Weekly Nuggets #35
This thirty-fifth edition of the Weekly Nuggets highlights a world economy increasingly shaped by scarcity, fragmentation, and the unintended consequences of rapid technological change.
While financial markets have largely absorbed the recent energy shock associated with disruptions in the Strait of Hormuz, the episode serves as a reminder that supply chains, commodity markets, and geopolitical developments remain deeply interconnected.
Several of this week’s discussions focus on the growing tension between inflationary pressures and economic growth. Rising sovereign bond yields, concerns over fiscal sustainability, persistent cost-of-living challenges, and tightening resource constraints all point toward a macroeconomic environment that looks increasingly different from the disinflationary world that prevailed for much of the past two decades.
Importantly, the AI-driven investment boom continues to reshape markets, capital flows, and corporate profitability. At any rate, many of the benefits remain concentrated in a relatively small group of companies, while the enormous demand for energy, semiconductors, and industrial materials raises significant questions about future inflation, productivity, and economic resilience.
The material gathered this week also revisits several recurring themes, including the enduring appeal of gold, the changing nature of speculation and gambling in financial markets, and the gradual reconfiguration of the global monetary and economic order.
As always, the Weekly Nuggets seeks not to predict short-term market fluctuations, but rather to identify the deeper structural trends increasingly defining the emerging macroeconomic landscape.
Tweets/Notes/Posts
1/ For sophisticated investors and trained financial experts, the fact that the typical fund manager simply follows the herd, at least when it comes to gold, is a real eye-opener.
2/ In case you were wondering, the Strait of Hormuz is effectively closed. Could it be that no one wants to pay the yuan-denominated toll fee to Iran?
3/ Accordingly, stocks of crude oil and derivative products have reached dangerous low levels. Nevertheless, the situation is far from being dire.
4/ Indeed, it seems the oil shock has passed. Naturally, it was only a matter of time for markets to adapt and correct the imbalance in the energy markets. Although the situation is not resolved, the light at the end of the tunnel is quickly approaching.
5/ Surprisingly to many people, the US, after triggering the energy crisis, has also been the main contributor to fix it… but the chief beneficiary too.
6/ However, holders of US Treasuries have grown increasingly anxious about the financial health of the US government. The fact that breakeven rates have barely budged, while premiums drove the rise in yields, it suggests bond vigilantism is cropping up again.
7/ This is the power of inflation. It may wreak havoc on society and widen wealth disparities, but it produces trillionaires. Doesn’t it make it all worth it?
8/ Speaking of widening disparities, the relentless earnings growth and massive profit margin expansion, along with the equities bull market, have been entirely concentrated in the tech sector. The question now is: when will the AI gains propagate to the other sectors?
9/ Fascinatingly, the performance of the US stock market has paled in comparison to most of the rest of the world since 2025. The scramble for chips has truly been wild.
10/ I guess we can throw the notion that the post-GFC economic recovery was occasioned by the wealth effect of the rising asset values.
Cartoons/Memes
1/ Finally, a Hollywood movie worth watching!
Podcasts/Interviews/Presentations
1/ How Low Will Gold & Silver Go? — Andy Schectman| Thoughtful Money
Commentary
In a recent interview on the Thoughtful Money podcast, hosted by Adam Taggart, Andy Schectman, CEO of Miles Franklin, reiterated his view that precious metals remain in a long-term bull market. While he acknowledged the possibility of short-term volatility, he expressed confidence that gold and silver prices are unlikely to fall much further and that new highs still lie ahead.
One segment that stood out was Schectman’s argument that growing activity on precious metals exchanges in Shanghai, Dubai, Mumbai, and Moscow demonstrates that prices established in Western markets, primarily London and New York, no longer reflect true global demand. This is a familiar talking point among precious metals bulls, but it is also an overly simplistic one.
Basically, price discrepancies between Eastern and Western exchanges are not evidence that Western benchmark prices are fundamentally broken. Rather, they typically reflect temporary surges in local demand or short-term supply constraints, which are quickly arbitraged away through international trading. While gold and silver may trade at premiums on Eastern exchanges at certain times, those premiums routinely narrow, disappear, or even reverse into discounts. The persistent convergence of prices across markets suggests that arbitrage mechanisms remain effective.
Despite recurring claims that the COMEX or the LBMA have lost their relevance, the evidence indicates that Western markets continue to serve as the dominant global price setters and liquidity providers for precious metals. Regional premiums and discounts may offer useful information about local market conditions, but they do not invalidate the central role that London and New York continue to play in global price discovery.
2/ The AI Cycle Will Turn This Year but First Things Get Even Crazier — Andreas Steno Larsen | The Monetary Matters Network & Real Vision
Commentary
In a recent appearance on the Other People’s Money podcast, hosted by Max Wiethe, Andreas Steno Larsen discussed the near-term and long-term consequences of the AI revolution for businesses, labor markets, and the broader economy. While he acknowledged the enormous productivity potential of artificial intelligence, Larsen focused on the constraints that could shape the transition period.
One of the more thought-provoking parts of the discussion was his challenge to the conventional view that technological progress is inherently disinflationary. For decades, advances in technology have reduced costs and improved productivity, helping to offset rising prices. However, Larsen argued that this trend may be nearing its limits.
According to Larsen, the rapid expansion of AI infrastructure is creating unprecedented demand for energy, metals, semiconductors, and other critical inputs. At the same time, supply chains remain strained and vulnerable to geopolitical disruptions, like those affecting trade flows through the Strait of Hormuz. As a result, shortages across the AI supply chain could contribute to a period of structurally higher inflation and rising living costs, with productivity gains proving insufficient to fully offset these pressures.
Nevertheless, such bottlenecks inevitably create winners. Larsen highlighted the investment opportunities emerging within the AI supply chain, particularly among companies involved in energy, critical materials, semiconductors, and supporting infrastructure. In his view, many of these beneficiaries remain overlooked by investors who continue to focus primarily on the most visible AI software companies.
Quotes
1/ A decade ago, the market capitalization of US semiconductor stocks was less than half the market cap of all US energy stocks. Today, this same ratio is fast approaching 5.5x with most of the gains appearing following the release of OpenAI’s ChatGPT in November 2022.” – Louis-Vincent Gave.
2/ “Commercial inventories of crude oil, of liquids, think petroleum, gasoline, diesel, jet fuel, they’ve all run down... We’re approaching unheard of inventory levels… [W]hen the [crude oil] price gets to a certain level, demand destruction brings it back into balance. Prices go so high, it becomes unaffordable. And that’s what happens. And so we’re at that level right now.” – Neil Chapman, Senior VP of ExxonMobil.
3/ “Of all the structural changes that it brings, the most significant will be the creation of something called a euro that is neither a single currency, nor the European currency nor, in most jurisdictions in Europe, a currency at all.” – Russell Napier.
Charts
1/ Undoubtedly, stock markets have boomed recently solely on account of the soaring demand for chips and other hardware to build the AI infrastructure.
2/ As asserted above, the cost-of-living was going to outpace wage growth. Apparently, we’ve entered that pitiful reality.
3/ Of all the things that could be more expensive, beef is certainly one of the worst. At least alcohol is still fairly cheap.
Articles/News
1/ Au so chic: Paris Mint to issue first solid-gold coins in a century
Commentary
The decision by the Monnaie de Paris to issue its first solid-gold investment coins in a century reflects the growing appeal of gold among investors seeking protection against inflation, financial uncertainty, and currency debasement. Beginning on June 16, four versions of the new Marianne bullion coin will be offered, marking the return of a French investment coin for the first time since the era of the Napoleon and Louis gold pieces.
Perhaps more interesting is the Mint’s decision to introduce a digital “e-Marianne” option. Investors will be able to own physical gold without having to store or secure it themselves, combining the traditional appeal of bullion ownership with the convenience of a modern financial product.
The initiative highlights how even long-established institutions are adapting to changing investor preferences. While demand for physical gold remains strong, many investors increasingly value accessibility and ease of ownership. By offering both physical and digitally held gold, the Paris Mint is seeking to appeal to both traditional savers and a new generation of investors, underscoring gold’s continued relevance in an increasingly digital financial world.
2/ Trad bookies ♥ prediction markets
https://www.ft.com/content/5794e8f1-32d5-4cdf-834c-4febf9ef5334?syn-25a6b1a6=1
Commentary
For those less attentive, prediction markets such as Kalshi and Polymarket have been portraying themselves as something more sophisticated than traditional gambling. By framing their platforms as tools for information discovery, risk hedging, and forecasting, they have blurred the line between investing and betting. In any event, as this recent FT Alphaville article highlights, the rapid growth of so-called “combos” – the prediction-market equivalent of sports betting parlays – suggests that many users are ultimately seeking the same speculative thrill that has long driven the gambling industry.
The success of combos is particularly revealing. Parlays transformed the economics of sports betting because they offered large potential payouts while embedding odds that strongly favored operators. Despite prediction markets’ claims that they are fairer because they operate through peer-to-peer trading rather than a traditional house model, the emergence of market makers and combo products has recreated many of the same incentives and outcomes found in conventional sportsbooks. As the article notes, established gambling companies are already profiting from this trend.
What prediction markets have really achieved is not the elimination of gambling, but its rebranding. The language may have shifted from wagers to forecasts and from gamblers to traders, yet the speculative behavior remains largely unchanged. Moreover, concerns about insider trading and attempts to influence real-world outcomes continue to cast a shadow over these markets. Parlays may have been renamed combos, but the house is still winning.