SpaceX IPO (Not) - Keep gold and commodities in mind

As usual, do your own research. Not financial advice. (Jun 26)

SpaceX IPO is all the rage now. Front page news. But something else is worth commenting.

USA has supposedly struck a deal with Iran. Someone made the point that once the American fleet leaves the region, it is very unlikely USA will go back and attack Iran again even if it plays games with its nuclear stockpile/inspection delay etc etc. So regardless of the text of the agreement, fair to assume the conflict is 90% finished.

Looks like the world and the global stock market will slowly re-set back to where things were before the war started. Oil price will likely drift lower but remain higher than before the conflict.

Something worth commenting in the past 2 days was the reaction of a bunch of small miners in Australia. The last month or so had been painful. June tax loss selling + the new CGT pressures these small cap miners relentlessly.

Post the US/Iran agreement, many of them bounced nicely (5-10% higher than the recent low). I think they have put in a bottom for the time being, barring more macro developments or global macro slow down.

Today, I saw this Youtube. Worth a listen if you are keen:

https://www.youtube.com/watch?v=V3yeDNxwdX8

The gist of the presentation was look at gold and commodities like copper and oil.

Some interesting slides:

1. Australian gold stocks are valued lower than gold producers in Canada.

2. Pic 2 is the most important chart which shows long period of under investment (say 10 years) for oil, metals, and ag.

3. No surprise here... Commodities lagged the stock market for almost 15 years.

The most important idea to remember is capital starvation will eventually lead to extended period of profitability if S&D tightens measurably.

So now we have Central Banks buying more gold than before. We have countries looking to spend to upgrade their war machines. AI will lead to upgrade of electrical infrastructure, and more and more data centres will be required.

Not an uninteresting backdrop for gold and commodities.

The June sell off for the small cap miners in Australia set up an interesting start into next financial year.