I want to look how to own the theme intelligently. The easiest retail product is the United States Natural Gas Fund symbol UNNG, but it is structurally flawed. It holds only the front month contract, forcing it to sell low and buy high as it rolls through the contangoed curve. That negative role yield creates persistent bleed, making the UNNG a poor vehicle for a long-term hold. Instead, I want to highlight a better alternative, the 12month natural gas fund, symbol UNL, which holds a laddered portfolio of the next 12 monthly Henry Hub contracts. That structure spreads the exposure across the curve, smoothing out seasonality and sharply reducing the roll decay. It's still a pure play on natural gas, but it gives you a cleaner exposure to the underlying long-term fundamentals rather than the front month weather noise. It is very easy to see the benefits by looking at the chart on page three of the chart book where I overlay the UNG and the UNL. It is clear to see that the bleed on the UNL makes it a poor vehicle for long-term investors. Now, while I usually prefer to build asymmetric payoffs through options, UNL's options are thinly traded. So, the cleanest expression here is simply a delta 1 long position anchored on the asymmetry of the entry price. One can simply use a technique of entering a starting position and scaling the position larger when technical trend following signals suggest a new bull cycle has started. In short, natural gas looks cheap both in absolute and relative terms and the fundamentals are quietly improving. You've got demand growth for LG exports, AI data centers, and industrial reshoring all hitting just as production growth flattens. If this market starts to repric, it could surprise people with how far it runs. And for investors looking to capture that upside without getting caught in the futures curve volatility, UNL is the smarter way to play it. That explanation worked for the pros. And of course, our retail audience can get the full briefing by attending Patrick's Monday webinar, which always dissects the trade of the week in detail. Macrovoic's listeners can get a free trial at bigpicturetrading.com. >> All right, Eric, let's get into the charts. Let's start talking equities here. What are your thoughts? Well, Patrick, the market is still freaking out about what Trump and Bessant's next moves will be, just as we anticipated that it would. My strong view is that what happens next will be headline driven and therefore is impossible to predict without inside information. Obviously, if Secretary Besson's uh Wednesday threats towards Russia were to lead to a major escalation in the Russia Ukraine conflict as was threatened. Well, that would uh potentially mean a whole lot more downside at least in the short run. But remember, wars are always inflationary. So even if we see an escalation here, look, we were already facing a formative secular inflation. And once the panic subsides, even a war escalation will be a tailwind for the stock market. So I don't see anything that is inherently fundamentally bearish here. Other than the potential that we could have a panic in investor sentiment if there's a major escalation, I think it's more likely that uh we'll get to some kind of negotiation and the threats will be taken off the table, but we'll see what happens. All right, Eric, this is a really interesting market. You know, I heard a great argument about the seasonality of markets, which is essentially during the six months between uh May and October, the markets substantially underperform and that November to April period is some of the best performance of stock market. A lot of people from a seasonality perspective are now anchoring that the stock market uh should do well. But in ma in my mind one of the big contributors to the strength that often happens from that seasonality is because those six months were so weak. Yet when you look at the performance from May to October we had one of the most extraordinary bull runs in 6 months up 35 plus% uh over a six-month period. This market is at elevated level. the idea that from these elevated levels you have some sort of alpha of further gains on the upside. I think at this year could be marginalized. Now overall this market still has not yet seen a 5% correction. That one day drop we had was closer to 4% from peak to trough and did test the 50-day moving average. So, a lot of the criteria is there, but overall we haven't had yet that proper multi-week month or multimonth correction that typically happens even three or four times a year. And so, uh, at some stage here, we're going to get a hiccup in these markets. The bigger question is, did we see the start of that? Now, well, we do have a couple of things that will decide this. Clearly, we're now uh in the pig in the python moment of earnings. We're going to get the majority of those big mag seven earnings coming out here in the next week or so and we're going to determine whether or not this becomes a huge tailwind for the market or whether it becomes an excuse for some profit taking. We continue to see overall the market breath deteriorating which is usually not a plus for the bulls but at the same time after we get through earnings comes the share buyback tailwind which uh will inject new money in there. So we have a market here that you can try to build an argument either way but I want to keep it super simple at this stage. The 6600 level technically is pretty significant. Not only was that where the lows came in uh from uh the previous weeks, but uh it also is where a basic trend following technique of 50-day moving average lies. If the bulls are going to stay in control of this market, we will not see that level violated. And so you want to in some degree or another give the bulls the benefit of the doubt. and so long as we can see them break these markets to a fresh new 52- week high and uh and make let's say a punch up to 7,000. But if we see that the selling in any way after or during this earning season uh has a feat kicked out below 6,600, we have a lot of systematic selling that could get triggered. Not only have we already seen vault targeting funds degrossing as realized volatility spiked, but many CTAs uh are going to start selling as we see that uh the market start to pivot uh with all the dealer gamma there. We could actually see a stock market air pocket develop that could create some downside volatility, but to me that only all happens below 6,600. So that's the pivot to watch for all of our listeners. All right, Eric, let's touch on that dollar. Patrick, the Dixie has firmed up toward the high end of its recent consolidation range, but we haven't seen a breakout yet. Lots and lots of pundits are calling for one, and they've described the risk of a face ripping dollar rally if certain Trump Bessant policy risks play out. I think that's a very real risk and it would be bearish for most other asset classes in the short term, but I think those will be viable dips more so on commodities than equities. Well, Eric, in my mind, the US dollar has been in a bare market all year, but really stopped declining close to four months ago. We've not only seen a double bottom form on the dollar index from its July and September lows, but quietly, we have now seen a sustained period where the dollar index has been trading above its 50-day moving average, making higher highs and higher lows, and generally the sentiment has remained decisively bearish. You have charts like the US dollar yen clearly turning up, deterioration in the pound sterling, deterioration in the euro, the um uh Canadian dollar continues to weaken, the Aussie dollar continues to weaken, and uh and we haven't seen obviously some very key technical levels broken on those, but they'll be very interesting to see whether the dollar can pull off a counter trend here uh for and it's really easy at this point to simply watch whether the Dixie can make a break above the 100 level because that will certainly catch everybody's attention as it would be making new six-month highs and uh certainly would start to squeeze out any shorts that overstayed their their positioning. Uh will that dollar rally happen is certainly the puzzle to watch here. All right, Eric, let's touch on crude oil. Remember what I said a few weeks ago here on Macrovoices that I thought President Trump's desire for lower oil prices would bring lower oil prices, but I didn't expect it to last. And that's exactly what's happened. I said, "Give them time and they'll either start another war or escalate one of the several that they already have in progress, and that will of course bring much higher oil prices." with Secretary Bessant's Wednesday afternoon declaration of major sanctions against two of Russia's biggest oil companies if Russia doesn't immediately cave to US demands and end the war. Well, my prediction, it seems, is about to be realized. Of course, this might all blow over and another deal might be struck to forget about all that sanctions talk and that would bring oil prices right back down. But it won't last. Adam Rosen Schwag and Anis Alhaji are among the smartest people in the oil markets and I agree with their bullish intermediate to long-term outlook. As far as short-term, anything's possible. You don't want to be long here unless you're willing to ride out potentially a $10 swing lower depending on how the politics play out. But eventually, we're going to see higher oil prices. Well, Eric, I'm going to just look at oil technically here for a moment. So when we go and look, we can see that oil retested its year lows. And so uh we got a double bottom bounce here. Now the bounce hasn't gotten above its 50-day moving average. It has not beat its fib zone. So no way that I want to in any way imply that oil has pivoted to a bull cycle. But we're going to get some very big tells here around this $60 to $62 level where we're currently trading. uh as oil trades up here, if this was a false start, then we should easily see the market return right back down below $60 and stay there. But the way I look at this here is that this is actually a pretty technically significant base. So if any structural new buying starts coming in here driving prices to the mid60s that could be enough to pivot uh this uh very bearish looking chart to being more neutral and one that is actually starting to demonstrate a basing uh now it may take months for oil's chart to turn more bullish and obviously a a geopolitical catalyst could accelerate that. Uh but it to me oil's incredibly asymmetric. I continue to subscribe to the oil bull case. Obviously Adam and Anas both shared some very strong convictions and I think that overall it'll be right. Um I think that uh next year will be a great year for oil. The question of course is that have we seen the lows and is it now the the turning point for these crude futures? And that's uh the puzzle we're going to continue to solve here in the weeks to come. All right, Eric, we got to talk gold now. Well, we had a roller coaster ride in gold futures this week. Down 150 bucks in a single day, fully retracing the next day, then down even harder by more than 200 bucks the day after that. My best guess as to what caused this is that some traders had inside information, limited inside information, just whispers of an imminent resolution to the Russia Ukraine conflict, which probably lacked any real detail until Secretary Bessant's Wednesday afternoon briefing made the administration's intentions clear. Now that I know what's on the table, I'm not at all on the side that this is a bearish development for gold. I strongly doubt that Russia would just cave to such demands. And frankly, I think that what Trump and Bessant just did was incredibly risky, signaling a potential move much higher on gold, not lower. Now, of course, if I have the geopolitics wrong and Trump magically negotiates an end to the war with no further kinetic escalation, he'll have earned that Nobel Peace Prize that he wants so badly. And I'll take a big loss as the geopolitical premium collapses in gold prices. But I don't mind being on the other side of that trade. I'm pretty sure the traders who are assuming that Putin will just cave to Trump and Bessant's demands have probably never dated a Russian. Yeah, Eric, gold had a a peak to trough move of $378. It was just an extraordinary swing. Uh look, uh whenever the velocity of a rise accelerates the way gold did, uh then the volatility to the downside is always reflexively proportional to the the speed and magnitude of the rise. So having huge downside, volatility is not a shocker. We've seen the implied volatilities of gold double, you know, from being in the teens to being close to 30%. And so overall, gold volatility and these huge swings are likely here to stay for the next little bit. The bigger question is uh is this now going to settle it into a a bigger more prolonged consolidation? I want to remind everyone that over the last year we have seen uh these two threemonth pauses in gold. There was the one that started back in November of last year lasting into January of this year and then again this summer we went into a consolidation from April that lasted all the way into July August in a sideways manner. There's these periods where the gold bursts higher and then takes a break and and consolidates. uh have we seen the beginning of one of these consolidations? And because of the magnitude of this rise, will the consolidation be deeper than the previous ones? These are all the puzzles to solve. At this moment, I wouldn't be shocked if we spent a little time back below 4,000 in this consolidation. I remain big picture, very bullish. And once we go through a consolidation, it almost always leads to the next major buying opportunity. And so, uh, I'm going to be watching closely, uh, what happens in terms of, uh, the the magnitude of this decline. We may spend a very good part of the fourth quarter in a consolidation, but, uh, it should, uh, continue its primary bull phase because there's a macro backdrop that is fundamentally bullish gold. And I think we can all agree that we haven't seen some macro pivot to suggest that the future of gold is going to be any different than we've talked about in the past few years. All right, Eric, let's talk uranium. Well, we've obviously just had a big correction and yes, I'm buying this dip in size. Now, it could definitely go much lower from here, especially if the AI story starts to unwind or even if the market figures out that net gas rather than nuclear is going to be the immediate benefactor of the AI story. But there's no way that this uranium bull market is over. It's just getting started. There was also what I think was a very important announcement this week which was almost completely ignored by the market. What they announced was that weaponsgrade plutonium that's left over from the Cold War and the US stockpiles. We don't need to build, you know, thousands more nuclear warheads. We've got too many already. They're going to make some of that plutonium up to 19,000 metric tons of it available to advanced reactor companies in order to avert the coming expected crunch on Halo fuel. H A L EU, which stands for highass assay, lowenriched uranium. In other words, it's 20% of the good stuff, U235, as opposed to just 3 to 5% in conventional reactor fuel. Why is this so important? The 1976 presidential race was very much about the so-called plutonium economy. A lot of smart people understood correctly that by taking the plutonium that we know how to manufacture in nuclear reactors and using it as fuel for more nuclear reactors and particularly building a kind of nuclear reactor called a breeder reactor which takes the unused nuclear waste in today's reactors converts it into plutonium and then burns it all in one fuel cycle. That's the way to go. That's the what we need to get to. It has been impossible to make any progress on that for the last 50 years in the wake of what frankly was a a ridiculous, emotionally charged, irrational political debate in the 1970s. My take on this is energy secretary Steve Bessant is going to deliver a nuclear renaissance beyond even my wildest dreams. I think they're going to really make some meaningful changes on policy. Hopefully, they'll eventually get around to reforming section 123, which prevents other c countries from being able to reprocess their uh spent nuclear fuel in order to extract plutonium and make more fuel out of it. Only France does that today. And it's not because only the French think that's important. It's because the US forbids almost everyone else by treaty from doing it. It's called section 123 go dates back to 1954 and it never made sense. We are prohibiting the recycling and the responsible processing and recycling of spent nuclear fuel. Now, Charl de Gaulle had the good sense to refuse to sign the 1968 nuclear non-prololiferation treaty until France became a recognized nuclear weapon state in the early 1990s. That is the real reason that France is the only country that in the west at least that reprocesses their spent nuclear fuel. It's because they're allowed to and they're not constrained by ownorous and unreasonable US policy. I think Secretary Steve Wright is the first guy in government to come along in my lifetime who understands this at least as well as I do and is about to change it all for the better. So, I really hope I'm right about this. I think we're on the cusp of some major policy changes and we could completely redefine how nuclear energy works. If we could somehow get over this nonsensical belief that spent nuclear fuel presents a much larger weapons proliferation risk than it really does. Yeah, certainly we've now had some sort of a correction underway. I I continue to be in the camp where I'm a buyer of uh uranium prices themselves as a commodity that through things like the SPAT physical trusts. Uh I think that they're still incredibly reasonably priced. But in regards to equities, I'm increasingly concerned that they may be correlated with the AI baskets. And if we see that there's going to be some sort of uh mean reversion in that space, I wonder whether we would see some heightened volatility in those equities uh that have run so much already. And so I'm at this stage much more focused on the uranium commodity itself where I think there's more asymmetry. Eric, let's touch on copper here. Well, it looks like copper is catching a bid finally and I'm glad to be long in size. China policy has to be central to what happens next. So, another deep dip on more China geopolitical who knows what happens next news is entirely possible. But that would be a very viable dip and I'd probably add to my already overweight position if such a move were to materialize. Well, overall, copper has been bought on dip, held the 50-day moving average, is attempting to break out. I mean, is there still a chance here we're going to punch up towards 5 and a/4 to 550? It's still on the table. Overall, there's a a bullish tailwind here. It has uh shown some sensitivity to the selling that we saw in the broader commodity space over the last week or two. Uh it'll be very interesting to see whether copper can just continue to march the beat of its own drum or whether it's going to correlate with a bigger basket. Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. >> I think that this in itself a red flag for me for the equity markets. Generally, what we have seen is that prior to a turn in the markets, often for even several months, you have uh bond markets leading with uh rising bond prices and and declining yields that precede that of a a market turn. The fact that we see this kind of flows and demand coming into the bond markets at minimum is uh something that we have to pay attention to uh to see whether or not this has some repercussions on the other markets. Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of Big Picture Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. Patrick, tell them what they can expect to find in this week's research roundup. Well, in this week's research roundup, you're going to find the transcript for today's interview, as well as the trade of the week chart book that we just discussed here in the postgame, including a number of links and articles that we found interesting. You're going to find this link and so much more in this week's research roundup. That does it for this week's episode. We appreciate all the feedback and support we get from our listeners, and we're always looking for suggestions on how we can make the program even better. 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Always consult a licensed investment professional before making investment decisions. The views and opinions expressed on macrovoices are those of the participants and do not necessarily reflect those of the show's hosts or sponsors. Macrovoices, its producers, sponsors, and hosts Eric Townsend and Patrick Serezna, shall not be liable for losses resulting from investment decisions based on information or viewpoints presented on Macrovoices. Macrovoices is made possible by sponsorship from big picture.com and by funding from fourth turning capital management LLC. For more information, visit macrovoices.com. [Music]
MacroVoices #503 Adam Rozencwajg: Gold, Oil & Uranium
Summary
Transcript
[Music] This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is. Bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Serezna. Macrovoic's episode 503 was produced on October 23rd, 2025. I'm Eric Townsend. Commodities guru Adam Rosenwag returns as this week's feature interview guest. I suggested to Adam off the air that we should include discussion of gold, crude oil, and uranium since those markets have been so hot recently. Then I asked him what else he wanted to cover. He laughed and assured me that he could easily fill the entire interview with deep dives on those three commodities alone. So that's exactly what we're going to do in today's feature interview. But at one point in the interview, we strayed into why Adam thinks that it will actually be natural gas rather than uranium that will benefit most from the AI boom. So, be sure to stay tuned after the feature interview for this week's trade of the week segment when Patrick will translate Adam's view on Natty into an actionable trading strategy. And I'm Patrick Sesna with the macro scoreboard week overweek as of the close of Wednesday, October 22nd, 2025. The S&P 500 index up 42 basis points, trading at 66.99. Market back toward the highs of the week, begging the question as to if the correction is already over. We'll take a closer look at that chart and the key technical levels to watch in the postgame segment. The US dollar index up 22 basis points trading at 98.88. The December WTI crude oil contract up 39 basis points trading at 5850. This week bounced off its year-to-ate lows. The December Arbob gasoline up 169 basis points trading at 181. The December gold contract down 324 basis points trading at 4065. This summary doesn't tell the full story of the intraweek drop that we just witnessed as a peakto trough $378 swing occurred in just 2 days. The December copper contract down 40 basis points to 499. The uranium down 396 basis points trading to 7640. and the US 10-year Treasury yield down three basis points, trading at 399 as it continues to make new year-to-ate lows. The key news to watch is the FOMC, ECB, and Bank of Japan monetary policy statements and press conferences. We'll also continue to watch the ongoing government shutdown and its impacts on the release of key economic data. This week's feature interview guest is Adam Rosenwag, managing partner and portfolio manager of Goring and Rosen Swag. Eric and Adam discuss gold, oil, uranium, and long-term commodity investing. Eric's interview with Adam Rosenwag is coming up as macrovoices continues right here at macrovoices.com. [Music] And now with this week's special guest, here's your host, Eric Townsend. Joining me now is Garing and Rosen Schwag founder, Adam Rosenwag. Adam, it's great to get you back on the show. It's been way too long. I I think we got to start with gold because it's on everybody's mind. Boy, I don't know what Tuesday was. I think it was the biggest down day in in the history of gold for the last several years. Is it uh time to panic? Is it all over or is this just a hiccup? >> Well, no. Wonderful to be back. Nice to chat with you again. That is certainly the question on everybody's mind. Right now, it's Wednesday, October 22nd, and we had a second down day after yesterday's large correction. And I'm staring at the screen right now with gold at $4,098 from a high of $4350 only a couple days ago. So down about 260 bucks in the last 2 days, fielding certainly a lot of questions. And look, the gold market is has been a super interesting one. I mean, obviously we all know gold has been a absolute rocket investment the last couple years. gold equities this year playing a big catchup after having uh underperformed last year and the year before. Uh and then so the big question is, you know, are we in a correction? Is this just a natural pause? And I'm going to kind of disappoint people. The truth of the matter is I don't know what tomorrow or the next day is going to bring. But I do think that we're still in a larger bull trend in gold. I don't think that the gold bull market is over. And there's a couple reasons for that. You know the first is when I whenever I think of gold I try to think of it in two terms. It's a little bit of a unique commodity. It's different than let's say oil. And the reason it's different than oil is the following. You know imagine oil. We have 100 and 145 million barrels a day of supply every day and 104 105 million barrels of demand and then about 4 billion barrels of inventory. So if you think of a bathtub, your your faucet's bringing in 100 a day. Your drain is letting out 100 a day, give or take. And the size of your bathtub, the level, the inventory is is about 4 billion. You have about 40 days of inventory cover in that market. So what really matters in oil markets and indeed most commodity markets is the marginal cost of the production. you know, have you hit a level where people are going to stop drilling new wells and declines are going to take hold and what is the price to squeeze out the incremental unit of of demand? It's really all about the faucet rate coming in and the drain rate going out. Uh if you compare that to the gold market, gold mine supply, which is effectively the faucet, right, your new production coming in, that's about 1% of all of the available gold in the above ground stocks in the world. So instead of 40 days of cover, you can think of your inventory levels as 100 years of cover. And realistically, the gold trade where price is set happens by people buying and selling units in that inventory back and forth to each other. Yes, of course, you have mine companies coming in and you have true demand that takes gold out of the market, I suppose, is infantestally small. Most of the gold that's ever been mined is still available somewhere above ground. So really what you're talking about is the price elasticity of your buyer and your seller. That's really what matters in the gold market because you're trading ounces in that inventory pool, the bathtub water as opposed to the faucet or the drain. And when I look at that, you know, the big buyer in the last two years has been the central banks. It's been China, it's been India, Brazil, it's been Poland. uh it's been all the countries that effectively have watched what happened following Russia's invasion of Ukraine because what happened then is the United States pressed a button on their computer terminal in Washington and they froze all the Russian Treasury assets which are cleared through the Swift system. Now, I'm not here to debate the ethics of that or the real politic of that. You know, maybe a country like the United States should stand up uh and and impose uh what it thinks is right or wrong. I don't That's a topic for another day. All I'm telling you is it's happened and there's countries around the world that say, "Look, you know, the bulk of our reserves backing our currency, our treasuries, and they're susceptible to Washington pressing a button uh and freezing those assets, and perhaps we should diversify that into something that they can't quite as easily reclaim." And that's been the appeal of gold. So those buyers, first of all, I think that trend is continuing. I don't see any thing in the geopolitics to suggest central banks you particularly emerging market central banks uh have bought enough gold uh to reach sort of western standards if you will. Uh so I think that's going to continue and that's completely price inelastic. I mean they don't care what the price of gold is. What they're trying to do is get dollar denominated assets out of the swift system and into something that's immune from that. And I think that's certainly going to continue. The other thing that I think is quite crucial when you look at those marginal elasticities of supply and demand is that we have not seen a huge buildup in western speculative investment interest in and I think that's really crucial and it shocks a lot of people. Yes, it's hooked up a little bit, but it's nowhere near what the Western speculators or investors have accumulated in past cycles. And that's a really finicky source of supply and demand because that's something it's really a momentum driven player in the market. When gold prices rise, we see Western investors become more interested. When you get a pullback, you start to see them sell. We all know that if gold were to hit $6,000 next week, we would see more interest from Western fund managers, not less interest. And conversely, if it fell back down to $2,000, which I don't expect it will, uh we would see widespread selling on the part of fund managers that that do hold gold. Uh so since they haven't accumulated this massive stockpile like they have in past cycles, I don't think that's a finicky source of supply that can come back into the market. One day it will be and that's something to worry about, but I don't think it's something to worry about just yet. Who is doing the buying and the selling then? Who is effectively selling the gold to the central banks? All indications suggest that it's a little bit of Indian retail. It's some recycling and it's mine supply. Now mine supply is falling for seven years in a row. And both Indian supply and recycled gold are very price sensitive. They need higher prices to bring more material into the market. So you have price sensitive sellers and completely beholden price insensitive buyers. And I think in general that's a good recipe for a bull market in gold. That's the micro structure. The next thing you have to look at in gold is the valuation of gold. Is gold expensive? And of course, the question becomes relative to what it we could look at. Is it expensive relative to housing? What's the median housing price in ounces of gold? Is it expensive relative to a basket of goods like the basket that they use for the GDP deflator? And if you look at the price of gold today per ounce relative to the median house in the US or relative to the GDP basket, uh then gold does seem expensive. It's not at a record high, but not far off and and it does seem a little bit expensive. If you look at it on the other hand, relative to let's say all the gold that's ever been mined, the value of that relative to all the stocks in the world today, all the common equity or all the debt, sovereign and commercial, then gold is awfully cheap. You know, we've seen in past cycles, a really simple measure, you divide the Dow by the gold price. And we've seen in past cycles where where stocks are cheap and gold's expensive, that ratio can get down to 2:1 or 1:1. And just to put that in perspective, you know, today with gold at $4,98 and the Dow is well in excess of 45,000. Today, in fact, it is $46,590. So one one would mean you'd bring gold to 46,000. Maybe that would happen with the Dow selling off. Fine. So maybe you take gold to 30,000, 20,000 or even 10,000 if you hit the 2:1 ratio. So when you look at it relative to stocks or financial assets in general or the monetary base, let's say, it doesn't look very expensive. It looks a little bit cheap. So that I would call a neutral. I would say that you can't really make the case. It depends what you look at whether it's expensive or whether it's cheap. Uh the micro structure is telling you that you probably will continue to see gold rally from here. So, I don't think that the gold bull market is over. I think that gold prices by the end of this cycle will hit extreme levels. I wouldn't characterize them as extreme. Uh, but gold realistically no longer represents the cheapest commodity that I look at. It doesn't represent the most out of favor commodity that I look at. And probably with incremental dollars that I had to invest, I might be able to find deeper value and deeper contrarian investments elsewhere in the market. So, that's where we stand today. We're holding our gold investments. we might trim them a little bit. Um not necessarily, you know, taking big exposures off the table, but in recent weeks with oil doing poorly and gold doing very very well, you know, our our exposure to gold has obviously increased and our exposure to other areas has decreased. So we might consider doing some rebalancing on the margin and maybe even a little bit more than that, but I still think that gold ultimately has legs to run. Adam, you described primarily a central bank buying as a result of the experience of the US freezing Russian assets. Other central banks are afraid, hey, wait a minute. What if they froze my assets next? I agree with that personally. But I've also heard quite a few different pundits say, "No, no, no, wait a minute. That's everybody's talking about that, but that's not really the story. This is about secular inflation. This is about the market recognizing that financial repression is the only way out of the US uh fiscal circumstance with with just way too much debt. That's really what it's about. Then other people say, "No, no, no. It's none of those things. It's really all about China. This is about China posturing in order to get ready to in some kind of partnership with Russia to try to intentionally replace the US dollar globally as reserve currency as an overt act of I don't know what you want to call it, financial warfare or something. Okay. If any of those other explanations turn out to be right, then the signals that we should be watching for would be different than just the central bank signals. What do you think of those other arguments? Do they carry weight? Do or do you feel convinced that it's the central bank doing the buying? >> No. Listen, I think I think it's all of the above. And I'm going to maybe uh sidestep the question a little bit or answer it in a little bit of a different way. We've spent a lot of time studying commodity cycles going back 150 years. And one of our observations was that big commodity bare markets usually end with massive shifts and shocks to the global monetary system, the way that we conduct our monetary affairs. And what's interesting, which we did not articulate nearly as well, cuz we've written about that, you go back all the way to the summer of 2000 and you remember summer of 2000 was the depths of the COVID lockdowns and I was invited to Switzerland to give a speech and so I decided to go. I was having a little bit of wander lust being locked up for a couple months and so I got on a plane. And I was the only person on a plane and I delivered this speech in Zurich and I talked about how from an observational perspective, if you want to know the catalyst that's going to end the commodity bare market and begin a new robust bull market, look for cracks or changes or shifts in the global monetary system. And I said at the time, look, I don't really know where that's going to come from exactly or not even exactly. I don't have enough hubris to even say what direction that might come from, but that's the area that I think you should watch and pay attention to. And remember at the time that was really the beginnings of this idea of China trying to implement trade settlement outside of the dollar in remi and maybe have that be backed by gold or convertible into gold so they didn't have to directly open up their their their current account and things like that. Since then, you know, we've gone through a few iterations. We've had the Marilago Accords, uh, which which has been an attempt to red dollarize or double down on a dollar standard and bring people into this sort of coalition of the West, if you will, where if you're on Team USA, you enjoy much lower trade tariffs, you enjoy uh, reciprocal defense agreements and lots of Fed swap lines, which like the likes of which we're seeing in Argentina right now. Otherwise, you're sort of on the periphery and the cost for doing that is is effectively to come in and double down on the dollar as a reserve currency. And Treasury Secretary Bessant and Steven Mirren, etc., have all talked about these Marilago accords in one way or another. And they've talked about wanting to have a very dominant, if not strong, because I don't think they want a strong dollar, but they want a dominant US dollar. uh and you're seeing some really radical shifts being being proposed by those white papers. So, I'm not sure the exact direction it's taking, but I do think that you're in what we call the right zip code or the right neighborhood for a fairly major monetary regime change. And how big could that be? Well, look, I'll put it into perspective. The bare market in commodities through the 20s ended right around the same time as Britain officially left the preWorld War I gold standard. They were trying desperately to get back on gold post World War I. They they suspended the standard during the war, which many countries did. Germany went through its hyperinflation. Britain tried to rightsize its economy to get back on gold at the preworld war exchange rate. They tried desperately through the 20s. They finally abandoned it in 28. The market peaked a couple months later and all of a sudden about a year later, and then all of a sudden you had the stock market collapsed, the depression. And what people don't realize in such an economically horrible time, that was actually a great time to be a commodity investor. Commodities and commodity stocks doubled in the next 10 years. You had a really strong bull market in the 1970s. That obviously came at the end of Brenton Woods, which was put in place post World War II and lasted all the way up to, I would say, 68. Most people say 71 when Nixon shut the gold window. I'd say ' 68 when Johnson took away the requirement to back the dollar by gold. It took another 2 or 3 years before you finally did run out of gold effectively and closed the window. And that brought in place this massive new bull market and inflation of the 1970s. And in the 1990s there was the Asian currency crisis, you know, and that completely changed how we conduct monetary systems. And it brought into being what we have today, which is most of the global south pegging their currency below market rates to the dollar to help spur exports and recycle excess dollars into treasuries. So you've had these three huge monetary shifts and each of them was a catalyst to devalue the dollar relative to gold and to bring assets away from hyperlong duration growth stocks and assets bonds too back into real assets and I think this time will be exactly the same. So look, when you look at what the United States is proposing to do, either on the Marilaago accord side of things or on the stable coin treasury side of things and in the other side of the world, you have China threatening to bring back a new goldbacked currency for global commodity trade settlement. This is nothing if not a major monetary regime change. This is the period of monetary regime changes. It tends to end what I call this carry bubble that we're in right now, which is emblematic of the everything bubble and the AI bubble and everything growth. The fact that GDP or the equity markets to GDP is about 240%. That's a huge anomaly that usually comes along with these carry bubbles. And I think a monetary regime change is going to be the catalyst to bring that back in line. And I think that's what gold's telling you. So, is it inflation? Yeah, it's related to inflation for sure. Is it China trying to dethrone the dollar? I think that's definitely part of it. Is it the US fighting back? Absolutely. Do I really care which way it goes? I mean, obviously, as a human being, I have some preferences. Uh, as a commodity investor, I think what this is proving to be is the catalyst to bring back a big strong resources bull market. I want to move on to a commodity that's not getting a whole lot of sunshine right now, which is oil. Our mutual friend Dr. Anna Alhaji and yourself are the only two voices I've heard recently saying, "Hey, wait a minute, everybody. They're missing the story. It's actually a bull story, not a bear story." Why do you think that? >> Well, you know, I respect his work quite a bit. I enjoy his readings. Uh, and so if I'm going to have only one person on my team, that's a good one to have. I think that right now before we get into the supply and demand and before we get into the underlying market forces, oil is the most hated asset class in the world today. We got oil and gas down to 1.8% of the S&P and today it's about I don't know 2.3 hardly above that. Long-term average about 12 to 14% and bull markets end at 30%. So we're nearly down to COVID level sentiments in energy markets, in oil markets. In many cases, I find that oil today reminds me a lot of gold back in 1999, notably because of this term, the barbarous relic. So you remember you go back to the '9s. Actually, I guess you really have to go back to the 70s. We ended the Brettonwood Standard in ' 71, and we tried our hand at fiat currencies. By 1980, it really wasn't clear that fiat currencies. So, most central banks just kind of held on to their gold. They really didn't know what to do. It's uncharted territory. By 1980, Vulkar comes in, breaks the back of inflation. 10 or 12 years later, this fiat currency thing looks like it has legs and it looks like it's here to stay. So, all the central banks in the world said, "Well, what do we do with all this gold? We've had it for thousands of years trying to prop up our currencies and back our currencies. uh but we don't really seem to need it anymore and it doesn't yield anything. I could buy bonds with this and and be much better off. So what am I doing? And they all got together and they agreed how much they could each sell and dump into the market every year. And it was became known as the barbarous relic. It was a barbarous relic of the past. It's how we used to conduct our monetary affairs and it had no use going forward. And in that environment, you could make the case that it was kind of worthless. you know, what would you pay for a gold mine to produce a metal that used to be used as money? You know, it was basically worthless. And the only problem with that was that by 1999, so much pessimism had baked itself into the gold market that you got gold prices down to about $280 an ounce below the cash cost of extraction. And it went on to become the best performing asset class not just of the next decade, but of the next quarter century. And actually my partner Lee had an article in Forbes magazine around that time in the summer of 2000 saying that gold would go up 10fold and be the best performing asset class of the coming decade. And from I wasn't working with him at the time but from what I heard when credential which is where he's working saw the article published they'd expected him to talk about oil and how he thought oil might be up 5 to 10% next year. And instead he said gold which had fallen 80% over 20 years would be a 10bagger in the next decade. They almost lost their lunch because it was this barbarous relic of the past with no use going forward. Except that it wasn't. You know, the narrative was wrong. And today, I feel like oil's a little bit of the same. Everyone today has this hyper bearish view on crude predicated on the fact that it's this barbarous relic of the past. It's how we used to get around. It's how we used to transport ourselves, but it effectively has no use going forward. And what would you pay for a longived oil asset today? Probably nothing, right? because it has no place. And why does it have no place? Well, cuz we're moving. We're electrifying everything. The problem is that that narrative is completely wrong. And the IEA, the International Energy Agency, is the one really promoting this view. You know, according to their data, we're now in a surplus market in excess of a million and a half barrels per day. Now, the global oil market's 105 million barrels a day. So a million and a half might not sound like a lot, but the oil market's all set on that marginal unit of supply and demand. So a million and a half surplus is about as bad as I've ever seen it. It's as bad as it was during CO. Now, it certainly doesn't feel to me or most oil traders, if they're being honest with themselves, that oil balances today are as bearish as they were during CO. It just doesn't feel like that at all. In fact, if the oil market can be very complicated and nuanced, but sometimes it's simple. If you pump a barrel of oil out of the ground, it has two places it can go. A refinery or a storage tank. And so, according to the IEA, we're pumping out a million and a half more barrels every day out of the ground than it need to go to the refinery. So, they should be going to storage tanks, right? Except they're not. Storage is actually flat for the year. What's going on? the surplus that everyone's talking about is not showing up in the numbers. And I would argue that whenever that happens, nine times out of 10, if not more, what it is is it's understated demand. It's that demand is actually running hotter than the IEA anticipates. And I think that's exactly the case today. So this kind of debunks a little bit of the big broader narrative that most of the market has which says last year was a balanced market. The first half of this year was a terrible surplus. The second half's an even worse surplus. And then following that trend, what does next year look like? Well, it must be a disaster. And sure enough, that's what they're predicting. But if all of a sudden the true data that's coming in shows that last year was balanced, the first quarter was balanced, the second quarter was balanced, and the third quarter is balanced, then you begin to question that narrative entirely. The oil price today is about as bad as I've seen it. It's not low. It's not an all-time low in nominal dollars. As of today, we're talking about a WTI price. It's up today a little bit. So 58 bucks. But in real dollars compared to kind of the monthly lows during CO of 25, it's not far off from that. When you look at it priced in ounces of gold, oil's never been cheaper. Never in history. 76 barrels to the ounce. To put it in context, in 1999, a single ounce could only buy seven barrels. That's when gold was the hated asset class. Today, oil's the hated asset class, and it's you can buy 10 times as much of it as you with the same ounce of gold. And I think it's this capitulation low pricing on a narrative that just doesn't exist. So if the market's kind of balanced today, what does that mean for next year? Well, first of all, it means demand is running stronger than they expect, which means next year it'll probably run stronger than they expect, too. The second thing which is probably maybe I'm burying the lead here is probably the most important is that the only source of nonopc oil supply growth for the last 15 years the only source has been the shales and it's now rolled over and we're a bit of a broken record on this because we've been saying that this was going to happen since 2019 and before people come out and say well that's ridiculous that's 6 years ago we didn't say it would happen In 2019, go back and listen to our podcasts and watch our read our letters. We said that 2025 would be the year that shale and total US production rolls over. And on a monthly basis, it was actually October of 24. That was the month that total shale production and the Perian, including the Perian, rolled over. And since then, we're down modest about 100,000 barrels. But I think we have enough data now, 10 or 11 months worth of data that shows that that was not a blip. It wasn't just one bad monthly read, which can happen in the oil markets, but rather it's the beginning of a sustained trend. And our models have been predicting this because of very, very standard geological features. We have run out of the best areas of the shells. The shells have been huge. And I don't blame anyone for thinking while we were on the ascendancy side of the shelf boom that they were infinite. But immense is not the same thing as infinite. And we've now gotten to the point where we've drilled out our best wells. We're drilling lower and lower quality wells and production's about to roll over. That's only happened twice before. The first was conventional US production in 1970. It brought about a huge bull market in crude. The second was the North Sea and Gulf of Mexico rolling over in 2003 brought about a huge bull market and I think that this time will as well. So I think the market's very very misunderstood here. I couldn't agree more, Adam. I mean, one of the things that's been reassuring to me because I've shared your bullish view has been the term structure. And I've I've always made the argument that for people who have the experience to interpret the term structure chart, it tells you a lot more than the flat price trend. And what I saw was more than six months of backwardation beyond the front month telling me that the storage ARB guys that that are just gaming how much available storage exists in Oklahoma and so forth, they think that there is a shortage despite the flat price. You've still got that backwardation. Well, guess what? That backwardation has almost come completely out of the market. But we've got a month or two of backwardation and it's much softer than it was much much less backwardation than it was a few months ago. Does that concern you at all? Cuz it looks like we're about to flip into a complete structural contango which would normally be a bearish sign. Yeah. And and you know that that's a very very good point. You know, I I'm astonished at how many oil market watchers, many of whom should really know better, treat the term structure of crude, which is to say the futures prices, as some sort of a voting mechanism or predictor as to where investors think that oil will be in a year or two from now or five or six. And in reality, you know, you and I both know that it's nothing of this sort. It's it's an arbitrage. So, if you wanted to take a long oil futures position for 5 years from now, just to really kind of draw out the term structure, someone's going to sell you that and they're going to have to offload that exposure by buying physical crude. Now, maybe they don't. Maybe they pair it with another futures contract. But somewhere down the chain, right, if you're long, someone's going to be short and they have to hedge that with a physical barrel. So, what do they do? Well, they buy the physical barrel, they pay for it, and they store it for 5 years and they deliver it back to you. So what price are they going to give you 5 years from now? It's not going to be the spot price. It's going to be the spot price plus the cost of storage plus the cost of capital. And that's why in normal conditions, the term structure of crude is always upward sloping. When you get a shortage, people tend to think of the long end of the curve as being lower. But it's not so much that. It's that people are willing to pay a premium for prompter delivery because they're worried about physical scarcity right now. And so the front end gets pulled way up because you have a what they call convenience premium. And at the same time, if there's not a lot of oil in storage, the cost of storage becomes very very benign. So that's not an upward force on the futures price the same as it is when storage is full. So you're right that a backwardated market or backwardized market tends to occur when inventories are low. And that has always been a little bit of the fly in the ointment for the oil bears for the last couple years. So now you're in a position, you're right, you have two months of backwardation, uh I guess four months, you know, the the backwardation hits its extreme at 2 months and then it's actually contangoed relative to the spot at 5 months, I think. And from there on out, uh it's an upward sloping contango. And that suggests that inventories are more ample. And indeed, look, we see that inventories have ticked up a little bit in the last two months or so, mainly as a result of some of these OPEC plus barrels flowing in to the market. And so, I do think that inventories are slightly higher than they were. And that's why I'm not one to say that the market today is in a big sharp deficit. I would call it largely balanced. and maybe it's loosened a touch and that's probably why uh you flip from a backwardation into a contango. However, here's the caution that I would make because you know Lee and I used to have this debate all the time and and you could go from the theory which says that a backwardated market is more bullish or you could go by the observation which is that big sharp contangos in the market tend to be a really good predictor of future price. Why? Well, a big contango means that inventories are ample. Inventories ample means that prices are low, which means you don't invest enough, which means production begins to roll over and that's what drives things. So, I think if you're looking at the term structure today, it reflects the oil market today, which is basically balanced to ever so slightly in surplus. Uh, but when I look forward into next year and particularly the middle part and end of next year, I see a very very tight market. So I suspect that the market next year at this time when we speak uh will be in backwardation and people who have bought oil equities uh will be in really good spot. If you buy oil futures in a contango today and you get a backwardation later you might have given some of that up but I think people that buy the equities will be in a really good position because I think the spot price is going to be a lot higher. You can't balance the market at today's price. You just can't do it. The thing that worries me about the term structure is a lot of traders, there's a whole group of people in the market whose rationale is look, there's a backwardated market. I'm getting paid a roll premium. Even if the flat price stays the same, I still make that that yield because I'm buying the next contract at a cheaper price. As soon as you have the state transition from a prompt backwardation into a prompt contango, all those guys say, "Okay, that trade's not working anymore. I'm out of here." So, the question is, how big is that group of traders compared to the rest of the market? It looks to me like we're only a month or two away from that tra state transition happening. If so, how concerned are you about those guys bailing? >> I think it's possible. You know, that's always the tough part of the oil markets is that the paper trade is much bigger than the physical trade. It's underpinned a little bit by the physical reality that when it's all said and done, the crude market is a physical market and we need to deliver 105 million barrels of oil day in and day out to a global integrated refining network to get gasoline in our cars. Right? So, it there's a lot of paper churning about and it can absolutely distort markets on a short-term or sometimes even a medium-term basis. But the oil market maybe more than any other single market in the world is rooted at the end of the day in fundamentals because it we're so reliant upon it uh day in uh and day out. So, will there be noise in the oil market? Almost assuredly. Uh does that mean that you can't invest? I think it just means you probably have to have a good strong courage of your conviction here. You know, the other thing that I worry about in the oil markets is that it's quite clear that the administration would like to see lower oil prices, particularly between now and the midterm uh elections. I don't really know how many levers they have to pull. I can't think of too many. The natural one to think about would be to release oil from the SPR. But given how politically intolerable that would be, you remember Trump went after Biden vehemently for having squandered our strategic petroleum reserves. So I don't know how you're going to go about doing that. I think the way the administration has chosen to date, they had hoped that they could get the industry to produce more, but as we said starting about a year ago, we said, look, this is a geological problem. It's not a political problem. And so a geological problem can't be can't be fixed from the lectctor and it can't be fixed from uh the podium. And I think we're beginning to see that. So you recall that the administration tried to run on a three arrows policy. One of which was boosting domestic supply by 3 million barrels per day. We never thought that would be possible. Incidentally, Nixon in the early '7s, in the first year when the US production stagnated, then came up with Project Independence to try to boost US production. At least in that plan, his intention was to raise the oil price to incentivize drillers. In this plan, it was to lower the oil price and somehow that was going to elicit a big supply boom. I'm not sure how that was going to happen, but it's not. Uh, and so now you've seen a little bit of a pivot looking towards our OPEC. uh I'm saying maybe between air quotes our OPEC allies because we don't usually think of OPEC as being allied with the West uh but our OPEC allies notably Saudi Arabia to increase quotas and increase production uh they've done that you know you've seen about a million barrels increase come out of Saudi it's not clear to me that they have much spare capacity from here and what's that done to the oil market I mean not much inventories have moved up a touch and you've taken out a $2 backradation and made it into a $2 contango. But this is not a market that has a high level of inventory in it today. And it's not a market that's in a sharp surplus. And it is a market that's going to have to contend with the only source of nonopc growth, the shales turning negative year by the end of this year. I think October of this year is my estimate for crude oil production and then continuing negative into next year. So I think you're I think it's a very very very bullish outlook for the next 5 to 10 years until you recapitalize this industry. >> Adam, let's move on to uranium, a commodity I'm very passionate about these days. What's your outlook and what do you think the major drivers are in this market? >> The uranium market is absolutely fascinating and we got involved all the way back in 2019 2018 when it was about 20 bucks a pound and you could buy Camo for $5 a share. compared to, you know, 90 bucks where it is today. It's probably off a little bit in the last couple days with the sell-off. 84 as of today. That's the US line. I think it still has room to run. And here's the reason why. There's lots of talk about SMRs and the new nuclear revolution and things like that. And I know the SMR companies very very well. In particularly I in particular I know Terrap Power very well, but I know Ollo is also I know New Scale. for those publicly listed ones today. I I really struggle with with their valuations. They've been unbelievable performers. Good on them. Uh but I have a tough time with those valuations. But leave that aside. I think that will be a huge story in the 2030s. But realistically for most investors, they're investing between now and the end of the decade. And that's probably on the generous side. And when I look at over that time frame, the market is in deficit today. And that deficit is only going to get worse. And that's what I don't think people understand. I get a lot of questions, how many nukes do we have to build to really put this market into a tight situation. It's in a tight situation. It's been in a tight situation for 4 years. What happened was that after Fukushima, Japan continued to take delivery of all of its contracted uranium supply even though it had no reactors turning. And so they built up a huge stockpile beginning in about 2018 2019 with some new reactors coming online in China and Korea as well as Kamico and Kazataprom curtailing their mine supply. The market shifted into a primary deficit. What does that mean? Mine supply was not meeting reactor demand. It was a deficit in the primary sense of the word. And what kept what made ends meet? What kept that market together was a sustained liquidation of the Japanese stockpiles. And that's what allowed mine supply to run below reactor demand for so many years. And those stockpiles are now gone. They've all been depleted. And you're in a much more heads up situation between mine supply and reactor demand. And that's a very, very tight market as a result. So people say to me, what has to change? Nothing. Just time has to change. And that started to change and really come to the four in late 22. In 2023, the hedge funds became very involved in the uranium space and their preferred vehicle was to buy the uranium junior miners and then to go and bull up the spat physical uranium trust, get it to trade at a premium. it would go out into the market, issue shares, and buy spot uranium. And that drove up the uranium price, which helped out the junior miners with a big levered beta. And so these guys could just roll that trade over and over again. And it worked incredibly well in 2024. Spot prices lifted about 25 bucks above term price. And that reflected, I think, the speculative fever in the market. We were invested that whole time. We decided to stick with it because we saw a tight underlying market. We debated whether we should sell at the beginning of 24. We didn't. I wish we had. Uh because in 24 those hedge funds unwound everything. They unwound everything. And in fact, they had started to go really net short. By the first quarter of this year, you could find Australian juniors with 30 days to cover and 35% of their float sold short. And it was the trade working in reverse. The idea was to keep the spat physical below NAV, spread a rumor that they would be unable to pay their bills and they'd have to liquidate their uranium holdings and that put downward pressure on the juniors which they made uh up for in their shorts. That's all done now. SPAT was able to come to market. They were able to raise money. They put that rumor to bed. It's all behind us. And the hedge funds for the most part are now out of the market. Did they make money? Did they lose money? I have absolutely no idea. I suppose when it was all said and done, they probably broke even. Uh but now they're out of the market. They're no longer distorting things and we're seeing a nice gradual increase back in the uranium price. So I don't see that changing until you bring on more mines and we will not bring on more mines till the end of the decade. I just don't see it. NextG will be the one to go first. It's not going to be before 2030. So how high can prices go in the interim? Well, that's where things get really exciting because once you have a nuclear reactor built, and remember, you don't need to build anything more to make this a tight bull market. So, just on what we have already built, you will pay almost anything for your fuel. All of the cost of that reactor is the capex. Once it's built, you feed the beast. And so, would you put two, three, four, $500 uranium? Today, it's about 85 bucks. Would you put 500 in your model and still make it work? I mean, you wouldn't want to do that as a fuel buyer, but you could. In fact, you would prefer to do that than shut down your mind. So, I don't see where you squeeze out demand. And supply, I guarantee you that the end of this bull market will come because of too much mind supply. Uranium is not the rarest thing in the world, but it is impossible to bring it on quickly because it's radioactive. There's a lot of permitting involved. There's a lot of civic engagement and discussions you have to have with the communities. you're not going to balance this market until at least 2030 and then it'll become a tug-of-war between the SMR, new demand, and new mine supply. But that I will defer to another day. >> I couldn't agree more. I I very much echo your extremely bullish views. I am very long and very bullish. But our job as professional investors is to think about what can go wrong. What can go completely wrong that would turn that would reverse this uranium bull market? I is it another Fukushima sized accident? Is it what are the things we need to think about that could completely derail this? Maybe the AI trend getting unwound probably is contributing a lot to the nuclear demand. >> Yeah, look again, you know, I don't think that you need this big AI data center buildout to acrue to new nuclear demand. In fact, you know, it takes a long time to build a uranium mine, but it also takes a long time to build a reactor. So, in reality, the AI demand in the next 5 years will be met through natural gas. And so, I think that's the biggest beneficiary short term. And I think potentially that's the biggest detriment. I suppose if all that falls apart, that could be a headwind, but it's gonna be more in gas. It's not going to be, you know, uranium for to power AI is 2030 and beyond. it can help with the speculative fever in the market and vice versa it can deflate that a bit right and so I think that you could definitely see sell-offs related to AI and certainly uranium stocks have a degree of momentum factor in them right now uh are they trading in and alongside the AI baskets I'm sure that they are uh but fundamentally I think that that should be largely immune in the next several years obviously another Fukushima style incident would would deliver could deliver a major blow to the uranium industry. I mean look ultimately many people died in Fukushima from the tsunami and from the ravishes of that. Uh when you look at the people that died from the nuclear incident, it was zero. Uh including all those guys that they sent into the reactors to contain certain parts of that damaged reactor. I think the first gentleman in that group in that cohort just passed this last year. And you know, I think the actuarial tables say that in a group of eight guys in their 40s and 50s, you know, 10 years or 15 years on, uh, the likelihood that one of them passes, although tragic, is is not zero. Uh, and I think it's right in line with that table. So, so you could really make the case that that nobody died in that and that it was as bad as a incident as it was. It was completely manageable particularly if you think that nuclear is going to alleviate global warming which is obviously a much bigger concern for a lot of people but nevertheless if something were to happen uh certainly I think that would from a sentiment perspective deal a big blow to the uranium trade. Um, the other thing, you know, is, and I'm not so sure that this is a a bearish thing of what could go wrong so much as it could signal the top one day. You know, one thing that I do think about quite a bit is that the Sprat Physical Uranium Trust, and I know those guys quite well, and I like what they do. I think they're very smart and shrewd that they set up that vehicle. But, you know, there's a lot of material in that, and there's always been this fear that they're going to sell pounds back into the market. I don't agree with that. I don't think that they'll sell pounds back into the market. I think they will stop at nothing to uh avoid doing that. But I also can envision a world where we're so tight uranium. And to think of a company in Canada sitting on a large stockpile of uranium when actual reactors can't get their hands on materials to be able to spin and provide uh electricity and risk impairing all the capital that went into that. That does not seem like what they call an economic, you know, Pareto optimal outcome. There's a situation that's better for everybody. I don't think again I don't think that the team at SPAT is looking to sell pounds under any circumstance, but I do wonder if at some point we get such a bull market going that someone doesn't just make a bid and acquire the entire Sprat physical uranium trust in order to get access to those stockpiles. And I kind of feel like if there's a bell to be rung at the top, you know, we like to think about what ends the bull market. I could see psychologically that ending the bull market when that happens. Uh but we're a long way away from that and I suspect there'll be a lot of fireworks between here and there. Yeah, I couldn't agree more. I think that is a very important signal. I'm very curious if you'd agree with me on this point because a lot of people in the uranium market seem to fear, desperately fear, oh my gosh, what if they try to confiscate sput? And my answer to that is that's an excellent goal that we as uranium investors should hope for. We'll be thanked for having created essentially a strategic uranium reserve that serves humanity well when the when spat correctly insists on behalf of those of us who are shareholders in it. Yeah, of course. If it's the right thing for the world, uh we'll be happy to liquidate the entire trust at a 25% premium to spot uh in order to help save the world. pay us off and there's no reason not to pay them off. There's no reason to expect a big political objection to that. So I don't see why anybody is fearing the force majour which I think is probably coming someday where sprat where sput is forced to liquidate entirely for the good of the world to make that uranium available. That seems to me like a wonderful outcome. What do you think? >> It's hard to speculate on on things like that in the future. You know, just the other day, we own a small position in the company Trilogy Metals, and now we have a large shareholder on the registry next to us, which is the Department of War, you know, which made a direct equity investment into that project. Would I ever think that I would see the Department of War alongside me on what can really only be described as like sort of copper junior, pre-production copper junior in Canada? No, not really. But, but here we are. So, certainly anything can happen. I'm of the opinion that the most likely buyer, at least as it stands right now, because when we used to say, look, someone's going to buy it and that material, there's no way that if that material has better use in the public market, then the spot price is indicating uh then there's going to be a situation where there's just benefit for everyone uh to put that material back in in into a useful form, right, into fuel rods and stuff like that. And while the government could do it, people often would say to me, "Yeah, the utilities would never do that. That's a super aggressive move." And that's true. But you know who would do that? The hyperscalers would do that. You know, the the risk capital involved in these large tech companies that have now committed to large nuclear buildouts to power their AI data centers. A and we can talk all about the AI bubble if you want. And I I suspect that the hyperscalers in five years from now don't look like they do today in any capacity. In fact, I think they'll be in a lot worse shape. However, you could begin to see that risk capital say, "Look, you know, we're going to just own a huge in uh uranium inventory to power the AI data centers to be fully integrated." Uh, I could certainly see that happening or if not them directly, then them funding a consortium that does that for their own benefit. So, I think eventually that material does make its way into the market. I don't think, like you, I don't think that's bad for uranium investors. I do suspect however that when it happens from a just a psychological perspective that we might look back and say in retrospect just like Glen Core going public in 2011 right before the commodity markets fell apart or these these weird psychological events that take place that in retrospect you realized that was the top that could be but it's not going to be a direct uh negative event for the uranium markets. >> Adam, I can't thank you enough for a terrific interview. But before I let you go, wait a minute. This is a little awkward. Normally my job here as the host is to say pitch your services. What are you selling in terms of your institutional research in this market? You guys are a little bit weird. You are selling or you are providing institutional quality research on commodities, but you insist on giving it away for free and not charging anything for it. What gives? What's what's the catch? >> All I ask is some some nice conversation and uh and good friends to talk to about this. Look, we're an investment firm. We invest in resource equity markets. Uh we have funds and different rappers uh for uh distribution in the US and abroad. We have a USITS fund and a US mutual fund. We're long only and easy to own. Uh and our research, you know, one of the things that we do do that's quite different uh is that we spend a lot of time uh researching. We spend a lot of time on the top down because I think to be a good resource investor, you have to have a good differentiated view on the commodity and we put it in the public domain so that people can follow us and audit us and understand the decisions that we've made and decide whether they agree with them or not because inevitably these markets take longer to play out sometimes or move against you and you can be right but still have your stocks go down. And so we've always felt that our partners and our clients and just the general public for that matter, uh we want to be very transparent in the research that we do. So everything's on our website, Go Rosen, Garing and Rosenwag is the name of the firm. Go Rosen is the website. Uh we put up all of our letters. We keep all of our old letters up so you can see all of our spectacular failures in years past as well as our good calls and uh and and we're just very very passionate about the space. So please, if you have any any interest, definitely go to our website and check it out. And I very strongly encourage everyone to do that. That is excellent institutional quality research that is free because you're basically it's the same way that I started Macrovoices. You're you're in the asset management business and you're promoting yourself by giving away free research. And I applaud you for doing so. Patrick Szna and I will be back as macrovoices continues right here at macrovoices.com. Now back to your hosts, Eric Townsend and Patrick Serzna. Eric, it was great to have Adam back on the show. Now listeners, you're going to find the download link for the postgame trade of the week in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoices.com. Just go to our homepage macrovoices.com and click on the red button over Adam's picture saying looking for the downloads. Patrick Adam made a key point in this interview that almost nobody is talking about. AIdriven power demand over the next 5 years, probably the next 10 years is going to be met primarily by natural gas, not nuclear. And yes, nuclear is the right solution long term, but it takes a long time to bring new nuclear capacity online. That's a big insight that the market is not pricing yet. So, where's the trade here? And please be sure to explain why Natty has the reputation as the widowmaker contract in the futures markets. Well, Eric, right now, natural gas is trading near decade lows. On page two of the slide deck, I've included a continuous futures chart that really illustrates how depressed pricing has become. Gas has quietly been left for dead, while uranium and other long-term energy plays have captured all of the attention. But the setup here is starting to look asymmetric. US gas prices have been compressed back toward marginal production costs just as new LG export capacity ramps up into 2026 layered on with an AIdriven surge in electricity demand which will rely on gas as the swing fuel and you've got yourself now the early stages of a tightening market that almost no one is positioned for. Now, trading natural gas futures directly is not for the faint of heart. It's a market defined by extreme seasonality with a term structure that can whip violently on small changes in weather or storage forecasts. That's why the front contracts have earned their infamous nickname, the widow maker. So, trading natty futures directly can be a big mistake unless you're really an expert on term structure, seasonality, storage, and logistical costs. So rather than trying to time the volatility through the futures, I want to look how to own the theme intelligently. The easiest retail product is the United States Natural Gas Fund symbol UNNG, but it is structurally flawed. It holds only the front month contract, forcing it to sell low and buy high as it rolls through the contangoed curve. That negative role yield creates persistent bleed, making the UNNG a poor vehicle for a long-term hold. Instead, I want to highlight a better alternative, the 12month natural gas fund, symbol UNL, which holds a laddered portfolio of the next 12 monthly Henry Hub contracts. That structure spreads the exposure across the curve, smoothing out seasonality and sharply reducing the roll decay. It's still a pure play on natural gas, but it gives you a cleaner exposure to the underlying long-term fundamentals rather than the front month weather noise. It is very easy to see the benefits by looking at the chart on page three of the chart book where I overlay the UNG and the UNL. It is clear to see that the bleed on the UNL makes it a poor vehicle for long-term investors. Now, while I usually prefer to build asymmetric payoffs through options, UNL's options are thinly traded. So, the cleanest expression here is simply a delta 1 long position anchored on the asymmetry of the entry price. One can simply use a technique of entering a starting position and scaling the position larger when technical trend following signals suggest a new bull cycle has started. In short, natural gas looks cheap both in absolute and relative terms and the fundamentals are quietly improving. You've got demand growth for LG exports, AI data centers, and industrial reshoring all hitting just as production growth flattens. If this market starts to repric, it could surprise people with how far it runs. And for investors looking to capture that upside without getting caught in the futures curve volatility, UNL is the smarter way to play it. That explanation worked for the pros. And of course, our retail audience can get the full briefing by attending Patrick's Monday webinar, which always dissects the trade of the week in detail. Macrovoic's listeners can get a free trial at bigpicturetrading.com. >> All right, Eric, let's get into the charts. Let's start talking equities here. What are your thoughts? Well, Patrick, the market is still freaking out about what Trump and Bessant's next moves will be, just as we anticipated that it would. My strong view is that what happens next will be headline driven and therefore is impossible to predict without inside information. Obviously, if Secretary Besson's uh Wednesday threats towards Russia were to lead to a major escalation in the Russia Ukraine conflict as was threatened. Well, that would uh potentially mean a whole lot more downside at least in the short run. But remember, wars are always inflationary. So even if we see an escalation here, look, we were already facing a formative secular inflation. And once the panic subsides, even a war escalation will be a tailwind for the stock market. So I don't see anything that is inherently fundamentally bearish here. Other than the potential that we could have a panic in investor sentiment if there's a major escalation, I think it's more likely that uh we'll get to some kind of negotiation and the threats will be taken off the table, but we'll see what happens. All right, Eric, this is a really interesting market. You know, I heard a great argument about the seasonality of markets, which is essentially during the six months between uh May and October, the markets substantially underperform and that November to April period is some of the best performance of stock market. A lot of people from a seasonality perspective are now anchoring that the stock market uh should do well. But in ma in my mind one of the big contributors to the strength that often happens from that seasonality is because those six months were so weak. Yet when you look at the performance from May to October we had one of the most extraordinary bull runs in 6 months up 35 plus% uh over a six-month period. This market is at elevated level. the idea that from these elevated levels you have some sort of alpha of further gains on the upside. I think at this year could be marginalized. Now overall this market still has not yet seen a 5% correction. That one day drop we had was closer to 4% from peak to trough and did test the 50-day moving average. So, a lot of the criteria is there, but overall we haven't had yet that proper multi-week month or multimonth correction that typically happens even three or four times a year. And so, uh, at some stage here, we're going to get a hiccup in these markets. The bigger question is, did we see the start of that? Now, well, we do have a couple of things that will decide this. Clearly, we're now uh in the pig in the python moment of earnings. We're going to get the majority of those big mag seven earnings coming out here in the next week or so and we're going to determine whether or not this becomes a huge tailwind for the market or whether it becomes an excuse for some profit taking. We continue to see overall the market breath deteriorating which is usually not a plus for the bulls but at the same time after we get through earnings comes the share buyback tailwind which uh will inject new money in there. So we have a market here that you can try to build an argument either way but I want to keep it super simple at this stage. The 6600 level technically is pretty significant. Not only was that where the lows came in uh from uh the previous weeks, but uh it also is where a basic trend following technique of 50-day moving average lies. If the bulls are going to stay in control of this market, we will not see that level violated. And so you want to in some degree or another give the bulls the benefit of the doubt. and so long as we can see them break these markets to a fresh new 52- week high and uh and make let's say a punch up to 7,000. But if we see that the selling in any way after or during this earning season uh has a feat kicked out below 6,600, we have a lot of systematic selling that could get triggered. Not only have we already seen vault targeting funds degrossing as realized volatility spiked, but many CTAs uh are going to start selling as we see that uh the market start to pivot uh with all the dealer gamma there. We could actually see a stock market air pocket develop that could create some downside volatility, but to me that only all happens below 6,600. So that's the pivot to watch for all of our listeners. All right, Eric, let's touch on that dollar. Patrick, the Dixie has firmed up toward the high end of its recent consolidation range, but we haven't seen a breakout yet. Lots and lots of pundits are calling for one, and they've described the risk of a face ripping dollar rally if certain Trump Bessant policy risks play out. I think that's a very real risk and it would be bearish for most other asset classes in the short term, but I think those will be viable dips more so on commodities than equities. Well, Eric, in my mind, the US dollar has been in a bare market all year, but really stopped declining close to four months ago. We've not only seen a double bottom form on the dollar index from its July and September lows, but quietly, we have now seen a sustained period where the dollar index has been trading above its 50-day moving average, making higher highs and higher lows, and generally the sentiment has remained decisively bearish. You have charts like the US dollar yen clearly turning up, deterioration in the pound sterling, deterioration in the euro, the um uh Canadian dollar continues to weaken, the Aussie dollar continues to weaken, and uh and we haven't seen obviously some very key technical levels broken on those, but they'll be very interesting to see whether the dollar can pull off a counter trend here uh for and it's really easy at this point to simply watch whether the Dixie can make a break above the 100 level because that will certainly catch everybody's attention as it would be making new six-month highs and uh certainly would start to squeeze out any shorts that overstayed their their positioning. Uh will that dollar rally happen is certainly the puzzle to watch here. All right, Eric, let's touch on crude oil. Remember what I said a few weeks ago here on Macrovoices that I thought President Trump's desire for lower oil prices would bring lower oil prices, but I didn't expect it to last. And that's exactly what's happened. I said, "Give them time and they'll either start another war or escalate one of the several that they already have in progress, and that will of course bring much higher oil prices." with Secretary Bessant's Wednesday afternoon declaration of major sanctions against two of Russia's biggest oil companies if Russia doesn't immediately cave to US demands and end the war. Well, my prediction, it seems, is about to be realized. Of course, this might all blow over and another deal might be struck to forget about all that sanctions talk and that would bring oil prices right back down. But it won't last. Adam Rosen Schwag and Anis Alhaji are among the smartest people in the oil markets and I agree with their bullish intermediate to long-term outlook. As far as short-term, anything's possible. You don't want to be long here unless you're willing to ride out potentially a $10 swing lower depending on how the politics play out. But eventually, we're going to see higher oil prices. Well, Eric, I'm going to just look at oil technically here for a moment. So when we go and look, we can see that oil retested its year lows. And so uh we got a double bottom bounce here. Now the bounce hasn't gotten above its 50-day moving average. It has not beat its fib zone. So no way that I want to in any way imply that oil has pivoted to a bull cycle. But we're going to get some very big tells here around this $60 to $62 level where we're currently trading. uh as oil trades up here, if this was a false start, then we should easily see the market return right back down below $60 and stay there. But the way I look at this here is that this is actually a pretty technically significant base. So if any structural new buying starts coming in here driving prices to the mid60s that could be enough to pivot uh this uh very bearish looking chart to being more neutral and one that is actually starting to demonstrate a basing uh now it may take months for oil's chart to turn more bullish and obviously a a geopolitical catalyst could accelerate that. Uh but it to me oil's incredibly asymmetric. I continue to subscribe to the oil bull case. Obviously Adam and Anas both shared some very strong convictions and I think that overall it'll be right. Um I think that uh next year will be a great year for oil. The question of course is that have we seen the lows and is it now the the turning point for these crude futures? And that's uh the puzzle we're going to continue to solve here in the weeks to come. All right, Eric, we got to talk gold now. Well, we had a roller coaster ride in gold futures this week. Down 150 bucks in a single day, fully retracing the next day, then down even harder by more than 200 bucks the day after that. My best guess as to what caused this is that some traders had inside information, limited inside information, just whispers of an imminent resolution to the Russia Ukraine conflict, which probably lacked any real detail until Secretary Bessant's Wednesday afternoon briefing made the administration's intentions clear. Now that I know what's on the table, I'm not at all on the side that this is a bearish development for gold. I strongly doubt that Russia would just cave to such demands. And frankly, I think that what Trump and Bessant just did was incredibly risky, signaling a potential move much higher on gold, not lower. Now, of course, if I have the geopolitics wrong and Trump magically negotiates an end to the war with no further kinetic escalation, he'll have earned that Nobel Peace Prize that he wants so badly. And I'll take a big loss as the geopolitical premium collapses in gold prices. But I don't mind being on the other side of that trade. I'm pretty sure the traders who are assuming that Putin will just cave to Trump and Bessant's demands have probably never dated a Russian. Yeah, Eric, gold had a a peak to trough move of $378. It was just an extraordinary swing. Uh look, uh whenever the velocity of a rise accelerates the way gold did, uh then the volatility to the downside is always reflexively proportional to the the speed and magnitude of the rise. So having huge downside, volatility is not a shocker. We've seen the implied volatilities of gold double, you know, from being in the teens to being close to 30%. And so overall, gold volatility and these huge swings are likely here to stay for the next little bit. The bigger question is uh is this now going to settle it into a a bigger more prolonged consolidation? I want to remind everyone that over the last year we have seen uh these two threemonth pauses in gold. There was the one that started back in November of last year lasting into January of this year and then again this summer we went into a consolidation from April that lasted all the way into July August in a sideways manner. There's these periods where the gold bursts higher and then takes a break and and consolidates. uh have we seen the beginning of one of these consolidations? And because of the magnitude of this rise, will the consolidation be deeper than the previous ones? These are all the puzzles to solve. At this moment, I wouldn't be shocked if we spent a little time back below 4,000 in this consolidation. I remain big picture, very bullish. And once we go through a consolidation, it almost always leads to the next major buying opportunity. And so, uh, I'm going to be watching closely, uh, what happens in terms of, uh, the the magnitude of this decline. We may spend a very good part of the fourth quarter in a consolidation, but, uh, it should, uh, continue its primary bull phase because there's a macro backdrop that is fundamentally bullish gold. And I think we can all agree that we haven't seen some macro pivot to suggest that the future of gold is going to be any different than we've talked about in the past few years. All right, Eric, let's talk uranium. Well, we've obviously just had a big correction and yes, I'm buying this dip in size. Now, it could definitely go much lower from here, especially if the AI story starts to unwind or even if the market figures out that net gas rather than nuclear is going to be the immediate benefactor of the AI story. But there's no way that this uranium bull market is over. It's just getting started. There was also what I think was a very important announcement this week which was almost completely ignored by the market. What they announced was that weaponsgrade plutonium that's left over from the Cold War and the US stockpiles. We don't need to build, you know, thousands more nuclear warheads. We've got too many already. They're going to make some of that plutonium up to 19,000 metric tons of it available to advanced reactor companies in order to avert the coming expected crunch on Halo fuel. H A L EU, which stands for highass assay, lowenriched uranium. In other words, it's 20% of the good stuff, U235, as opposed to just 3 to 5% in conventional reactor fuel. Why is this so important? The 1976 presidential race was very much about the so-called plutonium economy. A lot of smart people understood correctly that by taking the plutonium that we know how to manufacture in nuclear reactors and using it as fuel for more nuclear reactors and particularly building a kind of nuclear reactor called a breeder reactor which takes the unused nuclear waste in today's reactors converts it into plutonium and then burns it all in one fuel cycle. That's the way to go. That's the what we need to get to. It has been impossible to make any progress on that for the last 50 years in the wake of what frankly was a a ridiculous, emotionally charged, irrational political debate in the 1970s. My take on this is energy secretary Steve Bessant is going to deliver a nuclear renaissance beyond even my wildest dreams. I think they're going to really make some meaningful changes on policy. Hopefully, they'll eventually get around to reforming section 123, which prevents other c countries from being able to reprocess their uh spent nuclear fuel in order to extract plutonium and make more fuel out of it. Only France does that today. And it's not because only the French think that's important. It's because the US forbids almost everyone else by treaty from doing it. It's called section 123 go dates back to 1954 and it never made sense. We are prohibiting the recycling and the responsible processing and recycling of spent nuclear fuel. Now, Charl de Gaulle had the good sense to refuse to sign the 1968 nuclear non-prololiferation treaty until France became a recognized nuclear weapon state in the early 1990s. That is the real reason that France is the only country that in the west at least that reprocesses their spent nuclear fuel. It's because they're allowed to and they're not constrained by ownorous and unreasonable US policy. I think Secretary Steve Wright is the first guy in government to come along in my lifetime who understands this at least as well as I do and is about to change it all for the better. So, I really hope I'm right about this. I think we're on the cusp of some major policy changes and we could completely redefine how nuclear energy works. If we could somehow get over this nonsensical belief that spent nuclear fuel presents a much larger weapons proliferation risk than it really does. Yeah, certainly we've now had some sort of a correction underway. I I continue to be in the camp where I'm a buyer of uh uranium prices themselves as a commodity that through things like the SPAT physical trusts. Uh I think that they're still incredibly reasonably priced. But in regards to equities, I'm increasingly concerned that they may be correlated with the AI baskets. And if we see that there's going to be some sort of uh mean reversion in that space, I wonder whether we would see some heightened volatility in those equities uh that have run so much already. And so I'm at this stage much more focused on the uranium commodity itself where I think there's more asymmetry. Eric, let's touch on copper here. Well, it looks like copper is catching a bid finally and I'm glad to be long in size. China policy has to be central to what happens next. So, another deep dip on more China geopolitical who knows what happens next news is entirely possible. But that would be a very viable dip and I'd probably add to my already overweight position if such a move were to materialize. Well, overall, copper has been bought on dip, held the 50-day moving average, is attempting to break out. I mean, is there still a chance here we're going to punch up towards 5 and a/4 to 550? It's still on the table. Overall, there's a a bullish tailwind here. It has uh shown some sensitivity to the selling that we saw in the broader commodity space over the last week or two. Uh it'll be very interesting to see whether copper can just continue to march the beat of its own drum or whether it's going to correlate with a bigger basket. Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. >> I think that this in itself a red flag for me for the equity markets. Generally, what we have seen is that prior to a turn in the markets, often for even several months, you have uh bond markets leading with uh rising bond prices and and declining yields that precede that of a a market turn. The fact that we see this kind of flows and demand coming into the bond markets at minimum is uh something that we have to pay attention to uh to see whether or not this has some repercussions on the other markets. Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of Big Picture Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. Patrick, tell them what they can expect to find in this week's research roundup. Well, in this week's research roundup, you're going to find the transcript for today's interview, as well as the trade of the week chart book that we just discussed here in the postgame, including a number of links and articles that we found interesting. You're going to find this link and so much more in this week's research roundup. That does it for this week's episode. We appreciate all the feedback and support we get from our listeners, and we're always looking for suggestions on how we can make the program even better. 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