Oil To Collapse To $30/Barrel After Iran War Ends? | Doomberg
Summary
Energy Outlook: Guest argues current war-driven oil spike will ultimately yield an oil glut as supply surges and demand destruction/fuel switching take hold.
Natural Gas Advantage: U.S. natural gas remains extremely cheap due to shale co-production, creating strong incentives for power and industrial fuel switching.
LNG and Coal: LNG markets are tight in Asia while Europe hesitates to refill; a notable coal comeback is underway as buyers substitute away from expensive LNG.
Nuclear Energy: Potential policy tailwinds exist, but outcomes hinge on war risks near Middle East reactors; gas remains the primary competitor to nuclear in power generation.
Midstream Buildout: Post-war, expect major midstream infrastructure investment—pipelines and rail—to diversify away from the Strait of Hormuz chokepoint.
Regional Shifts: Anticipates a Global Energy Split (petrodollar vs petroyuan) and a “Fortress North America” advantage, with substantial new E&P potential in Latin America (Venezuela, Argentina, Guyana, Suriname, Brazil).
Investment Angle: Focus on companies tied to volume growth (E&P outside Hormuz, midstream, dual-fuel and switching tech) rather than pure oil price exposure.
Market Context: Later segment referenced ETFs like USO, GLD, SLV, GDX, XES for chart context, while emphasizing risk management and flexibility amid geopolitical uncertainty.
Transcript
When this war is over, price of oil is going to collapse. Um, the onslaught of incremental supply will hit markets just as demand destruction sets in. A return of the Middle East and the increase in production that always comes. You know, as we've said before on your show, all shortages lead to gluts. The long-term real price of all commodities is lower. And in 2 years, 3 years, four years, the price of oil in today's dollars will be $25, $30 a barrel. Welcome to Thoughtful Money. I'm its founder and your host, Adam Teagert. The war against Iran is creating a global oil shock both in price and supply. How serious and longasting is this likely to be? And what will the knock-on effects be for the future of oil and gas flows, for other conventional fuels like coal, and for the future of alternative sources like nuclear energy? To discuss in depth, we're fortunate to sit down with the green chicken himself, the energy expert, Doomberg. Dune, wonderful to see you again. Thanks so much for joining us today. >> Adam, great to be with you, my friend. Great to see you again. >> Thank you. And I I very much appreciate that. um given everything that you have going on in your life, I know you're about to enter kind of a blackout period for podcasts uh soon given some commitments which maybe you can share with the audience here, but very much appreciate that you are basically letting Fal Money be one of the last ones you speak with before that happens. >> Yeah, we're taking a small break from doing podcast hopefully. We're going to try um we've committed to uh to writing a book, you know, a Doomberg book, which is a big deal, a lot of work and um so taking a bit of a break. Of course, this was planned before the war in Iran broke out. Nothing like a hot war in the Middle East to scuttle your bookw writing sbatical plans, but we're going to try to take a pause at least. Um, but always happy to chat with you. And, you know, we we'd had this scheduled and so, um, h happy to chat with you today. Lord knows there's so much to chat about. >> Uh, well, there really is. Um, but before we dive into it, again, just congratulations uh on uh on getting uh invited to to write one and um I'm sure it's going to be a smashing success and when you reemerge, love to have you back on to tell this audience all about it. >> Greatly appreciate that. Thanks and certainly will. >> Okay. All right. Now, let's roll up our sleeves here. Um so much to talk about. I guess let's just start with this. How big of a factor is the Iran war on oil and gas markets? you know, is it going to be transitory as the administration is trying to say? Well, like, hey, look, we had to do this. It was a four to six week operation, and I think Trump said after it's done, oil's going to sink like a stone. Um, or is this more of a long-term game changer? >> I mean, let's take a step back. If you and I were handed the fact set of the past 40 days, you know, um hot war in the Middle East, straight of Hermoose closed for a month, tankers being blown up, Ukraine upping its attacks on Russian export facilities and oil tankers, um going back to Venezuela, the embargo on Cuba, which looks like Russia just broke. If you given us this fact set and um and said, "Hey, the overunder on the price of oil is 150." I think we would have both bet the mortgage on the over. Yeah. >> On the over. Yeah. >> Um so I think we have to start with that which is I have been personally surprised. Look, you know me, I'm no big peep oil proponent. In fact, quite the opposite. But um this is not an issue of geology. Of course, it is an issue of geography. Um, I would have been shocked to learn that oil is struggling to stay at or above $100 a barrel given this fact that especially that these are nominal prices. You know, the >> the the highs that we saw in the aftermath of the war between Russia and Ukraine has exceeded this >> even in nominal terms, let alone $147 a barrel back in 2008. So, one must take a pause and say, "Wow, what has changed that has allowed things to stay under control?" Now, of course, the um the bullish oil investors would say, "The government's manipulating the price of blah blah blah." And of course, they are. They're dumping hundreds of millions of barrels of oil onto the market with the expressed intent of keeping a lid on the price. And if you are long oil, you have to know that the G7 is your counterparty. um they are on the other side of your trade and they don't want you making money in a war in the same way that you know the Fed doesn't want you making money shorting banks during a financial crisis that you just have to recognize that you're you're you are fighting against the current of every western nation that is interested in seeing the price of oil state under control um and they've been largely successful. Look, if you asked for for two people to be in the seat that they're in right now, Scott Besson and Chris Wright at Treasury and Energy respectively would be two pretty good picks. I mean, if there's somebody who knows the oil business, it's a guy who's founded two oil uh and gas unicorns, Chris Wright and Scott Besson, of course, seasoned hedge fund manager, knows the intricacies of the markets well. So, that's the short term. Um, much depends on how long the war goes, but let's let's talk about what this means for the long term. Um we just put out a doom zoom for a prochure on Saturday called after Hermuz um punctuated equilibrium in the energy markets. And we think that that model from biology of a stable species floating along for years and years and years suddenly something consequential happens and it splits in two. And we think that's what's going to happen to the energy markets in the medium to long term. which is to say um the petro dollar versus petroan fight is going on right before us and you know much of US foreign policy going abroad in search of oil and fighting wars wherever you find barrels that was pre pre-shale and the US is now energy self-sufficient it doesn't need the Middle East you know who does need the Middle East China and who's backing Iran right now China and Russia and so you could see the splitting of the world in two >> where the Gulf states after what's happened to the US in this war which we can talk about turn to China and or Iran via China um because ultimately I I think the US um has been surprised by the by the way in which this war has evolved. So that is the sort of the grand vision in our view the thermodynamics. If you just as we did in this presentation take the statistical review of world energy's free spreadsheet and just look at how they are you know partition the regions North America, Central and South America, Europe, Africa, the CIS, you know the former Soviet Union and Asia Pacific. Um and you just look at from the year 2000 to the year 2024 oil production and oil consumption by region. In 2000, North America was short and everyone was competing for the Middle East. By 2024, the Western Hemisphere, North America, um, you know, is long oil. Canada and the US net exporters of oil, net exporters of refined products. Um, the two big needs are Europe uh, and China that that consume more than they produce. And um if you just draw a red line down the middle of the world and sort of lump Europe in with North America and the Western Hemisphere and you lump most of the Middle East in with China, then you're left with a couple of competitive regions, Africa, the Arctic, sort of the scene scenes for the next great game. Um and so that that's what we see as the grand vision. And last thing I would say is Trump is right when this war is over, price of oil is going to collapse. Um the onslaught of incremental supply will hit markets just as demand destruction sets in. Um we're going to see yes a period of time where countries who were caught short now tap up their reserves, create new reserves, fill the tanks, that will be bullish. Um, but when you're netting out all the flows, a return of the Middle East, um, and the increase in production that always comes, you know, as we've said before on your show, all shortages lead to gluts. Um, the long-term real price of all commodities is lower. And in two years, three years, four years, the price of oil in today's dollars will be$25, $30 a barrel. Um, >> wow. >> It's coming, Adam. It just is. It's hard to see that now. Look, all bets are off if every oil and gas producing piece of infrastructure in the Middle East is blown up in a fury because the war escalates and, you know, Iran pulls its dead man switch. Sure, it might take a little longer then for for that to to become reality. But if the war ends anytime soon and the infrastructure damage is capped at roughly where we are, the the the tsunami of supply that's going to come online, the engine switching that this is already driving, the technological innovation development in the hydrocarbon space that's coming. Um, look, what what caused what catalyzed shale was the $147 a barrel in 2008. anytime you see these super spikes in oil um you see these super spikes in technology um to extract to find extract bring to market and distribute um oil ever more efficiently. And by the way, last thing I'd say on this um because I know that's going to be like shocking to some people and you'll get some nasty comments. Um, boy, if you're if you're long oil and you're parentally bullish oil, and we all know who they are on Twitter, and every news is reshaped uh to make make it look bullish for oil. Boy, if the if the top is in, let's imagine tonight, you know, we're recording this before Trump addresses the nation tonight, so we probably should have led with that as a caveat because who knows what he's going to say. But, um, let's imagine the top is in. You know that futures Brent print of $120 a barrel a couple of weeks ago marked the top. That's as high as oil gets. The war ends, things stabilize. Yes, we stay around 80 or 90 for a long period of time. Under what scenario will you ever get $150 barrel of oil? Like if not this, then when, right? Like what are you waiting for that? Like what what set of facts would you need to get that super spike that we always hear about? um because you have a tsunami of natural gas, natural gas liquids. Um you have all of the other available technologies. Coal is making a big comeback like you mentioned. Um and so if not now, then when? And then why own it? Like at least if I own a stock, it could go up 10x. I don't know. You tell me. >> I think it's a really it's a really good question. And yeah, had we been brainstorming two months ago of what could cause that super spike in oil, I think we probably would have put near the top of the list, well, a massive war in the Middle East and the closure of the Straits of Hormuz, which is what we already have now. >> Yeah. Look, and one things, you know, we made a couple of commitments to ourselves when this war broke out. Um, two or three. First was that we would not um indulge in hyperbole just to get eyeballs. I mean, if there ever was a time where that might work, I suppose now would be it. We've tried to be cautious about what we've said. Second is we wouldn't we would try not to be super critical of of the commander-in-chief >> during a time of war. We're American citizens. We have >> friends with kids in the military. Um there's a fine line you have to walk. I think when you have a a large audience like both of us do. >> Um there's a time for you know retrospective analysis of what went right and what went wrong. um we have very strong views on um the wisdom of of how we got here and the mistakes that were made, but you don't have to um lead the charge necessarily when there's still troops in harm's way. And and I I wish more people felt that way. But um and then the third is we would respect markets. Um you know, when when we did our after action report of the European energy crisis um and how we did um full disclosure, we hung on to that crisis internally too long. the crisis was over before we recognized it as being over and that was because we thought the markets were wrong. markets are pretty good. Um, very valuable source of intelligence in an era of AIdriven psychop disinformation, misinformation um, online. And if the top really isn't, and I'm not saying it is, I mean, look, if there's escalation and we see the destruction of those facilities, well, then if we don't get $150 oil, I give up. Um, but if the top truly is in, like, we have to respect the markets. the markets if Trump declares peace tonight or some pathway out or exits NATO and um all the rumors that we're seeing on Twitter, the markets kind of got it right, you know, and so a healthy respect for the markets um a healthy respect for the commander-in-chief during a time of war and also um a healthy respect for and to our audience to not um try to make more of this than it is, try to understand what's actually going on, do our best to see through the truth and to write um perhaps with a bit more humility than we did last time in full disclosure. >> Okay. Well, intelligent informed sources like you that that chart that course are very much needed. So, let me ask you a couple of market related questions here. Um first off is is are we already seeing evidence of new production come online um elsewhere in the world as a result of of the bottlenecks there in the Gulf? >> It takes probably a little longer than that. Um, but of course, you know, if you look at the size of the bogey, it's 10%. It's huge bogey. But could you squeeze 1 2 3% everywhere all at once by trying a little harder, drilling a little more, being a bit more aggressive? Um, sure. Um there's also of course, you know, significant amount of inventory around the world that is being worked out and the and we're kind of trading future production for today. And what what do I mean by that? Just the mechanics of how the SPR release works. Um you give a million barrels to a refiner, they're not paying the US government cash for that. They're committing to return those million barrels plus I think 20% or 25% at some point in the future. And so Chris Wright has been saying, although a few people are listening, that um the net effect of this release will be an SPR that is more full when this is over than it would have been otherwise. And they don't need congressional approval to do this because there's really no money changing hands. Um, and so there's all kinds of ways in which the edges of this crisis are being sanded. Um, and it's funny because people are criticizing the government for doing that. I what did you expect them to do is my my question you know like so you know we're learning an enormous amount about all this but to your question about incremental production um just look look at Sinum Guyana Venezuela Argentina Brazil the natural gas prices in North America are telling you you know because they're down um >> that was my next question so go Let me just ask the question so folks understand we've seen the price of oil spike as a result of this. We have not seen that in in gas even though I understand like >> more of the tank like a greater percentage of the world's tankers for natural gas are stuck in the Gulf right now. So why is natural gas not responding here? >> Sure. Well again this is the time where where the following statement matters the absolute most. Um know what you're investing in. There is no such thing as the price of oil. There is the price of a certain grade of oil at a certain location at a specific time in the future. Right? So there's WTI for May, there's Brent for June. In the natural gas markets, it's even more important because you have the difficulties of transporting a gas. And I've been on your show pointing out to people that in the United States a major phase change has occurred, which is shale has brought in the co-production of oil, natural gas liquids, and natural gas from the same well, >> right? >> And so in a world where oil spikes to $100 a barrel and you're in the Perian, you're drilling as much as you can and you're giving away the gas. So gas trapped in the United States is dirt cheap. It's less than three bucks a million BT right now, which is $17 a barrel of oil. Um, this is exactly as would have predicted on, you know, given the thesis that I rolled out for your audience several times on this show. So, right now, um, natural gas LG between 60 and $20 a million BTU. Um, but natural gas in the US is sub3. It's free in the perine. It's negative in the perine. I mean I I could pull up the exact spot prices as we're talking but um you can't literally can't give it away. Same thing in Canada. So um today at the Waja >> which is why they have flared it for so >> of course. Yes. At the Waja hub in the Perian it's minus $4 a million BTU for natural gas today. And in Alberta um up there it's a buck a million BTU because we're just swimming in natural gas, right? And with oil at 100 you're going to drill for oil and give away the gas. Co-production changes everything. So, um, last point I'd say about LG, um, in the natural gas markets, LG is, let's just round up and say it's 20% of global natural gas. Now, it's probably more like 16 or 18, but um, and Qatar was 20% of that. So 2* 0.2 is 004. And there's an enormous amount of gas around the world. Now, if you are an LG importer like Korea, Japan, the European Union, um this is a bad deal for you. But we're seeing an awful lot of switching to coal because LG imports in coal literally do the same thing, which is being burned to produce electricity. So, Newcastle coal, as we're talking, is up to $137 a ton, which is still pretty cheap relative to the crisis of of of the Ukraine war. Uh but that's up a good um 20 25% from from pre-war. Um and then the last thing I would say is don't forget um you have China out there as well. It's just a huge giant pile of coal and it can toggle its gas demand as well. Um so that in our view natural gas being extraordinarily cheap in the US is not surprising and um LG prices being kept where they are is a bit surprising but there's a nuance there which is Asia is more expensive than Europe um so caros are being diverted to Asia because the European Union has decided to not aggressively refill its empty tanks yet betting on the war ending. Mhm. >> which could really blow up in their face if the war doesn't end. Um so we shall see. But you know um the European Union has proven nothing if not that it's willing to redline it once in a while. >> Right. Um although it has often been burned with those decisions. >> Um all right. So, uh, just real quick, um, so the great American shale basins, um, we've been seeing headlines, you know, through last year and into this year that, um, you know, active well counts were going down and and famously some players that had been in in those, uh, geographies for decades didn't have any active wells. Um, is activity starting back up now again because of this? >> I mean, we'll find out soon enough, won't we? I mean, ultimately the proof will be in the production pudding. I'm I'm I'm not a big believer in counting wells and and all of that stuff. I mean, it it it none of it corrects for technology. Um, and so I I just think we'll have to wait and see how much oil is produced. I mean, if there ever was going to be significant burst in production, you would think $100 a barrel would do it. One thing I would say though is um when you talk to people in the perian, they don't want $100 a barrel oil. That's actually not good for them in the long term. They realize that this is going to ultimately cause demand destruction and fuel switching. >> Yeah. >> You know, the sweet spot is 70 to 80 consistently and overshooting that by too much is not good for anybody. Yes, they'll make a ton of money um temporarily, but when you have natural gas for free, I mean, if there ever was a time to start switching your engines, right, you know, like we've talked about, right? >> Um that that arbitrage can't stay forever. Um and so we're right back up to the ratio of the price of oil to gas at Henry Hub is 35 again when it should be six. Um which means that there's huge advantage in >> a huge incentive to fuel switch. Yeah. >> Yeah. 100%. Yeah. And that that'll all come in time. Um like we say, but um you know when I'm I'm sitting here April 1st and WTI is 9885 with the Street of Hermoose closed since you know basically the beginning of March. It's truly incredible, >> right? And and the war still going on ra no specific >> no end in sight. Yeah. Um, okay. So, um, I do want to talk about fuel switching a little bit more, but real quick, I want to talk about source switching. So, um, you have a lot of the rest of the world that that does get their oil and gas from the Persian Gulf. We don't, um, as Americans, um, but a lot of the rest of the world does. And I have got to think, and you correct me if you think differently, but I've got to think that that they are saying, you know what, like even if this war ends at some point soon, I don't necessarily want to rush back and just buy as much as I did from there before because of of the risk premium, the heightened risk premium that this place just things might flare back up again. The Ren might, you know, decide to try to use it as a toll booth and a choke point and all that stuff. And so maybe I'm going to buy a little bit less from there and I'm going to buy more from other quote unquote maybe more dependable um providers or or or more stable providers and that that will be the next that would be the ne exporters that you mentioned earlier and I I know the administration has been saying that they're already seeing a surge in demand. Um, I know was it a week ago, a week and a half ago, the administration announced like 506 billion in in Indoacific trade deals that were just struck for for oil and gas from America. Um, and I remember reading as part of that that like if you're Japan, it takes you like 25 days to get your supply from the Gulf where let's say you're buying it from Alaska, it takes eight days and you don't have to worry about Alaska turning into a war zone. Yeah. Um, Russia, it's right next to Japan, too, don't forget. >> Um, >> yeah, they can. >> So, um, I think we'll see phases, Adam. I think, um, when the war is over, there will be a rush to buy every barrel that's available, regardless of where it comes from, to restock supplies. Look, it's not just the US that's emptying its reserves, right? So, you have the G7 countries. By the way, just as an aside, um because I know we're going to talk about renewables later, when was the last time the G7 held an emergency meeting because of a shortage of solar panels? But anyway, I digress. Um so, you'll see just like get every molecule bought that you can. Oh, by the way, there's a huge amount of oil on the other side of the street that needs to get sold. You know, oil we we put a post out, I think on like March 2nd, shortly after the war started. I was talking to our our mutual friend Jack Johnson over at Market Vibes and and um we came to three conclusions. One, um the oil business is is driven by credit, right? So there's an awful um you know, you sell forward your production and your your production is stuck behind the straight. Um you you're now facing margin calls, which is probably why gold dropped a little bit here this past month. Um two, there's no such thing as your banker, just a banker. Um, and three, in the long run, all collateral gets sold. And there's an enormous amount of collateral sitting be behind the straight that's probably been sold forward that bankers are going to want to be liquidating here when this is done. Um, and so you're going to have this wave of refill and storage expansion that's coming. I mean, Australia, we wrote about Australia this morning. They got caught completely naked. Frankly, it's scandal of epic proportions that Australia allowed itself to be in this position. They're going to spend money when this is done um to >> refilling their reserves. >> Well, creating reserves, >> okay, >> and and re and then filling them um perhaps opening up some refinings again and and allowing for drilling. You know, Australia has this amazing shell resource that everyone likes to downplay. Um so you'll see that. But in the long run, it will equiliiberate between these two poles. We think you know the bifurcation of the energy markets and logistics matters. You know, Adam, 28 days versus 8 days, you don't need much in the way of intramarket sales to get a globally efficient price. And so, if it makes sense to get your oil from Singapore via the Middle East, if you're Australia, you probably will in the long run going forward after you've topped off your storage tanks and begun to explore some more and maybe even refine some of your own crude. Ironically, you know, um, Australia, just not to pick on them, but they they only produce a third of the crude oil they need, and they're still a net crude. Well, not a net, they still export some of that crude because they can't refine it all at home because their refining capacity is even less than their their crude production capacity, right? >> Um, so yeah, I still think like logistics matters a lot. Um, and the US is not a huge net exporter. Um, because it still consumes an enormous amount of >> but it could but it could dial it up, right? >> Well, through through Venezuela. So, I saw a post on Twitter and who knows what's real, but um a flag in some Trump Library video has 56 stars on it which they're saying is like Cuba, Venezuela, Alberta, and Greenland. You know whatever pieces of the puzzle that Trump picks up along the way. So, what does it even mean to say America? you know, I'm just trying to make sure this podcast ages well, Adam. >> Okay. I wonder if Car Island is going to become one of >> I'll take the under. >> Yeah. Um but but sorry, just to get to the spirit of my question. Um because that's great nuance, but do do you expect this the implica long lasting implications of the world at all to shift where the world is is sourcing its oil and gas from or not really? >> Uh not really. Um I mean I do I think crisis creates a lot of commitments that go unfulfilled. You know never again will we be caught you know um with uh with uh bad mortgages permeating the banking system. Meanwhile we have private credit everywhere, right? I mean you know >> Yeah. Yeah. Okay. Totally get the point. Um all right. So let's go to fuel switching then. Um so I mean that's been a theme of yours in general with energy. Um but uh as you've already nodded to or given nod to a couple times here, uh it sounds like the war is is is already um accelerating that. Um probably in a couple different ways, but but two big ways is one, yeah, let's natural gas is so damn cheap. We just got to start really taking advantage of that differential. Uh but also coal, right? >> Yeah. Um h how how material do you think the the long-lasting effects of this war will be on having driven or provided an accelerant a catalyst uh for nations to start really investing in some of these switches? >> Let me give you an obvious one low hanging fruit that not not many people are talking about. The world still burns 4 and a half million barrels a day of oil to make electricity. >> Mhm. >> Like half of that's in the Middle East, but you know Italy last we checked still burns a fair bit of oil to produce electricity. We think um burning oil to produce electricity outside the Middle East will will not be long for this planet. That's one of the immediate changes. >> Just because you think it's sort of dumb energetically, correct? >> And just look at the price differentials. Yeah. I mean, you know, if >> again um let's just say it's 2 million barrels a day. That demand is gone now. Um bunker fuel, NAFTA instead of ethylene. There's all kinds of um market inputs that used to come from heavy barrels of oil that are that were being replaced by lights, natural gas liquids, other products of the shell boom. You know, we wrote we did a doom zoom called trend lightly um where we talked about how the the arch the arc of of hydrocarbon consumption was towards lighter and lighter molecules and and this crisis is only going to accelerate that. Um and so um in the long run hydrocarbons are fungeable. It's just comes down to engine switching. So if you're an investor, what does that mean? Any technology that enables switching ideally in fact that enables dual fuel use so you can switch between them without having to change the engine, >> those are going to be valuable. Um alternative technologies to hydrocarbons altogether uh in some cases will be valuable as well. But we don't think the main driver of being caught without enough fossil fuels uh is going to be to move away from them altogether. It's going to be to store more of them going forward so you don't get caught again. Um but we can discuss that. But the the broad strokes of fuel switching um there's nothing like a shock to a system to recalibrate where that equilibrium is, which is why we went with that punctuated equilibrium mental model for our our doom zoom last week. Um, whenever you shake a system up and the snowflakes fall back down to the bottom of the globe, you know, they tend to they tend to reorganize and and this is an opportunity to reorganize. If you had political pressure, you know, that stopped you from creating a strategic petroleum reserve because everyone was telling you this is a stranded asset and we're not going to Well, now's the time to overcome that that political pressure and to build those tanks to fill them. Um, and so I think we're going to see that. But um did that investment that you were thinking about making to run your engine on natural gas um or at least to put in a a flexible engine where you could toggle between the two depending on price. And it doesn't take much at the margins for that to really have a big impact once the war is over. And a lot of what we're talking about today is once the war is over, you know, assuming there's no nukes, assuming the infrastructure isn't destroyed, assuming the desalination plants aren't taken offline, you know, a lot of lot of assumptions here in what we're talking about. >> Okay. Um All right. So, in terms of policy tailwinds, right, um you there's there's just economic and probably policy um momentum building now more than ever to to do this fuel switching you're talking about. Is this also placing policy tailwinds behind uh country's nuclear energy ambitions? >> Uh much depends on the fate of the various reactors in the Middle East right now to be totally honest with you. Um we're seeing very dangerous escalations on both sides. You know, missiles landing dangerously close to nuclear reactors. The United Arab Emirates um just brought on, I think, four new reactors. you know, if those get damaged, if there's a major leak, if you have a a Fukushima missile, it could set back nuclear, again, you have to, as much as we're pro- nuclear, and we think, you know, um it is a superior fuel, um one has to be cognizant of the fact that a true radiation leak, for example, a major radiation leak that contaminates the salt water in the Middle East and makes those desalination plants, you know, not very useful. um that's going to set back nuclear power just as no oil spill can can >> can you know occur that would would match the frenzy of overreaction to a nuclear accident like we saw with Fukushima. Um >> okay >> um >> let's let's hope and assume that that doesn't happen. Um I I've got to think that this is making countries which of late have already been saying, "Hey, you know what? We've ignored nuclear for too long and it's got a ton of promise." It's just got to it's got to have a a greater pull than ever now, I think, to say, you know what, let's just become less dependent to these foreign sources of fuels, right? And the best way to do that is to have domestic nuclear reaction. >> I agree. Although >> the natural gas markets have not been as disrupted as the oil markets. So um the main competitor to nuclear is natural gas because you know of electricity generation even though some oil is still used to produce electricity. Natural gas's primary use aside from home heating um and fertilizer is to produce electricity. Um and so it's a bit less of an urgency there because fewer countries um are are beholden to LG and the ones that are already have pretty good nuclear, Japan and Korea for example. Um Japan turning its nuclear back on of course um and so um it's bit of a smaller country set that is impacted by LNG. Um although we are seeing at least in Europe the mouthing of the words that shutting down nuclear was a strategic mistake >> was a bad idea. Yeah. >> Yeah. So that's a you know the as we like to say 11 steps to go. Yeah. >> Okay. So so more than anything this is putting a wind uh tailwind to the back of gasification where people are just saying you know what this stuff's so damn cheap and it's not getting as compromised as oil. Let's just figure out how to use more of it more smartly. that and home drilling, you know, um, okay, while we probably possession does matter, um, you know, um, we we do think, for example, if things got really bad, um, the US would turtle, US and Canada would turtle up and they would they would manage exports to keep local prices cheap. Um, and we saw China limit the exports of refined products within 72 hours of the war breaking out. We saw Russia, as of April 1st, no longer exporting gasoline. Countries with surpluses take care of their domestic markets. And if you don't have a surplus, you're on the hook to compete with everybody else, which means you're either, >> and by the way, that was raised here in the States briefly, right? The administration had to come out and say, "We're not going to do that." Right? >> Well, then nothing is true until it's been officially denied now, is it? Um, right. >> And so, I mean, it would happen at the look, if if oil did go to 200, you think the US consumers are going to pay that equivalent price at the pump? Of course they're not. We have an election this year. >> It's not going to happen, right? and and you you draw a circle as we we we published a piece called Project Turtle. Um if you draw a circle around Canada in the US, you're self-sufficient in oil, natural gas, refined products, phosphate, potassium, um you know, ammonia, helium, sulfur, food stuffs, wheat, corn, soybean. But okay, it's Fortress North America. It's coming. I mean, of course, it's coming. And u >> right, do you think it'll be Fortress North America? or do you think it'll be Fortress America's? >> Uh, back to the number of stars in Trump's flag. Yeah, I mean, I think Venezuela would be part of that umbrella. We'll see about Mexico. The whole affair with Cuba, which we haven't talked about, has been fascinating to observe. Um, yeah. Well, you'd rather be in the Western Hemisphere for sure because even the South and Central uh Americas, you know, combined as a region are net oil uh exporters as well. They produce more than they consume. And there's an enormous amount of oil down there as we've chronicled waiting to be developed. Probably an extra 10 million barrels a day. When you go from, you know, the tip of Argentina to to the uh to the edges of Mexico, um like even Venezuela alone used to produce four, produces one. That has nothing to do with geology. That's all politics, right? Bad politics. >> And let me let's let's dive into that super briefly. So, in many of our past discussions, you've always said it is vastly easier to remove a political constraint than a than a geological one. Um, we may have just removed a big political constraint with Venezuela. Um, h how how much of a long-term gamecher do you expect that to be? And of course, we the future's unknowable. We have no idea if if you know things might go south there between our relations and the government and whatever, but assuming everything goes well. >> Yeah. I say it's going to come online faster than skeptics think, but it still will take a long time. Um I think the first half a million barrels a day will be easier than most people realize to bring online. You know, um there's going to be a cost curve of incremental production and the cheapest stuff will come along come online first. But the impediments to Vakama, you know, we note with interest that poor Buford Capital lost their appeal and um the one of the main impediments to developing Argentina's massive shale resource has now been removed. Um probably a bit of a a nuance for your audience, but YPF, the National Oil Company, um of Argentina won an appeal surprisingly um that, you know, basically freeze things up in Argentina. We had some thoughts on that, but that's probably for a different podcast. Um, you have Mexico is a mess easily cleaned up. Is it is it easier to clean up Mexico or find a bunch of oil that you don't know where it is yet? Right. I mean, Venezuela has proven its resource base can produce 4 million barrels a day. Okay. So, you snatched Madura and um play a ball with the existing government. You know, full credit to the Trump administration that is not dissolving to a or devolving to a Libya yet as far as regime change operation goes. That one's been pretty smooth. Um, but there's 3 million barrels right there. You could take Vakart and Argentina from, you know, 6 700,000 barrels a day or whatever it is today to 2 million, 3 million barrels a day. You could do Guyana. You could do Surinum. You could make make good with Brazil. You know, take the bee out of bricks and bring them into the fold. Um, >> there's oil off Cuba. Everywhere you look, you find it. Just a matter of being able to look for it. And last thing I would say, if there was ever a time where California gets its act together, you would think it would be now. Um, California has as much oil and gas as Texas, >> right? >> And and in a true crisis, um, as we say, the politics gets wiped away. It's a lot easier to change politics. And um probably no coincidence that it looks like perhaps two Republican candidates will face each other in the runoff uh coming up here because of the >> which is amazing. That's >> your your former home state has uh >> colored itself into a corner over there. >> Um let me ask you this though about about oil. So looking through your lens, Duneberg, where the world is is becoming more and more um able to shift to um lighter and lighter forms of hydrocarbon. Um and then then you know nuclear really does come online and whatnot and there's just alternative energies that are taking over the load. Um, it sounds like, and I know you've you've you've long said you're you're not a peak cheap oil guy. Um, you actually think that oil is is going to remain relatively rangebound kind of forever, at least for our lifetimes. Um, I want to say you've said something like, you know, average price around 50 bucks or something like that with obviously some variations. Um it it does seem if if it if that all that is true, it does seem that oil may switch from becoming the you know primary fuel source to being kind of the backup and that in and of itself will will keep a you know really keep the price in check because it's like there's not a lot of demand for it at some point in the future you know unless we get into real short-term price squeezes or sorry supply squeezes. I mean, there's always going to be a huge demand for oil, but you know, when I told you like we were going to respect the markets and and when the markets didn't respond the way we thought, um, you know, we we did a we did a piece on like, okay, what do what's going on here? Like, what are the markets telling us, right? So, at the thrust of that piece, we said, okay, everyone says that this is the worst oil shock since the Arab oil embargo. And I agree, probably is. What's different between then and now? Well, one of the things that's different is um as a percent of global energy supply um oil used to be around 50% in the 1970s and now it's just above 30%. Um will it be less going forward because of this? Absolutely. Has to be. Um and so >> while at the same time we have potentially more supply coming online, a whole list of countries, right? >> This is this is again why the long-term real price of oil has to be lower. Um and and it will be lower and and again that it's hard to say that now when everyone is worried about $200 oil. Look, >> oil oil can print at 200. It can't stay there. >> There's not enough demand for oil at 200 to to to take up 90 million 90 million barrels a day. like there is a price at which poor people can't afford to buy oil, >> right? >> And that it's it's less than $200 a barrel. We're already starting to see um demand destruction, switching all the things that that we're talking about. Um and so that's one of the big things that has changed. Um the other big thing that has changed is um there's an awful lot more oil inventory. We have a much freer market. Um the rationing of supply is being done by price and not by u dictate, you know. um by central planners mostly um and so countries that can't afford it, sad to say, aren't going to get it. So yeah, um Australia is going to outbid the Philippines for that cargo of of diesel. They're just going to get it. Um and that's it's unfortunate if you live in the Philippines. Um you know, um too bad, so sad. Better better luck next time, as we would say as kids, you know. Um it's unfortunate. It's the raw sort of um cynical power of the market. >> Um and the poor people suffer most and and that's what's going to happen here. >> All right. Um I uh tangent for a different time, but I just want to earmark it. Um Dubberg, when you come back for up for air, one of the conversations I'd love to have with you is doing a deep dive on the situation in California. um not not about necessarily the potential of what's there, but about what's going on right now with the fact that so many oil companies are leaving the state um and the policy decisions the state has made to to create that inhospitable environment in the you know this current situation as understand it is you know big big oil companies are leaving like Chevron just left after 140 years you've had refineries that are leaving or at least companies shutting down their refineries And basically California um is having to buy its oil um from far-flung and not necessarily very friendly countries right now. Um and of course that's all translating into a much higher price per gallon than than um everywhere else in the country. That's likely to go higher now from some of these refinery closures. So different deep dive for a different day, but would you be open to doing that? >> Sure. Let me give you one little let's let's give a teaser because um there's a world where what's happened in California ultimately spreads across the US and here's how um Trump spent an awful lot of political capital for this war. He splintered his base and we we like to point out to our Trump supporting friends that um he he only beat Camala Harris by a point and a half uh in the general election. And Gavin Newsome of all people is way better than a point and a half better candidate than Camala Harris. And so despite his mismanagement of the state's oil and gas infrastructure and its energy policy, he a has the perfect thing to blame it on right now, the war in Iran, and B is the political candidate most likely to benefit from a collapse of the Trump coalition. And so the very policies that put California into the hurt locker um the person who was behind much of that is is is odds on favor to become the next president in 2028. And don't wouldn't underestimate his chances. Look, you might disagree with his policies violently. The man is a gifted retail politician. He's a smooth operator, looks good on camera, um and is is a very formidable candidate. And so it's all the more important to understand what went wrong in California because it might actually get a replay here at the national level. >> All right. Very important points and I will just add my editorial. I aspire to be a media source like you Duneberg. Um very nonpartisan, very much just trying to chart uh what is versus what I think should be. But as a recent California resident, I feel quite confident in saying the vast majority of Americans I don't think would want to live under a California energy policy. Well, they're going to say brace for impact. >> Yeah. And you know what's what's what's frustrating is is even though I I live in a different state, you know, I jumped the border into Nevada. Um we still source our gasoline from California. So what happens with California gasoline prices happens here as well. >> You know, preparedness starts at home, my friend. >> That's very true. It is very true. Um gosh, maybe I should set up uh you know, my own oil ring in the in the back so I can start collecting the flared ga the gas that would otherwise get flared and then power my house on that. Um okay, so uh we only have a couple minutes left, Duneberg. So let's get to where the rubber meets the road. um you know in in the potential um uh I'm forgetting the word but you know the the the statistical chart where you've got the different nodes where things could go. Um fingers crossed you know one of the potential nodes is that okay this this war does come to an end in the next couple weeks. If it does you agree with the president that oil will drop like a stone. um whether it's from that potential trend or any others that are on your radar, is there any opportunity you see here for investors, you know, in in the relatively near-term, yeah, they can they can play some of our longer trends that you expect to last for the next years or decades, they can take that into account kind of with a long arc, but in the next, you know, quarter or two, >> sure, >> are there opportunities emerging from what's going on in the war? >> Yeah, look, anything that scales with volume production outside of the straight is going to be in huge demand. Um, and then there's going to be the mother of all midstream opportunities in the Middle East when this war is done because the street of Hermuz was a trick that could only be played once. Um, you're going to see choke points being diversified, pipelines through Aman, pipelines through Israel, railroad. We we'd want to be in the rail business in Iran. That's probably not an investable thesis right now, but um, you know, oil doesn't just move by sea. Um, it could move over land, too. Um, so pipelines, railroads, um, all of that stuff. Um, when Saddam Hussein lit the Kuwaiti oil fields on fire, all of the companies that went in and fixed stuff after that did very well. Um, the only caution that we would say is is try not to be leveraged to price as much as volume. Um, because prices are so much more volatile and likely to fall. Whereas the human endeavor, this constant unrelenting struggle against entropy requires ever more energy. And the easiest bet in the world is that global energy consumption will continue to go up and to the right. So if you can hitch your dollars to that wagon, wow, this company enables fuel switching. This company enables more oil production outside of the straight. This company enables those on the other side of the street to diversify their exits. Um, all of those are going to be winning themes in the short, medium, and frankly long term. >> All right. Um, fantastic. And, uh, I know you don't track individual stocks, but folks, I highly recommend you look into these sectors yourself. And if you have questions, you can, you know, ask them of a of a professional financial adviser who actually actively invests in these sectors and can give you specific companies to look at. Um, all right. Well, look, um, thank you so much. Um, I guess last question for you. Um, is is there anything that's burning really brightly on your radar that I haven't thought to ask you yet? And even if we don't have time to talk about it in depth now, maybe we can pick it that thread up later. >> Uh, boy, I we've talked about so much. What could we have possibly missed? I would say we are um skipping a few steps ahead and pondering what is going to be the next shale. You know, we mentioned this earlier, $147 a barrel of oil back in08, boom, shale revolution happens. What's that going to be this time around? Um natural hydrogen, ultra deep drilling, you know, abiotic oil in China. Um China unlocks its shale. Australia unlocks its shell. Um there's going to be that wholly unexpected boomlet of technological development um somewhere in the world and trying to skate where that puck is going right now is taking up an awful lot of our mind share and not something that that we really tal talked about today. All right. That would be super interesting to talk about. So, sort of like what's the next miracle, right? Like we had the Shirro miracle. >> Yeah, that there's always one. >> Okay. Um, fascinating. All right. Well, like write that book because I want you back on to talk about all this stuff as soon as you can. >> Sure. We We'll do a few podcasts over the summer, but I just needed to Yeah, let's talk about bad timing. >> Yeah. No, no, I get it. And I've written a book before. Sure. Sure. not as as uh august as yours is going to be. But it takes you that that first half is really getting everything synthesized and you know putting together your structure for >> and look you don't just want to write any book you want to write a great book and we want to you know to the publisher and editor that fought for us to get this book done and our agent and the whole Doomberg team you know you want to in our in our audience like you you want to respect the the the act of writing a book. It's a great honor to do it and we don't want to just write a book we want to write a great book. So it takes time, takes effort, takes focus. >> Well, you know, you you already have proven beyond a doubt that you your team there uh takes creating excellent written work uh as their north star and anybody who subscribes to your Substack knows that. So that gets me to my last question, which is for folks who would like to follow you and your work, where should they go? >> Yeah. Uh everything's at duneberg.com. Um three main products there. our newsletter um which is the predominant one. Um we have our monthly pro um seminar or you know um um videos that we put out for our premium tier dune pro and then also we have our new substack classics read aloud which you know um if you want to get an escape from all of this noise and to indulge in some fantastic literature we have a great product that we're building there which you can also find at duneberg.com. So um Adam um great to chat with you um always enjoy my appearance. Congrats on all of your success as well. It's been fun to watch. You know, I knew you when >> Well, thank you, buddy. And I can say right back at you. I remember you calling very much in your very early stages, and it was so clear to me that you guys were bringing um a formality and a discipline to this space that I hadn't seen from anywhere else. And uh which has made your your meteoric success no surprise. >> Appreciate it. Great to talk to you, my friend. >> You too. All right. See you soon, Deber. All right. All right. Well, now is the time of the program where we bring in the lead partners from New Harbor Financial, one of the endorsed financial advisory firms by Thoughtful Money. I'm joined as usual by lead partners John Lodra and Mike Preston. Gentlemen, thanks so much for joining me. Love to get your reactions to that fantastic discussion there with Duneberg. Uh John, why don't we start with you? >> Hello, Adam. Great to be with you and always uh always nice to hear Duneberg's comments. I I have to chuckle a little bit. I sometimes find myself wondering what Mike and I would choose as our avatar if we were forced to do so. And I I just I'm I'm at a loss. We're just two middle old middle-aged uh guys with receding hairlines, but hopefully uh at least enough entertaining to capture your your viewers attention. But >> all right. Well, that's your to-do for next time, John, is to figure out your your virtual spirit animal. >> There you go. >> When AI replaces all of us. Yeah. >> Exactly. Exactly. But I, you know, so, uh, look, Mike and I, we here at New Harbor, we're not energy experts. Um, in fact, I spent the first decade of my career in the energy and utility space. So, I kind of knew about energy markets, but I can I I know this much to say. They're incredibly complex. They're incredibly hard to to pin down. Um, you know, count us uh equally surprised that oil prices I mean, they shot up pretty pretty dramatically. Let's not let's not um underplay how much oil has shot up in in the last month with the the the war in Iran, but you know, I guess we could have easily seen things given the gravity of the trade, you know, close closure of the trade of Hermus and and that kind of thing of prices going even higher. So, I guess we're you know, a bit puzzled too that that things have been as as subdued as they have. But geez, I I can remember back to my early career in the energy industry and I remembered at the time, you know, we were projecting natural gas prices at, you know, $2 to $3 a million BTU. And that doesn't sound crazy today, but let me share a chart with you just to kind of let me just use this to emphasize that um we learned a long time ago whether whether you're talking stock markets, commodity markets, or whatever, actually forecasting prices is is as tempting and as as uh as seductive as it might be to to try to do that to kind of figure out what's going on, it's incredibly hard and and it's incredibly humbling. And let me just share this as as a personal life story. Uh this is a chart of natural gas prices. Henry hub natural gas prices. This is the main pricing hub in the United States. So I I was in the energy industry the 1990s basically. I remember right around here we were projecting um in energy markets natural gas prices as far as the eye could see $2 a million per million BTU. And you can see what happened in the couple decades. We got up to close to 15. Um no one saw that coming uh from in the late 90s. it was like, you know, $2, $3 for as far as the eye can see. So, I'm not going to be surprised by any forecast, whether it's way higher or way lower than we're going to be surprised. And, you know, we prefer to use systems and and techniques that don't try to anticipate, but adapt, right? And, um, you know, just a couple further, you know, it's important, I think, to take a zoom back. Uh, over over millennia, energy has been important to to humankind in so many ways, but it's it's it's evolved, too. This is a chart of US electricity generation by fuel source. Now Duneberg talked about in the 1970s how you know the oil shock then maybe is the most similar to to today. Yet back then oil was 50% of of total energy consumption versus say 30% today. But look at look at the energy uh or the fuel mix by just for power generation back in the in the 60s and 70s. Um, you know, natural gas, which is the the blue, was a relatively small amount. It was it was actually thought of back then as like being too valuable, too scarce to burn through a power plant. It literally was thought of that way by by the energy planners. And yet, look, today, it's it's the the largest by far um source of electricity production. Renewables have have made great strides, but they're still a small piece. Look what happened to coal. Coal has dramatically declined. So, these things are going to change. Fuel substitution is nothing new. It takes a long time for it to play out and I have no doubt there's going to be a equally kind of shocking mix of change over the next 30 years, but it's probably going to be in ways that we can't imagine. Uh I think energy storage technologies could be a gamecher. I bought a battery system for my solar panels at my house 10 years ago. It was wicked expensive. They're coming cheaper today, but that is a key thing to unlock a lot of energy innovation. So uh again and then this is total consumption but and this goes back to the 1700s. I mean you can see coal was everything right and then um I mean wood was was everything then coal took it over then oil and then you can see how how things change here but you know still as a total and this was as of uh 2024 um you know oil is still about 38% the total global uh I'm sorry US energy total cons uh uh consumption. A lot of that's for transportation, not so much electric power generation anymore. >> But, uh, color us color us, you know, uh, you know, a little bit unwilling to make bold forecasts of where prices are going to be because it's they're going to change. Uh, and shorter term, they can go anywhere. Um, you know, up or down. Uh, one one last thing I want to do just because we're talking about we're really here to talk about markets and investing for everyday clients like everyday people like our clients. This is an interesting chart that um and I I use this chart to to point out a couple things. First of all, um you'll go and see all kinds of, you know, uh financial influencers and talking heads out there saying, "Hey, if we look at the history of of wars and what it has meant for markets, you know, on average, they're up, you know, 5%, 10%, whatever over some future period of time." And the key there is to watch out for the word average, okay? because averages can be really misleading and and it's meant it's it's used in a way to say, "Hey people, calm down. Don't freak out. Certainly don't sell any stocks or or don't worry about the markets because on average it's going to be higher six months from now." But look at this. This is a you know, this is something Goldman Sachs put together. Each one of these is is a different war energy related or any energy confluenced war episode. And you can see sometimes, and this is the 0 Z here at the time of the the outbreak of that that particular event, you can see sometimes markets are way higher six months later. Sometimes they're way lower. And this gray area is the basically the the statistical band plus or minus uh you know 90%. Um all to say is averages can be tremendously misleading and dem damaging. this Yan Kapor war as even six months it was it was still down 15% from the start but uh that was in the bottom the the bare market of the 1974 bare market didn't bottom until October of 2000 uh 74 so it was down I think another 15 50% almost from there so you know be careful the charts you see out there as as to kind of be playing on people's psychology to to brush things off is as is don't worry this time will bounce back like it always has so I'll pause there >> I think that is a great chart And yeah, to your point, you know, people are told on the average it doesn't really mean much. And I've had some folks on this channel say that that these kind of tend to be nothing burgers to the markets, but to your point, it's on average, right? It's like I've if I've got one hand in a boiling pot of water and one hand in a freezing pot of water, well, on average, it's room temperature, but my hands are experiencing very different uh situations. And so you really do need to say, okay, look, yeah, average it's it's no big change, but it's much more likely to be either fire or ice. And so which one am I going to prepare more for, fire or ice? >> Exactly. Exactly. So re really uh important time to tune out the headlines, not stick your head in the sand, but really uh look for the signal from the noise, if you will. >> Yeah. Yeah. Well, and as you said earlier, and I liked how honest you were, John, which is like that having worked in the energy sector for as long as you had, the thing you have the greatest confidence in, is that nobody really knows exactly what's going to happen. And so, rather than trying to focus all your attentions on predicting where the puck is going to be, it's saying, look, I'm going to I'm going to monitor the puck, and as the puck starts changing direction, then we'll change with it. Um Mike, first anything you want to add to uh to John's point and and and then to that whole thing about you know being flexible and reactive um for folks that that you know thought Duneberg was wicked smart as I think he is. Um and you know he gave a number of areas to look at for opportunity here in the relatively near term. Can you guys at New Harbor help people put together an investing plan if they want to, you know, research and potentially get exposure to those sectors? >> Hi, Adam. Yeah, absolutely. If people want to put into action some of the ideas that Doomberg talked about, we can absolutely help them do it. You know, and there's a couple points that I liked about about Doomberg's talk. The first one is that, you know, he admitted that he's relatively shocked, right? He said it's difficult it's difficult for oil to stay above $100 a barrel. You never would have thought that would be the case. You know, when this um Iran war broke out, the one thing that went straight up was oil. Here is um USO is an ETF that tracks oil right back around here. I forget the exact date that the war broke out, but oil broke out and never looked back. Everything else went down. Stocks, gold, silver, bonds, even everything straight down. If you bought silver or gold thinking, well, shoot, war broke out. Let's buy some precious metals. And look what they did over the same period of time, you know, they're down quite a bit. They're starting to rally now, but gold and silver are down. Everything's down except for oil. And he admitted that. So, we're still pushing up here. USO is at 125. Crude's I think he said uh 98.885 as as we speak here today on April 1st. So, and he talked further about the sweet spot oil being 7080, but he would have thought that we'd be a lot higher. And so, that's what investing is like. You come up with a thesis, you test it, you put a position in place, you try and see what the market does, and it often doesn't do what you think it's going to do. And so, if you want to talk with us about putting some of these ideas to work, but even more importantly, talk with us about how to know if you're wrong, what to do if you're wrong, how to handle the emotions that go into being wrong, all that stuff. There's nothing mechanical really. There's no mechanical system that will just print money and particularly in the day of AI and computers and everything. It's really all about psychology. It's all about psychology and risk control. And so, yeah, you can make a lot of money in the markets, but you can lose a lot of money in the markets. Even if you're right, if you can't withstand the path, I think a lot of people in gold and silver are feeling it right now. If they came in too late, if they entered too high, they're getting shaken out because it's too painful to be too big and too late. And then you still get shaken out and you miss the whole move because the path pushed you out. That's what the market does. The market's job is to knock you off its back, particularly out of on on winning trades. So, a little bit of what I heard Duneberg talk about was humility saying, you know what, I would have thought it would have been a lot higher by now. And that's that's true. I would have thought that silver would be, you know, staying near its high above 100, but it had a big huge pullback. Do I think that that's over? No, I don't. But it's a little bit bigger than I expected. And maybe that's by design just to get people out. So, that was the first thing. The second thing that I thought was important to me is that um in his view, the straight of moves was kind of a one something that can't happen again in such a perfect storm way. You know, his theory is that the world has now seen that the straight of horos is really too much of an Achilles heel and that won't be allowed again in the future. His theory is that there's going to be alternate pathways built and so theoretically there'll be all kinds of opportunity out there in companies that could build ultimate alternate pathways. Companies that do uh you service the oil and gas industry. We're in an ETF in our model that's an oil service ETF and we actually got into that many months ago long before this war. We got into it because the charts told us to and we're always looking for the strongest sectors and that chart broke out and we put it in. But it's doing really well and we're in ticker symbol E XEES. It's not a recommendation. I have to give that caveat. But I want people to know just if they want to take a look at a chart that's an example of an ETF in the oil service industry that continues to do well. So those two things were important to me. Be careful investing on ideas. Those that plowed into the market, you know, on the ideas that the war broke out, so let's buy defense, let's buy metals doesn't work. You really have to get to know your own style, your own emotion. Risk an amount that you could afford to risk. Know how to admit when you're wrong. That's the hardest hardest part of all actually. And it really is um a battle for investment survival. I can't remember the person that wrote that book. I've read probably a couple hundred books on investing, but there's a old book called The Battle for Investment Advis uh survival. It might be Baruk if I remember right. It's a good book. And that's what it is a lot of times as an investor. You're battling for survival and learning as you go and hopefully getting better. >> All right. And a big part of that battle of survival is um you know let the market growth take care of you over time but make sure you're not getting killed you know along the way. You're not you're not suffering 100% of the draw downs. Um all right um Mike I'm going to come back to you because you mentioned the precious metals a couple times. I'm going to get back to you just so we can look at the existing charts and see what the technicals there might be telling you. John, let me come to you and if you can um pull up a chart of the S&P um you as we've been talking about for many many months now, the S&P has been stuck in this trading range um since October. And uh yeah, you look at the chart here, it certainly seems to have been rolling over. You know, a lot of people are very worried that this is a clear topping out process on the way to lower lows. Um, but if you do look at the chart here at the very end, um, one can argue, it's too early to say definitively, but one can argue that the market may have found a bottom here and is is beginning to bounce quite robustly off of it. Um, what are you taking from this? Does this look potentially like a Vbottom could be in the works here? Maybe the market is sniffing out that this war might not be the quagmire that some fear and that uh, we might get out of it, you know, sooner than later. So, a lot of uncertainty regarding the war, right? And we have a I think the president's addressing the nation tonight if if if plans haven't changed. Uh, who knows what that communication will be. There's been a lot of confusion. I mean, the headlines and the and the kind of interpretations of those have been all over the map, right? So, so clearly the markets are a little bit um volatile just related to that. But, you know, we try to tune all that out and really just let the market tell us. So we do a lot of work with charts, but it's more than that. It's more than simple moving averages and things like that. We look at a wide range of barometers of market breath and health and and not just at the macro level, but across different sectors. So for example, Mike alluded to the fact that we added um oil service stocks um I think it was October of last year, October, November if I'm not mistaken. And at the same time, we rotated out of financial stocks. So why did we do that? Well, we had long thought that energy stocks, the energy sector was fundamentally undervalued relative to the market, which is still screamingly overvalued, the US stock market. Um, but that undervaluation of the energy sector didn't matter much until the momentum and various metrics of of breath and momentum and and strength in that sector started to exert themselves. So, we had the the combine combination of fundamental um backdrop and technical backdrop that led us into energy. same kind of things led us out of financials. Actually, financial stocks have been very weak since about that same time last fall. And this is before, you know, private credit uh was in the news like it is today and how much exposure do banks have. So sometimes we want to we humans want to put approximate cause to to what's going on, but sometimes you just have to listen to the market and not overthink it. But back to the S&P. So this chart I think am I still sharing? I guess I am. So this is a daily chart of the S&P. Yeah. So, Adam, as you said, we we had one of the tightest ranges in a long time of the S&P going back to October. It had gone pretty much and maybe zooming out uh to to a weekly chart. You know, you can see it went, you know, this is this is October here, right through the, you know, early part of this year, it was kind of pretty sideways. Even though some sectors like energy were going screaming higher, basic materials were screaming higher, uh, a lot of things were outperforming, but the broad S&P was kind of stagnating. technology was starting to roll down. Some of the MAG7 was which carried the S&P higher was, you know, carrying it down or or at least stalling it. But we have seen a pretty notable rounded top here. Now, I just want to talk about a couple technical things. These various colored lines are different moving averages and such. So, for example, the green line is a 50-day moving average. You can see that was a very flat line. That's that's that's emblematic of a market that trades sideways. It's very easy for for a flat market to to become extremely overbought or oversold just simply because of the fact the market hasn't done anything in the in the reference period period that you measure these extremes against. Uh but we've taken out back in uh early March we took out the the the 50-day and the 21-day moving average and we've since about uh March 20th or so been below the 200 day moving average. uh here today. Well, yesterday we had a very large bounce in the market on kind of news of some kind of resolution. And today we're seeing a pretty notable reverser. We're still up a little on the day. We're about up twothirds of a percent in the S&P as we speak right now, but it's poked back down below below that 200 day moving average. That's a key level in and of itself. You know, if we if we fail at the 200 day, it's probably something to be careful about. Now, you combine that with our broader ba battery of indicators and we've seen a a notable degradation in the health of the market. We've seen, and I don't mean to get too too wonky here with technical terms, but things like bullish percents have have uh decidedly weakened. This is a a breath indicator. We've seen the the percentages of stocks within the index trading at or below certain different time frame moving averages uh starting to roll over and rolling over. Broadly speaking, our battery of indicators has been uh firmly on the negative side. Uh so we try not to read into hey is this over, you know, is this is this going to pop on a resolution of war? We just got to follow our indicators. Um and as of this point, we have not seen a a material improvement of those indicators. So what have we done? So let's first start with the fact that we, you know, we've been preaching caution or underweight equity for some time just simply based upon valuations. Now, we've been fortunate to be in the right kind of sectors, even if we're underweight. So, we're, you know, doing quite well. Um, but we have taken defensive measures. I'm going to call out this dotted uh horizontal line that's at at 6,500 on the S&P. These are put options we have on our client portfolios for those accounts that are big enough to to handle options like this. Um, which essentially is like an insurance policy. And you can see we poke below that 6,500 level. um that basically is a line in the sand at that we would essentially take the risk of about a third of our equity exposure. So we're about 45% in equities right now with a poke below that dotted line we would very quickly have the financial equivalent of d-risking uh to about 30% in equities. Um and the great thing about this is it it provides the hedge on the downside. But if we shoot higher here, yeah, we're going to lose some money on those on those puts, but we're going to be uncapped on the upside as we stand right now. So this is a just a a very nuanced way that we have used hedging to kind of take the downside risk or materially change the downside risk without you know putting our heads in the sand or putting the money under the mattress so to speak. And you know the there are a lot of different things. We sold some of our abroad equity exposure last week and then the week before we sold you know some healthc care exposure we had that was uh a weak sector based upon the the the things we look at. So we have we have you know systematically de derisked a bit here and uh you know broadly speaking our indicators have have yet to to kind of improve to the point where we'd want to lighten hedges or add equity exposure at this point. >> Okay. Uh that's always really super helpful. John, um I presume, but don't let me talk for you here, that if we were to turn down in, you know, the next couple days of trading, you could look at that as a an attempt from the market to um punch back up above what used to be its floor, uh the 200 day moving average, but failing to do so. That floor may now turn into resistance, and that might be a give you more technical validation that that a further rollover could be in progress. Yeah, there's a lot of simple cliches, but sometimes they're self-fulfilling. You know, you get a rally to to to prior support and it becomes resistance and yeah, you know, a lot of lot of eyes will be watching for that 200 day moving average to be either uh breached to the upside or or repelled down from here and and uh so far the it's it's proving in this very short period of time to to be a formidable uh ceiling for the time being. >> Okay. So again, just to sort of recap, the mo the preponderance of the indicators that you guys monitor are not turning more bullish yet at this point. And um you want to guide like a pilot flying at night, you want to guide by your instrumentation. Um I think one thing that makes this a little bit more of a challenging environment is there is a factor that can drive markets that you have no control over, which is essentially what America decides to do in this war, right? um you know, we could either step up the attacks on Iran and and make everybody fear that it's getting a lot worse and going to last for a lot longer or we could declare it over tomorrow. And that's just something that you really have to react to, right? >> Yeah. And one one other thing I would always want to remind folks, you got to bring this back to your own situation. Look, we have a tactical take on markets, but it's not a black and white and and nor are we uh arrogant enough to think that we can uh solve for optimal to the decimal place. Uh we have a handful of our clients that have established very sound financial footings that their biggest concern is is um not missing out on upside but on you know further downside. >> Capital preservation is a big part. >> Of course our job is to make sure yeah our job is to make sure that we're it's not emotions but reality of situation that are taking flight. uh several of our clients uh we we absolutely have have uh you know uh agreed with their inclination to kind of tilt even more conservative and we can do so all within the kind of the framework of our tactical model just in different dosages if you will. So, all point to say that there's no you're you're not going to hear like anybody that hears from their financial advisor that they feel like they're being shamed for even want to think about selling or or changing their allocation. you should really be looking elsewhere because that is not only a a factually improper position for any financial take given the weight of history, but it's darn right arrogant um frankly that our industry shames people if they think they want to change the mix and you know um they're they're made made to feel like hey you got to be with the program or you're out kind of thing you know it's just um folks don't don't need to stand for that. >> Okay. All right. Um All right, Mike, we only have a couple minutes left. Um so what what what can you tell us about the precious metals uh in in just a compressed period of time here? >> I'll try to be brief. I I would say this, you know, the the type of pullback that we've seen is about as much as u get to the right symbol here. The pullback we've seen in silver, gold, and the miners is is about as much as one can take. I think uh mentally if you're a bull, I mean as or I should at least say as much as many can take, you know. So, if we go to GDX here, um, a lot of people called out what looked like a triple top. And here's the problem. Here's the part that's hard about this trade in the miners is that there's a lot of s uh signs of exuberance and bearish confirmation. So, the the market got way ahead of itself and there's a lot of people that have done really well in the in the miners and in the metals last year. In fact, there's roughly a double last year. I will say this though, a big bull market doesn't usually kick off, have a year, a fantastic year, and then be over. Particularly in metals, normally it's like a a eight or 10 year affair. Let's call it a 10-year affair. So, it's probably early just based on history. But the technicals in this case have really test tested people's resolve. So, take a look at GDX. Here's a double top and a failure. The 50-day moving average right here, the red line, took out that. That's the first sign that people say, "Uh oh, I better I better watch this." And then there's this trend line. And be careful about trend lines. That's this this one right here that I just highlighted. You can move these all over the place really to make them you can almost try to make them say different things. But doing my best to be objective. Here's what the trend line looks like to me. And it took it off right back here at um 318 on March 18th. And so here's a bearish confirmation. We went to the 200 day moving average. A lot of people probably sold on this breakdown and we went through 10 days of consolidation and we didn't know what was going to happen. Maybe it would go further below the 200 day moving average. But look, all of a sudden with the last couple days, we've retaken the trend line. We've retaken the 50-day. And so those people that held through this suffered a 31% decline. It's hard. So all I can say is uh you're going to have to have a a theory and some faith sometimes. You can't just be a pure technical trader. Yes, you can as long as you're lightning fast, and you better be lightning fast if your positions are huge. But for those that have reasonable positions, this was a time of a test that might have been difficult psychologically, maybe not too difficult if you weren't too overexposed. And now, thankfully, we've started to heal the condition. So, here we are. >> Mike, you might want to add that we had some put on put options on that holding that that took took a bit of that sting out. We did we had uh we had put options right here at 90. So on half of our position we had put options at 90 on that breakdown through there. This is the option expiration the dotted line. We let half of the position go. We actually replaced it with bullion in gold because it had better relative strength at that time. But the truth is that that breakdown uh was um we had puts in place on some of it that actually gave some added value or alpha uh basically. So, but the miners are back up here. So, frankly, it looks good. We'll see what happens next. The market is at a critical juncture like John said and it seems like everything is trading together. Gold, silver, minor stocks, everything is all up or all down. We get good news, it all goes up and vice versa. Let's take a quick look at at silver and gold here. SLV is silver. It has this what I see as a big triangle. And then we had this breakdown here at uh 70 on um on SLV, which is roughly 80, maybe 78 to 80 on spot. Basically came down and tested the bottom part of that triangle. And look what's happening. We're coming back slowly. We'll see if we got a nice big pop back up here to like 80 on SLV. And that would be I guess close to 90 spot. We get back into this zone then I think we can say all of this was a fake out. So I can tell you this just talking with clients and just being in touch with my own emotions, our own emotions. This was a big drop in silver. This one was pretty hard to take if you were overextended in gold. Something similar here. Here's GLD. Look at this breakdown. Anyone in the world that's following technicals will say that that was a breakdown there. you know, a gap followed by two weeks of consolidation. It looked like it was going to continue, but right now, look at this. This might get above the 50-day. And frankly, if GLD gets up to 460 or so, which is not that far, this whole thing is going to look like a cluster, like an island reversal cluster that basically shook people out. So, that's what's been hard about this trade. Uh, I can't tell you with with absolute certainty that the technicals say it's bullish, but I can say it was difficult back here and I can say that things are a heck of a lot better here. And if we go just a little higher, I think the run will be on and some short covering will be happening. So, the big bull markets are not normally over in one year. Take a look at a monthly chart maybe just over the last uh 15 years. 2011 high. This big level back at 2,000 on gold we've been talking about for years. 2,000 became 4,000 became 5,500. And on a monthly chart, we had the first monthly uh down month uh which ended yesterday. That's not really a big deal in the grand scheme of things. So we look how much we've been whipping around. My opinion is that we'll go higher that we're not just going to double and end. Silver has had the the biggest triple top I think I've ever studied. Going back to 1980, it was 50 in 1980, 50 in 2011, and 50 this year. It doubled or actually even tripled or more last year. I believe we're going to whip around on this level and then ultimately take that out. Maybe even go, who knows, double from these levels in the next year to maybe 150 or something like that. That's what I think will happen just because of all these things we've been talking about and because they're not usually just going to be a one and done one year and it's over. I don't think this is the 2011 high situation. So, I guess we'll see. >> All right. Well, we'll be tracking it here every week with you guys. And I I just want to note, Mike, um yes, it's been painful for those of who have held gold over the past two and a half months. Um, but if you look at gold or silver prices or mining prices today where they are versus where they were a year ago, had I told you a year ago where they were going to be today, you would you would be throwing a ticker tape parade for me. So, got to keep it all in perspective here. U, but it's nice to see that the momentum seems like it may be turning back to the upside here. And again, we'll have you track this for us week in and week out. I also appreciate both you gentlemen um spending the time to talk through how you have used protective puts um in your portfolio. Um, as you said earlier, John, uh, you know, capital preservation is something that's important to a lot of your clients. Um, I know from the people that we refer over to you because they fill out the form, the majority of them says, "Look, capital preservation is my number one priority here." And I very much appreciate you guys um, you know, respecting that and running your portfolio um, with that goal in mind, but also explaining to people in these videos exactly how you do it, how the mechanics of it break down. Um, all right. Well, look, um, folks, if you would, uh, well, if you'd like to see Duneberg come back on as soon as his publishing schedule allows him writing the book, uh, let him know that by hitting the like button and then clicking on the subscribe button below, as well as that little bell icon right next to it. And if you would like to get some help from a professional financial adviser in putting into some sort of practical action the ideas that he shared here, um, highly recommend you get that from a good professional financial adviser. If you'd like to talk to one of the ones that thoughtful money endorses, perhaps even Mike and John themselves, just fill out the very short form at thoughtfulmoney.com. Only takes a couple of seconds to fill out. These consultations you'll have afterwards are totally free. There's no commitments involved. It's just a service these firms offer to be as helpful to as many investors as possible. Uh John and Mike, again, can't thank you enough. I wanted to spend a little bit more time this week. We just don't have it. um talking with you guys about some of the the interactions that I've had with folks that have talked with you in your firm recently. Um just the the the very um appreciative feedback I get uh is wonderful to see and it's um you know it helps me sleep well at night. Um it makes me feel like we're doing you know a service of good out here in the world for folks. But I just want to let you guys know how much I appreciate your partnership on that and treating these people so well. Um I do think it's important thing to do anytime and all the time but certainly in kind of highly emotional times like right now in the markets with the war and all the uncertainty and everything uh just to know that people who are working with you or at least the ones that are reaching out to me are saying they feel very good about that and it's letting them sleep well at night uh is wonderful to hear. So thank you gentlemen. >> Well thank you Adam. It's a a privilege to be able to serve our clients and we talk to a lot of folks that don't become clients and that's perfectly okay with us. We we value those discussions as well and we just want to impart some value. >> And thank you, Adam. We appreciate the opportunity each and every time that we're here. Happy to happy to have happy to be here. >> All right. Well, gentlemen, thanks very much. Look forward to seeing you next week. Everybody else, thanks so much for watching.
Oil To Collapse To $30/Barrel After Iran War Ends? | Doomberg
Summary
Transcript
When this war is over, price of oil is going to collapse. Um, the onslaught of incremental supply will hit markets just as demand destruction sets in. A return of the Middle East and the increase in production that always comes. You know, as we've said before on your show, all shortages lead to gluts. The long-term real price of all commodities is lower. And in 2 years, 3 years, four years, the price of oil in today's dollars will be $25, $30 a barrel. Welcome to Thoughtful Money. I'm its founder and your host, Adam Teagert. The war against Iran is creating a global oil shock both in price and supply. How serious and longasting is this likely to be? And what will the knock-on effects be for the future of oil and gas flows, for other conventional fuels like coal, and for the future of alternative sources like nuclear energy? To discuss in depth, we're fortunate to sit down with the green chicken himself, the energy expert, Doomberg. Dune, wonderful to see you again. Thanks so much for joining us today. >> Adam, great to be with you, my friend. Great to see you again. >> Thank you. And I I very much appreciate that. um given everything that you have going on in your life, I know you're about to enter kind of a blackout period for podcasts uh soon given some commitments which maybe you can share with the audience here, but very much appreciate that you are basically letting Fal Money be one of the last ones you speak with before that happens. >> Yeah, we're taking a small break from doing podcast hopefully. We're going to try um we've committed to uh to writing a book, you know, a Doomberg book, which is a big deal, a lot of work and um so taking a bit of a break. Of course, this was planned before the war in Iran broke out. Nothing like a hot war in the Middle East to scuttle your bookw writing sbatical plans, but we're going to try to take a pause at least. Um, but always happy to chat with you. And, you know, we we'd had this scheduled and so, um, h happy to chat with you today. Lord knows there's so much to chat about. >> Uh, well, there really is. Um, but before we dive into it, again, just congratulations uh on uh on getting uh invited to to write one and um I'm sure it's going to be a smashing success and when you reemerge, love to have you back on to tell this audience all about it. >> Greatly appreciate that. Thanks and certainly will. >> Okay. All right. Now, let's roll up our sleeves here. Um so much to talk about. I guess let's just start with this. How big of a factor is the Iran war on oil and gas markets? you know, is it going to be transitory as the administration is trying to say? Well, like, hey, look, we had to do this. It was a four to six week operation, and I think Trump said after it's done, oil's going to sink like a stone. Um, or is this more of a long-term game changer? >> I mean, let's take a step back. If you and I were handed the fact set of the past 40 days, you know, um hot war in the Middle East, straight of Hermoose closed for a month, tankers being blown up, Ukraine upping its attacks on Russian export facilities and oil tankers, um going back to Venezuela, the embargo on Cuba, which looks like Russia just broke. If you given us this fact set and um and said, "Hey, the overunder on the price of oil is 150." I think we would have both bet the mortgage on the over. Yeah. >> On the over. Yeah. >> Um so I think we have to start with that which is I have been personally surprised. Look, you know me, I'm no big peep oil proponent. In fact, quite the opposite. But um this is not an issue of geology. Of course, it is an issue of geography. Um, I would have been shocked to learn that oil is struggling to stay at or above $100 a barrel given this fact that especially that these are nominal prices. You know, the >> the the highs that we saw in the aftermath of the war between Russia and Ukraine has exceeded this >> even in nominal terms, let alone $147 a barrel back in 2008. So, one must take a pause and say, "Wow, what has changed that has allowed things to stay under control?" Now, of course, the um the bullish oil investors would say, "The government's manipulating the price of blah blah blah." And of course, they are. They're dumping hundreds of millions of barrels of oil onto the market with the expressed intent of keeping a lid on the price. And if you are long oil, you have to know that the G7 is your counterparty. um they are on the other side of your trade and they don't want you making money in a war in the same way that you know the Fed doesn't want you making money shorting banks during a financial crisis that you just have to recognize that you're you're you are fighting against the current of every western nation that is interested in seeing the price of oil state under control um and they've been largely successful. Look, if you asked for for two people to be in the seat that they're in right now, Scott Besson and Chris Wright at Treasury and Energy respectively would be two pretty good picks. I mean, if there's somebody who knows the oil business, it's a guy who's founded two oil uh and gas unicorns, Chris Wright and Scott Besson, of course, seasoned hedge fund manager, knows the intricacies of the markets well. So, that's the short term. Um, much depends on how long the war goes, but let's let's talk about what this means for the long term. Um we just put out a doom zoom for a prochure on Saturday called after Hermuz um punctuated equilibrium in the energy markets. And we think that that model from biology of a stable species floating along for years and years and years suddenly something consequential happens and it splits in two. And we think that's what's going to happen to the energy markets in the medium to long term. which is to say um the petro dollar versus petroan fight is going on right before us and you know much of US foreign policy going abroad in search of oil and fighting wars wherever you find barrels that was pre pre-shale and the US is now energy self-sufficient it doesn't need the Middle East you know who does need the Middle East China and who's backing Iran right now China and Russia and so you could see the splitting of the world in two >> where the Gulf states after what's happened to the US in this war which we can talk about turn to China and or Iran via China um because ultimately I I think the US um has been surprised by the by the way in which this war has evolved. So that is the sort of the grand vision in our view the thermodynamics. If you just as we did in this presentation take the statistical review of world energy's free spreadsheet and just look at how they are you know partition the regions North America, Central and South America, Europe, Africa, the CIS, you know the former Soviet Union and Asia Pacific. Um and you just look at from the year 2000 to the year 2024 oil production and oil consumption by region. In 2000, North America was short and everyone was competing for the Middle East. By 2024, the Western Hemisphere, North America, um, you know, is long oil. Canada and the US net exporters of oil, net exporters of refined products. Um, the two big needs are Europe uh, and China that that consume more than they produce. And um if you just draw a red line down the middle of the world and sort of lump Europe in with North America and the Western Hemisphere and you lump most of the Middle East in with China, then you're left with a couple of competitive regions, Africa, the Arctic, sort of the scene scenes for the next great game. Um and so that that's what we see as the grand vision. And last thing I would say is Trump is right when this war is over, price of oil is going to collapse. Um the onslaught of incremental supply will hit markets just as demand destruction sets in. Um we're going to see yes a period of time where countries who were caught short now tap up their reserves, create new reserves, fill the tanks, that will be bullish. Um, but when you're netting out all the flows, a return of the Middle East, um, and the increase in production that always comes, you know, as we've said before on your show, all shortages lead to gluts. Um, the long-term real price of all commodities is lower. And in two years, three years, four years, the price of oil in today's dollars will be$25, $30 a barrel. Um, >> wow. >> It's coming, Adam. It just is. It's hard to see that now. Look, all bets are off if every oil and gas producing piece of infrastructure in the Middle East is blown up in a fury because the war escalates and, you know, Iran pulls its dead man switch. Sure, it might take a little longer then for for that to to become reality. But if the war ends anytime soon and the infrastructure damage is capped at roughly where we are, the the the tsunami of supply that's going to come online, the engine switching that this is already driving, the technological innovation development in the hydrocarbon space that's coming. Um, look, what what caused what catalyzed shale was the $147 a barrel in 2008. anytime you see these super spikes in oil um you see these super spikes in technology um to extract to find extract bring to market and distribute um oil ever more efficiently. And by the way, last thing I'd say on this um because I know that's going to be like shocking to some people and you'll get some nasty comments. Um, boy, if you're if you're long oil and you're parentally bullish oil, and we all know who they are on Twitter, and every news is reshaped uh to make make it look bullish for oil. Boy, if the if the top is in, let's imagine tonight, you know, we're recording this before Trump addresses the nation tonight, so we probably should have led with that as a caveat because who knows what he's going to say. But, um, let's imagine the top is in. You know that futures Brent print of $120 a barrel a couple of weeks ago marked the top. That's as high as oil gets. The war ends, things stabilize. Yes, we stay around 80 or 90 for a long period of time. Under what scenario will you ever get $150 barrel of oil? Like if not this, then when, right? Like what are you waiting for that? Like what what set of facts would you need to get that super spike that we always hear about? um because you have a tsunami of natural gas, natural gas liquids. Um you have all of the other available technologies. Coal is making a big comeback like you mentioned. Um and so if not now, then when? And then why own it? Like at least if I own a stock, it could go up 10x. I don't know. You tell me. >> I think it's a really it's a really good question. And yeah, had we been brainstorming two months ago of what could cause that super spike in oil, I think we probably would have put near the top of the list, well, a massive war in the Middle East and the closure of the Straits of Hormuz, which is what we already have now. >> Yeah. Look, and one things, you know, we made a couple of commitments to ourselves when this war broke out. Um, two or three. First was that we would not um indulge in hyperbole just to get eyeballs. I mean, if there ever was a time where that might work, I suppose now would be it. We've tried to be cautious about what we've said. Second is we wouldn't we would try not to be super critical of of the commander-in-chief >> during a time of war. We're American citizens. We have >> friends with kids in the military. Um there's a fine line you have to walk. I think when you have a a large audience like both of us do. >> Um there's a time for you know retrospective analysis of what went right and what went wrong. um we have very strong views on um the wisdom of of how we got here and the mistakes that were made, but you don't have to um lead the charge necessarily when there's still troops in harm's way. And and I I wish more people felt that way. But um and then the third is we would respect markets. Um you know, when when we did our after action report of the European energy crisis um and how we did um full disclosure, we hung on to that crisis internally too long. the crisis was over before we recognized it as being over and that was because we thought the markets were wrong. markets are pretty good. Um, very valuable source of intelligence in an era of AIdriven psychop disinformation, misinformation um, online. And if the top really isn't, and I'm not saying it is, I mean, look, if there's escalation and we see the destruction of those facilities, well, then if we don't get $150 oil, I give up. Um, but if the top truly is in, like, we have to respect the markets. the markets if Trump declares peace tonight or some pathway out or exits NATO and um all the rumors that we're seeing on Twitter, the markets kind of got it right, you know, and so a healthy respect for the markets um a healthy respect for the commander-in-chief during a time of war and also um a healthy respect for and to our audience to not um try to make more of this than it is, try to understand what's actually going on, do our best to see through the truth and to write um perhaps with a bit more humility than we did last time in full disclosure. >> Okay. Well, intelligent informed sources like you that that chart that course are very much needed. So, let me ask you a couple of market related questions here. Um first off is is are we already seeing evidence of new production come online um elsewhere in the world as a result of of the bottlenecks there in the Gulf? >> It takes probably a little longer than that. Um, but of course, you know, if you look at the size of the bogey, it's 10%. It's huge bogey. But could you squeeze 1 2 3% everywhere all at once by trying a little harder, drilling a little more, being a bit more aggressive? Um, sure. Um there's also of course, you know, significant amount of inventory around the world that is being worked out and the and we're kind of trading future production for today. And what what do I mean by that? Just the mechanics of how the SPR release works. Um you give a million barrels to a refiner, they're not paying the US government cash for that. They're committing to return those million barrels plus I think 20% or 25% at some point in the future. And so Chris Wright has been saying, although a few people are listening, that um the net effect of this release will be an SPR that is more full when this is over than it would have been otherwise. And they don't need congressional approval to do this because there's really no money changing hands. Um, and so there's all kinds of ways in which the edges of this crisis are being sanded. Um, and it's funny because people are criticizing the government for doing that. I what did you expect them to do is my my question you know like so you know we're learning an enormous amount about all this but to your question about incremental production um just look look at Sinum Guyana Venezuela Argentina Brazil the natural gas prices in North America are telling you you know because they're down um >> that was my next question so go Let me just ask the question so folks understand we've seen the price of oil spike as a result of this. We have not seen that in in gas even though I understand like >> more of the tank like a greater percentage of the world's tankers for natural gas are stuck in the Gulf right now. So why is natural gas not responding here? >> Sure. Well again this is the time where where the following statement matters the absolute most. Um know what you're investing in. There is no such thing as the price of oil. There is the price of a certain grade of oil at a certain location at a specific time in the future. Right? So there's WTI for May, there's Brent for June. In the natural gas markets, it's even more important because you have the difficulties of transporting a gas. And I've been on your show pointing out to people that in the United States a major phase change has occurred, which is shale has brought in the co-production of oil, natural gas liquids, and natural gas from the same well, >> right? >> And so in a world where oil spikes to $100 a barrel and you're in the Perian, you're drilling as much as you can and you're giving away the gas. So gas trapped in the United States is dirt cheap. It's less than three bucks a million BT right now, which is $17 a barrel of oil. Um, this is exactly as would have predicted on, you know, given the thesis that I rolled out for your audience several times on this show. So, right now, um, natural gas LG between 60 and $20 a million BTU. Um, but natural gas in the US is sub3. It's free in the perine. It's negative in the perine. I mean I I could pull up the exact spot prices as we're talking but um you can't literally can't give it away. Same thing in Canada. So um today at the Waja >> which is why they have flared it for so >> of course. Yes. At the Waja hub in the Perian it's minus $4 a million BTU for natural gas today. And in Alberta um up there it's a buck a million BTU because we're just swimming in natural gas, right? And with oil at 100 you're going to drill for oil and give away the gas. Co-production changes everything. So, um, last point I'd say about LG, um, in the natural gas markets, LG is, let's just round up and say it's 20% of global natural gas. Now, it's probably more like 16 or 18, but um, and Qatar was 20% of that. So 2* 0.2 is 004. And there's an enormous amount of gas around the world. Now, if you are an LG importer like Korea, Japan, the European Union, um this is a bad deal for you. But we're seeing an awful lot of switching to coal because LG imports in coal literally do the same thing, which is being burned to produce electricity. So, Newcastle coal, as we're talking, is up to $137 a ton, which is still pretty cheap relative to the crisis of of of the Ukraine war. Uh but that's up a good um 20 25% from from pre-war. Um and then the last thing I would say is don't forget um you have China out there as well. It's just a huge giant pile of coal and it can toggle its gas demand as well. Um so that in our view natural gas being extraordinarily cheap in the US is not surprising and um LG prices being kept where they are is a bit surprising but there's a nuance there which is Asia is more expensive than Europe um so caros are being diverted to Asia because the European Union has decided to not aggressively refill its empty tanks yet betting on the war ending. Mhm. >> which could really blow up in their face if the war doesn't end. Um so we shall see. But you know um the European Union has proven nothing if not that it's willing to redline it once in a while. >> Right. Um although it has often been burned with those decisions. >> Um all right. So, uh, just real quick, um, so the great American shale basins, um, we've been seeing headlines, you know, through last year and into this year that, um, you know, active well counts were going down and and famously some players that had been in in those, uh, geographies for decades didn't have any active wells. Um, is activity starting back up now again because of this? >> I mean, we'll find out soon enough, won't we? I mean, ultimately the proof will be in the production pudding. I'm I'm I'm not a big believer in counting wells and and all of that stuff. I mean, it it it none of it corrects for technology. Um, and so I I just think we'll have to wait and see how much oil is produced. I mean, if there ever was going to be significant burst in production, you would think $100 a barrel would do it. One thing I would say though is um when you talk to people in the perian, they don't want $100 a barrel oil. That's actually not good for them in the long term. They realize that this is going to ultimately cause demand destruction and fuel switching. >> Yeah. >> You know, the sweet spot is 70 to 80 consistently and overshooting that by too much is not good for anybody. Yes, they'll make a ton of money um temporarily, but when you have natural gas for free, I mean, if there ever was a time to start switching your engines, right, you know, like we've talked about, right? >> Um that that arbitrage can't stay forever. Um and so we're right back up to the ratio of the price of oil to gas at Henry Hub is 35 again when it should be six. Um which means that there's huge advantage in >> a huge incentive to fuel switch. Yeah. >> Yeah. 100%. Yeah. And that that'll all come in time. Um like we say, but um you know when I'm I'm sitting here April 1st and WTI is 9885 with the Street of Hermoose closed since you know basically the beginning of March. It's truly incredible, >> right? And and the war still going on ra no specific >> no end in sight. Yeah. Um, okay. So, um, I do want to talk about fuel switching a little bit more, but real quick, I want to talk about source switching. So, um, you have a lot of the rest of the world that that does get their oil and gas from the Persian Gulf. We don't, um, as Americans, um, but a lot of the rest of the world does. And I have got to think, and you correct me if you think differently, but I've got to think that that they are saying, you know what, like even if this war ends at some point soon, I don't necessarily want to rush back and just buy as much as I did from there before because of of the risk premium, the heightened risk premium that this place just things might flare back up again. The Ren might, you know, decide to try to use it as a toll booth and a choke point and all that stuff. And so maybe I'm going to buy a little bit less from there and I'm going to buy more from other quote unquote maybe more dependable um providers or or or more stable providers and that that will be the next that would be the ne exporters that you mentioned earlier and I I know the administration has been saying that they're already seeing a surge in demand. Um, I know was it a week ago, a week and a half ago, the administration announced like 506 billion in in Indoacific trade deals that were just struck for for oil and gas from America. Um, and I remember reading as part of that that like if you're Japan, it takes you like 25 days to get your supply from the Gulf where let's say you're buying it from Alaska, it takes eight days and you don't have to worry about Alaska turning into a war zone. Yeah. Um, Russia, it's right next to Japan, too, don't forget. >> Um, >> yeah, they can. >> So, um, I think we'll see phases, Adam. I think, um, when the war is over, there will be a rush to buy every barrel that's available, regardless of where it comes from, to restock supplies. Look, it's not just the US that's emptying its reserves, right? So, you have the G7 countries. By the way, just as an aside, um because I know we're going to talk about renewables later, when was the last time the G7 held an emergency meeting because of a shortage of solar panels? But anyway, I digress. Um so, you'll see just like get every molecule bought that you can. Oh, by the way, there's a huge amount of oil on the other side of the street that needs to get sold. You know, oil we we put a post out, I think on like March 2nd, shortly after the war started. I was talking to our our mutual friend Jack Johnson over at Market Vibes and and um we came to three conclusions. One, um the oil business is is driven by credit, right? So there's an awful um you know, you sell forward your production and your your production is stuck behind the straight. Um you you're now facing margin calls, which is probably why gold dropped a little bit here this past month. Um two, there's no such thing as your banker, just a banker. Um, and three, in the long run, all collateral gets sold. And there's an enormous amount of collateral sitting be behind the straight that's probably been sold forward that bankers are going to want to be liquidating here when this is done. Um, and so you're going to have this wave of refill and storage expansion that's coming. I mean, Australia, we wrote about Australia this morning. They got caught completely naked. Frankly, it's scandal of epic proportions that Australia allowed itself to be in this position. They're going to spend money when this is done um to >> refilling their reserves. >> Well, creating reserves, >> okay, >> and and re and then filling them um perhaps opening up some refinings again and and allowing for drilling. You know, Australia has this amazing shell resource that everyone likes to downplay. Um so you'll see that. But in the long run, it will equiliiberate between these two poles. We think you know the bifurcation of the energy markets and logistics matters. You know, Adam, 28 days versus 8 days, you don't need much in the way of intramarket sales to get a globally efficient price. And so, if it makes sense to get your oil from Singapore via the Middle East, if you're Australia, you probably will in the long run going forward after you've topped off your storage tanks and begun to explore some more and maybe even refine some of your own crude. Ironically, you know, um, Australia, just not to pick on them, but they they only produce a third of the crude oil they need, and they're still a net crude. Well, not a net, they still export some of that crude because they can't refine it all at home because their refining capacity is even less than their their crude production capacity, right? >> Um, so yeah, I still think like logistics matters a lot. Um, and the US is not a huge net exporter. Um, because it still consumes an enormous amount of >> but it could but it could dial it up, right? >> Well, through through Venezuela. So, I saw a post on Twitter and who knows what's real, but um a flag in some Trump Library video has 56 stars on it which they're saying is like Cuba, Venezuela, Alberta, and Greenland. You know whatever pieces of the puzzle that Trump picks up along the way. So, what does it even mean to say America? you know, I'm just trying to make sure this podcast ages well, Adam. >> Okay. I wonder if Car Island is going to become one of >> I'll take the under. >> Yeah. Um but but sorry, just to get to the spirit of my question. Um because that's great nuance, but do do you expect this the implica long lasting implications of the world at all to shift where the world is is sourcing its oil and gas from or not really? >> Uh not really. Um I mean I do I think crisis creates a lot of commitments that go unfulfilled. You know never again will we be caught you know um with uh with uh bad mortgages permeating the banking system. Meanwhile we have private credit everywhere, right? I mean you know >> Yeah. Yeah. Okay. Totally get the point. Um all right. So let's go to fuel switching then. Um so I mean that's been a theme of yours in general with energy. Um but uh as you've already nodded to or given nod to a couple times here, uh it sounds like the war is is is already um accelerating that. Um probably in a couple different ways, but but two big ways is one, yeah, let's natural gas is so damn cheap. We just got to start really taking advantage of that differential. Uh but also coal, right? >> Yeah. Um h how how material do you think the the long-lasting effects of this war will be on having driven or provided an accelerant a catalyst uh for nations to start really investing in some of these switches? >> Let me give you an obvious one low hanging fruit that not not many people are talking about. The world still burns 4 and a half million barrels a day of oil to make electricity. >> Mhm. >> Like half of that's in the Middle East, but you know Italy last we checked still burns a fair bit of oil to produce electricity. We think um burning oil to produce electricity outside the Middle East will will not be long for this planet. That's one of the immediate changes. >> Just because you think it's sort of dumb energetically, correct? >> And just look at the price differentials. Yeah. I mean, you know, if >> again um let's just say it's 2 million barrels a day. That demand is gone now. Um bunker fuel, NAFTA instead of ethylene. There's all kinds of um market inputs that used to come from heavy barrels of oil that are that were being replaced by lights, natural gas liquids, other products of the shell boom. You know, we wrote we did a doom zoom called trend lightly um where we talked about how the the arch the arc of of hydrocarbon consumption was towards lighter and lighter molecules and and this crisis is only going to accelerate that. Um and so um in the long run hydrocarbons are fungeable. It's just comes down to engine switching. So if you're an investor, what does that mean? Any technology that enables switching ideally in fact that enables dual fuel use so you can switch between them without having to change the engine, >> those are going to be valuable. Um alternative technologies to hydrocarbons altogether uh in some cases will be valuable as well. But we don't think the main driver of being caught without enough fossil fuels uh is going to be to move away from them altogether. It's going to be to store more of them going forward so you don't get caught again. Um but we can discuss that. But the the broad strokes of fuel switching um there's nothing like a shock to a system to recalibrate where that equilibrium is, which is why we went with that punctuated equilibrium mental model for our our doom zoom last week. Um, whenever you shake a system up and the snowflakes fall back down to the bottom of the globe, you know, they tend to they tend to reorganize and and this is an opportunity to reorganize. If you had political pressure, you know, that stopped you from creating a strategic petroleum reserve because everyone was telling you this is a stranded asset and we're not going to Well, now's the time to overcome that that political pressure and to build those tanks to fill them. Um, and so I think we're going to see that. But um did that investment that you were thinking about making to run your engine on natural gas um or at least to put in a a flexible engine where you could toggle between the two depending on price. And it doesn't take much at the margins for that to really have a big impact once the war is over. And a lot of what we're talking about today is once the war is over, you know, assuming there's no nukes, assuming the infrastructure isn't destroyed, assuming the desalination plants aren't taken offline, you know, a lot of lot of assumptions here in what we're talking about. >> Okay. Um All right. So, in terms of policy tailwinds, right, um you there's there's just economic and probably policy um momentum building now more than ever to to do this fuel switching you're talking about. Is this also placing policy tailwinds behind uh country's nuclear energy ambitions? >> Uh much depends on the fate of the various reactors in the Middle East right now to be totally honest with you. Um we're seeing very dangerous escalations on both sides. You know, missiles landing dangerously close to nuclear reactors. The United Arab Emirates um just brought on, I think, four new reactors. you know, if those get damaged, if there's a major leak, if you have a a Fukushima missile, it could set back nuclear, again, you have to, as much as we're pro- nuclear, and we think, you know, um it is a superior fuel, um one has to be cognizant of the fact that a true radiation leak, for example, a major radiation leak that contaminates the salt water in the Middle East and makes those desalination plants, you know, not very useful. um that's going to set back nuclear power just as no oil spill can can >> can you know occur that would would match the frenzy of overreaction to a nuclear accident like we saw with Fukushima. Um >> okay >> um >> let's let's hope and assume that that doesn't happen. Um I I've got to think that this is making countries which of late have already been saying, "Hey, you know what? We've ignored nuclear for too long and it's got a ton of promise." It's just got to it's got to have a a greater pull than ever now, I think, to say, you know what, let's just become less dependent to these foreign sources of fuels, right? And the best way to do that is to have domestic nuclear reaction. >> I agree. Although >> the natural gas markets have not been as disrupted as the oil markets. So um the main competitor to nuclear is natural gas because you know of electricity generation even though some oil is still used to produce electricity. Natural gas's primary use aside from home heating um and fertilizer is to produce electricity. Um and so it's a bit less of an urgency there because fewer countries um are are beholden to LG and the ones that are already have pretty good nuclear, Japan and Korea for example. Um Japan turning its nuclear back on of course um and so um it's bit of a smaller country set that is impacted by LNG. Um although we are seeing at least in Europe the mouthing of the words that shutting down nuclear was a strategic mistake >> was a bad idea. Yeah. >> Yeah. So that's a you know the as we like to say 11 steps to go. Yeah. >> Okay. So so more than anything this is putting a wind uh tailwind to the back of gasification where people are just saying you know what this stuff's so damn cheap and it's not getting as compromised as oil. Let's just figure out how to use more of it more smartly. that and home drilling, you know, um, okay, while we probably possession does matter, um, you know, um, we we do think, for example, if things got really bad, um, the US would turtle, US and Canada would turtle up and they would they would manage exports to keep local prices cheap. Um, and we saw China limit the exports of refined products within 72 hours of the war breaking out. We saw Russia, as of April 1st, no longer exporting gasoline. Countries with surpluses take care of their domestic markets. And if you don't have a surplus, you're on the hook to compete with everybody else, which means you're either, >> and by the way, that was raised here in the States briefly, right? The administration had to come out and say, "We're not going to do that." Right? >> Well, then nothing is true until it's been officially denied now, is it? Um, right. >> And so, I mean, it would happen at the look, if if oil did go to 200, you think the US consumers are going to pay that equivalent price at the pump? Of course they're not. We have an election this year. >> It's not going to happen, right? and and you you draw a circle as we we we published a piece called Project Turtle. Um if you draw a circle around Canada in the US, you're self-sufficient in oil, natural gas, refined products, phosphate, potassium, um you know, ammonia, helium, sulfur, food stuffs, wheat, corn, soybean. But okay, it's Fortress North America. It's coming. I mean, of course, it's coming. And u >> right, do you think it'll be Fortress North America? or do you think it'll be Fortress America's? >> Uh, back to the number of stars in Trump's flag. Yeah, I mean, I think Venezuela would be part of that umbrella. We'll see about Mexico. The whole affair with Cuba, which we haven't talked about, has been fascinating to observe. Um, yeah. Well, you'd rather be in the Western Hemisphere for sure because even the South and Central uh Americas, you know, combined as a region are net oil uh exporters as well. They produce more than they consume. And there's an enormous amount of oil down there as we've chronicled waiting to be developed. Probably an extra 10 million barrels a day. When you go from, you know, the tip of Argentina to to the uh to the edges of Mexico, um like even Venezuela alone used to produce four, produces one. That has nothing to do with geology. That's all politics, right? Bad politics. >> And let me let's let's dive into that super briefly. So, in many of our past discussions, you've always said it is vastly easier to remove a political constraint than a than a geological one. Um, we may have just removed a big political constraint with Venezuela. Um, h how how much of a long-term gamecher do you expect that to be? And of course, we the future's unknowable. We have no idea if if you know things might go south there between our relations and the government and whatever, but assuming everything goes well. >> Yeah. I say it's going to come online faster than skeptics think, but it still will take a long time. Um I think the first half a million barrels a day will be easier than most people realize to bring online. You know, um there's going to be a cost curve of incremental production and the cheapest stuff will come along come online first. But the impediments to Vakama, you know, we note with interest that poor Buford Capital lost their appeal and um the one of the main impediments to developing Argentina's massive shale resource has now been removed. Um probably a bit of a a nuance for your audience, but YPF, the National Oil Company, um of Argentina won an appeal surprisingly um that, you know, basically freeze things up in Argentina. We had some thoughts on that, but that's probably for a different podcast. Um, you have Mexico is a mess easily cleaned up. Is it is it easier to clean up Mexico or find a bunch of oil that you don't know where it is yet? Right. I mean, Venezuela has proven its resource base can produce 4 million barrels a day. Okay. So, you snatched Madura and um play a ball with the existing government. You know, full credit to the Trump administration that is not dissolving to a or devolving to a Libya yet as far as regime change operation goes. That one's been pretty smooth. Um, but there's 3 million barrels right there. You could take Vakart and Argentina from, you know, 6 700,000 barrels a day or whatever it is today to 2 million, 3 million barrels a day. You could do Guyana. You could do Surinum. You could make make good with Brazil. You know, take the bee out of bricks and bring them into the fold. Um, >> there's oil off Cuba. Everywhere you look, you find it. Just a matter of being able to look for it. And last thing I would say, if there was ever a time where California gets its act together, you would think it would be now. Um, California has as much oil and gas as Texas, >> right? >> And and in a true crisis, um, as we say, the politics gets wiped away. It's a lot easier to change politics. And um probably no coincidence that it looks like perhaps two Republican candidates will face each other in the runoff uh coming up here because of the >> which is amazing. That's >> your your former home state has uh >> colored itself into a corner over there. >> Um let me ask you this though about about oil. So looking through your lens, Duneberg, where the world is is becoming more and more um able to shift to um lighter and lighter forms of hydrocarbon. Um and then then you know nuclear really does come online and whatnot and there's just alternative energies that are taking over the load. Um, it sounds like, and I know you've you've you've long said you're you're not a peak cheap oil guy. Um, you actually think that oil is is going to remain relatively rangebound kind of forever, at least for our lifetimes. Um, I want to say you've said something like, you know, average price around 50 bucks or something like that with obviously some variations. Um it it does seem if if it if that all that is true, it does seem that oil may switch from becoming the you know primary fuel source to being kind of the backup and that in and of itself will will keep a you know really keep the price in check because it's like there's not a lot of demand for it at some point in the future you know unless we get into real short-term price squeezes or sorry supply squeezes. I mean, there's always going to be a huge demand for oil, but you know, when I told you like we were going to respect the markets and and when the markets didn't respond the way we thought, um, you know, we we did a we did a piece on like, okay, what do what's going on here? Like, what are the markets telling us, right? So, at the thrust of that piece, we said, okay, everyone says that this is the worst oil shock since the Arab oil embargo. And I agree, probably is. What's different between then and now? Well, one of the things that's different is um as a percent of global energy supply um oil used to be around 50% in the 1970s and now it's just above 30%. Um will it be less going forward because of this? Absolutely. Has to be. Um and so >> while at the same time we have potentially more supply coming online, a whole list of countries, right? >> This is this is again why the long-term real price of oil has to be lower. Um and and it will be lower and and again that it's hard to say that now when everyone is worried about $200 oil. Look, >> oil oil can print at 200. It can't stay there. >> There's not enough demand for oil at 200 to to to take up 90 million 90 million barrels a day. like there is a price at which poor people can't afford to buy oil, >> right? >> And that it's it's less than $200 a barrel. We're already starting to see um demand destruction, switching all the things that that we're talking about. Um and so that's one of the big things that has changed. Um the other big thing that has changed is um there's an awful lot more oil inventory. We have a much freer market. Um the rationing of supply is being done by price and not by u dictate, you know. um by central planners mostly um and so countries that can't afford it, sad to say, aren't going to get it. So yeah, um Australia is going to outbid the Philippines for that cargo of of diesel. They're just going to get it. Um and that's it's unfortunate if you live in the Philippines. Um you know, um too bad, so sad. Better better luck next time, as we would say as kids, you know. Um it's unfortunate. It's the raw sort of um cynical power of the market. >> Um and the poor people suffer most and and that's what's going to happen here. >> All right. Um I uh tangent for a different time, but I just want to earmark it. Um Dubberg, when you come back for up for air, one of the conversations I'd love to have with you is doing a deep dive on the situation in California. um not not about necessarily the potential of what's there, but about what's going on right now with the fact that so many oil companies are leaving the state um and the policy decisions the state has made to to create that inhospitable environment in the you know this current situation as understand it is you know big big oil companies are leaving like Chevron just left after 140 years you've had refineries that are leaving or at least companies shutting down their refineries And basically California um is having to buy its oil um from far-flung and not necessarily very friendly countries right now. Um and of course that's all translating into a much higher price per gallon than than um everywhere else in the country. That's likely to go higher now from some of these refinery closures. So different deep dive for a different day, but would you be open to doing that? >> Sure. Let me give you one little let's let's give a teaser because um there's a world where what's happened in California ultimately spreads across the US and here's how um Trump spent an awful lot of political capital for this war. He splintered his base and we we like to point out to our Trump supporting friends that um he he only beat Camala Harris by a point and a half uh in the general election. And Gavin Newsome of all people is way better than a point and a half better candidate than Camala Harris. And so despite his mismanagement of the state's oil and gas infrastructure and its energy policy, he a has the perfect thing to blame it on right now, the war in Iran, and B is the political candidate most likely to benefit from a collapse of the Trump coalition. And so the very policies that put California into the hurt locker um the person who was behind much of that is is is odds on favor to become the next president in 2028. And don't wouldn't underestimate his chances. Look, you might disagree with his policies violently. The man is a gifted retail politician. He's a smooth operator, looks good on camera, um and is is a very formidable candidate. And so it's all the more important to understand what went wrong in California because it might actually get a replay here at the national level. >> All right. Very important points and I will just add my editorial. I aspire to be a media source like you Duneberg. Um very nonpartisan, very much just trying to chart uh what is versus what I think should be. But as a recent California resident, I feel quite confident in saying the vast majority of Americans I don't think would want to live under a California energy policy. Well, they're going to say brace for impact. >> Yeah. And you know what's what's what's frustrating is is even though I I live in a different state, you know, I jumped the border into Nevada. Um we still source our gasoline from California. So what happens with California gasoline prices happens here as well. >> You know, preparedness starts at home, my friend. >> That's very true. It is very true. Um gosh, maybe I should set up uh you know, my own oil ring in the in the back so I can start collecting the flared ga the gas that would otherwise get flared and then power my house on that. Um okay, so uh we only have a couple minutes left, Duneberg. So let's get to where the rubber meets the road. um you know in in the potential um uh I'm forgetting the word but you know the the the statistical chart where you've got the different nodes where things could go. Um fingers crossed you know one of the potential nodes is that okay this this war does come to an end in the next couple weeks. If it does you agree with the president that oil will drop like a stone. um whether it's from that potential trend or any others that are on your radar, is there any opportunity you see here for investors, you know, in in the relatively near-term, yeah, they can they can play some of our longer trends that you expect to last for the next years or decades, they can take that into account kind of with a long arc, but in the next, you know, quarter or two, >> sure, >> are there opportunities emerging from what's going on in the war? >> Yeah, look, anything that scales with volume production outside of the straight is going to be in huge demand. Um, and then there's going to be the mother of all midstream opportunities in the Middle East when this war is done because the street of Hermuz was a trick that could only be played once. Um, you're going to see choke points being diversified, pipelines through Aman, pipelines through Israel, railroad. We we'd want to be in the rail business in Iran. That's probably not an investable thesis right now, but um, you know, oil doesn't just move by sea. Um, it could move over land, too. Um, so pipelines, railroads, um, all of that stuff. Um, when Saddam Hussein lit the Kuwaiti oil fields on fire, all of the companies that went in and fixed stuff after that did very well. Um, the only caution that we would say is is try not to be leveraged to price as much as volume. Um, because prices are so much more volatile and likely to fall. Whereas the human endeavor, this constant unrelenting struggle against entropy requires ever more energy. And the easiest bet in the world is that global energy consumption will continue to go up and to the right. So if you can hitch your dollars to that wagon, wow, this company enables fuel switching. This company enables more oil production outside of the straight. This company enables those on the other side of the street to diversify their exits. Um, all of those are going to be winning themes in the short, medium, and frankly long term. >> All right. Um, fantastic. And, uh, I know you don't track individual stocks, but folks, I highly recommend you look into these sectors yourself. And if you have questions, you can, you know, ask them of a of a professional financial adviser who actually actively invests in these sectors and can give you specific companies to look at. Um, all right. Well, look, um, thank you so much. Um, I guess last question for you. Um, is is there anything that's burning really brightly on your radar that I haven't thought to ask you yet? And even if we don't have time to talk about it in depth now, maybe we can pick it that thread up later. >> Uh, boy, I we've talked about so much. What could we have possibly missed? I would say we are um skipping a few steps ahead and pondering what is going to be the next shale. You know, we mentioned this earlier, $147 a barrel of oil back in08, boom, shale revolution happens. What's that going to be this time around? Um natural hydrogen, ultra deep drilling, you know, abiotic oil in China. Um China unlocks its shale. Australia unlocks its shell. Um there's going to be that wholly unexpected boomlet of technological development um somewhere in the world and trying to skate where that puck is going right now is taking up an awful lot of our mind share and not something that that we really tal talked about today. All right. That would be super interesting to talk about. So, sort of like what's the next miracle, right? Like we had the Shirro miracle. >> Yeah, that there's always one. >> Okay. Um, fascinating. All right. Well, like write that book because I want you back on to talk about all this stuff as soon as you can. >> Sure. We We'll do a few podcasts over the summer, but I just needed to Yeah, let's talk about bad timing. >> Yeah. No, no, I get it. And I've written a book before. Sure. Sure. not as as uh august as yours is going to be. But it takes you that that first half is really getting everything synthesized and you know putting together your structure for >> and look you don't just want to write any book you want to write a great book and we want to you know to the publisher and editor that fought for us to get this book done and our agent and the whole Doomberg team you know you want to in our in our audience like you you want to respect the the the act of writing a book. It's a great honor to do it and we don't want to just write a book we want to write a great book. So it takes time, takes effort, takes focus. >> Well, you know, you you already have proven beyond a doubt that you your team there uh takes creating excellent written work uh as their north star and anybody who subscribes to your Substack knows that. So that gets me to my last question, which is for folks who would like to follow you and your work, where should they go? >> Yeah. Uh everything's at duneberg.com. Um three main products there. our newsletter um which is the predominant one. Um we have our monthly pro um seminar or you know um um videos that we put out for our premium tier dune pro and then also we have our new substack classics read aloud which you know um if you want to get an escape from all of this noise and to indulge in some fantastic literature we have a great product that we're building there which you can also find at duneberg.com. So um Adam um great to chat with you um always enjoy my appearance. Congrats on all of your success as well. It's been fun to watch. You know, I knew you when >> Well, thank you, buddy. And I can say right back at you. I remember you calling very much in your very early stages, and it was so clear to me that you guys were bringing um a formality and a discipline to this space that I hadn't seen from anywhere else. And uh which has made your your meteoric success no surprise. >> Appreciate it. Great to talk to you, my friend. >> You too. All right. See you soon, Deber. All right. All right. Well, now is the time of the program where we bring in the lead partners from New Harbor Financial, one of the endorsed financial advisory firms by Thoughtful Money. I'm joined as usual by lead partners John Lodra and Mike Preston. Gentlemen, thanks so much for joining me. Love to get your reactions to that fantastic discussion there with Duneberg. Uh John, why don't we start with you? >> Hello, Adam. Great to be with you and always uh always nice to hear Duneberg's comments. I I have to chuckle a little bit. I sometimes find myself wondering what Mike and I would choose as our avatar if we were forced to do so. And I I just I'm I'm at a loss. We're just two middle old middle-aged uh guys with receding hairlines, but hopefully uh at least enough entertaining to capture your your viewers attention. But >> all right. Well, that's your to-do for next time, John, is to figure out your your virtual spirit animal. >> There you go. >> When AI replaces all of us. Yeah. >> Exactly. Exactly. But I, you know, so, uh, look, Mike and I, we here at New Harbor, we're not energy experts. Um, in fact, I spent the first decade of my career in the energy and utility space. So, I kind of knew about energy markets, but I can I I know this much to say. They're incredibly complex. They're incredibly hard to to pin down. Um, you know, count us uh equally surprised that oil prices I mean, they shot up pretty pretty dramatically. Let's not let's not um underplay how much oil has shot up in in the last month with the the the war in Iran, but you know, I guess we could have easily seen things given the gravity of the trade, you know, close closure of the trade of Hermus and and that kind of thing of prices going even higher. So, I guess we're you know, a bit puzzled too that that things have been as as subdued as they have. But geez, I I can remember back to my early career in the energy industry and I remembered at the time, you know, we were projecting natural gas prices at, you know, $2 to $3 a million BTU. And that doesn't sound crazy today, but let me share a chart with you just to kind of let me just use this to emphasize that um we learned a long time ago whether whether you're talking stock markets, commodity markets, or whatever, actually forecasting prices is is as tempting and as as uh as seductive as it might be to to try to do that to kind of figure out what's going on, it's incredibly hard and and it's incredibly humbling. And let me just share this as as a personal life story. Uh this is a chart of natural gas prices. Henry hub natural gas prices. This is the main pricing hub in the United States. So I I was in the energy industry the 1990s basically. I remember right around here we were projecting um in energy markets natural gas prices as far as the eye could see $2 a million per million BTU. And you can see what happened in the couple decades. We got up to close to 15. Um no one saw that coming uh from in the late 90s. it was like, you know, $2, $3 for as far as the eye can see. So, I'm not going to be surprised by any forecast, whether it's way higher or way lower than we're going to be surprised. And, you know, we prefer to use systems and and techniques that don't try to anticipate, but adapt, right? And, um, you know, just a couple further, you know, it's important, I think, to take a zoom back. Uh, over over millennia, energy has been important to to humankind in so many ways, but it's it's it's evolved, too. This is a chart of US electricity generation by fuel source. Now Duneberg talked about in the 1970s how you know the oil shock then maybe is the most similar to to today. Yet back then oil was 50% of of total energy consumption versus say 30% today. But look at look at the energy uh or the fuel mix by just for power generation back in the in the 60s and 70s. Um, you know, natural gas, which is the the blue, was a relatively small amount. It was it was actually thought of back then as like being too valuable, too scarce to burn through a power plant. It literally was thought of that way by by the energy planners. And yet, look, today, it's it's the the largest by far um source of electricity production. Renewables have have made great strides, but they're still a small piece. Look what happened to coal. Coal has dramatically declined. So, these things are going to change. Fuel substitution is nothing new. It takes a long time for it to play out and I have no doubt there's going to be a equally kind of shocking mix of change over the next 30 years, but it's probably going to be in ways that we can't imagine. Uh I think energy storage technologies could be a gamecher. I bought a battery system for my solar panels at my house 10 years ago. It was wicked expensive. They're coming cheaper today, but that is a key thing to unlock a lot of energy innovation. So uh again and then this is total consumption but and this goes back to the 1700s. I mean you can see coal was everything right and then um I mean wood was was everything then coal took it over then oil and then you can see how how things change here but you know still as a total and this was as of uh 2024 um you know oil is still about 38% the total global uh I'm sorry US energy total cons uh uh consumption. A lot of that's for transportation, not so much electric power generation anymore. >> But, uh, color us color us, you know, uh, you know, a little bit unwilling to make bold forecasts of where prices are going to be because it's they're going to change. Uh, and shorter term, they can go anywhere. Um, you know, up or down. Uh, one one last thing I want to do just because we're talking about we're really here to talk about markets and investing for everyday clients like everyday people like our clients. This is an interesting chart that um and I I use this chart to to point out a couple things. First of all, um you'll go and see all kinds of, you know, uh financial influencers and talking heads out there saying, "Hey, if we look at the history of of wars and what it has meant for markets, you know, on average, they're up, you know, 5%, 10%, whatever over some future period of time." And the key there is to watch out for the word average, okay? because averages can be really misleading and and it's meant it's it's used in a way to say, "Hey people, calm down. Don't freak out. Certainly don't sell any stocks or or don't worry about the markets because on average it's going to be higher six months from now." But look at this. This is a you know, this is something Goldman Sachs put together. Each one of these is is a different war energy related or any energy confluenced war episode. And you can see sometimes, and this is the 0 Z here at the time of the the outbreak of that that particular event, you can see sometimes markets are way higher six months later. Sometimes they're way lower. And this gray area is the basically the the statistical band plus or minus uh you know 90%. Um all to say is averages can be tremendously misleading and dem damaging. this Yan Kapor war as even six months it was it was still down 15% from the start but uh that was in the bottom the the bare market of the 1974 bare market didn't bottom until October of 2000 uh 74 so it was down I think another 15 50% almost from there so you know be careful the charts you see out there as as to kind of be playing on people's psychology to to brush things off is as is don't worry this time will bounce back like it always has so I'll pause there >> I think that is a great chart And yeah, to your point, you know, people are told on the average it doesn't really mean much. And I've had some folks on this channel say that that these kind of tend to be nothing burgers to the markets, but to your point, it's on average, right? It's like I've if I've got one hand in a boiling pot of water and one hand in a freezing pot of water, well, on average, it's room temperature, but my hands are experiencing very different uh situations. And so you really do need to say, okay, look, yeah, average it's it's no big change, but it's much more likely to be either fire or ice. And so which one am I going to prepare more for, fire or ice? >> Exactly. Exactly. So re really uh important time to tune out the headlines, not stick your head in the sand, but really uh look for the signal from the noise, if you will. >> Yeah. Yeah. Well, and as you said earlier, and I liked how honest you were, John, which is like that having worked in the energy sector for as long as you had, the thing you have the greatest confidence in, is that nobody really knows exactly what's going to happen. And so, rather than trying to focus all your attentions on predicting where the puck is going to be, it's saying, look, I'm going to I'm going to monitor the puck, and as the puck starts changing direction, then we'll change with it. Um Mike, first anything you want to add to uh to John's point and and and then to that whole thing about you know being flexible and reactive um for folks that that you know thought Duneberg was wicked smart as I think he is. Um and you know he gave a number of areas to look at for opportunity here in the relatively near term. Can you guys at New Harbor help people put together an investing plan if they want to, you know, research and potentially get exposure to those sectors? >> Hi, Adam. Yeah, absolutely. If people want to put into action some of the ideas that Doomberg talked about, we can absolutely help them do it. You know, and there's a couple points that I liked about about Doomberg's talk. The first one is that, you know, he admitted that he's relatively shocked, right? He said it's difficult it's difficult for oil to stay above $100 a barrel. You never would have thought that would be the case. You know, when this um Iran war broke out, the one thing that went straight up was oil. Here is um USO is an ETF that tracks oil right back around here. I forget the exact date that the war broke out, but oil broke out and never looked back. Everything else went down. Stocks, gold, silver, bonds, even everything straight down. If you bought silver or gold thinking, well, shoot, war broke out. Let's buy some precious metals. And look what they did over the same period of time, you know, they're down quite a bit. They're starting to rally now, but gold and silver are down. Everything's down except for oil. And he admitted that. So, we're still pushing up here. USO is at 125. Crude's I think he said uh 98.885 as as we speak here today on April 1st. So, and he talked further about the sweet spot oil being 7080, but he would have thought that we'd be a lot higher. And so, that's what investing is like. You come up with a thesis, you test it, you put a position in place, you try and see what the market does, and it often doesn't do what you think it's going to do. And so, if you want to talk with us about putting some of these ideas to work, but even more importantly, talk with us about how to know if you're wrong, what to do if you're wrong, how to handle the emotions that go into being wrong, all that stuff. There's nothing mechanical really. There's no mechanical system that will just print money and particularly in the day of AI and computers and everything. It's really all about psychology. It's all about psychology and risk control. And so, yeah, you can make a lot of money in the markets, but you can lose a lot of money in the markets. Even if you're right, if you can't withstand the path, I think a lot of people in gold and silver are feeling it right now. If they came in too late, if they entered too high, they're getting shaken out because it's too painful to be too big and too late. And then you still get shaken out and you miss the whole move because the path pushed you out. That's what the market does. The market's job is to knock you off its back, particularly out of on on winning trades. So, a little bit of what I heard Duneberg talk about was humility saying, you know what, I would have thought it would have been a lot higher by now. And that's that's true. I would have thought that silver would be, you know, staying near its high above 100, but it had a big huge pullback. Do I think that that's over? No, I don't. But it's a little bit bigger than I expected. And maybe that's by design just to get people out. So, that was the first thing. The second thing that I thought was important to me is that um in his view, the straight of moves was kind of a one something that can't happen again in such a perfect storm way. You know, his theory is that the world has now seen that the straight of horos is really too much of an Achilles heel and that won't be allowed again in the future. His theory is that there's going to be alternate pathways built and so theoretically there'll be all kinds of opportunity out there in companies that could build ultimate alternate pathways. Companies that do uh you service the oil and gas industry. We're in an ETF in our model that's an oil service ETF and we actually got into that many months ago long before this war. We got into it because the charts told us to and we're always looking for the strongest sectors and that chart broke out and we put it in. But it's doing really well and we're in ticker symbol E XEES. It's not a recommendation. I have to give that caveat. But I want people to know just if they want to take a look at a chart that's an example of an ETF in the oil service industry that continues to do well. So those two things were important to me. Be careful investing on ideas. Those that plowed into the market, you know, on the ideas that the war broke out, so let's buy defense, let's buy metals doesn't work. You really have to get to know your own style, your own emotion. Risk an amount that you could afford to risk. Know how to admit when you're wrong. That's the hardest hardest part of all actually. And it really is um a battle for investment survival. I can't remember the person that wrote that book. I've read probably a couple hundred books on investing, but there's a old book called The Battle for Investment Advis uh survival. It might be Baruk if I remember right. It's a good book. And that's what it is a lot of times as an investor. You're battling for survival and learning as you go and hopefully getting better. >> All right. And a big part of that battle of survival is um you know let the market growth take care of you over time but make sure you're not getting killed you know along the way. You're not you're not suffering 100% of the draw downs. Um all right um Mike I'm going to come back to you because you mentioned the precious metals a couple times. I'm going to get back to you just so we can look at the existing charts and see what the technicals there might be telling you. John, let me come to you and if you can um pull up a chart of the S&P um you as we've been talking about for many many months now, the S&P has been stuck in this trading range um since October. And uh yeah, you look at the chart here, it certainly seems to have been rolling over. You know, a lot of people are very worried that this is a clear topping out process on the way to lower lows. Um, but if you do look at the chart here at the very end, um, one can argue, it's too early to say definitively, but one can argue that the market may have found a bottom here and is is beginning to bounce quite robustly off of it. Um, what are you taking from this? Does this look potentially like a Vbottom could be in the works here? Maybe the market is sniffing out that this war might not be the quagmire that some fear and that uh, we might get out of it, you know, sooner than later. So, a lot of uncertainty regarding the war, right? And we have a I think the president's addressing the nation tonight if if if plans haven't changed. Uh, who knows what that communication will be. There's been a lot of confusion. I mean, the headlines and the and the kind of interpretations of those have been all over the map, right? So, so clearly the markets are a little bit um volatile just related to that. But, you know, we try to tune all that out and really just let the market tell us. So we do a lot of work with charts, but it's more than that. It's more than simple moving averages and things like that. We look at a wide range of barometers of market breath and health and and not just at the macro level, but across different sectors. So for example, Mike alluded to the fact that we added um oil service stocks um I think it was October of last year, October, November if I'm not mistaken. And at the same time, we rotated out of financial stocks. So why did we do that? Well, we had long thought that energy stocks, the energy sector was fundamentally undervalued relative to the market, which is still screamingly overvalued, the US stock market. Um, but that undervaluation of the energy sector didn't matter much until the momentum and various metrics of of breath and momentum and and strength in that sector started to exert themselves. So, we had the the combine combination of fundamental um backdrop and technical backdrop that led us into energy. same kind of things led us out of financials. Actually, financial stocks have been very weak since about that same time last fall. And this is before, you know, private credit uh was in the news like it is today and how much exposure do banks have. So sometimes we want to we humans want to put approximate cause to to what's going on, but sometimes you just have to listen to the market and not overthink it. But back to the S&P. So this chart I think am I still sharing? I guess I am. So this is a daily chart of the S&P. Yeah. So, Adam, as you said, we we had one of the tightest ranges in a long time of the S&P going back to October. It had gone pretty much and maybe zooming out uh to to a weekly chart. You know, you can see it went, you know, this is this is October here, right through the, you know, early part of this year, it was kind of pretty sideways. Even though some sectors like energy were going screaming higher, basic materials were screaming higher, uh, a lot of things were outperforming, but the broad S&P was kind of stagnating. technology was starting to roll down. Some of the MAG7 was which carried the S&P higher was, you know, carrying it down or or at least stalling it. But we have seen a pretty notable rounded top here. Now, I just want to talk about a couple technical things. These various colored lines are different moving averages and such. So, for example, the green line is a 50-day moving average. You can see that was a very flat line. That's that's that's emblematic of a market that trades sideways. It's very easy for for a flat market to to become extremely overbought or oversold just simply because of the fact the market hasn't done anything in the in the reference period period that you measure these extremes against. Uh but we've taken out back in uh early March we took out the the the 50-day and the 21-day moving average and we've since about uh March 20th or so been below the 200 day moving average. uh here today. Well, yesterday we had a very large bounce in the market on kind of news of some kind of resolution. And today we're seeing a pretty notable reverser. We're still up a little on the day. We're about up twothirds of a percent in the S&P as we speak right now, but it's poked back down below below that 200 day moving average. That's a key level in and of itself. You know, if we if we fail at the 200 day, it's probably something to be careful about. Now, you combine that with our broader ba battery of indicators and we've seen a a notable degradation in the health of the market. We've seen, and I don't mean to get too too wonky here with technical terms, but things like bullish percents have have uh decidedly weakened. This is a a breath indicator. We've seen the the percentages of stocks within the index trading at or below certain different time frame moving averages uh starting to roll over and rolling over. Broadly speaking, our battery of indicators has been uh firmly on the negative side. Uh so we try not to read into hey is this over, you know, is this is this going to pop on a resolution of war? We just got to follow our indicators. Um and as of this point, we have not seen a a material improvement of those indicators. So what have we done? So let's first start with the fact that we, you know, we've been preaching caution or underweight equity for some time just simply based upon valuations. Now, we've been fortunate to be in the right kind of sectors, even if we're underweight. So, we're, you know, doing quite well. Um, but we have taken defensive measures. I'm going to call out this dotted uh horizontal line that's at at 6,500 on the S&P. These are put options we have on our client portfolios for those accounts that are big enough to to handle options like this. Um, which essentially is like an insurance policy. And you can see we poke below that 6,500 level. um that basically is a line in the sand at that we would essentially take the risk of about a third of our equity exposure. So we're about 45% in equities right now with a poke below that dotted line we would very quickly have the financial equivalent of d-risking uh to about 30% in equities. Um and the great thing about this is it it provides the hedge on the downside. But if we shoot higher here, yeah, we're going to lose some money on those on those puts, but we're going to be uncapped on the upside as we stand right now. So this is a just a a very nuanced way that we have used hedging to kind of take the downside risk or materially change the downside risk without you know putting our heads in the sand or putting the money under the mattress so to speak. And you know the there are a lot of different things. We sold some of our abroad equity exposure last week and then the week before we sold you know some healthc care exposure we had that was uh a weak sector based upon the the the things we look at. So we have we have you know systematically de derisked a bit here and uh you know broadly speaking our indicators have have yet to to kind of improve to the point where we'd want to lighten hedges or add equity exposure at this point. >> Okay. Uh that's always really super helpful. John, um I presume, but don't let me talk for you here, that if we were to turn down in, you know, the next couple days of trading, you could look at that as a an attempt from the market to um punch back up above what used to be its floor, uh the 200 day moving average, but failing to do so. That floor may now turn into resistance, and that might be a give you more technical validation that that a further rollover could be in progress. Yeah, there's a lot of simple cliches, but sometimes they're self-fulfilling. You know, you get a rally to to to prior support and it becomes resistance and yeah, you know, a lot of lot of eyes will be watching for that 200 day moving average to be either uh breached to the upside or or repelled down from here and and uh so far the it's it's proving in this very short period of time to to be a formidable uh ceiling for the time being. >> Okay. So again, just to sort of recap, the mo the preponderance of the indicators that you guys monitor are not turning more bullish yet at this point. And um you want to guide like a pilot flying at night, you want to guide by your instrumentation. Um I think one thing that makes this a little bit more of a challenging environment is there is a factor that can drive markets that you have no control over, which is essentially what America decides to do in this war, right? um you know, we could either step up the attacks on Iran and and make everybody fear that it's getting a lot worse and going to last for a lot longer or we could declare it over tomorrow. And that's just something that you really have to react to, right? >> Yeah. And one one other thing I would always want to remind folks, you got to bring this back to your own situation. Look, we have a tactical take on markets, but it's not a black and white and and nor are we uh arrogant enough to think that we can uh solve for optimal to the decimal place. Uh we have a handful of our clients that have established very sound financial footings that their biggest concern is is um not missing out on upside but on you know further downside. >> Capital preservation is a big part. >> Of course our job is to make sure yeah our job is to make sure that we're it's not emotions but reality of situation that are taking flight. uh several of our clients uh we we absolutely have have uh you know uh agreed with their inclination to kind of tilt even more conservative and we can do so all within the kind of the framework of our tactical model just in different dosages if you will. So, all point to say that there's no you're you're not going to hear like anybody that hears from their financial advisor that they feel like they're being shamed for even want to think about selling or or changing their allocation. you should really be looking elsewhere because that is not only a a factually improper position for any financial take given the weight of history, but it's darn right arrogant um frankly that our industry shames people if they think they want to change the mix and you know um they're they're made made to feel like hey you got to be with the program or you're out kind of thing you know it's just um folks don't don't need to stand for that. >> Okay. All right. Um All right, Mike, we only have a couple minutes left. Um so what what what can you tell us about the precious metals uh in in just a compressed period of time here? >> I'll try to be brief. I I would say this, you know, the the type of pullback that we've seen is about as much as u get to the right symbol here. The pullback we've seen in silver, gold, and the miners is is about as much as one can take. I think uh mentally if you're a bull, I mean as or I should at least say as much as many can take, you know. So, if we go to GDX here, um, a lot of people called out what looked like a triple top. And here's the problem. Here's the part that's hard about this trade in the miners is that there's a lot of s uh signs of exuberance and bearish confirmation. So, the the market got way ahead of itself and there's a lot of people that have done really well in the in the miners and in the metals last year. In fact, there's roughly a double last year. I will say this though, a big bull market doesn't usually kick off, have a year, a fantastic year, and then be over. Particularly in metals, normally it's like a a eight or 10 year affair. Let's call it a 10-year affair. So, it's probably early just based on history. But the technicals in this case have really test tested people's resolve. So, take a look at GDX. Here's a double top and a failure. The 50-day moving average right here, the red line, took out that. That's the first sign that people say, "Uh oh, I better I better watch this." And then there's this trend line. And be careful about trend lines. That's this this one right here that I just highlighted. You can move these all over the place really to make them you can almost try to make them say different things. But doing my best to be objective. Here's what the trend line looks like to me. And it took it off right back here at um 318 on March 18th. And so here's a bearish confirmation. We went to the 200 day moving average. A lot of people probably sold on this breakdown and we went through 10 days of consolidation and we didn't know what was going to happen. Maybe it would go further below the 200 day moving average. But look, all of a sudden with the last couple days, we've retaken the trend line. We've retaken the 50-day. And so those people that held through this suffered a 31% decline. It's hard. So all I can say is uh you're going to have to have a a theory and some faith sometimes. You can't just be a pure technical trader. Yes, you can as long as you're lightning fast, and you better be lightning fast if your positions are huge. But for those that have reasonable positions, this was a time of a test that might have been difficult psychologically, maybe not too difficult if you weren't too overexposed. And now, thankfully, we've started to heal the condition. So, here we are. >> Mike, you might want to add that we had some put on put options on that holding that that took took a bit of that sting out. We did we had uh we had put options right here at 90. So on half of our position we had put options at 90 on that breakdown through there. This is the option expiration the dotted line. We let half of the position go. We actually replaced it with bullion in gold because it had better relative strength at that time. But the truth is that that breakdown uh was um we had puts in place on some of it that actually gave some added value or alpha uh basically. So, but the miners are back up here. So, frankly, it looks good. We'll see what happens next. The market is at a critical juncture like John said and it seems like everything is trading together. Gold, silver, minor stocks, everything is all up or all down. We get good news, it all goes up and vice versa. Let's take a quick look at at silver and gold here. SLV is silver. It has this what I see as a big triangle. And then we had this breakdown here at uh 70 on um on SLV, which is roughly 80, maybe 78 to 80 on spot. Basically came down and tested the bottom part of that triangle. And look what's happening. We're coming back slowly. We'll see if we got a nice big pop back up here to like 80 on SLV. And that would be I guess close to 90 spot. We get back into this zone then I think we can say all of this was a fake out. So I can tell you this just talking with clients and just being in touch with my own emotions, our own emotions. This was a big drop in silver. This one was pretty hard to take if you were overextended in gold. Something similar here. Here's GLD. Look at this breakdown. Anyone in the world that's following technicals will say that that was a breakdown there. you know, a gap followed by two weeks of consolidation. It looked like it was going to continue, but right now, look at this. This might get above the 50-day. And frankly, if GLD gets up to 460 or so, which is not that far, this whole thing is going to look like a cluster, like an island reversal cluster that basically shook people out. So, that's what's been hard about this trade. Uh, I can't tell you with with absolute certainty that the technicals say it's bullish, but I can say it was difficult back here and I can say that things are a heck of a lot better here. And if we go just a little higher, I think the run will be on and some short covering will be happening. So, the big bull markets are not normally over in one year. Take a look at a monthly chart maybe just over the last uh 15 years. 2011 high. This big level back at 2,000 on gold we've been talking about for years. 2,000 became 4,000 became 5,500. And on a monthly chart, we had the first monthly uh down month uh which ended yesterday. That's not really a big deal in the grand scheme of things. So we look how much we've been whipping around. My opinion is that we'll go higher that we're not just going to double and end. Silver has had the the biggest triple top I think I've ever studied. Going back to 1980, it was 50 in 1980, 50 in 2011, and 50 this year. It doubled or actually even tripled or more last year. I believe we're going to whip around on this level and then ultimately take that out. Maybe even go, who knows, double from these levels in the next year to maybe 150 or something like that. That's what I think will happen just because of all these things we've been talking about and because they're not usually just going to be a one and done one year and it's over. I don't think this is the 2011 high situation. So, I guess we'll see. >> All right. Well, we'll be tracking it here every week with you guys. And I I just want to note, Mike, um yes, it's been painful for those of who have held gold over the past two and a half months. Um, but if you look at gold or silver prices or mining prices today where they are versus where they were a year ago, had I told you a year ago where they were going to be today, you would you would be throwing a ticker tape parade for me. So, got to keep it all in perspective here. U, but it's nice to see that the momentum seems like it may be turning back to the upside here. And again, we'll have you track this for us week in and week out. I also appreciate both you gentlemen um spending the time to talk through how you have used protective puts um in your portfolio. Um, as you said earlier, John, uh, you know, capital preservation is something that's important to a lot of your clients. Um, I know from the people that we refer over to you because they fill out the form, the majority of them says, "Look, capital preservation is my number one priority here." And I very much appreciate you guys um, you know, respecting that and running your portfolio um, with that goal in mind, but also explaining to people in these videos exactly how you do it, how the mechanics of it break down. Um, all right. Well, look, um, folks, if you would, uh, well, if you'd like to see Duneberg come back on as soon as his publishing schedule allows him writing the book, uh, let him know that by hitting the like button and then clicking on the subscribe button below, as well as that little bell icon right next to it. And if you would like to get some help from a professional financial adviser in putting into some sort of practical action the ideas that he shared here, um, highly recommend you get that from a good professional financial adviser. If you'd like to talk to one of the ones that thoughtful money endorses, perhaps even Mike and John themselves, just fill out the very short form at thoughtfulmoney.com. Only takes a couple of seconds to fill out. These consultations you'll have afterwards are totally free. There's no commitments involved. It's just a service these firms offer to be as helpful to as many investors as possible. Uh John and Mike, again, can't thank you enough. I wanted to spend a little bit more time this week. We just don't have it. um talking with you guys about some of the the interactions that I've had with folks that have talked with you in your firm recently. Um just the the the very um appreciative feedback I get uh is wonderful to see and it's um you know it helps me sleep well at night. Um it makes me feel like we're doing you know a service of good out here in the world for folks. But I just want to let you guys know how much I appreciate your partnership on that and treating these people so well. Um I do think it's important thing to do anytime and all the time but certainly in kind of highly emotional times like right now in the markets with the war and all the uncertainty and everything uh just to know that people who are working with you or at least the ones that are reaching out to me are saying they feel very good about that and it's letting them sleep well at night uh is wonderful to hear. So thank you gentlemen. >> Well thank you Adam. It's a a privilege to be able to serve our clients and we talk to a lot of folks that don't become clients and that's perfectly okay with us. We we value those discussions as well and we just want to impart some value. >> And thank you, Adam. We appreciate the opportunity each and every time that we're here. Happy to happy to have happy to be here. >> All right. Well, gentlemen, thanks very much. Look forward to seeing you next week. Everybody else, thanks so much for watching.