Wall Street Unplugged
Episode: 864March 8, 2022

The bull market in commodities is just getting started

We’re in a crisis unlike any other in recent memory. I break down the massive volatility amid the Russia-Ukraine war… and the Fed’s plans to raise interest rates. [0:30]

Meanwhile, politics are helping send oil prices rocketing higher. Prepare for a rant… The situation goes to show how much—and how quickly—government policies can change the market landscape… as we’ve seen since Biden replaced Trump in office. [5:00]

And there are several simple solutions to high oil prices the government is ignoring… [13:55]

As politicians ramp up the economic sanctions on Russia, I name a few sectors that should see a lot of increased investment dollars. [22:40]

And you definitely want exposure to commodities. I share some stats on why we’re still in the early stages of this bull market. [26:45]

Inside this episode:
  • We’re in a crisis unlike any other [0:30]
  • How politics are driving oil prices [5:00]
  • We should increase oil production here in the U.S. [13:55]
  • Musk is pounding the table on nuclear energy [16:00]
  • Why natural gas is key to our national security [19:35]
  • Sectors to benefit from sanctions against Russia [22:40]
  • Why high commodity prices are here to stay [26:45]
Transcript

Wall Street Unplugged | 864

The bull market in commodities is just getting started

Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on main street.

Frank Curzio: What’s going on out there? It’s Tuesday, March 8th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down headlines and tell you what’s really moving these markets. I don’t think I have to tell you what’s really moving these markets. I think everybody knows. But holy cow, and pretty crazy times yesterday. It’s funny, my buddy from Sentio Capital sent out a tweet asking, could someone find me a financial crisis in the last 45 years, where the dollar index didn’t rise, but rather fell? I can’t find one, but I’m open to being shown otherwise. Thank you.

Frank Curzio: And I responded like this. It’s going to be the basis for this podcast. It’s very important. I’m going to show you how to make money. I’m going to show you what it’s exactly going on and why you really, really, really need to pay attention. I responded and I told him, I said, I wouldn’t define this as a financial crisis. This isn’t 2008. This isn’t like, holy cow, the banks are uncapitalized, the whole system’s… It’s not a financial crisis. If you look at an unemployment, employment is solid. Balance sheets are flush with cash. There’s a good amount of buybacks coming in this quarter, last quarter. Record buybacks last two quarters. I think it was $500 billion in total bought back.

Frank Curzio: Banks have never been stronger in terms of capital, household wealth is still near record highs, so we’re not in a financial crisis. This is a different type of crisis. And it’s one that no one’s ever seen before, which is why everyone is getting it wrong. Because what do we do, we look at the past to see what happened to try to dictate what’s going to happen in the future. But this never happened, this never happened in history. Lockdowns due to COVID, the Fed injected trillions in liquidity when that happened, which was okay, but then asset prices hit record highs over a year ago. And what did the Fed duo, still pedal to the metal. I’m going to go crazy. We’re going to spend money like crazy. I don’t think we’ll see inflation. Our targets for 2%, if it goes above 2%, we are going to raise rates. We’re at 7%.

Frank Curzio: But now, we’re in a market where it’s a first time, I want to say for the first time ever, with a fix above 30 and major indices below the 200 day moving average. The Fed is actually going to tighten, that’s never happened. That’s never happened. It should be doing the opposite now, but they can’t. And we never had inflation, we haven’t had inflation since the early eighties, so nobody really knows how to deal with it. Oh, the Fed’s got to beat it. They don’t have to raise rates as much. No, it’s okay. There’s a lot of… This problem doesn’t go away by itself. This is where the Fed is handcuffed with the only thing that they could do, and we pointed this out 12 months ago, nine months ago, six months ago that inflation’s not going to be transitory. The Fed flipped over in November saying, okay, it’s not going to be transitory. Not only is it not going to be transitory, it’s going to be here for a while. But this is a different type of crisis, so expect the UN expected. And that’s what we’re seeing all over the place. Very confusing.

Frank Curzio: Why are companies in technology reporting great numbers and still down tremendously? Nike’s numbers weren’t that bad down 30% plus from its highs. Starbuck’s down 30% from its highs. You can go to list of great companies that are getting annihilated. And you’re looking at going, wow, these guys reported good earnings and they’re trading now at a market multiple, but they’ve been trading there for like the last three weeks, and they’re still down another 10, 15%. That’s what happens when you have all this liquidity in the market, and it’s coming out at the same time. But yesterday, you’re not going to see many uglier days than that. And you have zero business technology, semis, biotech, maybe the safe haven is like Microsoft is starting to get hit.

Frank Curzio: And now, we have oil surging. We’re seeing what, airlines and cruise companies not prepared. Who’s prepared for 130 oil? They were prepared and doing great at 70, 80 and expecting 90. That’s fine. That’s a healthy economy. That’s normal. We’ve been lucky that oil prices have been so low for so long. But before that we went, what 5, 6, 7 years of over $90 a barrel. And yesterday, we went as high as 140 sometimes. But that’s pretty much on average where we should be. But 125, 130 now, you’re seeing airlines, cruise company, traveling agency stocks, hotels, start pulling back as well. I mean, $125 a barrel. I thought a hundred would hold. You heard me say that last week or the week before saying, wow, everyone is kind of long on this trade, but apparently they were hedging themselves because once we broke the a hundred, I mean, boom, it was gone. It was gone. It went from 100 to 108 like immediately.

Frank Curzio: But if you need more confirmation, why this happening or how dumb our politicians are, here it is. We have Russia, Ukraine. Russia, one of the largest oil producers in the world. But here, what’s the solution. Let’s place sanctions on Russia, which will result in a massive increase in energy prices, which hurts everyone in the world, except for countries where energy is their prime source of economic growth. Like Russia, Iran, Venezuela, many countries that hate us. Let’s make them stronger and make us weaker at the same time. Then, we have these crazy insane goals of decreasing our dependence on fossil fuel. So the US, even though we have more oil and we know what to do with are still not able to drill at full capacity and there’s permits there, but they’re going to cost… I mean, it’s going to cost tremendously with carbon credits and things like that. They were trying to cut back just like the whole world wanted at a time where it’s threatening our national security, things are different.

Frank Curzio: Europe is in the same boat. They actually did a fantastic job: Super aggressive reducing their dependence of fossil fuels and renewables. This is why their economies are getting annihilated now as energy prices are insanely out of control. Because even though they switched to those alternative measures, which cost more, not anymore. I’ll get to that in second. You’re looking at Europe, still having a ton of dependence. And that’s why they’ve had a push for more renewables on foreign oil, including Russia.

Frank Curzio: So, you look at their economies are getting annihilated with energy prices higher and higher, insanely out of control. You could say, well, Russia, Russia did… It was Russia. They were in crisis pretty much for a year, nine months before this even happened. Look at the UK months before the Russian invasion; oil was at 70. I mean, it’s up 80% plus since then and 40% plus this year alone. And natural gas price went at $5 here, which people are like, wow, that’s expensive. They’re over a hundred dollars in the UK. I mean, they were surging before this happened. And now, today, our government said, you know what, we’re going to take a stand. We’re not going to import Russia oil. And it’s funny how everyone on both sides, and I don’t care what side you’re on, this is about your money.

Frank Curzio: I’m going to go back and forth about stuff. And I’m getting emails. People pissed. I’m a conservative; you’re too liberal on certain things. I tell these, I don’t care. If you got to get offended, get offended. My job is to help you make money. That’s why you listen to this podcast. I try to give you these many facts as I can, but you have people on both sides of the aisle that are applauding this move in hopes Europe is going to follow and do the same thing. So, a quick note here on stats you might not be seeing in the media because everyone’s happy, high fiving and saying, wow, we’re punishing Russia. In the meantime, I just paid $93 to fill up my truck. I don’t even remember paying over $80 in my life, 90, $93. That’s how much it costs. And you know how much driving I have to do with my kids.

Frank Curzio: But quick though here, so if you’re looking at Russia oil, banning those imports, that amounts to 3% of us crude oil imports, 3%. But it’s only 1% of total crude processed by used refineries. Now what does that mean? Because you’re like, wow, 1%, that’s really nothing. You have to look more into it. Because the US refinery part is really interesting. 1%, that’s not going to hurt us. Nobody’s going to ask why. Well, I’m going to ask why. So, the US buys Russian oil in part because they produce a certain type of oil that’s able to feed refineries in order to make fuel at top capacities. That’s the professional definition. To put simply, it’s some of the best oil in the world. That’s semi-refined already. Where American refineries, what are they used to? They’re accustomed to processing thick sludgy crude from Venezuela, Middle East. It’s not like that with Russia. It’s a different type of oil. It’s fantastic.

Frank Curzio: And you see it just in those numbers. You say, well US, just 3% of imports. That’s a little number, but that’s a pretty big deal in a market where supply is now super tight. And you try saying your margins are going to be lower by 3%, say that on a call and your stock’s going down 15, 20%. So, 3% seems like a tiny number, but we’re getting a special type of oil that’s really, that’s very refined before it even gets here. Three percent’s not a game changer for us. However, we want Europe to follow suit. Are you crazy? Are you absolutely out of in mind?

Frank Curzio: What if Europe does follow the US and also bans imports from Russia? I going to answer that question for you actually. They can’t. They can’t do it. There’s no way that they could do it, unless they want to immediately, immediately destroy their economies. They’ll destroy their economies immediately. The damage will be felt for many, many years. Russia, largest energy exporter in the world, largest energy exporter, supplying the EU of 40% of its gas and 30% of its oil. If you look at Europe, if they decide to ban imports, oil imports, oil is going to go over $200 in a second, very, very easily. And we’re at 120, 125 where we’re at today, and that’s not a pie in the sky number and just throw… I hate when people just throw out numbers, they just throw out numbers. Oh, the markets got to go down 25%.

Frank Curzio: What’s the numbers behind it? I have no numbers. I just think it’s going up. No, that $200 barrel isn’t some numbers you just pulled out. And Bank of America is forecasting for over $200 a barrel if Russia exports are cut off, which means, and this is based on a shortfall of 5 million barrels a day, 5 million barrels a day, which is a lot considering, what is it, 80, 81 million barrels a day consumption. 5 million barrels a day you’re pulling from the market. So, our politicians are trying to come together globally to stop Putin. They’re only destroying their economies while making energy-producing nations much, much stronger. Think about that for a minute. These are all politicians. These are the people that don’t know how to run a business. They don’t know how to do anything.

Frank Curzio: You could argue what you want about Trump and you could hate his guts or whatever. The reason why Trump got in is because everybody was sick of the political bullshit. And what happened? We were energy independent. You saw low crime rates, there weren’t any wars, nothing like that. Now, when you get politicians in there, it’s a different story. Their agenda’s a lot different from someone else. I’m not saying that Trump did everything right. He didn’t it. And he’s a buffoon. And again, having him as president with just his personality, There’s strengths and weakness says to every single president, and I get it. I get why they hated him. He did everything the best, the greatest. I’m this, everybody, black community loves me more, Latin community loves me more. No one did more for them than me. No one. I get it, why you hate him, I get it. But it’s just interesting how, when you bring an insider in there, it’s kind of easy to fix a lot of those problems when politicians, that’s not their agenda.

Frank Curzio: So, here we are. What’s the solution? What’s the solution to get oil back down and get economies back running? You know what, there’s several that are pretty simple that should satisfy the masses. But of course, our politicians are involved and it’s politics. And money Trump’s national security, your livelihood, my livelihood. And we saw that firsthand during COVID, which you should see, by the way, it’s an incredible video. I don’t care what side you’re on, if you don’t believe in facts or whatever, and you have your opinion, don’t watch it, whatever. But if you really look at this, just watch it’s from Dr. Tess Lawrie to Dr. Andrew Hill, where they produced dozens of studies showing early on Ivermectin considerably reduces death in COVID patients if taken early. And Dr. Hill basically canned it instead of presenting to the WHO and the CDC, or he probably did show them. And then, that’s when the massive campaigns came out to show that this super cheap alternative medicine that anyone could buy should be banned. Anyone suggested it works, should get through social media, even though it has very few risks, almost hardly any risks. And if you’re a doctor and mention that you should take this, you’re probably going to lose your license.

Frank Curzio: That’s what fueled the massive push behind vaccines and getting the emergency approval. Which, what does that mean emergency approval? It means that you’re allowed to prove it without even worrying about the risks involved or even publishing the risks involved. And look at the massive amount of money generated across the board for all these companies. It’s very, very powerful. Why did you suppress something that’s cheap that everybody could buy? It’s powerful. I’m going to say whatever side you’re on, just watch it. It’s kind of amazing. You have tons of doctors saying, here’s our data. Here’s what we’re showing. Here’s our studies. And they’re going, nope, we don’t care.

Frank Curzio: That’s what happens. It’s not about saving you or helping the country. No, it’s their own pockets. That’s what politicians are. Come on, you guys have to know that by now. They don’t care about you. If they really cared you, I mean, think about it. All the cities would be cleaned up. You have more police on the streets, be safer than ever. They don’t care about you. Absolutely not. Anyway. So the US, we could easily increase production. When we start producing enough oil, not just satisfy our energy needs, which we were doing a few years ago, but we make an absolute fortune exporting our oil and natural gas to Europe. This is going to make us incredibly, incredibly, incredibly powerful compared to the rest of the world, incredibly powerful. And for the climate change crazies that think the world’s going to end in a few years unless we do something today, which again, we’re told by Algo over a decade ago, which, he’s now close to a billionaire from the money he generated from carbon credits off his initiatives and owned a whole bunch of houses even on the coastline. Again, we’re supposed to be under water right now.

Frank Curzio: I’m not against climate change, but not to the point where it’s a threat to our national security. Where now, look at our economy, look at what people are paying for oil. Look how much control other countries have over us simply based because of laws that we… It’s not that we used to be totally dependent on Saudi Arabia, on OPEC. It wasn’t the case with our new technology. We have the energy here. Whoever has the energy controls the world. That’s it. It’s that simple. Forget about technology. Technology? What’s it fueled on? It’s fueled on electricity. Whoever controls the energy, like you’re seeing with Russia. The whole entire world’s against Russia now, and nobody can do a thing to stop him from invading Ukraine. Think about that. Can’t do a thing.

Frank Curzio: But how about this? How about we drastically increase production and we use the tens of billions of profits from oil to funnel into alternative energy projects. Doesn’t that make sense? That’s an easy, quick solution, but we know it’s not going to happen because politics are evolved. Instead, we’re looking at countries like Iran, Venezuela to increase oil output. If we begged them, increase, increase, increase. I’m not sure if you’ve been to those areas lately, and there’s probably a reason why, because you probably get kidnapped as an American.

Frank Curzio: I do have friends in both areas, but still these are countries that are not friendly with the US. Why would we do that instead of not increasing oil here? Second option, open all uranium plants again. It’s the safest, cheapest, most cleanest. 24-hour base load power. 24-hour base load is important. Solar, you need the sun. Wind, you need the wind to blow. This is 24-7 base load power all the time. That’s still super cheap. And closing uranium plants is also about politics. There’s a massive agenda and tons of lobbying dollars, which is bribes, being paid to politicians to shut this great form of energy off. But now, again, national security, crisis mode, oil prices higher and higher and higher. It’s insane.

Frank Curzio: Even had Elon Musk come out this week, Elon Musk, EVs, climate guy, owns the largest EV company on the planet. So, what he is saying here did not support his agenda. And he goes, “Hopefully, it’s now extremely obvious that Europe should restart dormant nuclear power stations and increase power output of existing ones. This is critical to national, international security. Also, nuclear is vastly better for global warming than burning hydrocarbons for energy.” And for those who mistakenly, as in parenthesis, I’m quoting him here, think that at this is a radiation risk, pick what you think is the worst location. I will travel there and eat locally grown food on TV. I did this in Japan many years ago, shortly after Fukushima. Radiation risk is much, much lower than most people believe.

Frank Curzio: Why aren’t you open up nuclear plants? Why? It’s safe, 24-hour base load, cheap, climate friendly. Why? Why not? What are you worried about? Politics. So, nuclear is an easy option. Yet, what are we seeing from Europe? They’re thinking about it, but not yet. Instead of turning to coal again to make up the difference in low oil and gas supply. Coal, a form of energy that’s death to everyone. Coal-fired, everyone. Coal, you have coal and everybody dies. Coal? No way. You can’t have coal ever. To where the US is in the process of closing 75 coal fired plants due to new regulations passed by the EPA, which we all know is the most corrupt government organization in the world. I really wish that they were for climate change, but they’re not. They’re full of shit. Trust me, I have seen projects that they closed down, that have nothing to do with climate change.

Frank Curzio: That’s another day, another rant. Germany is considering going back to coal. France is. But listen to this, you have Portugal, you have the UK, Greece, Hungary, Denmark all said, we’re done with coal. No way. It’s bad for the environment. We are done with coal. That’s it. No more coal. Which is kind of ironic, if you think about since they now import a shitload of coal from Russia, which is 87%. From 87% in Poland to 44% in Spain, everybody else is in between. That’s how much they import coal. That’s how much as a percentage. So I guess coal, if you’re looking at coal being produced in Russia, it doesn’t hurt the planet as much as coal being produced in other countries, right? I guess that’s the case. I don’t know. Why? Why not produce it on your own soil? No, no. We’re going to get it from Russia. We want to save the planet, but we’re going to get it from someplace else. You got to love this shit. You can’t make it up.

Frank Curzio: This is our politicians. This is what they’re talking about. So, nuclear seems much better than coal, but coal is also a temporary option since we’re talking about national security right now, which should trump climate change, which it’s not right now. It’s unbelievable. Even though everyone’s paying higher prices, economies are going to shambles. We’re seeing it. It’s going to get worse. How about another solution, a solution that I think you heard of, I’m pretty sure you heard of this solution. I’m not sure if you did or not. Yes, I’m being super sarcastic in New York. How about natural gas? When did natural gas become so hated by environmentalists? It’s responsible for reducing more carbon emissions than solar and wind over the past few years. For example, in Europe emissions in 2018, latest figures available, were 23% below 1990 levels. In the US, emissions fell 15% from 2005 to 2016. This was mostly due to more natural gas usage.

Frank Curzio: Again, this is political. Nobody cares about facts, data, numbers, just like they didn’t care about numbers during COVID. Just close everything, keep kids out of school for a year, make them wear masks. This is what we’re going to do, no matter what the data showed. But those who truly believe, if you’re a climate change fan and you’re way out there, which is fine. You could believe whatever you want to believe, it’s America, it’s a free country, believe it or not, whatever. But if you are really way out there and truly believe that we can achieve a hundred percent renewables in the US one day, maybe in 10 years, 20 years, I’ll give you 50 years. There’s something that you should know, if that happens in the US. It’s going to require using 50% of all the land in the US to make this happen.

Frank Curzio: You’re probably not going to live anywhere. You’re going to be living on a park bench someplace, if there’s any park benches available, which is cool, but the planet’s going to be saved. You think the planet’s going to be saved. You really don’t know, you think. That’s a stat you’re not going to hear from the EPA ever, ever, but that’s what a hundred percent renewables does. That’s okay. Nobody wants to ask for questions, right? Just, hey, this sounds like a good idea. Let’s do it. Let’s put a lot of money into it. You’re going to make money. Doesn’t matter, we have a blank check. We’re the government, we can print money forever. Who cares? Who gives a shit? Right? We just print money, print money, print money. I don’t know if we’ll ever make money on it. Who cares? I don’t care if you make, I don’t care if you make money, it’s not going to hurt me. I’m a politician, it’s not going to hurt me at all.

Frank Curzio: Just whatever you want to do, do it. Here’s a money for it. Sounds good. Wait, these people want it? Am I going to get their votes? Okay, let me throw money at it. That’s the political landscape. But turning on nuclear, opening the pipelines, producing more oil and gas in the US to where a portion of those profits will fund alternative energy projects, which by the way, right now, pay attention guys, because the cost to build renewables in Europe is now much, much lower than the current power prices that we’re seeing. Now, the power prices are really out of control in Europe. We’re seeing, I just mentioned natural gas in the UK, a hundred dollars, 500 dollar in natural gas. So, it costs 40 euros a megawatt on average to build a new solar and wind in Europe versus current European power prices that are closer to 150 euros to 200 euros. And that’s megawatt, depending on the country. Think about that. Four to five times more expensive, if you’re looking at that power prices right now.

Frank Curzio: That opens up the floodgate for alternative energy. There’s a solution right there where everyone wins. At least over the long-term, we’re producing more oil for now, funneling that money into alternative energy, which for the first time in decades, and maybe it’s been that way for a few months now, is economical. It was never economical. Now, it’s economical. So pay attention. Start looking at solar, wind, some of these names have gotten crushed for some reason. They’ve gotten crushed with this whole Russia thing, but now they’re starting to come back over the last couple days, if you notice. But massive money is flowing into these areas already based on politics alone, a hundred percent renewables. Again, we got to go over the top. We can’t say 30, 40% renewables. It’s got to be a hundred percent renewables. No more fossil fuels ever. Which is hilarious, right? Which is fine.

Frank Curzio: But you’re seeing all corporations, everybody pushing this way. And now, after the Russia crisis and where energy prices are and where they see they could be, not only is it very economical to produce wind, solar, hydro, which hydro is also bad to environments. I saw hydro plants, but they’re bad for environments because they can cause flooding. I don’t mean to be sarcastic or an asshole laughing, but I’ve been to a massive hydro plant and it’s unbelievable. And that’s 24-hour base load, because once you turn the water on, the water’s going to come on. And it flows through waterfalls and you’re seeing it. It’s unbelievable, saw a massive plant in Vancouver. I went to go visit it with Marion, it was incredible. But for some reason, hydro’s on that list of, don’t ask any questions why, but we don’t like hydro, could cause flooding. We’re not even talking about hydro. You’re looking at wind, solar projects, extremely economical. Does reduce the dependence of fossil fuels and it’s going to reduce dependence from countries that are not so friendly.

Frank Curzio: So, you can see the problem lies with the people making the decisions right now. They can do whatever’s in their best interest to line their pockets. Not your best interest, my best interest, definitely not the country’s best interest. No way. We’ve seen that over the past few years. No way. No way. You try going out 10:00 at night in New York City, in some of these major cities, good luck. I’ll give you 50-50, whether you get a beating or get robbed. Hopefully, that’s all that happens to you.

Frank Curzio: But turning on oil, natural gas, pipelines until this Russia thing blows over is logical and makes sense from every angle. It’s great for every American who’s now paying an absolute fortune to fuel their cars and homes. Why aren’t we doing this? I don’t know. I have no idea. Why not? Let’s go to Iran, let’s go to Venezuela, see if they’ll turn on their oil. What? Are you kidding me? Are you out of your mind? Is that really true? I’m looking to see if that’s fake news, maybe it is. Tell me if it’s fake news. But I’ve seen it on every station so far, I’ve seen it on CNN, which I watch sometimes. I see it on Fox sometimes. I mean that’s what’s being reported right now. Is that true? Remember, if you’ve been to these countries, holy cow, that’s a better solution than turning on the faucet here with the oil?

Frank Curzio: Because we see the problem right in front of us, we can make a number of decisions. But the option our politicians want, even US and Europe, is to cut off Russia oil exports, which is going to do what? And America just now, as I’m reporting and doing this podcast, it was announced this morning for the US to cut off Russia imports. But what is that going to do? It’s going to make oil prices absolutely surge even further, which we saw Monday morning when they were suggesting this, before they actually did it on Tuesday, today. It’s going to make Russia even stronger as China is going to buy all the energy Russia will send them now. But that’s our fucking solution, that’s what politicians believe, on both sides, is the answer.

Frank Curzio: That’s the answer they believe will help stop this thing. And I don’t know if they believe that’s going to curb oil prices, I don’t know if they know what’s going on or if they have to pay. I know they get driven around every place and get cars and picked up and complain about climate change while driving their private jets and getting flown everywhere. I get it. I don’t know. But the plan’s going to drastically increase the price of oil.

Frank Curzio: Now, let’s look at the bigger picture here for investment purposes because this is what we care about, ourselves. That’s what we need to care about. Can’t care about what the politicians are going to do because we know they don’t really care about us. So, if you look for investment purposes, commodities in general, it’s not just oil that’s surging, which I know some of you may feel like you missed a boat. It keeps going higher and higher. You didn’t want to buy these companies up two, 300% now. They keep going higher and higher. I get it. I’m about to share something that’s very alarming, very alarming with you. And I’m an optimist, most of the time. This is pretty negative. So, if you’re looking at commodity inventories, they’re at the lowest levels since 1990, so over 30 years, commodities as a whole, the lowest levels.

Frank Curzio: Now, what does that mean? It means we don’t have enough commodities to meet demand. And guys, this is not going to change overnight. How did this happen? Several reasons. Well, you have COVID, which demand fell off a cliff, so every commodity producer stop producing immediately, to cut costs. That was 2020. Now our government injected tens of trillions into the market, increasing demand. This came at a time when demand was starting to surge by itself in 2021, early 2021. Now, it’s surging much, much more. Now, we have massive demand and little supply, chips, uranium, oil, gas. Let’s go back to pre-COVID and let’s look at gold, silver, copper when miners were going through a massive bear market from end of 2011, 2012 to today outside of 2016, 17, gold, silver stocks fed pretty well for like a good nine, 12-month period. But mostly, it’s been a horrible, horrible market.

Frank Curzio: Now what happens during horrible markets? Now you can say the same with fertilizer, same with nickel, which is used to make batteries for EVs, which saw its price go from 20,000 to over a 100,000 in a few days due to massive shortcoming. Something, I can’t explain it in terms of the odds of that happening, the probability of that happening, it’s kind of like our stock market going up like two X immediately. It’s just off the charts, like rare, could ever happen. And that’s definitely not factored into EV stocks like Ford, GM, Tesla, every major car manufacturer, every one of them producing EVs. And it’s not that I would short all these names, I short Tesla since they’re going to own EV market for at least another 18 months.

Frank Curzio: These guys are not going to be able to produce EVs at the pace they’re forecasting, not even close over the next couple years. They just don’t have the supply. That’s why Ford keeps raising the amount of money it’s going to spend. Went from 22 billion, 18 months ago to 30 billion, six months ago. Now it’s 50 billion we’re going to spend. Why do you keep upping that number? Why, because you don’t have the supplies in place. You don’t even know where you’re going to get them. But we’re going to produce 2 million EVs in 2026. I think they produced over 2 million cars, all cars, for a three-year stretch, four-year stretch in the last like 10 years. It’s crazy.

Frank Curzio: But getting back to gold, silver, copper, where weak markets for the past decade resulted in little drilling for new projects. Now, when you look at oil and natural gas, you can get up and running pretty quickly. Again, that’s if you cap wells and want to start producing again. If you’re looking to drill from scratch, it’s not that difficult to get the permits in place, especially if they’re areas that already are giving tons of permits. And it’s probably going to be a little more relaxed now with oil prices higher and we’re looking at solutions. But then getting rigs there, fracking, again, I’ve been to every major shale area. I’ve hopped on rigs, takes a few months from scratch, a few months. We could increase production pretty quickly once we get the okay to drill.

Frank Curzio: Gold, silver, copper, that’s different. It takes 10 years or longer to build a mine. You’re talking about infrastructure, permitting, which is hard to get. You better know everyone in that area, every politician. Distribution, it’s massive. It’s crazy. It’s a crazy expensive process, which now makes a lot of sense to go balls to the wall with copper at $5. Holy cow. Gold over 2000, silver taking off. But these are the next commodities to surge, which we’re starting to see right now. Fertilizer, copper, gold, silver, wheat, corn coming on a nickel trade not long ago, which is hard to invest in. But if you missed a boat on oil, no worries, because these are areas that are set to explode with inventory so depleted. And look at aluminum, we have Alcoa in our Curzio Research Advisory portfolio, and we’re doing amazing on this thing.

Frank Curzio: I just read a note from Trafigura Group. Hopefully, I pronounced that right, but they’re giant metals trading firm. Trafigura, I think it’s called. So, they recently said, going to get a lot of these notes and stuff like that, and some of the stuff you have to pay for, but they said the deficit, talking about aluminum, is now moving at such a speed that it’s unsolvable. The world will run out of stockpiles, run out of stockpiles by early 2024, as Bloomberg reported. Aluminum prices have more than doubled since the first 2020 COVID shutdowns and now sits near a 13-year high. Guys, as you could see, it’s not just an oil problem. Inventories, commodities are at 30-year lows. It takes time to replenish those. What does this mean? Owning these commodities or gaining exposure to them is going to help you offset this massive of inflation risk. And it’s a inflation risk, and it gives me no pleasure in saying this. It’s going to be around for a long time. A very long time.

Frank Curzio: It’s going to take at least six months, minimum to years to increase inventories to meet massive demand for commodities, which we’re still seeing. Housing, as the market takes off, rates are going a little bit higher, but now much higher. That’s why this is something you can’t explain. This is a market that people, it’s confusing so many people. When you’re looking at the past, what happened? Forget about it. I say it a lot, throw out every investment book you ever read, because what’s going on right now, there’s no playbook. There’s nothing. There’s not like some play, hey, you know what, this team stopped the Chiefs like five games ago, let’s look at what they did to stop all those fast guys. There’s no playbook. The Fed doesn’t even know what’s going on. They’re supposed to be the smartest in a room and they are so far behind. Holy shit, are they far behind.

Frank Curzio: You think inflation’s going to start moderating in the months ahead, good luck. It going to take much, much, much longer. Which means the Fed better start raising by more than 25 basis points at, it’s meeting this month. Since you’re light years behind the curve, just get it over with, 50 basis point hike in March. The next meeting, another 50 basis point hike. And if you do that, it’s going to significantly lower that uncertainty and that inflationary risk, but that’s definitely not going to happen. It’s not priced into the Fed futures, which suggests zero, zero chance of a 50 basis point hike in March, zero. It’s going to be 25 basis. Powell actually said it’s going to be 25 basis when he testified in Congress last week.

Frank Curzio: So yes, this is going to be painful, but we’re talking about short-term pain. If the Fed raises aggressively, maybe 12 months or so compared to a long, drawn out inflationary trend that lasts for many, many years, which will be absolutely terrible for the markets because it’s going to create massive uncertainty to where the Fed continues to be behind the curve when it comes to tightening and you’re not going to know what they’re going to do. They’re going to do the same thing, oh, 50 basis, we got to get aggressive, they said it in November. Now this crisis came along. You’re like, well, let’s go easy. You can’t afford to go easy. It’s inflation. You have no choice. You’re handcuffed. You have no choice. Should have been raising rates over a year ago when we had all-time highs in every asset class in January, February 2021, a year later, whatever.

Frank Curzio: Let’s not talk about what you did, let’s talk about how you solve it. You solve it by raising rates, creating a more certainty. Otherwise, what’s, you think Russia and Ukraine is the last of the major events that’s going to disrupt the markets over the next two years. Are you crazy? China, Taiwan, which I don’t think will ever happen just because, we can’t do anything about Russia. We don’t import anything, whatever. And they know that. China, we could end them if we wanted to. We could just stop buying stuff and buy it every place else and destroy their economy. And that will be massive. It would crush us as well because we need rare earth minerals and stuff like that. But those tariffs, really, really, we could crush them compared to Russia, which we really can’t do anything to. We say we’re going to do stuff, but they’re like, we don’t care. We know the playbook, you did the same thing with sanctions last time we took go Georgia, last time we took over Crimea. We saw our currency absolutely crash. We know exactly what’s going to happen when we do this. And what do we do? We did exactly what Russia expected us to do with sanctions. Crazy.

Frank Curzio: So, not the best outlook here, but there’s ways to absolutely make a fortune in this market by having exposure to commodities. And personally, I do. I have uranium investments, gold investments. But I’ve had this exposure for a long time where they underperform the overall market for a while. Now, thank God, I have these things in my portfolio. And there are in a lot of portfolios at Curzio Research. Katusa has every right. I mean, Dollar Stock Club has a ton uranium stocks in it and gold stocks. We have gold stocks in both portfolios. Fertilizer stocks, aluminum stocks, because let me tell you something, if I didn’t have that, the rest of the portfolio and everyone has the exposure to technology is getting absolutely annihilated. Some of this stuff I’m still holding onto. Everyone is. You look at Nike, Starbucks, you look at Netflix.

Frank Curzio: I mean a lot of these names, a lot of great names are down tremendously, tremendously here. To diversify, you have to have exposure to commodities because if you have a hundred percent long-only portfolio, and it’s equity portfolio and you have no exposure to gold, Bitcoin, commodities, it’s very, very dangerous as you’re seeing. Even airlines, cruises, banks, I thought they were all fantastic bets. And some of those are found in our portfolios as well. They should be doing very, very well in the environment, pre oil prices surging, so pre-Russia, but now they’re trading their lows again because of the massive increase in oil prices, which is definitely going to hurt travel. I mean 70, 80, 90, these stocks were higher, a 110, 120, 130 or higher, no, that’s a difference. That’s a difference maker. That’s the difference of people not traveling or going away and saying, forget it. I can’t afford these flights, the rental cars. I can’t afford it right now. Let’s just wait. Let’s do something else.

Frank Curzio: So, I’m going to leave you one last note here, since I’m running a little late and I’d like to keep these in 30 minutes. And this is from the head of commodities at Goldman Sachs, he says, so when we think about this space and going forward, he’s talk about commodities. Let’s say there are $250 trillion of assets under management in the world right now, if only 1% of it goes into commodities, that’s $2.5 trillion. He says, do you know what the amount of investment in commodities is right now? It’s somewhere around $225 billion. So 1% would equal 2.5 trillion. Right now, it’s 225 billion. He says just minuscule relative to the potential. So, I would tend to think a large portion of these asset managers around the world, these guys are getting crushed, are going have to turn to physical goods, physical commodities as a way to hedge that kind of risk as we start to look out further and the risks associated with decarbonization. And I’d also throw inflation in there. That’s very powerful. Just 1%.

Frank Curzio: So, that’s why you’re seeing gold start to rise. You seeing gold stocks start doing well. You look at silver, you look at fertilizer and different… Mosaic, we have in the portfolio. It’s doing very well. Alcoa, where you’re looking at commodities in general to think that, hey, this is just a quick trend that’s going to reverse. Guys, I showed you inventories at 30-year lows, you can’t increase inventories overnight. You can’t do it. It takes months and even many, many years, if you’re looking at the metals. I don’t know what the Fed’s going to do. The Fed doesn’t know what it’s going to do. I know what they need to do. They need to raise rates. It’s going to hurt the market. It’s going to push us into recession, but we’re looking at 12 months of uncertainty compared to many, many years. That’s the path we’re taking right now. And our politicians, forget it. Holy shit. I wouldn’t be surprised if oil goes over 200. If they get Europe, if they do not produce, if we’re not allowed to produce more oil here and we get Europe to basically ban those imports, they’re dead. Europe’s dead in water. And prices easily go past 200 a barrel.

Frank Curzio: Hopefully, that’s not the case, we find a solution. But that’s not the answer. I don’t know what is the answer, but I know that the current answer to the current solution is hurting everyone else except for Russia, except for Iran, except for Venezuela and the countries that hate us the most. That’s very, very dangerous. These guys owning coal, uranium, gold, silver, these commodities, they haven’t surge yet. Coal prices have, but still most people avoiding coal stocks like the plague. They hate them. And that’s fine. Gives you an opportunity to buy some of these things.

Frank Curzio: But if you’re looking at coal stocks, they producing more cash than an entire market caps. Think about that for a minute. I don’t know if you technical analyst, if fundamental, that never happens. You’ll never see that. Right now, as of three, four months ago. Now these stocks are starting to move higher. The coal names, very attractive. People are turning on to coal. Aluminum is still a buy. Lithium companies, not many out there. Fertilizer names. So those of you who missed boat in oil, there’s tons of areas I focus on. You can find these names throughout our portfolios, but now it’s going to help you reduce inflation risk, which is going to be around for a very, very long time, guys. Very, very long time. I just explained that and showed you statistics. It’s going to help hedge your portfolio that’s probably getting wrecked right now. If you have tons of exposure to technology, growth, biotech, which continues to get nailed.

Frank Curzio: So, I hope this helps. Quick note here. Thursday’s podcast is going to be a great one. My interview’s with Amir Adnani who was the founder, CEO of UEC. One of the smartest people in the uranium industry, spent his entire life in uranium. I went to go see his Hobson plant in Texas. This is about seven, eight years ago, very familiar with uranium and the industry. He’s going to break down what’s going on right now. A lot of stuff, including what he’s hearing from the heads of states about reopening nuclear plants across Europe. Is that going to happen? Is it not going to happen? He’s a person that will have an inside scoop on this. So, definitely listen to Thursday’s podcast.

Frank Curzio: Guys, this is it for me. Questions, comments, you’re free to email them to frank@curzioresearch.com. That’s frank@curzioresearch.com. Can’t wait to get the emails for this podcast. Have a great day. I’ll see you guys tomorrow. Take care.

Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged

 is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.

Frank Curzio
Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 12 million times.

Editor’s note:

You don’t have to look further than The Dollar Stock Club portfolio to see just how well commodities are doing… with gains like 89%… 163%… and 168%… across spaces like aluminum, uranium, and oil.

And there’s plenty more upside from here…

For just $4 a month, this advisory is the easiest way to get exposure to commodities today.

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