The Great Repricing with Jeff Currie

Summary

The HC Commodities Podcast: "The Great Repricing" with Jeff Currie
Host: Paul Chapman (HC Group)
Guest: Jeff Currie (Carlyle Group – Private Markets, Commodities/Energy)
Date: January 28, 2026

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Episode Overview

In this engaging conversation, Paul Chapman and returning guest Jeff Currie tackle the complex economic and geopolitical backdrop shaping today’s commodities markets. They examine the paradoxical patterns of inflation, commodity cycles, the divergence between “molecules” (oil, gas, food) and “elements” (metals), underinvestment, the rise of government intervention, the AI boom, and the macro forces that could ignite a new phase of repricing across asset classes. The discussion is as much about big-picture market structure as it is about commodity-specific drivers—and whether the world is moving from rule-based trade to a more mercantilist, power-based order.

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Key Discussion Points & Insights

1. Inflation, Stagflation, and Market Narratives

[02:02–05:04]

• Jeff notes the global economy and commodity demand are both stronger than expected, thanks partly to fiscal support in major economies, but says markets remain largely dismissive of imminent inflation—outside of gold and precious metals.
• “If you don’t have food and fuel as being a driver of stronger prices, then it’s hard to argue for any type of inflation… a high correlation between oil and energy prices and inflation.” (Jeff Currie, [03:45])
• Despite credible inflationary risks, markets are “unrelenting” in their view that prices can’t go meaningfully higher; “the macro setup for 2026 is more than sufficient to be able to start to create some of these pricing pressures.”

2. Commodity Performance: Molecules vs. Elements

[05:36–08:31]

• The dichotomy: Metals (elements) like gold, silver, and copper are “going straight up” while “molecules” tied to carbon (hydrocarbons and food) are struggling.
• “If it’s got an atomic number and it’s in the periodic table, it’s going straight up... If it’s a molecule and it’s got a carbon and hydrogen attached, God help you.” (Jeff Currie, [06:30])
• Molecules are policy targets because of their direct links to inflation and cost-of-living. Governments have taken extensive action to keep food and energy prices down through enabling higher supply from Russia, Iran, and Venezuela, SPR releases, and relaxed regulations.

3. Supercycle Thesis & Underinvestment

[08:34–11:39]

• Currie revisits the commodity supercycle thesis (initiated October 2020):
  • Drivers: De-globalization (national security, onshoring, defense spending), decarbonization, and redistribution (income inequality).
  • “Copper, gold... have played out as expected. Oil has been the laggard... the underlying theme is underinvestment.” (Jeff Currie, [09:53])

4. Why “Molecules” Have Lagged

[12:38–17:06]

• Governments on both sides of the aisle want low energy prices, viewing them as key to social and political stability.
• Addressing underperformance in oil: “Why do you want to be short in a market that’s already killed off investment? Demand’s not slowing down… On every marker, oil is massively cheaper than what it looks like on your screen.” (Jeff Currie, [13:20])
• “The most powerful man in the world wants it at $50.”
• This approach—maximizing supply from sanctioned nations, rapid increases in food output, looser immigration—created a near-term glut, but has only deferred supply constraints.

5. Geopolitics, Deglobalization, & Hoarding

[17:06–18:28]

• The Venezuela episode is foregrounded as geopolitical, not purely oil-based: “It wasn’t about the oil... it’s a continuance of deglobalization—a move from rule-based to power politics.” (Paul Chapman, [17:06])
• Expect more inventory hoarding (especially by importers like China and India) and more fragile supply chains.

6. Commodity Cycle Dynamics: Are Supercycles Just Spikes?

[18:28–26:53]

• The cycles—historically 10+ years—are now seen as shorter, more volatile, with the same “spike” pattern (e.g., 1970s, 2000s) but higher highs and higher lows each time.
• “The drop since 2022 has lasted a lot longer than I ever thought it could.” (Jeff Currie, [26:36])
• Lack of investment and “fear-mongering” about oil supply gluts could actually reinforce higher prices down the road.

7. The Supposed Oil Glut: Real or Not?

[27:11–30:55]

• Currie lambastes the prevalent oil glut narrative as unsupported by data or actual fundamental oversupply.
• “I have never seen a view in any commodity market so convicted one direction… there’s no evidence of it.” (Jeff Currie, [28:24])
• Discussion on “phantom barrels,” floating storage, and the tendency for the market to misinterpret underlying data.

8. AI, Asset-Heavy Business Models & Macro Repricing

[32:26–35:33], [39:20–43:30]

• AI/data center buildout as the new “shale” (hyperinvestment, capital flows, asset-heavy transition):

  • “The world’s becoming asset heavy. We’re going back to the old world where you got to put steel in the ground... the bottleneck is going to be power and commodities.” (Jeff Currie, [22:57])
  • “The equity holders end up with a donut...the bondholders get made whole, managements make out, governments do well, but the equity guys end up with not much.” (Jeff Currie, [37:08])
  • The “AI compute” market already has an observable commodity price (see Bloomberg’s H100 price index) and it’s falling—a warning that technological gluts can appear fast.

• Macro repricing:

  • A radical shift (i.e., oil from $100 to $20) can be triggered not by demand collapse but by a surge of “macro repricing” where everything readjusts—currencies, rates, commodity prices, asset flows.
  • “Once you get panic set in... everyone grabs those ships as fast as they can... Suddenly there’s no more glut.” (Jeff Currie, [41:53])

9. De-dollarization, Gold, & Crypto

[42:20–52:47]

• After 2018 and 2022 sanctions, nations like Russia hoarded gold and de-dollarized—gold as the true “dark” asset.
• “If you’re looking to hedge yourself from de-dollarization, nothing beats precious metals.” (Jeff Currie, [52:16])
• Crypto and AI tokenization are important, but governments can still intervene; physical precious metals remain clandestine.

10. Rise of Mercantilism & State Capitalism

[59:17–62:56]

• Movement from rules-based global trade to power-based, state-capitalistic systems, mirrored in the bifurcation of payment systems (SWIFT vs. China’s CIPS).
• Commodity trading platforms must be “crypto and AI native,” with tokenization enabling secure and flexible cross-border operations.
• “State capitalism is back, but markets at the same time... We got DeFi going on... if you’re going to do this right, you better be crypto native because that’s the way you get around it.” (Jeff Currie, [60:31])

11. Historical Parallels & Mindset Shift

[62:59–66:32]

• The current cycle is historically normal: 50 years of British, then American globalization, punctuated by long periods of mercantilism.
• “The vast majority of history is more like today and less like the period... the anomaly is the 50 years each under British and American leadership.” (Jeff Currie, [62:59])
• Technological revolution happens because of societal need (see tokenization/DeFi): “The technology only becomes prevalent when society has a need of it.” (Paul Chapman, [65:57])

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Notable Quotes & Moments

• On inflation’s drivers:
  “If you don’t have food and fuel as being a driver of stronger prices, then it’s hard to argue for any type of inflation.” (Jeff Currie, [03:45])

• On policy vs. market cycles:
  “If the government has an incentive out there to keep prices low in the commodity space, it’s going to be all those molecules.” (Jeff Currie, [06:52])

• On underinvestment and supply response:
  "They got more food, more energy and more labor by relaxing all the rules... the key point here is you created a lot of supply by pushing on a lot of strings." (Jeff Currie, [15:15])

• On the oil glut narrative:
  “I have never seen a view in any commodity market so convicted one direction... and it is convicted on something where you really can’t even see the evidence.” (Jeff Currie, [28:24])

• On technological cycles in commodities & AI:
  “Don’t bet against an engineer. Give them enough time and money, they will solve the problem... and massively increase supply far beyond what anybody thought.” (Jeff Currie, [33:15], reflecting on both shale and AI compute)

• On gold vs. crypto:
  “You can transact in precious [metals] without anybody ever knowing it… if you’re looking to hedge from de-dollarization, nothing beats precious.” (Jeff Currie, [52:16])

• On the changing trading environment:
  “Yes, [commodity trading platforms] will be great for those in this, but you better be technologically savvy. The world’s getting more complicated.” (Jeff Currie, [56:01])

• On the macro cycle:
  “These things are cycles... and the catalyst is usually some policy decision somewhere in the world that creates these repricings.” (Jeff Currie, [49:36])

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Timestamps for Important Segments

• [02:02] – Currie outlines 2026’s macro setup and inflation outlook
• [06:30] – “Molecule vs. element” commodities thesis
• [09:53] – Supercycle drivers: deglobalization, decarbonization, redistribution
• [13:20] – Policy-driven oil supply and the record “mega short” thesis
• [22:57] – The asset-heavy world: AI/data centers, investment shifts
• [28:24] – Debunking the oil glut consensus
• [37:08] – On equity returns amid technological cycles (AI, railroads, shale)
• [41:53] – How a macro repricing could unfold (“hoarding” scenario)
• [52:16] – Gold and the de-dollarization thesis
• [56:01] – The future of commodity trading: crypto/AI native
• [60:31] – Defi, tokenization vs. state capitalism
• [62:59] – Historical globalization cycles and current return to mercantilism

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Summary for Uninitiated Listeners

This wide-ranging episode explores why metals are soaring but oil, gas, and food (the “molecules”) aren’t—spoiler: it’s all about politics, deliberate government intervention, and inflation control. Underinvestment and skeptical market narratives persist in oil, often out of step with supply/demand realities. At the same time, the next investment wave—spurred by AI and the need for real, not “virtual,” assets—could trigger a broad “repricing” of capital flows, echoing past cycles.

The episode paints a world moving from rule-based market structures toward bilateral, state-driven, technologically-enabled commerce, requiring firms and investors to embrace crypto, AI, and tokenization—or be left behind.

Currie’s concluding advice: don’t be fooled by consensus views, understand the cycles, and recognize when the “anomaly” is actually the norm. In commodities, those who invest for security of real assets in volatile times—and embrace technological sophistication—will be best positioned for what comes next.

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For further information, visit: www.hcgroup.global

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Transcript

[Jeff Curry]

Foreign.

[Paul Chapman]

Welcome to the HC Commodities Podcast, a podcast dedicated to the commodities sector and the people within it. I'm your host, Paul Chapman. This podcast is produced by HC Group, a global search firm dedicated to the commodities sector. Today we're discussing the macroeconomic and political picture and how that plays into commodity markets. Are we on the precipice of inflation, the breakdown in free markets? And is there really a hydrocarbon glut out there? And elements on the periodic table have gone parabolic from gold to silver to copper to zinc. Is it molecules turn Next returning to the show is Jeff Curry of Carlyle, where he works in private markets in the commodities business, particularly in energy and critical minerals. Please do like and subscribe on the platform you're listening on. It really does help support the show and as always, I hope you enjoy this fascinating episode. Geoff, welcome back to the show.

[Jeff Curry]

Pleasure to be back as well.

[Paul Chapman]

We need you right, because we sort of tipped over from interesting times into slightly terrifying times and there's so much going on, much of which commodities sits at the heart of it. This is sort of this commodity security story in some ways playing out or at least used as the stalking hall for other geopolitical aims. We're going to get all to that. The bit that I guess I'm certainly struggling with is what is going on in the global economy. There seems to be so many countervailing forces and stories out there. Some are inflationary, some are deflationary, some seem like we're on the brink of recession, others not. At the same time, global trade seems to be shifting again, decoupling. I mean, can you help us understand where we are? And perhaps we can start with inflation and dare I even say it, stagflation.

[Jeff Curry]

I think the bottom line is relative to where expectations were, let's say a year ago with the threat of tariffs, the world's a much stronger place than I think what most people anticipated. And when we look at commodity demand, whether if it's in oil and other commodities, it's been coming in stronger than expected. So from a economic as well as commodity demand perspective, while albeit is not gangbusters, I would argue it's more positive than what would have been anticipated given everything that's gone on now. That said, I think the risk profile is not as great, at least outside of the US Than what I think many people would have thought given the fact that you have so much fiscal underpinnings coming from places like Germany, Japan, the big beautiful bill in the United States. So you put it all together, the Economic side of the picture, I would argue is probably strong enough to reinforce those inflationary concerns. And I think that's probably where we really should begin these discussions. And you look at the market, whether if it's in break even inflations, oil prices and the rest of them, there is a unrelenting view that they can't go higher. You know, whether if it's the narrative around the big oil supply glut in crude oil, you look at the back end of the yield curve, you know, 4.1% nominal yields, which is a nominal amount of inflation built in. You look around the market, the markets don't express any of these concerns about inflation with the exception of gold and precious metals. But we'll talk about, there's a lot of other drivers behind that. So I think there's a lot of focus. As you brought up, first word that came out of your mouth was inflation. But the markets do not tend to agree and it's hard to argue if you don't have food and fuel as being a driver of stronger prices, then it's hard to argue for any type of inflation. You know, it's a high correlation between let's say oil and energy prices and inflation. So I think that's wrong and I think that's what we're going to be spending most of our day today talking about. But I think that the macro setup for 2026 is more than sufficient to be able to start to create some of these pricing pressures that are expected to be seen in 2026. And I would argue that the precious space is foreshadowing that more than anything.

[Paul Chapman]

Yeah, I mean I find it fascinating if you look at 2025, even 2024, and this is a little bit of this thesis around have the commodity cycles themselves not only sort of decoupled, we're seeing a different story in oil than we are in gold, we are in copper. But also they've shortened from sort of this 10 year, whatever it is, eight year down to two or three. But the, you know, 2025 seems like the year that the, the dog didn't bark. Right. I mean also famously in email.

[Jeff Curry]

The.

[Paul Chapman]

You know, we had the US and Israel bombing Iran. Oil prices go up and then they go down the next day. You have concern even, even sort of the, the standard S and D world of okay, Europe's going to start drawing from its gas inventories because it's going to be cold winter and then, you know, prices still go down in natural gas. I mean commodities have done with the exception Of a couple you mentioned, gold, have kind of done the opposite of expectations that just would, would signal and herald a very healthy weakening demand for most of them across the board. So can you just, is that a fair perception? And again, it kind of this, you know, everything's saying that, oh, inflation shouldn't be worried about, but there just seems to be some nagging doubts about inflation being that kind of, you know, you go bankrupt slowly and then all of a sudden. Right. Which is what happened in 2022 with the second stimulus from Biden and so forth.

[Jeff Curry]

Yeah, I think the narrative out there is definitely one of oil supply gluttony. We have more than enough energy and food, don't worry about it. And the way I like to characterize the commodity space is if it's got an atomic number and it's in the periodic table, it's going straight up. Silver, you know, au, ag, cu, like copper, all of them, even zinc has joined the rally recently, you know, zi. So that group of commodities are doing really well. If it's a molecule and it's got a carbon and a hydrogen attached to it, God help you. And you know, whether that's food like carbohydrates or hydrocarbons like you know, oil and gas and, and coal. So the molecules are struggling now. The molecules are the ones that drive inflation. You can let all those metals in the periodic table go to the moon. They're not going to do anything to inflation too small. If the government has an incentive out there to keep prices low in the commodity space, it's going to be all those molecules, the chs, which is basically your food and your fuel. We think about policy going back to 2022, it has been very much directed at containing the prices of both of these. Whether it was turning a blind eye to Russia, Venezuela, in Iran and letting them ramp exports all the way back up to pre war levels or pre sanction levels. They've done what they can or SPRs or whatever it takes to keep prices down. Also I'd like to note that the week before that invasion in Venezuela, we had a record short in oil, 230 million barrels. Are these coincidences, are they planned? I don't want to get into that.

[Paul Chapman]

Nor do I have poly market bets.

[Jeff Curry]

Yeah, but you know, then why would you be max short going into that the week, the weekend before the weekend? I'm not, you know, there's a, there wasn't any real news out there to drive a max short in there. But by the way, the ability to move prices around with that short is substantial. In fact, you know, people make the point. Oil last, last year was down, you know, $15 or whatever it was something like 25% I think it was. That short alone would have explained all that price move. So was there a fundamental move in, in prices over the last year? It's hard to argue with the size of that short. But I want to go back to 2022 and I want to take this back to our view that we were entering a commodity super cycle in 2020, in October of 2020. And at that point in time, the view was based upon three big themes. One was de globalization, meaning that, you know, whether it was through spending on defense or whether it was spending for duplicate supply chains, duple industrial bases, whatever it might be, as we de globalize, you're going to demand a lot for commodities. The second one was decarbonization, it's called electrification. And then the third one was redistribution, call it the war on income inequality. As you put money to lower income people they were going to buy. And it was these big three drivers that were going to drive that commodity super cycle, by the way. Copper, gold and the rest of them is pretty much played out as expected. Oil has been the laggard and I would say food to a lesser degree and a part of, I would argue that caused this. And by the way, the underlying theme across all this is the underinvestment theme, the revenge of the. Because they haven't built it up. Then you throw these demand drivers on top of it. It was going to put more pressure on it. When we think about those three drivers, they've been turbocharged since we put that view out. You know, deglobalization, I mean it could get stronger by the day and you need to build out more and more of your own supply chains and you got to build your own military. All of that very commodity intensive. The electrification story. Turbocharged, everybody's focused on, oh, the green is going to fall back under the current administration, by the way. There's no evidence in investment whether if it's in Europe, China or anything that's slowing down. You forget calling it green or ESG or whatever.

[Paul Chapman]

Call it security of supply, security of supply.

[Jeff Curry]

It's being turbocharged and the electrification is going to be a part of that. Then throw in data centers on top of it. So that story is turbocharged from when we brought this out. And then when we look at income inequality and the spending, I mean look at, you know, the big beautiful bill and the, the these governments are wanting to throw money at the lower income groups. So all of it's still very much intact. So the question you have to ask is what went wrong with the molecules?

[Paul Chapman]

Well, is that because they're affected by those two things? So you take that thesis and people should go back and listen to our first episode together. Where you lay that out is of course, oil hinges both on governments. You hear Trump all day long, despite wishing energy dominance. Right. He wants low prices somewhere. I think in the administration's mind, we're set in 1976 or something. New York's awful and oil prices are all that matters, but they want them low. And governments around the world do. Right. Energy prices are felt at the ballot box, so people are subsidizing them. But also at the same time that electrification story gets supercharged. And you just have to look what's going on in Texas, right? 20% wind or solar renewables. Sorry, you know, it's that studies eating. We're seeing that. Absolutely. In China it is eating molecule demand. Are we to look at this? The super cycle is happening. It's just, you know, X out the poor old hydrocarbon molecule, throwing the carbohydrate.

[Jeff Curry]

Molecule in there too. Right or wrongly, both Biden and Trump administrations were guilty of this. They think if they can keep those prices of those two down they got, they can keep inflation at least affordability issues under control. And I think that, you know, you know, your point about, you know, Trump wants, you know, when I ask people about the, about the mega short in there, I go, why are you short? And you know, why would you want to be short in a market that's already killed off investment? You're too low for that. It's underperformed every other marker on the planet earth in terms of its pricing. So if you put on a relative value, oil is just massively cheaper than what it looks like on your screen. And you look at demand, it's not slowing down. You have a record short. You know, you look at geopolitical risks at very high levels. Markets backwardated inventories in the consuming areas are below the five year average. You have refining margins, healthy physical grade spreads haven't weakened. What is bearish about this market and why do you want a record short? Short answer is most powerful man in the world wants it at 50 as you said. However, these are physical markets. Putting pressure on them like that, you know, conventionally end up in a, you know, a big repricing. But I want to go back to what went wrong. I was actually just like, let's Ask what happened and you look at the response in 22 and 23. They created more energy, more food and more labor supply than you thought ever was possible. In fact, all the problems we have today are a response to that. Let's go over, let's just start with, with, with oil. What was the best way to get it down? Just let Russia, Venezuela and Iran pump as much as you possibly can. That's what they did. You see it. They turned a blind eye to it. And then on food and environmental issues, you know, cutting down rainforests in the Amazon or, or palm trees, palm oil trays in Malaysia, just let it, let it rip. Get the food up as fast as you possibly can. And then on labor, open up the floodgates. On immigration, I think one of these calls, we were there, we're talking about how the UK with 2x on immigration, the US was up 50% and the Canada was up something like 3x. Bottom line, they got more food, more energy and more labor by relaxing all the rules that were in place. Now what are we dealing with right now? Venezuela, Iran, this is the give back to that. What are we dealing with? ICE in the US It's a lash back to dealing with that last bout of inflation just opened up the floodgates to immigrants to get the wages down and now you're getting the lash back on all of these things. And so I think the. Yeah, the key point here is you created a lot of supply by pushing on a lot of strings and everybody's focused on Iran and Venezuela creating new supply. They're already exporting as much as they possibly could given current, but you're not getting any supply out of these two places for another five, ten years, bare minimum. I like to point out the time period between when George Bush Jr. Landed on that aircraft carrier in 2003 for mission accomplished and in the time you saw oil supplies coming out of Iraq in any volumes was about a decade. And Iraq is in way better shape than what Venezuela or Iran or are in today. So I don't think the supply side of that is not what needs to be focused on. Well, I think that really the critical point of what's going on in the world, and you see it in gold, is the geopolitical implications of Venezuela are huge for the oil importing countries of the world, Europe, India and China. And what are you going to want to do? Hoard? Build precautionary inventories of everything from food to energy and everything you can get your hands on. It's just too dangerous in this Current environment, you've got the Americans boarding tankers. And so I think the geopolitical side of this thing is far larger and more important than the fundamental oil supply side of the equation.

[Paul Chapman]

Yeah, and that's the, I mean we did an episode emergency pod where we had a green mantle chap on Nick Kumleben and yeah, the kind of the, and this was, you know, a couple days after. But it feels Venezuela wasn't about the oil. They might have sold it to Trump himself on that, but it wasn't about the oil. Right, but what it has done is a continuance of that. Let's put it under the bucket of de globalization which is we're in a world of power politics, not rule based politics. And that in some ways is set up against both the, the sort of the, the way the markets have been structured, but also the economies themselves. Right. And this all predates, I mean China's been building its SPR all of last year. As you say, Gold is a story in that as well. And just, just going back to that super cycle thesis for a second there. So all of those three were ripping the bit that then kind of I guess did get constrained first because we had a banking crisis very early on. I guess the bit that wasn't accounted for was Russia's invasion of Ukraine and then, which I think is in some ways the first war of the energy transition. But then that triggered a banking crisis, a credit crisis that then suddenly meant the money supply was constrained and that's what kind of nipped that commodity super cycle or at least probably delayed it would be the argument out of this discussion.

[Jeff Curry]

Actually the way I like to phrase it, it just went too high too fast. Actually if you look at a chart of like copper and the metals and you just look at them since October 2020, take out that huge explosion in 22, it's just kind of a steady line up since October 2020. You know, our target was 15,000 in five years. We got the 13,000 and change in three years, I guess. Yeah, we're, we're well on the way. We're on the way.

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[Paul Chapman]

Within that, which again signifies these sort of fraying markets and also this swing that you and I spoke to in our last episode about back to government intervention. And that really is the story and that's really the challenge of the volatility in these markets. Are you a buyer of that thesis? We'll come back to the economy in a moment. Are you a buyer of the thesis that 20 years ago, 30 years ago, 50 years ago, the world moved much slower? Commodities, you know, essentially commodity cycles were ultimately tied to the capital base, capital cycles. And it took 10 years to make a mine, it took 10 years to drill, put a hole in the ground off the coast of Venezuela or whatever it might be. And that really determined a 10 year cycle. But today we're in a world where you've got much more, more cycles more often and with higher peaks and lower troughs. Or is that actually just a, a rough journey on the way to a super cycle?

[Jeff Curry]

I think the super cycle was never a big super cycle. It was, think about the one in the 2000s. It was a, it was a spike in 04.05, another spike in 08, another spike in 2010 or 11. That was enough to create the shale revolution in game over. That was in oil. It's similar for that. You think about the 1970s spike in 73, another one in 78, another one in 80, 81. That was enough to create enough North Sea supply. Game over. Even the inflation, you can see the big spikes, they feel like they were this upward steady trend in prices. But the reality is they were just a sequence of three or four big mega spikes. And I think that dynamic. Because by the way, when you look at the physical capital story, it looks like what you think it's a 10, 15 year cycle that hasn't changed. Yeah, maybe you got some just in time inventories, but the physical world, you've got the ability through tech to speed up deliveries. It still takes time to put steel in the ground. And the other thing that I think people are missing here is the US the reason why you think the cycles all got quicker is the U.S. was that asset light software model, infinitely scalable at almost no cost. That party's over with the big asset light companies, you know, the Googles and the Amazons of the world, they're putting steel in the ground through their hyperscalers. They're joining the think about this, you know, in the Exxon and you know the big oil majors, they on average they spend about 60% of their free cash flow on investing. This group is now exceeding that. I think there are 83, 84% now and some of them are over 100% like the shale guys were in 2013, 2014. These guys, when they were back in the era of asset light and infinitely scalable models and software, they were putting maybe 15, 25% of it into the ground. These guys are acting like commodity producers now. And by the way, what's the multiple on an oil company versus a multiple on one of these asset?

[Paul Chapman]

10 versus 100, 300. Right.

[Jeff Curry]

These guys are going to get re rated. I don't care. People want to call it a bubble or whatever. Bottom line, they just need to be rerated. It's, you know, they, they don't function like, I guess another way to say it is probably the world's becoming asset heavy. We're going back to the old world where you got to, you know, put steel in the ground, which is another, this is another way of saying why you want to be long all the real assets, the bottleneck on this thing, because that's where your, you know, the, the, the issue is going to be a problem is there. And then when we look at the, the amount of investment in all of these, these spaces and there's all this talk about power and everything in the AI race, you really haven't done much to grow it. And you've got rising pricing pressure of power prices in the US Very little.

[Paul Chapman]

Dispatchable power has been built in the last 20 years. And that's stark in markets like ERCOT, which is experiencing some of the highest growth of these hyperscalers and also just domestic demand as well. But everything's been geared towards renewables. Great. But actually the market structures incentivize not building the bits you need, which is nukes and cogen and all the rest of it that's on, irrespective of the weather.

[Jeff Curry]

Yeah. And you look at all of this, you still haven't, you haven't invested. Like right now, this quarter is the last of the big major oil non OPEC projects that will be coming online. And then you look at refineries, 20, 27, you know, it starts to the, you know, it, it's done and over with in terms of new refineries because we never thought demand was going to grow. It goes back to the point demand's not great, you know, but a million barrels per day type, year over year, demand growth is far above what anybody would have expected five years ago. So this is the big much Higher, you know and you're, you're quite, you're. I didn't ever answer your question about all of the, the, the decarbonization or electrification of the world. Right now, this point right now transportation is hard to electrify and that's what oil goes into in the power gen. Absolutely. Yes, you're impacting the other sources. But for oil, anything, the EV picture has slowed down. I think going back to the AI race. AI the bottleneck is going to be power and commodities and China's light years ahead of the US on that. I mean they're building that grid whether if it's solar, wind, nuclear. And by the way, they don't do this to save the world, they do this to create energy independence. Yeah, all of it was done EVs. It's just, I think if there's one message to give the policymakers stop thinking about this stuff as being green and eco and get it, get out of that debate. That debate was, you know, circa 2122.

[Paul Chapman]

This and it's not even true.

[Jeff Curry]

Right.

[Paul Chapman]

I mean in terms of the actual manufacturing. Yeah, yeah. This is, this is security. Well, I'm going to come on to that because I, you know, I, I, I'm, I'm going to channel your comments you made at the FT last year. But just, just to nail it down, we're seeing prices rising in those, in those elements and a lot of that, you know, you know, we need to figure out why that is. But molecules alone. In fact oil inflation adjusted is basically at an all time low. Right. 50 bucks is more like you know, 20 buc if you adjust it for inflation over the last 20 years.

[Jeff Curry]

Absolutely.

[Paul Chapman]

Okay, so that's an interesting analysis that actually these commodity super cycles are really sort of like three big spikes and we just push them together. But they were sufficient to make big changes in the capital investment which we're definitely not seeing right now.

[Jeff Curry]

The spikes. The way I phrased it in 2020 is the highs are higher each time and the lows are higher and they start to become more frequent. I will say this one, this. The drop from 2022 has lasted a lot longer than I ever thought it could. But I think a lot of that.

[Paul Chapman]

Does it herald a new one?

[Jeff Curry]

Right.

[Paul Chapman]

Like we just have one big spike or maybe two. You know and if you using history as our guide, we've probably got a second or a third one in our future because of, you know, what we're definitely not seeing is a change in behaviors with respect to oil.

[Jeff Curry]

Yeah. By the way, if anything, the demand outlook over the last 12 months got stronger because of the loss of EVs on a structural bas on the supply side. You know, the fear mongering around the oil supply glut has created a lack of investment. So you got behavioral changes that actually reinforce higher prices, not lower prices. And this glut story has been in the market since August of 2024 when OPEC first started raising production. We're now what, how many months, 18 plus months into this oil supply glut. Where is it by the way? You shouldn't be having to scrape the data to find the evidence of this if it's a real glut. These things, you know, Paul, you and I have lived through these things. These things hit you over the head like a sledgehammer. You don't have to go looking for the data. And they don't happen in backward dated markets. They don't happen at $60 a barrel. They don't happen at, with, with margins, healthy refining margins. They don't happen with healthy physical grades. You know, it's like that's the part I just that I don't get. There's no diversity in views, Max. Sure, everybody's leaned one direction, but the data supporting this, it's the most convicted view. I've been doing this for three decades, I have never seen a view in any commodity market so convicted one direction. You can see it in the data and it is convicted with something where it really can't even see the evidence. So that 4 million barrel per day surplus or whatever, you know, just there's the numbers are so large, but there's no evidence of it. Even if you take all the fourth quarter build. I mean, I think it's Goldman's view, their numbers had like 650,000 barrel per day build in fourth quarter. A lot of that seasonal. So where is it, you know, that's even doing the floating at sea and all these other things. And there's real reasons why you have a big amount of oil floating at sea.

[Paul Chapman]

A lot of that because large bits of the earth are shut down, right? You can't go, yeah, you can't touch it.

[Jeff Curry]

And by the way, everybody goes, will it come? I go, you know Paul, you and I are old enough to remember that Iranian oil was sanctioned by Obama in 2012. It didn't come off those ships until 2016. Yeah, it can sit on those ships. And that was 80 million barrels. And most of that stuff was condensate and never really impacted the market. When it finally came in came out but I think there's a lot of explanations for what's going on. I like to point out there's only one group who has any clarity of what happens to demand in the emerging markets and that's opec. Do they want selling down in there? They don't have the same type of big surplus as being forecast. But the part of this that I simply do not get is the conviction in these shorts around something that doesn't have. I've seen better trades in my life than, than than being short oil right now. I'm not, I'm not trying to dispute the glut story or anything like that. I'm just going why? What are you playing for? Why do you want to have a record short in a market that's already everybody is consensus view. You cannot seem to get this thing under a Brent basis of 66, 64 this morning. You can't get it down below sustainably below 60 and you've waited for that big floating oil at sea glut to come to shore for almost six months now and it hasn't. I just simply don't know. I don't see what people are playing for in this. But you know I, you know if I go out on TV and tell the story the amount of comments I get back vicious ones is telling you people really believe this one. Well I can find you better things to go put your money in.

[Paul Chapman]

Well and the other challenge there is, there's so. Everything is so sort of amped and hyped right. I mean the, the challenge of the S and D breaking through in a world where you know an email can get sent on a Sunday night. We're recording Monday morning this will go out next week. I mean you know that can upend the world, right? I mean we'll end up there because I do have this sort of fundamental question about kind of the breaking of markets. At some point you know would are we just going to revert to bilateral contracts? Because the actual the nature and structure of these commodity markets as we built them rely on kind of international law no less and less government intervention, you know private companies doing business and at some point you know if you're subject to a sanction overnight, you know what happens right Just, just one, one bit on just to pin it on. AI the is fascinating comment on they are becoming these. They need to be repriced because they're becoming sticks in the ground. Is there, you know, is there a sense how confident are we that that itself is not a. You're getting discounted if you haven't, if you're not dealing with hyperscalers at the moment and so forth. And actually we might be way over building capacity because chips get more efficient, more effective, more power efficient, all this kind of stuff. Or indeed, you know, we all stop using chat GPT just to sort of, you know, I don't think this is going to happen. But you know, the actual use cases of chat GPT are pretty, pretty asinine at the moment for the vast majority of people.

[Jeff Curry]

By the way, I wrote this piece titled how much does AI rhyme with Shale? With the A and the L and shale capitalized to look like AI, the two stories are almost identical.

[Paul Chapman]

It's a massive sort of American sort of land, you know.

[Jeff Curry]

Oh yeah, by the way, it's almost like these investment bankers took the pitchbooks from the shale, erased out the names of the energy guys and get a.

[Paul Chapman]

Permit, do some land work and then flip it to the next guy for 10x.

[Jeff Curry]

The only difference is, the only difference is the shale guys did all of that contracting into the pipes and then they gave him those guaranteed contracts and then the pipe guys would go out and raise money. Here they go. They go from the data centers upstream into the power. Other than that, it's identically the same structure, same financial engineering, same everything. Now I like to go back in 2013, the world hated tech. They go, tech is just, they were like, there was no worry about a oil supply glut in 2013. All you want to do is own energy. Microsoft couldn't do anything right. You didn't want to touch the nasdaq. And there was no, in fact, they were talking about peak PC demand. It's over with. You don't want to be in tech. And fast forward, you know, 18 months later, NASDAQ is ripping and oil is at 25 bucks, which, you know, they didn't. And it wasn't that they underestimated the demand for oil, it's just that the engineers, I have a saying, don't bet against an engineer. Give them enough time and money, they will solve the problem. And they massively increased commodity supply far beyond what anybody thought. And let's go to the day there's no worry about a AI compute glut. A lot of worry about an oil supply glut. So the mirrors of where we were in 2013, it's almost perfectly reversed. So there's no worries from any investor of a, of an AI compute glut. You know what's interesting? I wrote that piece, I Had a picture in there. It shows the price of AI compute. It's a commodity. You can trade it. Bloomberg has their, their, their Silicon H100 price index. And by the way, it's done nothing but go down.

[Paul Chapman]

Yeah, I mean markets sold for it, right? I mean like, you know, by the way. But I was going to say it's the blind spot that you don't, you're not solving for. I mean, you know, the. Which is interesting, right, Because I think the chips are going to use less power if that becomes the rate limiting. They're going to use less water and so forth, which is a negative. I mean this is the complexity of this you deal with all the time. I just find it fascinating the, you know, obviously that that's not a very good story for, you know, a lot of, A lot of natural gas and power rests on an AI story. And, and what's sort of forgotten there is sort of the, as you say, the molecule story behind all of that.

[Jeff Curry]

By the way, one thing I wanted to finish, make the point on here, two, two things. One, when I published that piece, nobody knew that there was a commodity called AI compute yet. They're pumping trillions of dollars into this and they don't know they can follow it just like the price of oil. And by the way, it's already flashing like 2014 in oil. That aside. But the other thing that I found interesting, went back and looked at all these big technological revolutions almost in every case, the equity holders end up with a donut. Whether if it was shale railroads, whatever it might be. The bondholders get made whole managements make out like the best bandits. Bandits. And then governments do well because they got the technology. So everybody but the equity guys do well every case. So may I ask you why everybody's piling into the equity list? There's no history they'll get paid out because what happens is they end up killing themselves with too much investment. Going back to your question, do you end up with a glut on this in the end? And I think your point, whether the chips or not, I go, don't bet against an engineer. They're getting better and better. Then think about Saudi Arabia came in with its price war, you know, and finally destroyed the shale guys. And what really caused the equity to go to zero in 2015 and 2016. The reality is in this case China, AI is Saudi. They can come in and undercut this. This is just like you see these stories over and over and over. How come you want to belong the equity when you know History does not paint a good picture for any of these technologies. But here's a broader point this brings into Europe and why I live over here in London. It's a fixed income currencies and commodity culture. It's not an equity culture. You know, it's more lending. And so, you know, we ask about, well, the innovation happens. You see, it takes the equity to create the innovation, but it's a moonshot for some. But the rest of them don't end up with too much left over when it's all said and done on these. But, you know, so that the equity culture of America, the fact that they do this is a great thing because it creates the innovation, but the track record isn't good.

[Paul Chapman]

Yeah. There's a book I've just finished which you must read if you haven't called Cattle Kingdom by Christopher Knowlton. And it is the rise and fall of ranching cattle, beef in the, in the 1870s, 1880s, 1890s. And it's absolutely fascinating. And every single kind of the step in that process, from at one point, you know, being the like 30 of the US GDP to basically zero tracks right from innovations of cattle towns through the innovation of refrigeration. Just fascinating. And all takes place in, in sort of a span of 25 years.

[Jeff Curry]

Cool.

[Paul Chapman]

It's. It's really good. Yeah. Castle Kingdom. I'll. There's one for, there's one for listeners to try out, but yeah, great, great book. Okay. Yeah, that again, you know, fascinating insight and the, I guess just, just one final bit on oil because I'm kind of, I guess I'm. What, what makes, you know, there's no narrative out, well, what, what makes oil go to 100? Is it, is that even feasible anymore? Are we just simply saying that 60. There just seems this fundamental sort of flaw around that price which belies this idea of a glut out there, you know, and actually if we just see demand kind of continue as we're seeing it, and the lack of investment, oil's just good for another 20 years kind of story. Or is there something out there lurking that could make it go parabolic again?

[Jeff Curry]

The gold and copper have gone parabolic and there's no shortage where oil goes is. The upside here, I think is extremely large across the entire commodity complex. Let me give you an example. I think we're going to go through a macro repricing. It'll end up being rates, oil, everything. And we've lived through two of them in our lives. And I want to go Back to the one in 2014, 2015, it wasn't the collapse in oil prices, it was a macro repricing. And to make this point, in 2012 you took a pitchbook from a private equity deal for an oil field in Canada at $110, $120 oil that they were using back then. And you look at it, it had an IRR of 25%. Fast forward to 2016, take the same deal, $40 oil. What do you think the IRR was at? $40 oil wasn't 25%, but it's not as bad as you think. It was somewhere around 19%. Why? Because everything repriced, the price of steel, the price of copper, the Canadian dollar, interest rates, everything repriced. So yeah, it wasn't like the whole world fell out of bed, but what it was is the capital moved out of the old economy and went into the new economy. Because by 1516 they go, hey, maybe there's something to do with this tech. And by the way, they were chasing Uber and like the Aaron B's of the world at that point.

[Paul Chapman]

The zombies that ate all that cash.

[Jeff Curry]

Yep. But the point being is everything repriced and nobody thought oil could have gone down from 100 all the way to 20. That's repricing macro. And by the way, it happens so fast. You remember we come in every day, oil down seven or eight bucks, you know, the euro, you know, collapsing from 121, 15, 115 to 110. And every day you come in and everything moves, interest rates, currencies, everything reprice and boom, you hit bottom. And China was pretty sick at late 2015, early 2016, voila. We've been in that world since 2016. And I think the question is once you get panic set in, let's say now I start hoarding oil, I'm China. US has boarded these ships, the dark fleet ships. World's not looking very safe anymore. Let's say I take all that glut. Why wouldn't they? They're ships. Anyway, there's 300 million barrels sitting of Russian and Iranian and Venezuelan oil floating around out in the South China Sea. By the way people look at that glut, that may be their strategic reserve. They own the ships, just let them sit out there. So is it a glut or is it China's? And I think that if we saw. Here's the way I like to think about what happened in gold first was 2018, Mnuchin and the Trump administration, first time they used sanctions, treasury based sanctions.

[Paul Chapman]

Around Swift, Yeah, messing with the dollar.

[Jeff Curry]

And from that point forward, The Russians sold 93 billion US Treasuries, bought gold and physical greenbacks, pallets of physical greenbacks were flown into Russia. So if they had to pay something in dollars, they used greenbacks so that nobody could take it from them. And then 2022 happens. US freezes Russian Central bank assets, Gloves are off. You don't trust the US government, you don't trust dollars, you don't do anything. You de dollarize. And that's when gold just went parabolic because you had to hoard the gold.

[Paul Chapman]

Yeah. So that fundamental repricing, it seems like that would all circle around the dollar and some of the pieces are on the board to make that happen. Correct me if I'm wrong here, all.

[Jeff Curry]

You need is oil to fall into that mix. I think copper is getting into that, is starting into that. And then you just fundamentally revalue these things. It has nothing to do with everybody's counting barrels and economics. You know, I look back at the 2000s, fundamentally you had no shortage, you never did. The market repriced.

[David Hunt]

Hello, I'm David Hunt, founder and managing director at Hyperion Search. Founded over a decade ago, Hyperion Search has helped organizations from major utilities to startups recruit their leadership teams and key individual contributors to accelerate both their growth and and the energy transition. Our three main verticals are renewable power, energy storage and e mobility. The energy transition and the talent that delivers. It has been our passion since day one. To find out more, visit hyperionsearch.com or listen to my leaders in clean tech podcast available on all platforms.

[Paul Chapman]

But is that repricing, you know, one layer behind that I'm just sort of. And again, I might be way off on this, but to me it would seem if you step back from the world. I read a great book last year called our dollar your problem, which is a fascinating sort of review of the pros and cons of being the world's global currency and ways it's getting jeopardized. But of course it would seem to me that if you step back, what would cause a fundamental repricing which would profoundly impact oil would be that I'm making it upright. Jerome Powell's out pressures on the new incumbent to lower interest rates. The market doesn't buy it. It's, you know, that triggers sort of again, these things happen very swiftly. A realization, a change in perception of U S debt, it gets sold off. Interest rates go way up, you know, more like a 7%, 8% on a 10 year note or whatever it might be because they can't sell the things that causes massive inflationary pressures or you know the, the barrel of oil is still priced to dollars. It goes to 100. You know, it commensurately goes up worlds in a. You know, suddenly there's a big scramble on for a new world. You know how, how do markets work in this new world order? Is that a, an alarmist but possibility.

[Jeff Curry]

I don't think that's, you know, you said it, I didn't say it. But I, I. And by the way they'd all go hand in hand. China starts to hoard the oil. India gets panicked. They take everybody just grabs those ships as fast as they can. Then you realize oh there's no more glut. And by the way that could happen. It's observationally equivalent to what you're seeing today. Mine, mine, mine, mine. I want it let me remind you want real assets.

[Paul Chapman]

Right. Whatever that scenario plays out the minute.

[Jeff Curry]

You'Re I think all these, everybody listening is they've seen those charts of s and P versus commodities. It's a joke. These things haven't moved since 2014. 2015. The overall assets in financial markets are three and a half times larger today than what they were in 2014. Three and a half times larger. Commodity markets are down probably around 50% since then with gold is probably making about 25%. Now. Here's the point I like to make. Why can this thing reprice? All of a sudden you've got how much money sitting in all those hyperscalers and they go oh, we got to get out. You know, there is some lost in trying to get out, but that money's got to find a new home. Where would you put your money? Real assets.

[Paul Chapman]

Yeah. And so I put it in these. You want to incredibly underpriced oil companies at 10108 to 10p with 8% yield or whatever it might be.

[Jeff Curry]

And by the way, every time you go through one of these repricings and now I thought the time we created something new in February of 02 we had the revenge of the old economy and that the old economy was underinvested because new economy sucked too much capital out of it, blah blah blah. I'm realizing these are cycles. And if you go back, the first one I can see was the equivalent of Microsoft in the late 60s was Coca Cola brand asset light infinitely scalable. The whole idea of a brand low interest rates, LBJ pushing on the Fed to keep interest rates low sound very similar today.

[Paul Chapman]

I mean doing extraordinary Things in bathrooms to step on colleagues.

[Jeff Curry]

Yeah, then. And then, then it was a transition. Finally the system broke. And what was the catalyst that broke the system? It was OPEC or. Yeah, it was the Arab oil embargo. And by the way, what was the arable oil embargo? They didn't cut global oil supplies, they redirected it from the countries that were supporting Israel. It's very similar to what Trump is doing today by taking the oil that normally be going to China and India and redirecting it. It's not much different. And well, that was the catalyst that forced that macro repricing, the first big one. Then Coca Cola got all the big brands and Nifty 50 in the 60s was all brand Gillette and everything like that. That was your, your asset light world back then. And then, you know, by the time you get to 1980, 81, Exxon's the King of the mountain and who, I don't know where Coca Cola was. Guess what happens then? You saw macro repricing back to asset light and the asset heavies guys got killed. Stayed that way all the way until 2001, 2002 this time Microsoft is the asset light guy at the top and Exxon's at the bottom. Fast forward to 2010. Exxon's at the top, Microsoft's at the bottom. Fast forward to 2022, Microsoft is back at the top and you know, you know Exxon's at the bottom. And by the way, what's happening now though? I think what's going to happen, the asset light guys are going to turn into asset heavy. Everybody's kind of meat in the center because they're all putting steel in the ground. I don't want to get too far off the reservation here, but I think the key point here really is these things are cycles on these macro repricings, you know. And by the way you look at the catalyst, the catalyst is usually some type of policy decision that gets you that way. The One in the 2001 was China's admission to the WTO. I'd argue the 70s was the Arab oil embargo. But it's some type of policy decision somewhere in the world that creates these repricing.

[Paul Chapman]

And the problem is what gets us out of the old economy into the new, as you say, typically has been the US and its dynamism around people willing to take and the ability to take risk, financial risk without incurring personal and political and all the rest risk that creates that dynamism and that's changing. But that's that again, probably a different part. So three questions for you. One small, too big, one small, which is not that small, would be to say that scenario I laid out, you know, and things are sort of hinging on that. It is a possibility as opposed to sort of, you know, a far. You know, a mad conspiracy theory. The. Does that then make bitcoin go parabolic or is it the Swiss franc or something? I mean, what happens, you know, you've got all this cryptocurrency has gone back up. It seems to be part of a massive sort of asset. All assets rising apart from the real ones, like oil. Big bubbles. Is there, you know, do you have any sense. Is that a worthwhile discussion to talk about what happens to kind of these alternative currencies in that. That dollar inflationary world?

[Jeff Curry]

The thing about them is in a de. Globalized world, they're decentralized. And you don't want the government touching them. But the reality is the government can touch them. It's like they can figure out your.

[Paul Chapman]

Wallet if they want to.

[Jeff Curry]

Yeah, they can find it. But the beauty about Precious and why Precious just goes to the moon. People are realizing the obvious. You can transact in Precious without anybody ever knowing it. You buy crypto, you got the on ramp, and then you got the off ramp. You want to turn this into dollars. You know, gold. You know, you can take pieces of your portfolio, you can build it around.

[Paul Chapman]

Same goes for Flint. You know, we'll be back to trading antlers.

[Jeff Curry]

Yeah, exactly. Actually, there's a Russian oligarch who told me, why do I want bitcoin? I'm running down the. I'm running down this river. I got a. I got a bad guy after me. I got my buddy with me.

[Paul Chapman]

I want to. I want a 1911 and a bar of gold.

[Jeff Curry]

Yeah. But then we pick an axe and cut my gold bar in half. Give him something that can jump in the river and swim across. But if I have my fob, my fob's going to get wet and my crypto dies in the fob. You know, the. The crypto is. Just doesn't have that same ability whether if it's, you know, precious metals. The other thing about Precious is. Yeah, everybody talks about they know where this glut is because they got satellites that can see that the ships. And oil. Oil is easy to find. You can't find. Nobody knows where the gold's going. You can't. You can't use satellites to track it. It's too dense. I mean, oil is A joke. It leaves a huge footprint. That's why you can see where it goes everywhere. But with gold. No, I like to point out gold is a $30 trillion market cap company or commodity. Obviously not all of that is accessible to the market. Cryptos. 1 1/2 trillion. So what's the history of the market in gold? Three millennia. What's the history of crypto? 16 years. You know, it's the. If you're looking to hedge yourself from de dollarization, there's nothing beats precious.

[Paul Chapman]

When was it that the US government came and confiscated all of our gold?

[Jeff Curry]

Yeah, it was in the 30s or the 40s, I can't remember. But you're somewhere, somewhere in that.

[Paul Chapman]

I was going to say, you know. You know, I mean. Anyway, so. Okay, second question. Yeah, so that we've, we've just had Roland Reichsteiner on, of, of McKinsey. He and I have sort of had this ongoing discussion that maps over this discussion around kind of, you know, are we, you know, this narrative of oh, we had five good years of volatility and now 24, 25, it's just 13 and 14 all over again and we've got another four years ahead of us and no one, no one really wants to believe in that because it's just quite depressing to go back to where we were. If you're a commodity trader, that is pretty fine for everyone else. His thesis is no way. Just look at what's going on in the world. This isn't a progressive march towards free markets and, you know, less and less government intervention. This is the other way, supercharged. And here's our. And the discussion we had was around this privileged few. Right. There's, there's, there's a handful of commodity traders who privately owned, they've consolidated for the most part down to, you know, five and sort of three or four others, or four and three or four others. And then you've got a small select number of IOCs, NOCs majors and refiners who have or are building, often with HC's help, commodity trading platforms. And the thought is that actually the window to build those is closing because of market share particularly and talent and all the challenges. But if you have that commercial platform going into the next decade, you are going to not only obviously survive and not go bankrupt like, you know, as we saw when previous spikes of volatility, but also actually thrive is, you know, how do you now think about. And this isn't all about hedge funds. This is talking about a physical merchant commodity trading platform. Is that going to be the gold star asset that every investor is going to say to that trade that, that oil company or whomever. If you don't have this platform, I'm discounting you. As opposed to the obverse which has been true time immemorial.

[Jeff Curry]

I think the ultimate version of it. Yes, but it better be crypto and AI native meaning your technology's got to be best in class. The old school. Pounding out the phones as a physical broker is not going to do. You've got to be because you're. Let's go back to your point about the world's going to get much more complicated. You want to be able to tokenize this stuff. That's why I say be crypto native. You want to be able to tokenize this stuff and move it around in ledgers and everything like that. Which is, you know, I'm on the board of Abex, which Abex is by the way Avex repriced over the last year, like 10x part of it because it can do this kind of stuff. And I think the key point here is yes, markets can become that much more hostile. And so you're going to want some of the most sophisticated technology be to optimize both on the asset side and optimize on the liability side. So I agree with you, it's going to be great for those that are in this but you better be really technologically savvy because the world's getting more complicated and more complicated, just requiring a greater level of sophistication. You can't have a bunch of guys, hey, I know so and so in India to be able to move my nickel from point A to point B. Yeah, I mean the old story was, you know, I extend credit to a, some producer of some commodity somewhere in the world they use that credit to produce it. I get the offtake agreement. I get the offtake agreement, then I've got my ability to create supplies to other people in the world. And that was the arbitrage. This time it's going to be much more difficult to secure it and it's going to be more difficult to find the off takers. So you're going to want to have sophisticated technologies to be able to do this and some of them are going to want no footprints on their gold or whatever it might be. So having having a level of sophistication I think is going to be really critical.

[Paul Chapman]

Well, I think undoubtedly as well this is a cost based business and if you can flip all of your middle and back office, you know into agentic AI, then you know, that has some profound, you know, positives. The. Yeah, I mean the, the one challenge, one fly in that ointment. And this leads on to the third question, of course is going to be your sphere of operation is shrinking. Right. If, if suddenly you're being asked to pick sides, you know, then if you're going to work with us, you can't work in the China block. That's going to limit some of the fundamental abilities. Well, with it, I don't know because obviously, you know, many of these trading houses trace their ancestry to Mark Rich and it was doing difficult things in difficult places. Not necessarily with the sanction of, you know, the US or others. I mean, what's your comment there?

[Jeff Curry]

Oh, you've got to be. And you're, you're already getting two payment systems. You have the Swift payment system and you have the SIPs. SIPs is cross border International Payment System. It's the Chinese ones. So everybody talks. Those ships are interchangeable on those dark fleets. No, they use SIPs, they, they don't use Swift, they use Chinese insurance and the rest of that. Yeah, you're going to have to have the ability to be able to, if you're going to be a true trader and move this stuff around the world, you're going to have to have that ability to be able to technologically move into these other markets smoothly in and out. There will be an arbitrage, there always is an arbitrage between one system and you know, and the other. And there's a lot of money to make between those. But I think being caught in one and not in the other, it's going to be incredibly difficult. And I think, understand, I think part of the reason why the oil supply glut narrative is so big here in the west is people don't understand what's going, they don't know enough about the other system to be able to look at the fundamentals that have any read on it.

[Paul Chapman]

Yeah, we're just getting this lens of kind of the Atlantic west, right. Or Mediterranean west. Is this, and my final question is sort of around, you know, the, this shift from rules based to power based politics, the kind of, from free markets to mercantilism, you know, this sort of 1905 versus 2025 kind of, you know, you know, shift. And in some ways as you talk, it's kind of like the China fication of trade. The west is sort of becoming, you know, the US is becoming more like China in some ways in terms of policy directing, economics as opposed to allowing economics to do its thing. Am I overstating the case? Where is the role of indexes and fast money and all the rest of it in that world? If that carries on, if we are in a 30 year retrenchment from free markets and increased government intervention and everything hinges on security, supply, not cost and sustainability, are we back to a world where I pay my originator more than my trader and it's all about bilateral deals and owning the asset and all the rest of it?

[Jeff Curry]

I think absolutely yes. State capitalism is back, but markets at the same time. We got defi going on. Let's go back to tokenization. As you start to tokenize these commodities and now you can move them around in a defi system and you start to, you know, you create a new, it helps propel the defi world we're moving towards. So I'm not going to say free markets are dead and the rule based society, rule based society is most likely, you know, you can start writing it, your eulogy on it because the rules aren't going to be the same on a global basis. But at the same time you have the rise of defi crypto. That's why I say if you're going to do this, you're going to do it right. You better be crypto native because that's the way that you get around it. And I think the question is how much of different rule base do you want to do? One thing I like about what Abex is doing is you create a token on this stuff. You can embed the rules of the east with the rules of the west in there, depending on where you are so that the smart contract is written up that it deals with that and you can move that token around. But I think the key here is don't underestimate the market in the trading because the defi system will offset that rise in state capitalism.

[Paul Chapman]

Okay, so I should sell my dollar, buy a.

[Jeff Curry]

By the way, the US governments tell you to sell your dollar and buy.

[Paul Chapman]

State capitalism, buy a barrel of oil.

[Jeff Curry]

You know, it's by the way, the reason why they want the stable coins is so they can find a new buyer of, of, of the debt. Yeah.

[Paul Chapman]

But then you know, again, and this is always the toughest, it's, it's the darkest hour before dawn. You know your sort of the earlier discussion here was when everyone's telling you there's tons and when every, when your bellhop tells you there's a glut of oil, it's time to buy oil. You know, is there. And this might be a massively hopeful. If everyone's out there, including a recruiter who's a podcaster as well, telling you that we're in a, you know, we've shifted to a power based order instead of a rules based order that it's time to. It's time to bet on democracy again.

[Jeff Curry]

Yeah, I, by the way, the, you know, will democracy ever, ever look the same as it did before? By the way, the vast majority of history is more like today and less like the period.

[Paul Chapman]

Yeah, exactly. We've had this 20, by the way, 20 years.

[Jeff Curry]

You look at the election in 2024 when the Labour Party came into power, and it was 2024 or 1924. 1924, UK and when labor power came into its rise, labor was just like maga, identical. The world had a period of globalization that lasted from 1870 when the British put coal on the ships until 1920. Lasted about 50 years. And then we went into a period of fragmentation, bilateral derangements From Call it 1930s until 1986, 87. And before 1870, the world was all mercantilistic. So the anomaly. So call it 50 years of globalization under the British and 50 years of globalization under the Americans. And why was it you needed one big hegemon that would bear the cost of it. And yeah, what happened was it became untenable to the British population. They got upset and sounded just like that.

[Paul Chapman]

This is the, this is the. Soon as you spend more in defense, servicing the debt is. I mean, it's fascinating as well. The other thing I'd just say there is kind of like, I think it was Napoleon Bonaparte, they say he said it was to understand the man, look at where it, look at his world view when he was 20. Right. What was going on in the world then. I've butchered that quote. But, you know, everyone who's a, you know me, it was 2000, 2001. Right. Most of the current swathe of leadership in the global commodities world, you know, their world view, they're set in a world where everything was free markets. You know, hey, why should the government do this? Less regulation the better. You know, let us do our thing. We'll appropriately apportion capital and interest out there. That's probably in some points why it's so jarring is that actually they are, they're the anomaly in the course of history. But also it's quite a fundamental mind shift about like what's going on in these economies and older people, the older generation remember it, the Younger generation have only ever lived it. Right. So it's, it was sort of a fascinating inflection point about how you deal with this.

[Jeff Curry]

Yeah. And I think there's a lot of truth to that statement that the, the biases are, are, are deep. And by the way, the only way people change is through pain and the adoption of crypto in a real time basis and tokenization of everything. People are still kind of afraid of it. And it'll take. By the way, you know, what created DocuSign in the whole world was Covid. You were forced to use everything on that.

[Paul Chapman]

Yeah. Teams wasn't really used. Right.

[Jeff Curry]

Until we suddenly had to use that technology on you. And I think we're going to go to a point that's going to force tokenization and crypto on the world. I actually, I don't know if I like the word crypto anymore. It is.

[Paul Chapman]

Well, it's. Yeah. Tokenization defies.

[Jeff Curry]

Just defi.

[Paul Chapman]

Yeah. Because you're not actually talking. Yeah. Buying Bitcoin. Well, there's. We had Mark Kalansky on the podcast last year, you know, the author of Salt and Cod and those fantastic books and discussing his book Paper and he talks about the technology fallacy, which is this idea that a new tech technologies comes along and change the world. The argument is actually. No, it's the opposite. Right. Is the technology only takes the. Becomes so prevalent when society has a need of it.

[Jeff Curry]

Right.

[Paul Chapman]

So paper was invented 2,000 years before the Europeans started using it. And it's just because they didn't need it.

[Jeff Curry]

Right.

[Paul Chapman]

There just wasn't that much literary society going on. There wasn't that much law and all the rest. It was only when, when, when that came along after the Renaissance that Europeans started using it. The Arabs were using it four or five hundred years before, a thousand years before in terms of mathematics, you know. So yeah, and this is the challenge. Right. There's lots of organizations have been really trying to tokenize commodities for a long time. Maybe now its hour has come in this rather more brutal and challenging world that we're in that hopefully, you know, will, you know, my hope is at least we'll go back to normal pretty soon. But anyway, I don't think that's going to happen.

[Jeff Curry]

Ye. Paul, I'm not on that.

[Paul Chapman]

Okay, well I will see you, I hope, at the FT Commodities conference in Lausanne in April. I'm sure we'll bump into each other before. As always, Jeff, really appreciate your time. Always a fascinating discussion and lots of lots in there for people to unpack and listen closely to.

[Jeff Curry]

Absolutely. Thanks for having me. Paul.

[Paul Chapman]

Thank you for listening. To find out more about HC Group, our global offices and our expertise in search within the commodities sector, please visit www.hcgroup.