Gold: A Structural Buyer Welcomes Lower Prices
After fifty years in markets, I've learned to participate in them for money, not for excitement. I am not an excitable person, and that temperament shapes everything that follows. I am certain that ten years from now the gold price will be much higher—at least in nominal terms—than it is today. That conviction makes me a structural buyer of gold, and for a structural buyer, lower prices are a benefit rather than a threat.
Consider a simple thought experiment: if gold moved $1,000 in either direction from here, my behavior would be asymmetric. If it rose $1,000, I would not be a seller. If it fell $1,000, I would be a big buyer. Lower prices are squarely in my interest. Some investors feel very differently, but that is because they are watching price instead of value. Gold's recent weakness—its high was somewhere around $5,500–$5,600, and it has since pulled back to just north of $4,000, printing lower lows on the way down to around $4,100 and then south of $4,000—only feels painful if you fixate on the quote rather than the underlying worth.
Gold Stocks Are the Cheapest I've Seen in Forty Years
The way I value gold mining equities is against their net present value, assuming their production is sold at today's spot price. On that basis, gold stocks are as cheap as I've seen them in forty years—largely because producer margins have become so high while the equities have not kept pace. It wouldn't surprise me to see them get cheaper still, but I don't care, because my discipline is about the delta between price and value, not about calling the exact bottom.
There is a personal irony in this timing that delights me. This market malaise happens to coincide with a conference featuring curated, hard-worked content on mining shares. It would have been embarrassing to stand at the podium and tell people I had assembled a great composite of mining shares that were all too expensive to buy. Instead, the curated content is arriving simultaneously with reasonable entry points—a happy coincidence.
Why I Ignore the Charts
There is a notable divergence worth pointing out: gold itself made a new low on this last pullback, yet the large-cap miner index (GDX) made a lower high rather than a lower low. Does that divergence mean anything to me? No. I leave technical analysis to the technicians. My entire life is about the delta between price and value. Perhaps because I ignore technical analysis, my timing is usually lousy—markets often reveal more through divergences than headlines ever will, but reading those signals is not my craft.
The honest reason is one of time. Fundamental analysis—the net present value and net asset value calculations I run—consumes all of my hours. After fifty years, I sometimes wish I had learned more about technical analysis, but I simply don't have time to acquire a new skill. That is exactly why I value bringing different expertise to bear on the same challenges: I do the valuation work, and others handle the charts.
The payoff of this approach is that entrances driven by value rather than momentum take care of their own exits. If you enter well, the exit resolves itself.
Silver: A Speculation That Went Hyperbolic
Silver is a chart I can actually speak to. It ran up to around $120 or a bit north of that in a classic hyperbolic advance—what Canadians call a "hockey stick" graph. Such moves almost always reconcile themselves downward. Silver has since taken a roughly 50% haircut from those highs. The backside of a hockey stick is just as steep as the front side; it's simply a lot less fun if you're on the wrong side of it.
The rule I follow is straightforward: if I'm already in an asset class and I see a chart that looks like that vertical hockey stick, I become a seller. Conversely, if I want to be in an asset class and I see a hyperbolic down move, I am often a buyer.
That said, I didn't sell silver merely because of the hockey stick pattern. I sold because I owned silver in a speculative account, and my entire thesis for owning it was that once silver became an unhated asset, it would recover in price. It didn't merely recover—it went hyperbolic. In this particular case the chart genuinely does explain my timing. Did I sell anywhere near the top? No. Did I take a great big, fat slug out of the middle? Yes—and that is the best I can realistically hope to do.
My average entry was around $25. I tend to hold things far longer than traders do. For a while, the time value of money worked against the trade, but the truth is that when you enter well, you eventually reach a period where you're paid so much "rent" that the time value of money becomes irrelevant. A highly certain four- or five-year trade that carries you from roughly $20 to $75 is a great deal of fun. Plenty of commentators promise 90-day triples; the problem is that very few people ever actually experience them.
I Save in Gold and Speculate in Silver—Through the Equities
I do not buy silver bullion. I save in gold and I speculate in silver. My silver speculation was premised on the metal being hated, and it isn't hated yet—which is one reason I've stepped back. Curiously, the silver stocks are cheaper than silver itself, which sets up an attractive asymmetry:
- If silver rises, the silver stocks will probably rise with it.
- If silver trades sideways, the silver stocks—priced at a discount to today's value of silver—will likely outperform the metal.
- If silver declines, the mining valuations already discount lower prices, so they will probably decline less than the metal.
Weighing those three outcomes, I now prefer to express my speculative instincts through silver equities rather than silver itself. As for whether the junior silver miners have bottomed—one junior index (SIJ) essentially flatlined even as silver fell—I leave that to the chartists. All I do is relative valuations.
Oil: Today's Weakness Is Planting Tomorrow's Shortage
Oil has just gone through a significant sell-off, and understanding it requires separating a temporary price picture from a structural one.
First, the political overlay for consumers: if California's governor gets his way, drivers there will see $20 gasoline irrespective of the oil price—but that's a separate discussion from the commodity itself.
Now to the oil market. The dramatic high points on the recent chart were not the result of rationing by price. They were prices set in anticipation of a shortage that never actually materialized. A couple hundred cargoes north of the Strait of Hormuz were and are able to get through. Between abundant floating inventory and strategic petroleum reserves held by the United States, China, and Japan, among others, there was never a genuine shortage—except in certain countries that lacked the budget to store oil. What did happen is that cargoes loaded during $110 pricing unloaded at $140, meaning there were $30-per-barrel premiums that never appeared on the price chart at all. That episode of very high prices, in turn, produced demand destruction across low-income economies around the world.
A Weak 2026, Then Rationing by Price in 2029–2030
The near-term consequence is structurally lower oil demand for as much as six months, coinciding with the resumption of supply. I therefore expect the oil price to remain relatively weak through 2026.
But here is the part the price chart does not show and that investors must understand: we are heading for rationing by price around 2029 or 2030—not because of war, but because of chronic underinvestment. The oil industry, and particularly the parastatal producers, have been underinvesting in sustaining capital to the tune of roughly a billion dollars a day for a couple of years, and they continue to do it. During the recent conflict, Iran obviously wasn't making sustaining capital investments—it had other uses for the money—and neither were the Saudis, the Emiratis, or the Kuwaitis. On top of those deferred investments, a great deal of capital equipment was physically blown up in those countries and will need to be replaced.
The underinvestment being made now, as a species, worldwide, in sustaining capital will absolutely, positively, without fail result in lower producing capability—unless we pick up our spending, which we are not going to do. The price levels seen two or three months ago are precisely the levels you'll see again in 2029–2030.
A Once-in-a-Decade Equity Opportunity
For any investor whose time horizon extends beyond a long weekend, the oil equity prices coming this summer—once the equities finally reflect the lower crude price—will likely be once-in-a-decade experiences. The market will look only at three months of past performance and ignore the near-certainty of lower future production. That myopia is exactly what creates a spectacular buying opportunity.
Concretely, I expect Exxon to retrace back toward the levels of last October—a retest of around $100. Recommending Exxon at $90 and recommending it at $180 are entirely different propositions, and I think we get the chance to buy the lower one again. When the very best of the best is selling at a substantial discount to net asset value, you don't need to venture far down the quality curve. Separately, the basket of Canadian junior producers discussed previously has already fallen dramatically and will likely fall further—representing a spectacular three-to-four-year opportunity.
The Hidden Bottleneck Is Insurance, Not Wages
A reasonable worry is that maritime crews, having been stranded on tankers during an on-again, off-again conflict, will be hesitant to re-enter the Strait of Hormuz, and that businesses will look for ways around it. But wages and salaries are a tiny fraction of the total cost of transporting oil and gas, so I actually expect maritime trade to increase and an accommodation with hesitant workers to be reached.
The real bottleneck will be insurance premiums. What you're already seeing is that sovereigns—the Chinese, the Japanese, and the Americans—are subsidizing insurance premiums for tankers. In effect, the risk is migrating from the tanker owner to the taxpayer. It's a time-honored technique.
You will also see infrastructure built to route around the choke point. The Saudis will certainly upgrade the Yanbu pipeline, which runs across the Arabian Peninsula and lets them ship as much as 7 million barrels a day out of Yanbu on the Red Sea. And capacity will increase on the UAE pipeline that allows oil from north of the Strait of Hormuz to be transshipped and exit through Oman, bypassing the strait entirely.
Why the Conflict—and the Building—Won't Stop
These pipeline upgrades say more about expected conflict than any diplomatic headline. The underlying conflict between Sunni Islam and Shia Islam—between the Arabian Peninsula and Iran—is not over. The conflict between Iran and Israel, which both sides regard as existential, is not over either. Whether the United States plays a continuing role is a separate question. The Iranian leadership appears to view a hardline position as existential for itself, and given Netanyahu's statements, Israel evidently believes the same about its own survival. Because the confrontation looks intractable and both sides treat it as existential, the political turmoil around the Strait of Hormuz is not finished. Were I the Saudis—especially as a party to the Sunni–Shia divide—making the Yanbu Trans-Arabian pipeline more robust would seem an obviously good idea. Markets fixate on ceasefires; strategic investment assumes disruption continues for years.
Oil Services: The Companies That Will "Coin Money"
From a macro perspective, blowing up oil infrastructure is genuinely good for the oil services companies. It isn't just the repair of what's been destroyed—it's that in the early 2030s the industry will have to make up for all that deferred sustaining capital investment. The services firms are going to coin money.
I am not smart enough to identify the most leveraged players, and I've tried to play oil services with limited success for forty years. So I simply buy the best of the best: I own Schlumberger, Halliburton, and Transocean (Rig). That is my entire oil-services portfolio, and I expect to make a boatload of money on it.
The Through-Line: Value Over Momentum
Across gold, silver, and oil, the same discipline applies. The biggest investing mistake is confusing momentum with lasting value. Hyperbolic rallies rarely end gracefully, because speculation always outruns fundamentals before reversing. Timing perfection almost never creates wealth; buying exceptional value—especially after emotional liquidations and while the crowd extrapolates three months of past performance—usually does. Once an asset becomes universally loved, the balance shifts from opportunity toward risk. The wisest course is to accept imperfect exits, buy quality when premier companies trade below intrinsic worth, and position ahead of shortages that are inevitable but not yet obvious to everyone else.
