Join Plurilock CEO Ian Paterson on Monday Nov 29th at noon pacific time, 1pm MT, for an update on the cybersecurity sector, an overview of PLUR’s string of acquisitions and record earnings in Q3, plus Q & A for investors considering adding cybersecurity to their portfolios. CLICK HERE to register.
Sponsor content received from Integrated Wealth Management
This week’s EVA provides another sneak preview into David Hay’s book-in-process, “Bubble 3.0” discussing what he thinks is the crucial topic of “greenflation.” This is a term he coined referring to the rising price for metals and minerals that are essential for solar and wind power, electric cars, and other renewable technologies.
It also centers on the reality that as global policymakers have turned against the fossil fuel industry, energy producers are for the first time in history not responding to dramatically higher prices by increasing production. Consequently, there is a difficult tradeoff that arises as the world pushes harder to combat climate change, driving up energy costs to painful levels, especially for lower income individuals.
What we are currently seeing in Europe is a vivid example of this dilemma. While it may be the case that governments welcome higher oil and natural gas prices to discourage their use, energy consumers are likely to have a much different reaction…read more.
We’ve talked about the Commodity Super Cycle – a major theme in the coming years. Uranium is on our list of commodities that stand to benefit from this cycle, and this is why our managers began investing in the sector earlier this year. Its price has exploded recently due to short term developments, but the long term fundamentals for the nuclear story are strong. ~ Sandor Kiss, Integrated Wealth Management
One week ago and about a year after we turned bullish on the uranium sector, which has more than doubled despite Democrats’ unwillingness to include uranium in their ESG umbrella, we presented readers with a unique take from Harris Kupperman, who explained how the Sprott Physical Uranium Trust could serve as a springboard to substantial further gains not only in the price of uranium itself but also uranium-linked stocks and ETFs. Comparing its action to the positive feedback loop that emerged in the Grayscale Bitcoin Trust, which served as the springboard allowing bitcoin to rise from $10,000 a year ago to over $60,000 earlier this year, Kupperman said that the Sprott Trust had the potential to “upend” the illiquid uranium market by creating an actual physical shortage that would then translate to much higher prices, to wit:
The Sprott Physical Uranium Trust commonly (known as SRUUF), is the entity that has upended the uranium market. Since launching its ATM 13 days ago, it has acquired 2.7 million pounds of uranium. This is an average daily rate in excess of 200,000 pounds or roughly a third of global production on an annual basis. If GBTC is the roadmap to follow, as the price of uranium begins to appreciate, the inflows into the trust should accelerate. Interestingly, there are plenty of other entities also purchasing physical uranium, uranium that utilities were counting on for their future needs. The squeeze is on…read more.
WHEN FACEBOOK SAID Tuesday that it was suspending the accounts of a team of NYU researchers, it made it seem like the company’s hands were tied. The team had been crowdsourcing data on political ad targeting via a browser extension, something Facebook had repeatedly warned them was not allowed.
“For months, we’ve attempted to work with New York University to provide three of their researchers the precise access they’ve asked for in a privacy-protected way,” wrote Mike Clark, Facebook’s product management director, in a blog post. “We took these actions to stop unauthorized scraping and protect people’s privacy in line with our privacy program under the FTC Order.”
Clark was referring to the consent decree imposed by the Federal Trade Commission in 2019, along with a $5 billion fine for privacy violations. You can understand the company’s predicament. If researchers want one thing, but a powerful federal regulator requires something else, the regulator is going to win.
Except Facebook wasn’t in that predicament, because the consent decree doesn’t prohibit what the researchers have been doing. Perhaps the company acted not to stay in the government’s good graces but because it doesn’t want the public to learn one of its most closely guarded secrets: who gets shown which ads, and why…read more.
Bubbles are evident and only get acknowledged after they pop. Such is because, during the inflation phase of the market bubble, investors rationalize why “this time is different.”
We have seen many examples of this rationalization over the last couple of years. Such as stocks are cheap based on economic growth, low-interest rates justify high valuations or the “moral hazard” of the “Fed put.” Other examples come from the analysis of stock prices, such as this tweet recently.
While the analysis is correct, average stock prices do not solely define a bubble.
Such is where we need to start.
What Is A Bubble?
According to Investopedia:
“A bubble is a market cycle that is characterized by the rapid escalation of market value, particularly in the price of assets. Typically, what creates a bubble is a surge in asset prices driven by exuberant market behavior. During a bubble, assets typically trade at a price that greatly exceeds the asset’s intrinsic value. Rather, the price does not align with the fundamentals of the asset.“
This definition is suitable for our discussion; there are three components of a “bubble.” The first two, price and valuation, as noted above, are get dismissed or rationalized during the inflation phase. That rationalization is due to investor psychology and the “Fear Of Missing Out (F.O.M.O.)
Jeremy Grantham posted the following chart of 40-years of price bubbles in the markets. During the inflation phase, each got rationalized that “this time is different.”