hello and welcome to commodity culture where our goal is to make you a better investor in the commodity space my name is Jesse day before we dive in standard disclaimer nothing here is investment advice do your own due diligence and today's episode is brought to you by Ark silver gold osmium they offer personalized service and competitive prices with no minimum purchase for silver gold platinum or osmium here's just some of the comments left on this YouTube channel about Arc sgo and owner Ian everard have bought from Arc good source and price I cannot say enough good about Ian and his company he is the most honest individual I could find in order to buy precious medals if you were looking to buy precious medals I recommend Ian at ARK silver he is a straight shooter so go to argo. com and contact Ian everard today at 307 264 9441 or by email at Ian Argo and make sure to tell him that commodity culture sent you and today's guest has a wealth of experience in the mining industry and is an expert on geopolitics China and the Commodities sector and the founder of Simon hunt strategic Services it's Simon hunt welcome to the show Good afternoon well I want to get started with a broad overview from your perspective of the global economy and financial markets you could take this any direction you want to go geop politics what are the main themes and Trends you're watching right now that you think more investors should be paying attention to big question and probably the most important one I think there are two themes we need to be watching very carefully the first is the likelihood that America and most of the rest of the world will be in recession in the second half of this year the second is that there's the probability that Wars in Europe will escalate wars in the Middle East will escalate that there is a risk and I emphasize risk that a Cyber attack will shut down Bank computers and possibly also Airline excuse me Airline and electricity grid computers the the Cyber attack could actually be undertaken by the G7 country's intelligence Services obviously to accuse Russia for doing it with the objective of when the system is reopened that they introduce Central Bank digital currencies what does this mean for markets first of all markets have been assuming that everything is hunky dory in the world that valuations are being priced for a stable world and that a shock will come unexpectedly to most Market participants so that we will see by the end of this year or early next year to take the S&P as an example a 40 odd percent correction in the S&P index down to 3,000 most other markets will follow suit it means also that inflation will remain sticky putting it politely and that the FED will be reluctant to lower interest rates this year in fact there's probably a debate going on within policy makers in Washington do we defend the dollar or do we defend the treasury markets obviously those who voice for defending the dollar would be the neocons since it would be part of their posturing to retain America's hemony so the likelihood is that America sorry that the dollar will remain at around current levels before declining sharply next year I think the big risk to Market is that if as I think very likely that Wars escalate then Japan will be wanting to bring back most of its foreign investments which at the end of last year total something like four trillion that would have massive implications or financial markets since it would be the end of the carry trade so really what I'm saying is that we the world is sitting on a precipice that there will be shocks coming in the second half of the year which will impact financial markets commodity markets and the way you and I spend our money very interesting you know I think a lot of people have kind of gotten complacent since all the restrictions from the pandemic were removed people are thinking well now we're back to the world is normal and I think as as you're saying markets are reflecting that sort of attitude you meant that that's very interesting that you mentioned the potential for a Cyber attack particularly on the banking sector to then potentially introduce a cbdc um is because of that risk does that make it more important for people to hold wealth outside of the banking system in the form of whether that be gold or silver cash under the mattresses well how can people kind of mitigate that potential risk what are your thoughts exactly what you said to hold assets outside the banking system to hold physical assets like Precious Metals gold in particular because I think within a very few years probably within three years within the brics group of Nations gold will be back in the monetary system but I think the other very important asset that people should hold particularly households is food food is going to be in short supply somebody for instance told me that one of the burger chain restaurants in America is no longer selling beef burgers because they have no beef chicken burgers so it's very important to hold um enough food to last not just for a couple of weeks but for a year or so I mean I have advised my son son's family and my daughter's family to do likewise the food is going to be in short supply one because of the wars two because of um disruptions to supply chains I mean even here in Dubai I find that my usual red wine the hotel's out of stock which doesn't mean the hotel's out of stock it's their supplier is out of stock so already if you look around there are pockets of short supplies so just wait until we have the real shock it's going to be nasty so having enough food will be your savior yeah that's a very good point and one that I think most people don't consider I want to shift to The Copper sector right now because you research the global economy and how it impacts the copper Market talk to us about your main findings there when it comes to Copper not what you hear or mostly read from investment Banks I have to say but I've been involved in the copper industry ever since a child when my father was involved in it in Northern risia now Zambia and I worked for two major copper companies uh my take is this physical consumption is weak globally and is particularly weak in China there is plenty of copper most of it is being held outside the exchanges but even in China on the Shanghai Futures exchange you've got 300,000 tons of copper there will probably be a small Surplus this year next year so I should come come back to this year what we've seen in this massive spike in prices was funds and Banks going very long of copper Futures in the process squeez people on comx metal is being diverted to comex which will start arriving in comx warehouses early next month the fact that proper consumption will get even weaker as the world evolves into recession in the second half of this year so that consumption will be weaker than the possibility of a fall in production there's the risk of at least one big strike in Chile and the potential for a strike in Zambia and DRC because of very high inflation and workers will be demanding a big increase in wages so I think that by early next year copper prices will fall to below $7,000 from the current where wherever we are 10,500 something like that but next year is going to be very interesting one the dollar will fall sharply because the FED will be unleashing with the new government will be unleashing a huge monetary and fiscal stimulus two there will be a recovery in PH in physical consumption China will be recovering quite sharply by the end of this year and the ECB will also be stimulating so we see first of all a recovery in actual physical consumption secondly the dollar falling inflation Rising manufacturing will add to inventory of physical copper semis products Etc right through the whole manufacturing chain so let's say that real physical consumption Rises by 4% next year which I think is probable you probably need to add on another two percentage points to um to allow for manufacturing restocking so you get a 6% increase in physical consumption add to that you have the funds going crazy again as they always do when the dollar Falls and inflation Rises they look for their Hedges one of which is copper production will probably be rising a tad but not dramatically so on our numbers we look for a deficit next year a proper deficit not one that is um put out by many of the investment Banks this year a real deficit of around 900,000 tons so prices go from a low of say 7,000 tons by early next year to around 14,000 tons or doubling in price when we when 2 5 26 in the early months of 27 that may appear sharp but go back to 7879 in the pace of 12 months copper prices Rose by I think it was 75% what happens then problem is that with high inflation Global inflation probably around 15% and US inflation around 133% what do the Bond vigilantes do they don't like it so you get take 10 year treasuries would be Ys will be rising over 10% and Global long-term bonds equally if not more what does that do to a highly indebted system is going to crash it so all asset prices other than food precious metals will collapse I won't give you numbers for where we see the S&P because you need a big dose of whiskey um and you will see copper prices and other Bas metal prices at levels that are outside people's comprehension so we then move into a completely different era which will be not just one of financial panic but real wars both within countries and between countries and I think that's going to be five to seven years of very nasty and difficult times at the end of which the world will be restructured it will be no longer will it be an American hedgy it would be a world a multilateral world led by China and Russia and we will get peace inflation will have been killed the way forward won't be debt it would be equity and we enter the next long-term Global 40-year period of growth back to what the average we've seen since 1900 of GDP averaging 4% a year the problem then is what will what currency will copper another base Metals be priced in if you look back profits that copper producers have made since 1980 are illusionary because a$1 1980 today is worth 25 cents slowly I think developing countries are realizing that linking prices to linking prices to dollars is not the way forward so I think the way forward well I think I mean within five years if not within three years bricks members won't be 10 there'll be 40 and those additional members will include a number of Base metal producing countries so you go back to old connell's famous words Commodities are our assets but your problem so that really comes back to what sort of currency should we expect from the bricks the first step is obviously going to be using blockchain technology and others to create a trade and investment platform that obviates the need for the dollar I local currencies the stage will come quite soon when China will will announce our currency is backed by the gold which our c hold which based on numbers that friends of mine have done is about 23,000 tons today and in which in recent months China's government has has wanted its citizens to increase their goal Holdings by the pboc setting up platforms that households can buy gold physically off the Shanghai Gold Exchange from their bank accounts even on a monthly payment system so when that happens I think Russia will follow suit and say the ruble is backed by the gold that we own which is over 12,000 tons and increasing by 3 to 400 tons a year so the next stage and I don't have details but one can suspect that rcks will develop their currency platform linked to Gold just as quietly Russia is linking the oil price to to ounces of gold That's the Way Forward I do want to hone in on China for a moment here an area that you have a lot of experience and you've just laid out a very interesting scenario there however we we hear a lot of conflicting reports from various media sources when it comes to China some of them say the economy is in shambles their demographic data is looking really bad for the future and they're on the verge of collapse obviously that's kind of the western mainstream media narrative you have people on the other side yeah you have people on the other side saying that actually China is one of the next Global superpowers you mentioned in the in the new world forward that it will be Russia and China that will lead the way and China's obviously a commodity Powerhouse um so I'm wondering how you could maybe if you could maybe shed some more light on on China's role in the years ahead and the strength that you see um coming from China right now China's economy is obviously in a transitioning phase trans transiting from Eon an economy driven by real estate towards economy now being driven by manufacturing and China is not going to reverse course and allow so much of their investment to be channeled into speculation whether whether it be property or the stock market they want the stock market to be driven by fundamentals and in fact just the other day they have announced a huge Crackdown on financial speculation and the financial markets we don't quite know yet what's going to emerge but clearly there's a big Crackdown coming so China is having to as it transits to manufacturing at the same time it understands what's happening in the big wide world and is having to make contingency plans in the event of War I mean there are some Factory sources tell me that they are having to allocate floor space to producing Goods for the PLA and you can see they're preparing for war by cleaning up the pla weather War materializes it doesn't matter they're making the preparations I think a second factor is is they understand that they understand the debt issues that all G7 countries have got themselves into and don't want to get their own economy into it's interesting that as a percentage of GDP central government and local government debt is 55% of GDP the big numbers are corporate debt 120% plus household debt which is mostly mortgages 61% and then you've got the off-balance sheet local government debt of over 60 trillion R&B approximately 10 trillion US dollars so what they are probably going to do or will announce after the third plenum in July is a very specific designated infrastructure program to help to help local governments get out of their debt mess and to give them the means of actually releasing projects I mean for instance I'm reliably told local governments in northern China are bust and cannot issue any um projects and for copper I'm told there is no no consumption is flat period if not falling in northern China which is about 30% of China's copper consumption so what this will do will be lay the foundations for a cyclical recovery I emphasize cyclical and that will gather Pace in the second half of this year and obviously into 2025 which will then coincide with what the rest of the world is doing I think the big theme in China is that they are very long-term planners and she was brought in to clean up the speculative mess caused by his predecessors and to strengthen the party so as part of that China is BR everything back into its own arms I. E the S soes at the expense of the private sector and you you can hear chatter about how different in different sectors private companies are falling by the wayside so once they've cleaned up the mess and got their arms around everything then I think you will find in maybe 10 years time time 15 years time that it's back to releasing the energy of the private sector so that I think is the big picture very well said um fascinating breakdown I'm wondering what your thoughts are on oil markets at the moment and and where you see energy headed as we speak today WTI Crude at $80 a barrel again um you know there's been a lot of talk out there from various politicians about the so-called green energy Revolution as a lot of people I've spoken to point out it's not sustainable to be building solar panels and and windmills everywhere and that we're going to need oil for a very long time to come I'm wondering what your thoughts are on the oil Market are you is it is it bullish over the long run in your view first of all I think green energy is a political Ploy it's completely unsustainable and in fact CEO of Exon at a meeting in November last year an APC meeting I think it was said it very clearly we invest in fossil fuels we do not invest in Renewables but we do invest in technology that reduces emissions that was brilliant so what does it mean for oil I think there is a risk between now and early next year of oil falling quite sharply because of weak demand recession but from the early months of next year we see oil Rising very sharply indeed the one thing that we have to watch which will cause my forecast of oil weakening in the second half of this year to be wrong is that should Israel stroke America launch a specific attack on Iran on specific infrastructure Iran has made preparations by putting explosives on the floor bed of the horo Straits which at the click of a switch they can shut the whole hos Straits down but longer term oil is here and we will see without the Straits being shut down I think oil by the end of next year will be 150 something like that I want to Circle back to your discussion of the future ahead um new world where Equity instead of debt is driving the economy and you said it's led by by Russia and China and the the brics Nations um as well how do you think about different political leadership around the world in the sense that for most people who subscribe to the mainstream Western View they would consider that some kind of catastrophe like oh my God if if Russia and China are in charge they're just going to enslave the world it's going to be a dystopia across the planet I I mean we're seeing Western governments turn more and more authoritarian but it feels like a lot of the population in those countries is refusing to wake up to that fact because I think it's just too terrifying to consider we're the de we're the democracies we're we're the the people that tell the rest of the world how to be free and yet now here here's what's happening in places you know like Canada where I'm from where they they freeze people's bank accounts trying to police hate speech now you know Scotland UK the list goes on and on um how do you think about that in terms of you know the Chinese are in control the Russians are in control is it is it the case of you know the the cleanest dirty shirt in the laundry bin I think at the end of the day the vast majority of politicians have some element of of sociopathy to their to their makeup they crave power um is it a matter of just like everybody's a bad guy but the one that causes the least damage would be best to be in charge or is it not like that have have we been misled at large about Russia and China and are they actually benevolent governments I think you you you've summed it up in your last sentence I think that the media as you know is controlled and part of that control is to make people believe that Russia and China are bad boys they are full-blooded Communists no free speech etc etc etc whereas yes China in particular is an authoritarian government but it's a pragmatic one the second point I'd make is they won't control the world it's a multilateral world in which the members of bricks all have to agree they have big arguments so it's a it's it'll be a different world structure but one that will not be dominated by any one country that uses any excuse to attack invade issue sanctions against any other country where really has has no rightful reason to do that why is it causing disturbances in places like Georgia even in your country it's we have to control the world you have to do what we tell you to do whereas I think that in the bricks world that won't be the case you get on with your life in your own country um whether we like it or not interesting well Simon this has been a fantastic conversation thank you so much for coming on the show before I do let you go um tell us about Simon hunt strategic Services what it is you do there and where people can find that um you can go on to Simon Das hunt.
com where you'll find information about what we do and how you can subscribe to our services great well I'll put a link to that in the description below so people can check that out thank you once again and Simon for coming on and sharing your knowledge with the audience good I enjoyed it thank you for having me and thank you for joining us today as a reminder this episode is brought to you by Ark silver gold osmium go to argo. com for all of your precious medals needs and contact owner Ian everard today at 30726 49441 or by email at Ian argo.
