Video & Podcast Of The Week
Some Thoughts On Precious Metals, Market Dynamics And Distortions & The Financialization Of The Oil Market
Before I get to the video and the podcast of the week, I wanted to talk about precious metals after the run they have had. Gold and silver have had a big move in recent weeks, and my favorite of the bunch, platinum, is back to sleep after a big move off the bottom in April. I talked about this on RogueNews the other day, but I wanted to highlight it again here. Every other video on certain podcasts / YouTube channels I like to watch is about the miners and how cheap they are, and why the move will continue. I’m still a secular bull on gold and silver for a variety of reasons, but it seems like sentiment on the sector is a little overcooked currently. I think platinum is still the most attractive of the bunch, but that’s just my two cents.
The Market Huddle w/ Porter Collins & Vincent Daniel
For anyone interested in broader markets, this one is a must watch (and their new Substack, What Are We Doing?, is a must follow). They talk about the intersection of Trump, tariffs, and how market structure has changed in recent years. They got into how they are expressing their bearishness on the market, and the expectation for continued debasement through gold and gold miners, along with other commodities sectors. The most interesting part for me was how the market has been changed by a couple factors, from ETFs and passive flows to the multi-manager / pod shops, and how it leads to small cap opportunities that get ignored by big institutional money.
I agree with their view that on a long enough timeframe, yield curve control and quantitative easing are inevitable. They also talked about Luke Gromen’s view on the S&P becoming a matter of national security, and why price discovery isn’t allowed in these markets (too big to fail if you will). At the end they got into crypto, and highlighted an important point on how stablecoins have connected bitcoin and ethereum (and other major cryptos) to the treasury market. This one will definitely give listeners something to think about, no matter what your view on markets might be.
Oil Ground Up w/ Ilia Bouchouev
The other podcast of the week is also on market structure, this time focused specifically on the oil market. Fundamentals still matter, but how other factors have started to play a role in oil markets. He talked about how paper barrels and financial market trading drives oil prices and the two waves of financialization that have increased futures volume over the last couple decades. This has been driven by algorithms, commodity trading advisors (trend following), and fast money, and he describes how changes in positioning from institutional money are the largest driver of short term moves in oil prices. He doesn’t think that oil prices go below $50 regardless of the size of a potential oversupply because of the financialization of the market. At the end of the day, it’s an asset that is cheap in a world of expensive assets. It’s an interesting take, but for anyone interested in energy, this one is worth a listen.
“When I started my career in the mid-90s, for every barrel of physical consumption, we were trading roughly one barrel of futures. So the ratio between the two was one to one. Today, we consume roughly 100M barrels a day, but we trade 6 billion barrels a day on an average day. On some recent days, we went up to 10 billion. So basically we’re trading 60 times more than we consume on a daily basis.”
- Ilia Bouchouev