Hello everyone, I’m back with another incredible interview with Adam Rozencwajg of Goehring and Rozencwajg. In this episode, we dove deep into why commodities are poised for a significant rise, discussing the macro shifts like Trump’s and Bessent’s economic realignments, tariffs, and the so-called Mar-a-Lago Accord. What I especially love about how G&R approach investing is that they start with a solid macro thesis that then becomes specific investments.
Like me, they’ve concluded that it’s time (once again) for the great investing pendulum to swing back from “all things paper” to “all things real.”
Adam’s macro thesis centers on the idea that a radical shift in the global monetary system has been initiated, which will rival any of the last century. This shift involves re-dollarization, altering global trade incentives, and seeks to profoundly reset the entire global economic order. “Bold” doesn’t even begin to cover it.
An important element of their thesis involves the carry trade, where investors borrow in low-interest-rate currencies to invest in higher-yielding assets, while betting (enormously) on low volatility. This trade has historically ended with major monetary regime changes, often accompanied by a violent return of volatility that crushes markets and upends portfolios.
Our discussion also highlighted how commodities are undervalued compared to stocks, a situation that has preceded major bull markets in commodities three other times. This undervaluation, combined with the potential for a monetary regime change, sets the stage for commodities to shine.
We also revisited the oil depletion paradox, especially since the EIA now concedes that U.S. shale oil production will peak in 2027, much sooner than previously projected. This is a big deal, signaling a sea change for the US and energy investing sentiment, which, truthfully, is in the dumps.
In summary, we’re at a pivotal moment where a fundamental analysis points towards a commodities bull market, driven by both geological realities and macroeconomic shifts. The setup is there, the catalyst is emerging, and the value in commodities is undeniable. This could be a time for investors to consider commodities as a hedge against the uncertainties of the current financial landscape.
In times of change, protecting your investments with assets outside the traditional financial system is wise. For more insights, check out Adam’s detailed analysis in Goehring and Rozencwajg’s quarterly commentaries.
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by doubletap