We need to talk about Kevin Warsh.

Today I need to dispel one of the biggest myths in financial markets.

And in so doing, prepare you for one of the biggest market events of the last three years – set to play out over the next three months.

Due to a confluence of factors…

Namely the war in Iran…

The midterm elections…

And this market event I’m referring to…

The next three months could be extremely volatile.

We’ve already gotten a taste of it over the last couple of weeks.

AI stocks have been breaking down. Risk-on assets have gotten the wind knocked out of them.

But we need to prepare for the real possibility that things could get worse – much worse – before they get better.

I promise, there’s light at the end of the tunnel. Before the end of this year, I believe the bull market will continue.

But this doesn’t mean you need to bury your head in the sand until then. There are ways to profit through volatility. We’ll discuss them today.

In fact, today I’ll even give you a sneak peak at a new trade I just issued to a special group of my top subscribers.

So let’s get into it…

“A Good Family Fight”

On Wednesday, Kevin Warsh gave his second press conference as the new Chairman of the Federal Reserve.

For the second time in his tenure, the Fed left interest rates unchanged.

At first, markets loved it.

Then, something happened.

He referred to a series of “shocks” – meaning economics shocks – and suddenly, markets started to roll over.

He said he didn’t characterize yesterday’s decision as a “pause.” He referred to it multiple times as a “good family fight,” indicating several Fed governors were ready to raise rates.

And he pointed out, correctly, that markets aren’t waiting for them.

Real rates – meaning interest rates set by the market – have risen in the last 42 days, in response to incoming economic data, and in anticipation of what looks like an official interest rate hike from the Fed.

Trump’s Guy?

This brings me to the myth that we need to dispel.

President Trump nominated Kevin Warsh for the position of Fed Chairman in January.

This came after a very dramatic, high-profile dispute between Trump and the outgoing Fed Chair, Jerome Powell.

Between 2022 and 2023, the Fed engaged in the sharpest rate hike in 40 years, due to historic inflation caused by massive government stimulus, surging energy prices from the war in Ukraine, and supply chain disruptions caused by the Covid-19 pandemic.

In 2024, the Fed cut rates by a full percent. A year later, they did it again.

Trump wanted more.

He demanded that Jerome Powell cut rates further to his own personal target of 1-2%. That would drive economic activity to the heights of his first presidency, and allow the government to refund the debt at lower rates (placing less burden on taxpayers).

He called him a numbskull, a moron, a dummy, and a stupid person for not doing as asked.

But, there’s a problem.

1 on 12

The Chairman of the Federal Reserve does NOT control interest rate decisions.

That’s a myth.

The Fed is an independent body composed of 12 voting members who make up the Federal Open Market Committee (FOMC). It includes seven Fed governors (including the Chairman), the president of the Federal Reserve Bank of New York, and 4 regional presidents representing the remaining 11 regional Fed banks.

These 12 men decide policy. Not the Chairman. The Chairman has just one vote like the rest of them.

All the Chairman does is preside over meetings and let his voice and opinion be heard – both behind closed doors and in facing the public.

That’s it.

Today, there’s this public perception that the Chairman alone has the power to change rates. He doesn’t. This myth materializes because President Trump kept calling Powell to cut rates, as if he could just wave a magic wand and make it happen.

And, because Trump picked Warsh, people seemed to believe he would come in and get the job done.

Now, people are scrambling to make sense of how Trump’s guy could threaten to do the opposite.

Water is Wet. A Hawk Is Hawkish

This comes as no surprise to people who know Warsh’s history.

When he served as a Fed governor in 2008, he was the lone, standout voice who warned that the Bernanke-led Fed’s decision to conduct an unprecedented, zero percent interest rate (ZIRP) policy would inevitably lead to runaway inflation.

Ultimately, he voted with the majority – but he stood out as the sole monetary hawk, noting in September 2008 that he was still hesitant to let go of his concerns regarding inflation.

At the time, deflation was the concern, so his warning fell on deaf ears.

He continued this hawkish stance through additional rounds of quantitative easing. In November 2010, he published a public critique warning of inflation and asset bubble risks.

For years, inflation remained muted, but certainly, the stock market went on to post its longest run in history, with the Nasdaq surging more than 1,000% from its 2009 lows to its 2021 peak.

When supply chain disruptions hit in 2020, and interest rates were still at zero, his prophecy on inflation proved correct – albeit 12 to 14 years later.

And when the Fed responded too late – you can probably guess, he called them out on it then, too.

The Good, and the Bad

The good news, of course, is that Kevin Warsh has been right on policy at every major market inflection point of the last 20 years.

This means he can influence the Fed to raise rates when necessary, and cut when appropriate.

In 2022, the Fed let inflation get to 9% before they made any decisions.

As for the bad news…

When the Fed raises rates – which it looks increasingly likely they will during the FOMC meeting on Sept 16 – the markets will react badly.

Market participants are currently pricing in a 60% probability of an interest rate hike during that meeting. Let’s point out, though, that this probability was closer to 80% on Wednesday. So, these numbers can change.

The probability of a hike by the end of this year, however, is over 80%. So, we need to brace for the high probability that a hike is coming before the end of the year.

As for interest rate cuts? Investors are forecasting just a 0.3% probability of lower rates one year from now

The Caveat

When you add this dynamic into the other driving forces in the market – namely the war in Ukraine, and energy supply shortages due to the buildout in AI data centers – all of this points to higher inflation, which points to higher rates, and soon.

There is one caveat. Employment numbers have been coming in lower. The economy added just 57,000 jobs in June, although the unemployment rate ticked down. June’s consumer price index also decreased by the single largest month-over-month drop since April 2020, a full 0.4%, although inflation remains higher than the Fed’s target at 3.5%. Yesterday, we also learned that the U.S. economy slowed to just 1.5% growth, offsetting some of Warsh’s comments about “strong” economic conditions.

If these trends continue – lower employment, inflation and growth – then they could fend off the impending risk of higher rates.

But for now, the specter of higher rates remains.

1 Stock to Buy Now

The midterm elections also cast uncertainty on the future. And markets hate that.

Betting markets are forecasting an 87% chance that Democrats take the House. Republicans have a slight edge when it comes to keeping the Senate, but it’s not baked in.

When you consider all of these factors – war, elections, economic conditions and inflated asset prices – we need to brace for continued volatility, at least through the November election.

This is when you need to be extra selective with your investments.

If you’re a trader, you need to take small bites of the apple whenever opportunities present themselves. For instance, I captured a 1,000% return on some weekly call options this morning, on an AI compute company that I bought yesterday into the close. I suspected Microsoft and Meta’s earnings would show continued demand for AI spending.

If you’re not an active trader, then I have one idea for you.

Today, the war in Iran is creating enormous inflation in one sector of the market – energy.

Oil recently spiked over $100 per barrel.

And right now, this is my top way to play it…

It’s a stock our managing editor at the Daily Reckoning, Adam Sharp, has talked about before – Petrobras (PBR).

It’s the largest oil producer in Brazil, the largest economy in South America.

It pays a 6% dividend and trades for just 4-times forward earnings.

In other words, the company is willing to pay you 6% per year to hold shares that are almost guaranteed to be higher in four years. You never see that.

A near term catalyst – this morning Exxon Mobil reports earnings, and they’ve already hinted at massive profits due to inflation.

Traders might consider call options on PBR that expire in August or September. You can go at the money, or just out of the money, for very cheap. And the company reports its own earnings next Thursday. I plan to recommend calls in 10X Trade Club this morning.

The post This “Trump Myth” Will Cost You appeared first on Daily Reckoning.

This past weekend, from my hotel in Midtown Manhattan, I strolled up Fifth Avenue… all the way to the Metropolitan Museum of Art. Along with the Louvre, the British Museum, the Uffizi, the Vatican Museums, and the Hermitage, it’s one of the world’s great museums. (The only one I haven’t been to is the Hermitage. Perhaps I’ll remedy that when Europe and Russia kiss and make up.)

I used to walk around the British Museum and National Gallery in London (another great one) to ease my hangovers on the weekends in my 20s and early 30s. Looking at beautiful paintings, sculptures, and armor soothed my sore head.

But this weekend in the Big Apple, I was sober as a judge. I wanted to get my 10,000 steps in and enjoy myself while I was doing it. But, of course, my curiosity got the better of me.

It’s the ownership panels every time. For a finance guy like me, seeing a benefactor or a patron on a museum plaque doesn’t make me think, “Oh, what a generous person!” Instead, I think something more along the lines of “What proceeds were they turning into respectable transfer mechanisms?”

It’s not money laundering, per se. It could simply be a case of making incomes from landed properties more mobile. I came across two Canova sculptures that were especially interesting from that perspective.

Stone Turned Into Life?

It’s Rome, in 1804. A Polish countess named Valeria Tarnowska walks into a sculptor’s studio. She wants a hero.

She doesn’t want a portrait, but a scene. Perseus, fresh off killing Medusa, holding up the severed head like a trophy. Clash of the Titans, but early 19th-century style.

She visits Antonio Canova, the most famous sculptor in Europe. Medusa may have turned men to stone, but Canova turned stone into sculptures that seem to breathe.

What did Tarnowska actually buy?

She had had land rents and cash, which are boring, forgettable, and hard to move. She turned that capital into eleven feet of marble everyone in Europe would recognize and admire.

You can’t smuggle rental income across a border. But you can transport a famous statue.

You see, art isn’t just decoration. It’s dense, portable, and murky. Nobody quite knows what it’s worth, or who really owns it. High value, easy to move, thick layers of dealers standing between the buyer and the money. The U.S. Treasury has studied this exact combination. It’s the same profile that makes a painting a great place to hide a fortune today.

Canova himself wasn’t laundering money. But he turned wealth into a shape that could cross a border, something no farm or a factory could. And he made the new owner look good for owning one of his sculptures, to boot.

The Second Statue Hides a Cap Table

A few rooms over sits another Canova: Paris, the mythic judge who started the Trojan War with one bad verdict. Same sculptor. Same era. A better story.

Napoleon’s wife, Joséphine, commissioned the original Paris in 1807. It was imperial French cash, spent on a vanity project. When she dies, the statue didn’t vanish into a warehouse. Tsar Alexander I of Russia bought it and put it in the Hermitage. It was part trophy, part power move. Empire handed it to empire, and the story attached to it only grows.

Canova’s workshop did what any studio does with a hit: it made another copy. The Marquess of Londonderry bought one on a trip to Rome in 1823. He shipped it home to London, where it sat in his townhouse for over a hundred years. Long after his house is gone, a donor gave the statue to the Met. A private trophy became part of a public collection.

Look at this lineup:

• Founder: Joséphine, French imperial cash
• Buyer: Alexander I, Russian imperial collection
• Second buyer: Londonderry, British aristocratic money
• Exit: a modern bequest, American museum ownership

The statue never changed, but the wealth transferred. Napoleon fell to Wellington at Waterloo. Empires rotate, as they always do, around the world. Old money faded into museum bequests.

Marble makes good collateral across centuries. It’s an asset that survives every regime change.

Same Play, New Paperwork

Today’s art laundering cases follow the same script as Joséphine and Alexander. The people are worse, but the lawyers are better. That’s the only real difference.

Modern versions look like this:

• Sanctioned buyers route cash through shell companies to acquire blue-chip art, so nobody can trace who really owns it.
• Criminals pledge art bought with dirty money as collateral for a “clean” loan from a lender who doesn’t ask questions.
• Free ports, those tax-free storage warehouses dotted around the world, let art sit unregistered for years, changing hands quietly.

None of this needs fake art or stolen art. It just needs art that’s genuinely valuable and hard to price. That describes a 200-year-old Canova as well as it describes a painting nobody can compare to a recent sale. You know, like a Hunter Biden special edition.

The real engine here is what dealers call the story premium. It never shows up on a balance sheet, but it does most of the work.

A Perseus in your front hall says: “I have taste,” “I have history,” or “I have won something.”

A numbered bank account in Geneva is silent.

A marble hero is loud money, capital that screams victory while quietly moving somewhere new. For the right buyer, that’s the whole point of buying it.

Wrap Up

If you walk through the Met, you’ll see the little labels that give you dates and donor names. But most people don’t realize they’re standing in front of a five-century paper trail.

In more recent times, grand imperial names became more mundane things. Joséphine and Alexander became oligarchs and sanctioned officials. Canova’s studio became a shell company in the British Virgin Islands or a free port in Geneva.

But the trick hasn’t changed: park your wealth in something beautiful, portable, and nearly impossible to price, and watch it cross borders that cash never could.

Perseus is still holding up that head. He’s also been quietly holding six empires’ worth of money for two hundred years.

The post The Marble Ledger appeared first on Daily Reckoning.

Can Marxism offer a framework for understanding artificial intelligence (AI) and the tech bros behind it?

This is not to suggest that Marxism is a viable economic system or a practical alternative to capitalism. It’s not. But Karl Marx was a heterodox economist before he became an ideologue, and some of his ideas are powerful tools for understanding economics, even if his overall program was a failure.

Let’s use some of those tools to understand the rise of AI oligarchs and the future of AI.

We begin with Marx’s main idea: the abolition of private property. How do tech bros feel about private property? They steal it. If you can simply take private property, then it’s not private. Marx would approve.

The AI gang does this by scraping vast amounts of internet content for use in training their large language models (LLMs). That material includes copyrighted books, magazine articles, academic papers, images, music and countless other forms of intellectual property (IP).

Do tech bros pay royalties? Do they pay licensing fees? Sometimes, but often they don’t. They take what they want like internet pirates, or the Bolsheviks after the Russian Revolution in 1917.

In fact, AI models have used my nine books in their training sets. Google, Apple, Microsoft, OpenAI and Meta have paid me nothing. Anthropic offered to pay me $37,000 for some (not all) of my books. I accepted the offer, but I still haven’t received the payment. Maybe I’ll call my lawyer about that before their IPO.

The point is that much of the AI crowd behaves no differently than the imperialists of the 19th and early 20th centuries, who exploited land, resources and human capital, including slavery, while paying little or nothing in return.

V. I. Lenin called imperialism “the highest stage of capitalism.” But Lenin never met a tech bro. They put imperialists to shame.

YOU Are Paying for the Boom

Marx’s theory was based on the idea that the owners of the means of production (capitalists) used labor but did not pay workers a fair share of the surplus created by the production process. There are a lot of flaws in this theory.

But the tech bros have a better idea: Get rid of human labor completely.

AI allows companies to pay some workers less because a growing share of productivity comes from software rather than labor. More to the point, AI is eliminating certain jobs entirely, as seen in layoffs among software developers and in industries such as healthcare and customer service that are increasingly using AI to perform repetitive or administrative tasks.

In the AI world, capitalists don’t just take more than their share; they take the entire buffet table. The tech bros’ solution to mass unemployment is guaranteed basic income, a handout. This ignores the dignity of the individual, which is achieved largely through productive work.

Other examples of taking public assets for private use include massive demands placed on the electric grid to power hyperscale data centers. Towns and counties around the country could face higher electric bills as hyperscalers compete with residents and businesses for available electricity.

It’s another case of extracting wealth from everyday Americans to feed the AI beast.

Even that’s not enough. AI applications are being crammed into our laptops, tablets and smartphones whether we know it or not and whether we like it or not. This is forcing manufacturers to build more powerful devices, which can increase costs for consumers while requiring additional processing power to handle AI features.

Many of these AI features operate by default, even if users never intentionally engage with them. That means you may be using AI without realizing it.

Never mind that AI output can be inaccurate and, at times, dangerous. The problem is compounded as AI-generated content increasingly circulates online and becomes part of future training data. Meanwhile, many AI features collect large amounts of user data from the devices they run on.

Individual AI users also provide fresh inputs to LLMs through prompts, interactions and, in some cases, data collected from their devices. AI operators are hungry for this kind of information because they have already consumed vast amounts of publicly available internet content, while the quality of that content continues to deteriorate as more AI-generated material floods the web.

Are you getting paid for information that may be collected from your device? Do you even know it’s happening? Almost certainly not. This is just another form of digital extraction that enriches the tech bros while helping fuel trillion-dollar valuations.

In addition to authors, artists, local communities and everyday Americans, the AI mafia is also feeding off the government. Subsidies include streamlined permitting for massive data centers, tax incentives and abatements in many jurisdictions, favorable regulatory treatment in some areas and enormous government contracts.

There are costs associated with all of these government benefits, but they are not borne by the AI companies themselves.

They’re borne by everyday citizens in the form of taxes, higher electricity rates, reduced quality of life as data centers reshape small communities and the risk that increasingly capable AI systems could create serious disruptions in sectors such as banking, telecommunications and healthcare if they malfunction or are misused.

The Extraction Economy… And New Revolutionaries

The Chinese are no better. The success of Chinese AI models such as DeepSeek and Moonshot has been aided by their ability to build on advances made by leading U.S. AI labs. It’s a case of one group of pirates raiding another group of pirates.

Both thrive on information they did not create, but the Chinese have become especially adept at turning those advances into low-cost competitors.

This predatory behavior can be likened to imperialism or piracy. The technical economic term for it is externality. That means the profits and benefits of extracting information are kept by AI firms, while many of the costs are pushed onto the public.

It’s no different than a gold mine that keeps the gold but dumps the cyanide used in refining into public waterways. The miner gets the gold and the public gets poisoned. The fact that AI is digital does not make the behavior any more acceptable from a social perspective.

Perhaps the most disturbing aspect of Silicon Valley’s extractive culture is that many CEOs are not only aware of it; they thrive on it. They have perfected the art of turning their own customers into unwilling guinea pigs. A culture of short-termism, disdain for the public and pure greed keeps the extraction racket going.

If there’s one ray of sunshine, it’s that some members of Gen Z appear to be turning their backs on AI, autonomous agents and endless screen time.

There’s growing fatigue with the amount of time people spend online, along with increasing concern about the pervasive nature of AI. This shift also reflects widespread frustration that much AI output is bland, repetitive or simply wrong.

Some Gen Zers are doing something that now seems almost radical: They’re reading books.

There are many reasons why the AI bubble could burst, but the Gen Z revolt may be one of the least appreciated and most unexpected.

The post Tech Bros Run the Marxist Playbook appeared first on Daily Reckoning.

Even before this energy price spike, affordability was a big problem. A structural, long-term trend.

The chart below, via Goldman Sachs, shows how costs have risen in the U.S. since 2000. The dotted lines represent projections out to 2035.

Source: Goldman Sachs

Hospital services are up nearly 300% in 26 years. Tuition more than 165%. Daycare costs up 150%. And these are based on government statistics, which always undercount true inflation.

There are fluctuations, but the pattern is clear. Steadily higher.

As a percentage of income, these items are eating up a bigger piece of the pie.

It’s affecting Americans across the board. As our colleague Zach Scheidt recently highlighted in our app’s Daily Feed, the savings rate recently dropped to 3.6%.

Download the free Paradigm Press app here.

Americans are saving less, and more people are living paycheck to paycheck.

A shocking example of this comes from that same Goldman Sachs report. The firm’s survey showed that 41% of households making more than $300,000 per year consider themselves “paycheck to paycheck”.

Source: Goldman Sachs

Shockingly, 40% of those making more than $500,000 per year also report living paycheck to paycheck.

Look, much of this comes down to inflationary factors we can’t control. But if you’re making more than $300,000 or $500,000 per year, and not saving, that’s… not ideal.

Lifestyle Creep

This phenomenon is known as “lifestyle creep”. In other words, as we make more money, we spend more.

Too many people get a raise or bonus and spend it on expensive vacations, optional home renovations, or a new car, rather than investing it.

Most of us are guilty of this to some extent. But if you’re reading this newsletter, that means you’re actively looking to become a more effective investor.

And in today’s pricey world, being better at investing means spending less.

Driving your car until it dies. Cancelling that cable package and switching to a cheaper streaming service. Moving your money out of that big bank that pays 0.03% on savings and getting a better yield. Keeping those older appliances and fixtures. Ditching expensive meals out and cooking great food at home for less.

A lot of it boils down to not falling into status traps. We need to look at living beneath our means as a superpower. That’s the first step.

And then there’s the investment angle…

Adapt, Survive, Thrive

I understand saving and investing isn’t easy in this environment. Costs are rising and the job market stinks.

For those who are already retired, finding attractive income investments is also a challenge. The S&P 500’s dividend yield is down to a paltry 1.1%. Stocks have done well of course, but yields are tiny at current levels.

Treasuries could perform well over the next few years, especially if the Federal Reserve is forced to cut rates and restart QE. But after that, inflation is likely to outpace bond yields. And there’s always a chance rates rise significantly (and Treasury prices fall) before the Fed is forced to act.

During such times, having exposure to alternative investments is important. This is why we here at Paradigm have been focused on these ideas.

Gold, silver, miners, oil, and other natural resources. Hard assets that will grow their value regardless of inflation or trade wars. Most investors still own very little of them. But if you were a member of Jim Rickards’ services over the past few years, they’ve booked some huge gains in these sectors. And we believe there’s much more to come.

Our goal is to continue helping you find solid and profitable ideas for these crazy times. But in order to take full advantage of them, some need to take that first step – and spend less.

The post The “Paycheck to Paycheck” Problem appeared first on Daily Reckoning.

Did you know that much of the gold mined and refined in the U.S. gets exported? And much of that metal ultimately heads toward Asia, where China and other gold-hungry nations have read the world’s balance sheet better than the policy wonks in Washington?

Meanwhile, are you skeptical about what passes for “tech” these days? Software, chips, AI, data centers, visa-heavy labor force, stock options, trillion-dollar market caps… and what exactly is the return to America and its people?

Asked another way: are we turning good money, energy, concrete, steel, other scarce metals, engineering talent and national savings into waste heat? Maybe much of today’s tech should be called “toasters that don’t make toast.”

With that in mind, today we’ll discuss gold and capital misallocation: hard assets, monetary insurance, wealth preservation and, where possible, yield from assets that make the world run.

Plus, in a note at the bottom, I’ll tell you how to register and watch (at no cost) a talk I’m having tomorrow evening, July 29^th, with two of the best gold and investment guys in the business.

Let’s dig in…

Welcome to New Readers

First, a warm welcome to new subscribers. In addition to the newsletter you signed up for, Paradigm Press also sends supplements like Morning Reckoning and Rude Awakening at no extra cost.

Our idea is simple: focus on hard assets such as precious metals, energy and foundational sectors that create real value. We like things that preserve wealth over time. Many also offer a yield angle, meaning your assets can work for you and deliver income.

Now let’s discuss gold, energy and capital allocation — because the story of the dollar is also the story of what America builds, what it neglects and what it ships away.

First, Follow the Gold

Long ago, I learned not to trust speeches from politicians and central bankers. And when it comes to gold, it’s better to watch the loading docks, refinery flows, cargo manifests and vault inventories. The real story is about who holds the metal and where.

Oddly enough, I learned that lesson at Harvard — the old Harvard, not today’s ideological theme park. In fact, in an intro economics class called “Ec 10,” we spent a month on gold: ancient money, medieval banking, gold-backed notes, Spanish treasure fleets, New World bullion and the inflation that followed when too much metal chased too few goods. All that, and more.

Then, citing Keynes (badly, as usual), the instructors told us to forget gold because it was a barbarous relic. The message was clear: gold was quaint and academic economics was modern.

But gold stuck in my head. Plus, I found a geology professor who taught mines and minerals and happened to be a gold bug. And I learned quite a bit of useful economics from handling Harvard’s world-class mineral collection; in some ways more than from the economics department, although I offer respectful nods to all the Nobel Prize winners there.

Now skip ahead. In much of the West, gold remains a monetary embarrassment, nor for polite bankers to discuss. The official economic future is derivatives, cloud computing, social media, AI and other abstractions promoted by guys with glossy investor decks.

Meanwhile, foreign central banks are buying gold at a pace not seen in generations: China, India, Russia, Poland and many more.

The World Gold Council says central banks bought over 1,000 tonnes annually in each of the three years through 2024, far above the previous pace of 400–500 tonnes per year. In its 2025 survey, 95% of respondents expected global central bank gold reserves to rise this year, while 73% expected the dollar’s share of global reserves to fall over five years.

So, follow the gold and the message is plain: the dollar-dominated monetary order is fading. The future may not be “gold-backed” in the old textbook sense. But any credible reserve system must respect gold again. Learn it now, or learn it the hard way later on.

China Reads the Balance Sheet

We’re entering a new monetary jungle where China is the 800-pound gorilla. Beijing runs trade surpluses, collects dollars and has options. In the old model, China recycled dollars into Treasuries. China made goods, America consumed them, and the proceeds returned to Wall Street. But no more.

In recent years, Beijing has reduced Treasury holdings while accumulating gold, some reported and much likely off the books. And China’s logic is simple. Gold has no counterparty risk. A U.S. Treasury bond is a promise from a near dysfunctional government that runs chronic deficits and issues debt by the trillions.

China gold reserves over past 45 years. Credit Bloomberg News.

One standard knock against gold is that it pays no interest. True. But neither does gold default. That is, gold in a Chinese vault is immune to Congress, the Federal Reserve, the Treasury Department and sanctions lawyers. Nobody can print it. Nobody can conjure it from a server farm. That is why gold is back in fashion among people who manage national balance sheets.

America, the Monetary Resource Colony

Now comes the scary part. In Q1 2026, U.S. exports of non-monetary gold reached about $47.2 billion, according to U.S. data, per the St. Louis Federal Reserve Bank/FRED. Suddenly, gold has moved into export levels normally associated with Boeing aircraft and ExxonMobil or Chevron refined petroleum.

U.S. “non-monetary gold” exports surged in recent quarters. Credit FRED/Federal Reserve Bank St. Louis.

In plain English, the U.S. is shipping out its gold – “non-monetary,” they say; but STILL a monetary metal! – while importing consumer goods, electronics, pharmaceuticals and financial obligations.

Think about that. This country still claims “world reserve currency” status, yet exports the world’s most revered and ancient reserve asset. And buyers want gold precisely because they want less dependency on the dollar. (“Here are a bunch of dollars; now gimme the gold!”)

Exporting primary value is what resource colonies do; they sell hard assets for paper. And at least to a geologist, it’s crystal clear that a resource colony ships ore while the imperial power keeps the refinery, the bank, the pricing power and the ledgers.

In short, America is behaving less like a value-add economy and more like a quarry.

De-Dollarization Does Not Show Up in Press Releases

Oh… And don’t expect de-dollarization to arrive with a brass band. No treaty. No press conference. No magic BRICS note.

It arrives as portfolio adjustment: fewer Treasuries in foreign accounts, and more bullion. Or perhaps an oil seller accepts non-dollar payment and later turns that surplus into gold in Shanghai.

Right now, day-to-day, the dollar still dominates because of liquidity, legal infrastructure, habit and network effects. But reserve status is not a force field. As Hemingway said about going broke, it happens gradually, then suddenly.

The Tech Mirage and the Mine Shaft

Meanwhile, American capital markets worship at another altar. We are told – by academic economists and Wall Street promoters – that value and wealth creation now resides in software, platforms, AI and data centers. There’s a cultural theme that mining is dirty, petroleum is old, refineries are ugly, ore bodies are relics. And the future is weightless; just a universe of infinite ones and zeros floating in a cloud.

Except this allegedly weightless economy has become very heavy. AI requires data centers, power lines, cooling systems, backup turbines, chips, specialty equipment, concrete, steel, copper, rare earths and electricity by the gigawatt.

The old Silicon Valley story was that a few clever people in a garage could create global wealth with code. But today’s AI giants need hundreds of billions merely to keep the Wall Street growth story alive. And frankly, “tech” no longer looks asset-light. It looks like classic heavy industry with better public relations.

Capital Misallocation, Value Mispricing

Often, investors avoid miners because mines need big upfront capital: exploration, mapping, engineering, permitting, roads, drill rigs, site prep, mills, tailings systems, equipment, skilled labor and endless maintenance and operational expense.

But now Big Tech has the same curse of capital intensity. Yet many tech and AI valuations still assume the old nine-month software cycle and zero-cost scaling. It’s gross capital misallocation, hiding in plain sight. Hundreds of billions are flowing into AI infrastructure on the assumption that future software revenues will justify today’s checkbook.

But currently, the big cash flow is not floating into a high-margin profit cloud. It is being poured into land, concrete, power hookups, cooling loops, chips, backup systems and long-dated contracts. This is not a software cycle. It is an industrial buildout like the country ought to have for, say, shipbuilding or battery plants.

And the question is not whether AI and data centers are useful. Some of this techy magic works quite well. The question is whether this buildout will earn a return on capital. And that answer remains far from proven.

When tech companies spend like miners building, say, a giant, multibillion-dollar porphyry copper project, investors should stop valuing them like garage software firms. Future cash flows have not yet been earned; they’re not even in sight on a distant horizon.

Meanwhile, many AI plays face the same bottlenecks as every other industrial project: energy, materials, skilled labor and time. Markets punish miners for capital intensity and yet reward tech firms for the same behavior.

Through it all, the unfashionable foundations of civilization — energy, ore, mining, refining, metals, shipping, manufacturing and grid — remain underbuilt in America. But the digital future still begins down in a mine, a power plant and a factory.

Mispriced Reality

And this gets us back to gold miners, companies that sell something of which central banks in China and other nations cannot seem to get enough. Gold supply is limited by geology, permitting, mining, metallurgy, politics and time. You cannot summon a tier-one gold mine with a venture-capital term sheet.

Yet many gold-mining equities still trade as if official-sector gold demand is temporary. Meanwhile, many tech leaders trade as if AI revenue will soon arrive in tidal waves, and that Chinese competition will stand aside, while electricity will stay cheap and capex will magically convert into high-margin profits.

Somebody is wrong here. Either central banks are fools for buying gold at scale, or markets are misallocating capital into stories and fables, while starving the companies that produce actual metal, let alone monetary metal. My instinct is that people with vaults know more than people with pitch decks.

The Dollar’s Store-of-Wealth Problem

A deeper issue is the dollar itself. The dollar is useful. It pays bills, settles invoices and measures retirement accounts. But as a long-term store of wealth, it has a design flaw; namely, that the U.S. system depends on issuing more and more of them.

And this leads us to look at inflation, which is a feature and not a bug in modern monetary policy. Debasing the currency is part of the operating system.

Sad to say, a dollar saved in a drawer or bank account for more than a few years, let alone decades, is a wasting asset unless converted into something productive, scarce or both. So, when central banks buy into gold they are not saying the dollar will disappear tomorrow. They are saying dollar-only reserves are long-term imprudent. And this should make every saver pause.

If reserve managers want more gold and fewer dollar claims, why should private investors assume cash and conventional financial assets are enough? So, what to do? Well… own physical gold, and own companies that mine it, or control royalties on productive mines. This just reflects the world as it is.

The Big Picture

To sum up where we’ve been today… Big Tech builds while mined gold leaves the country. And definitely, the monetary map of the world is being redrawn.

Of course, America possesses immense advantages; things like energy, agriculture, capital markets, technology, rule of law (when courts choose to honor it), and a stubborn entrepreneurial culture.

But no nation stays wealthy by exporting hard assets, importing paper claims and directing capital toward fashionable abstractions while neglecting mines, metals, energy, and basic necessities of industry like roads, railways, ships, factories and the like.

Again, follow the metal! Follow the balance sheets. Follow what serious people do when they are not talking.

The fact of gold leaving America is not just a trade statistic, it’s a warning flare. It’s a blaring smoke alarm. The world is preparing for a less dollar-centered future, and the United States is helping to build the off-ramp.

That’s all for now, but!!!

If you want to know more, tomorrow evening at 7:00pm Eastern, Wednesday July 29^th, I’ll be on a broadcast with old friends Rich Checkan and Adrian Day, to discuss precious metals, mining ideas, energy, the war in Iran and much else. Both of these gents are deeply knowledgeable about gold, silver and the mining biz, and I suspect that we’ll open the throttles wide on ideas. It’s free to sign up and watch; see you there!

And… Thank you for subscribing and reading.

The post America Exports Its Monetary Soul appeared first on Daily Reckoning.

In my spare time, I enjoy learning about archaeology. And I’ve noticed something strange.

Ancient skulls often have perfect teeth and strong jawlines.

This may seem odd.

Because for 99.99999% of human history, we didn’t have toothbrushes or braces. No orthodontic surgeons to remove wisdom teeth.

So how were ancient people’s dental health so good?

Much of the answer lies in how they were used.

Gnawing on bones, chomping cartilage, and chewing on roots from a young age.

These actions create small stresses which tell the jaw and teeth to grow big and strong.

Meanwhile, today we puree young kids’ food into a slurry. The result is often underdeveloped jaws, and crowding of the teeth. This is also part of the reason why so many people have to get their wisdom teeth removed.

Take a look at the image below.

On the left is an ancient Japanese hunter-gatherer’s skull. On the right is a more recent Japanese farmer’s skull.

This is a dramatic example, but throughout the fossil record, this relationship tends to hold true. Due to their lifestyle, hunter-gatherers had far stronger jaws and teeth than modern humans do.

How is this related to investing, you ask? Stay with me for a moment…

Good Stresses

Ten years ago I read Nassim Taleb’s excellent book Antifragile.

It changed my perspective in a way few books have.

In Antifragile, Taleb explains how sometimes stress and volatility is good.

Something is antifragile if it benefits from disorder and chaos.

In many ways, our bodies are antifragile.

For example, astronauts in space don’t stress their bones enough due to the lack of gravity. So they grow weak, and have to constantly create impact stress to avoid becoming even weaker.

Even with specialized exercise tools, astronauts can only spend so long in space before their bones and muscles atrophy.

Taleb also cites how trees grown indoors don’t get enough wind stress, and if you try to bring them outside, they’ll quickly break.

Without certain environmental stresses, living beings cannot attain their maximum potential.

Many of these same principles can be applied to investing.

Building an Antifragile Portfolio

Regular readers will have already guessed where I’m going with this.

Precious metals (PMs) are one of my favorite antifragile assets.

The more things fall apart, the stronger they perform. They thrive on chaos. Now, some may look at recent performance of gold and silver during the Iran war, and say “it’s not working”.

Gold and silver have sold off since the Iran war began. But we need to examine their performance over long periods of time.

Since 2000, gold has returned about 10% a year on average. Despite its recent crash, silver has still almost tripled since it was around $20 in 2023. Those are excellent returns for “safe haven” assets. But unfortunately they won’t always perform exactly when we want them to.

Gold and silver got ahead of themselves in the last year, and we’re simply experiencing the inevitable correction before the bull market resumes.

Durable Catalysts

The market stresses we’ve been experiencing lately are unlikely to be resolved any time soon.

Inflation in “developed” countries has become problematic for the first time in decades. Trade wars are rewiring global commerce. And we’re witnessing the first truly modern wars in Ukraine and Iran.

Moreover, nations around the world are hitting a tipping point with debt and deficit, most notably the U.S. and Japan.

Eventually vast sums of money will be printed by central banks and governments around the world.

So maintaining an antifragile portfolio will remain important for the foreseeable future.

Other Hard Assets

More broadly, it’s important for investors to have exposure to hard assets. If you own the S&P 500, it’s done incredibly well over the last 15 years.

But today the Magnificent 7 tech giants make up a whopping 37% of the S&P 500.

There’s barely any exposure to oil and other natural resource companies in the big indexes today. So you have to actively seek out industrial metal miners like Vale or BHP. The same goes for stalwart oil companies like Exxon, or more speculative names like Petrobras.

If we go through an extended period of stagflation, you’ll want to own more than just tech stocks.

Hard assets remain a key part of my portfolio. And this current dip is a nice buying opportunity.

What Else is Antifragile?

One of the most significant potential “black swans” is if something bad happens to the dollar. People who don’t have exposure to foreign stocks and/or precious metals risk losing a lot of their wealth in such a scenario.

This is part of the reason I own emerging market stocks. If the dollar ever crashes, owning foreign stocks will be a huge help. And it doesn’t hurt that they’re cheap with big dividend yields.

I believe American investors should own a healthy portion of their wealth in foreign stocks, especially emerging markets. Why EM? Because other developed nations like those in the EU suffer from many of the same problems we do in America. De-industrialization, a deteriorating political system, and far too much debt.

So for me, emerging markets are a key part of an antifragile portfolio.

I’m not saying you should sell all your “normal” assets. What I am saying is that now is the time to think about diversifying into more antifragile assets.

The post Antifragility in Life and Investing appeared first on Daily Reckoning.

Ukraine has gotten a lot of press lately over its high-profile drone strikes against Russia. And for good reason.

This week alone, Ukraine has destroyed at least 5 large ecommerce distribution centers in Russia.

The strikes create apocalyptic scenes like the one below:

Source: Pravda Ukraine

The destroyed warehouses and distribution centers are owned by a company called Wildberries. This is Russia’s version of Amazon.

Dramatic pictures like this have led some to believe that Ukraine is winning. But we need to put these strikes into context.

Ukraine’s recent strategy with its long-range drones has been to strike “soft targets”, which are not as well protected as military sites.

Military bases, ammo depots, and fuel storage are more valuable targets. But they’re better protected, with layered anti-drone and electronic warfare systems. These “hard” targets have become extremely difficult for Ukraine to reach.

So Ukraine has been focusing on soft targets. And to some extent, it’s working.

Ukrainian strikes on oil refineries and distribution centers will certainly cause pain in Russia. Higher energy prices, shortages, environmental damage, and disrupted commerce.

But can such strikes win the war? Call me skeptical. My suspicion is that they will only serve to rally the Russian people behind the government, and increase Russian strikes against Ukrainian infrastructure such as power plants, locomotives, and oil facilities.

Ukraine’s strategy at this point relies almost entirely on drones. Short-range FPV drones on the frontlines, and long-range strike models to strike deep into Russia. But Russia has tightened up security around military sites inside the country, so Ukraine has been forced to switch to soft targets.

Meanwhile, Russia continues to destroy both Ukraine’s economic and military might.

Putin’s War Machine

Strikes by Russia don’t get nearly as much attention in Western media.

But the country is steadily wearing down Ukrainian forces and infrastructure. Using a combination of glide bombs, missiles, drones, and artillery.

Unlike Ukraine, Russia’s is a multi-faceted attack.

Guided glide bombs are perhaps its most effective weapon on the frontlines. These bombs range from 550 pounds all the way up to 6,600.

Source: AP

The munitions are dropped from jets, mostly the SU-34 fighter-bomber, at high altitude and speed. Once the wings unfold they can fly more than 40 miles.

Russian SU-34 dropping a glide bomb at altitude

This allows Russia to target the frontlines from a safe distance. The introduction of these weapons has been devastating for Ukrainian forces attempting to hold the line.

Russia’s glide bombs started out with questionable accuracy, but have been steadily improved over the course of the war. Now these silent munitions are the bane of frontline Ukrainian soldiers.

Every day Russia drops approximately 267 glide bombs. That’s according to a Ukrainian source, the Kyiv Independent.

In comparison, Ukraine has a limited number of aircraft to drop American glide bombs from, and Russian SU-35 fighters patrol the border with long-range air-to-air missiles, keeping them well away from the frontlines.

These weapons are extremely difficult to counter. They have no heat signature like a missile for defensive systems to lock onto.

Missiles and Drones

Despite recent Ukrainian successes, Russia maintains a lead in long-range strike capability. Namely: missiles and drones.

Russia launches approximately 210 long-range attack drones per day, targeting Ukrainian military sites, power plants, factories, and even gas stations near the front.

Meanwhile Ukraine will save up their long-range attack drones and launch a volley of 500 or more in a single night. Then they have to rebuild stocks for weeks or months to get enough inventory for another big package, hoping to overwhelm Russian air defenses. Their success rate against hard targets have decreased significantly, and now Russia will look to increase protection of soft targets.

And in terms of missiles, Russia has the most proven ballistic missiles in the world. The Iskander-M, pictured below, has become a cornerstone of the war.

Source: Wikipedia

The Iskander has proven to be a devastating weapon. It is hypersonic, maxing out at around Mach 6. Defenders have little time to prepare once a launch is detected. Russia also has a large selection of cruise missiles which it employs to devastating effect.

Russia is now in wartime production mode, pumping out huge numbers of missiles, drones, and bombs.

An Ugly War

The conflict in Ukraine is heartbreaking. It’s likely that more than a million soldiers have died so far. And thousands of civilians have perished, with millions displaced. A tragedy.

Now both sides are increasingly hitting soft targets. Energy sites, distribution centers, ships, ports, locomotives, and more. Economic and environmental damage is mounting.

Ukraine is hanging on for now. But the country depends on American and European weapons, food, and money to keep the war going.

The country’s new strategy of hitting soft targets within Russia will not win the war. It will only contribute to the escalation cycle.

Unfortunately, I’m not optimistic about a diplomatic resolution anytime soon. It looks like this one will be decided on the battlefield.

Russia will eventually seize victory, at significant cost. But they will emerge as the most experienced modern military in the world. Their advantage in missiles, drones, electronic warfare, and glide bombs will only grow.

If we don’t watch out, we’ll make a permanent enemy of Russia. Countless examples throughout history show this would be a mistake.

Otto von Bismarck, 19th century German Chancellor, famously said, “It is better not to wake the Russian bear.”

Wise words. Ones we should heed.

The post Russia is Still Winning in Ukraine appeared first on Daily Reckoning.

On Monday, Yemen announced a blockade on Saudi oil exports.

At the time we wondered, “Does Yemen have the firepower to shut down Saudi oil exports? We’re about to find out.”

It looks like we have an answer. Yesterday Yemen’s Houthi forces struck 2 full Saudi oil tankers with anti-ship missiles and drones.

The result was catastrophic for both ships:

Source: X

This is an ugly development. These VLCC oil tankers are massive. They carry 2 million barrels of oil each, worth about $200 million dollars at current prices. The ship itself is worth another ~$100 million. So two Yemeni strikes caused about $600 million in direct damage, and far more indirectly.

Brent crude oil has since spiked above $100 a barrel.

President Trump responded to Yemen’s strikes this morning on Truth Social:

Source: Truth Social

Clearly the President isn’t happy about this development. Saudi Arabia normally exports more than 6 million barrels of oil per day, 6% of the global total. Yemen’s actions have the potential to shut down their exports, plus another key Strait in the area, Bab al-Mandab.

Source: GFSIS

On Monday, we wrote the following about oil, “If the Strait of Hormuz remains closed, and Yemen is able to prevent Saudi exports, we’re going a lot higher.”

Since then, crude is up another ~$14 a barrel. But we could be heading a lot higher. $150+ oil is entirely possible if we don’t get a resolution soon. As we discussed Monday, the world’s oil inventories and strategic reserves are already significantly depleted.

Hormuz Updates

Yesterday, U.S. Central Command (CENTCOM) issued the following fact check on X/Twitter:

Source: CENTCOM

CENTCOM said the Strait of Hormuz is “open for transit regardless of IRGC threats and attacks.”

That’s fine in theory, but convincing captains to cross the Strait at this point is going to be a difficult task. These captains just watched a number of ships burn after missile strikes. Iran has struck numerous ships on the southern route, which passes through Omani waters, and is the preferred U.S. passage.

But the southern route through Hormuz also appears to be heavily mined, and it looks like a few tankers have struck sea mines over recent days.

There’s a heated battle for control of the Strait of Hormuz, and I hate to say it, but Iran appears to be winning. This is their home turf, and they have thousands of anti-ship missiles and drones spread along the coastline. The majority of traffic lately has been taking the northern (Iranian-controlled) path.

Overall, Hormuz crossings have fallen back to about 15 per day. Before the war, 150+ ships were transiting per day. And when the ceasefire was in effect, we briefly got up to 35-40.

Recent strikes on tankers and other ships won’t help. Insurers will be extremely hesitant to offer coverage to ships attempting to cross.

Markets Finally Notice

Investors have mostly shrugged off all this chaos, and U.S. stock markets remain near all-time highs.

But today we’re finally seeing a selloff. The tech-heavy Nasdaq 100 index is down 1.97% as of 2:00 pm ET today, while the S&P 500 is down 1.4%.

Could stocks rally if we see signs of a diplomatic breakthrough? It’s possible. But eventually the market will have to accept the fact that the most likely outcome is further escalation.

If oil stays at current levels, it will negatively affect the global economy in a big way. Prices will rise, consumers will pull back, and the effects will ripple throughout the global economy. If we go much higher, the situation becomes more acute.

We also have to consider the growing strain on fertilizers, industrial metals, and petrochemicals. These are the commodities our world depends on, and a huge chunk of them come from the Persian Gulf.

It doesn’t help that Russia’s energy exports are down sharply due to Ukrainian drone attacks.

Once again, we face a potentially disastrous energy crisis. At any moment, major strikes on oil infrastructure could resume.

Eventually, this conflict will be resolved by diplomacy. But the stage for negotiation will be set on the battlefield.

Both sides want to improve their position by pressuring the other militarily. Neither our U.S. leaders or Iranian ones are ready for compromise yet. Evidently, we need more pain first.

More soon.

The post Battle of the Straits appeared first on Daily Reckoning.

I was walking through Lower Manhattan early Sunday morning when a window stopped me cold.

It was the poster, pasted across the glass. A tailor fitting a red British coat. A Black man standing beside him. The title read: “Hercules Mulligan and the Spy Network That Saved a Revolution.”

Credit: Sean Ring

I’ve walked those streets a hundred times. I had never heard the name.

That’s a crime. So let me fix it.

The Tailor Who Fooled an Empire

Hercules Mulligan came off a boat from Ireland as a boy. His family landed in New York around 1746. He went to King’s College, which we now call Columbia. Then he opened a tailor shop.

It wasn’t just any shop. It was the best shop in the city. If you were rich in New York, you bought your clothes from Mulligan. And after the British took the city in 1776, that meant British officers, too.

Picture the scene: a proud English colonel walks into the city’s finest tailor’s shop and orders a brand new coat. Mulligan smiles, pulls out his tape, and starts to measure. And he talks, as we know the Irish do so well. Mulligan asks easy questions. He flatters the officer. He listens to his boasts, nodding politely.

The careless officer then brags about the war.

“When do you need the coat back, Colonel?”

“Oh, soon. We march within the week.”

That was it. That was the whole trick.

Mulligan didn’t crack a safe. He didn’t steal a map. He just stood close to vain men who couldn’t imagine that their tailor mattered.

The Blind Spot

The most powerful empire on earth had a blind spot. It couldn’t see the people right in front of it.

To a British officer, a tradesman was furniture. An immigrant was beneath notice. And an enslaved man? Invisible.

That blindness was the crack in the armor. And Mulligan drove a wedge straight through it.

He often knew the British army’s next move from one small tell: when they wanted their uniforms finished. Need it fast? They’re marching soon. It was intelligence hiding in a tape measure.

The British generals had maps, gold, and the finest army in the world. They didn’t have the one thing that wins wars. They didn’t know what was happening on the ground.

But Mulligan did.

Cato Carried It

Mulligan gets the name on the window. But he didn’t get there alone.

The intelligence had to travel out of the city, past British checkpoints, and into Washington’s hands. Mulligan couldn’t make that trip. A well-known merchant taking long walks toward enemy lines would hang.

So the messages went with Cato.

Cato was a black man enslaved in the Mulligan household. He slipped through the lines, carrying secrets, because the British never dreamed a man like him could matter to the war.

Understand the stakes. If Mulligan were caught, he was a wealthy white merchant with connections. He might be traded or jailed. If Cato were caught, he faced a rope.

He was caught. British soldiers seized him and beat him hard, trying to make him talk. The man running the questioning had tortured other American spies. Cato said nothing. They let him go.

Think about that. He was fighting for a “liberty” that, at the time, didn’t include him. And he risked everything anyway.

Mulligan later helped found the New York Manumission Society, which pushed to end slavery in the state. Make of the story what you will. Just don’t leave Cato out of it, even though history nearly did.

Twice, He Saved the General

The legend credits Mulligan with saving George Washington’s life twice.

Once, late on a freezing night in 1779, a rushed officer came in, needing a coat, and let slip that the British planned to capture Washington within a day. The warning went out. Washington slipped the trap.

Two years later, a huge supply order tipped Mulligan off that hundreds of soldiers were being sent to catch Washington on the road. Again, the warning went out. Again, the general got away.

When he turned traitor, Benedict Arnold named Mulligan a spy. Somehow, the fast-talking tailor argued his way out of the noose.

Wrap Up

When the British finally sailed away in 1783, Washington marched back into New York as the most famous man alive.

The morning after, he chose where to have breakfast. He walked to the home of Hercules Mulligan.

Washington’s message was unmistakable. The tailor was a patriot, and Washington owed him.

To be fair, much of this story reaches us as oral history. Careful historians warn the paper trail is thin. Read it with open eyes. But the bones are solid, and the lesson is timeless.

The people who change history are rarely the ones on the balcony. They’re the ones in the room, holding a tape measure or carrying a message no one thought to search for.

The empire watched its generals. It should have watched its tailor.

Go look this man up. Then look up Cato. You’ll walk away taller than when you started.

The post The Man Who Took Their Measure appeared first on Daily Reckoning.

A Reuters headline published back in December 2025 touted: Five Energy Market Trends to Track in 2026, the Year of the Glut.

Analysts expected oil to be oversupplied. That aged well for about two and a half months…

However, natural gas remains hated here in the U.S. The “Year of the Glut” moniker stuck with traders. And they are heavily short. In fact, natural gas looks cheap, hated, and prepared for a serious uptrend.

And I don’t say that lightly. We call natural gas the “widow maker” for a reason. Trading natural gas is like trying to get your eight seconds on a gold star Brahma bull. But sometimes you get a good draw. And that’s what we see right now.

Here in the U.S., big money hates natural gas. The shadow of last year’s glut forecast remains fixed in traders’ minds. But the market turned sharply in the last few months.

War in Iran and Ukraine devastated the global natural gas supply. LNG markets are ripping higher. And in the U.S., data centers are gobbling up real estate in west Texas to take advantage of the proximity to cheap natural gas for electricity.

The only folks that don’t seem to get it are U.S. investors. And that’s the opportunity. Let me show you what I mean. Below is a 30-year chart of spot natural gas prices in the U.S. The current price is under $3 per million British thermal units (MMBtu). The blue line is the 5-year moving average price.

As we can see, the current price is below the 5-year moving average. In other words, the current price does still show a glut of natural gas. And we expected that. Here’s what the U.S. Energy Information Administration (EIA) published in January 2026:

Remember, this was before the war in Iran shut down exports from the Middle East. So far, that chart is right on. But I expect to see that rise in price to move higher, faster due to the limited liquified natural gas (LNG) exports.

That brings us to our first opportunity. You see LNG prices in Europe and Asia are as high as $18 and $19 per MMBtu, respectively. That gives U.S. LNG exporters a huge margin. And the industry thinks that it will continue.

There are currently six major LNG plants either expanding or under construction. The EIA forecasts LNG exports from North America to more than double by 2029. Most of that comes from the U.S.

This is important because natural gas is difficult to ship without pipelines. Compared to oil, natural gas is immobile without these special LNG facilities. The recent wars in Ukraine and the Strait of Hormuz, clearly demonstrate the unreliability of those supplies.

So, in the short term, companies like Cheniere Energy (NYSE: LNG) are going to make a ton of money on this trade. Cheap U.S. gas, shipped to Europe and Asia is a great trade right now.

However, natural gas prices can’t stay this cheap for long. And that’s why we want to own the lowest cost natural gas producers in the U.S. Companies like Range Resources (NYSE: RRC), Antero Corporation (NYSE: AR), and EQT Corporation (NYSE: EQT) are low cost and major natural gas producers.

And like natural gas prices, the stocks are down:

EQT is now as cheap as it was in 2025. And that’s our second opportunity. It’s not ripe yet…but soon. We just want to see this chart tick up a little bit. As soon as that uptrend starts, it’s game on.

So, in summary, buy LNG producers today and watch natural gas producers for the next few weeks. When they move higher, jump into that trade. Be prepared for some volatility. But if you hold for a year, you will be rewarded.

The post Everybody Hates This Commodity appeared first on Daily Reckoning.