Forget Tech: Why Hard Assets Will Win The Decade | Jeff Currie

Jeff Currie (0:00)

There's only one thing you call that is, they didn't like the price that the market was providing. And in any other terminology, I call that financial repression. They want the yields lower. And the reason why we pounded the table on gold, we have financial repression. It creates inflationary pressures. It's intentionally done to lower the value of that debt. So the debt holders want out, what's gonna protect you in that kind of environment? It's gonna be owning the hard assets. We have a problem in diesel.

And that's an affordability problem. And we just go back to our problem on interest rates, interest rates, that 10 year sets mortgages. It's an affordability problem.

And we think about gasoline prices, retail. So everybody's thinking about, oh, oil's at 94 and it's not at 150 You're 189 on diesel. You have an affordability problem. So it's not something we're waiting for, it's here.

Wilfred Frost (0:52)

Welcome to The Master Investor Podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business leaders and politicians in the world, giving you, our listeners, an edge. The Master Investor Podcast is sponsored by The World Gold Council, BNY Investments, LSEG and Interactive Brokers.

Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice or a personal recommendation. More on that in the show notes. My guest today is Jeff Currie. He's one of the world's four most experts on commodities. He spent three decades at Goldman Sachs building and then leading their commodities team.

He left Goldman in 2024, spent two years at Carlisle before deciding to go out on his own. He's the founder of Rail Macro and of ABAC's Markets. Looking forward to discussing both of those new ventures with him later on in the conversations. But Jeff, it is an absolute pleasure to see you. Welcome to The Master Investor Podcast.

Jeff Currie (2:01)

It's a pleasure to be here. I've been waiting to do this, Wilfred. So, you know, I've done this with you going back from when you were at CNBC for literally decades. So it's a pleasure to be reunited in this kind of format.

Wilfred Frost (2:13)

Well, I couldn't agree more, and particularly, I would say, in this format, because it gives us plenty of time to explore the key factors. And obviously, we're going to get into all the commodities. But I feel like we have to start with the yield picture, which is the story of the last couple of weeks. What is your quick snapshot on the rise in yields before we get to some of the actions that we've seen from policymakers in response?

Jeff Currie (2:41)

I mean, this has been really at the core of our thesis, is that the debasement pressures from public debt being so large at this point, and the lack of investment in hard assets and the inflationary pressures creating a sharp rise in yields. And I think we're beginning to see that take place. And I would expect it to be a theme.

We turn bullish on commodities in October 2020 And that's when you look at yields, that's pretty much where they troughed. Yields, commodities, hard assets, all of that. And the view was that these things were just going to be a straight line up for decades. And by the way, if you look at the picture, it was a straight line down for nearly four decades. So I think that we are in that, call it a super cycle on hard assets and commodities, and yields are going to be a part of that. And I think this is, we're not in the first inning of this. This is like, we're in like the second or third inning of it. And I think we're going to see more of it.

Wilfred Frost (3:47)

And for our non-American listeners, you're referring to the second or third inning of nine of a baseball game there. Yes, I forget.

Being based in Spain now, Jeff, you're going to have to adapt some of your analogies. I will. A true European that you are now. Let's touch on the intervention, then. I mean, obviously, Scott Besson, the US Treasury Secretary, announced his buyback or the size of the buyback going forward and his intention to try and dampen the rise in yields at the longer end in the curve. Talk us through your reaction to that.

Jeff Currie (4:23)

Whatever you want to call it, maturity swaps or whatever people have termed it, there's only one thing you call that is, they didn't like the price that the market was providing.