History repeats; don’t get caught on the Wrong Side

Earlier in the week, I laid out why the AI trade is wearing thin.

Describing this as a bull market that’s descending into its twilight years.

And as I warned, the charlatans in charge will do all they can to keep the gravy train rolling.

Finding new ways to squeeze every dollar out of retail investors who are ready and willing to give away their measly savings to billionaires via the stock market.

And right on time, Altman delivered.

As you might have seen, artificial intelligence has come under intense scrutiny in recent days, following warnings about the serious risks it poses to humanity.

OpenAI announced that its AI models are misbehaving (again).

Apparently, generating instructions to circumvent restrictions imposed on them, hiding mistakes, and fabricating information.

Goodness me, how scary, I’d better top up my NVIDIA holdings just in case.

The real story of how CEO’s Operate

Now, I’m as far from an expert on AI as you could get.

However, I do have a first-hand understanding of market behaviour. And that comes from working at several listed companies over the years.

And whether it’s the executive of a mining firm or the CEO of a major tech company. The game is the same:

To keep your share price high, you need to hold investors’ attention.

And that’s what ‘rogue AI’ is all about.

Fear sells. What we’re witnessing is market propaganda at its best.

You may have heard the quote that some attribute to Mark Twain describing a gold mine as nothing but a hole in the ground with a liar at the top.

In many cases, that’s true.

But today, the ultimate fraudsters sit high up in Silicon Valley using media patsies to keep this bull market steaming along. And as I said, retail investors continue to lap it up.

And if you want to participate in that, by all means, go for it. The final throes of any bull market often deliver the most spectacular gains of all. Pushing everyone to go ‘all-in.’

But just make sure you’re not sitting on the wrong side once they discover they’ve been duped. Sentiment could give way quickly, especially in today’s era of automatic trade desks.

How does this link to Commodities?

So, let’s bring this back to resources, specifically, what happens to commodities when US tech begins to unwind?

The assumption here is that AI is the key driver of today’s rising commodity prices, particularly certain critical minerals, including copper.

An expected explosion in AI data centre construction is driving up commodity futures prices.

But a few things to keep in mind…

Why are virtually all commodities lifting regardless of whether they have any connection with AI or not?

I don’t know about you, but I haven’t been able to find any practical link between this year’s surge in wheat prices and the ramp-up in CPU chip production.

Maybe the workers are getting hungrier? Who knows.

Whether it’s gold, platinum, or wheat, commodities are experiencing price inflation across the board.

This is evidence that the commodity cycle is at work, and that’s going to happen with or without an AI boom.

Over the coming weeks, I will continue to explore some of the major underlying factors that could really be underpinning this multi-commodity uplift: Beyond AI.

And why you should be looking at this asset class via the lens of a long-term growth story, not a temporary speculative haze.

I’ll leave it there for today.

Have a great weekend ahead.