The AI Boom Has a Fatal Flaw

**Jeff Currie** (0:00)
We coined the term, The Revenge of the Old Economy, in February of 2002, when the.com bubble was crashing. At the time, I thought it was a one-off event. Now I'm starting to realize that it just happens every basically 12 years.

**Steven Feldman** (0:22)
My guest today is Jeff Currie, the man who spent 27 years as Goldman Sachs' global head of commodities research and became arguably the most followed commodities analyst on Wall Street. Jeff and I were partners at Goldman. We overlapped, but didn't really interact. Different worlds inside the firm. But I've been reading his work and watching his calls for years, and I have a long list of things I want to understand better.
Jeff is now executive co-chairman of Abaxx Markets, a Singapore-based commodities future exchange that is trying to build the benchmark contract for the next generation of global commodity trade. He's also the co-founder of 1947 Oil and Gas, a producing oil and gas company in the Gulf of America. He spent 27 years telling the world what commodities were worth. Now he owns a piece of them. That's a different conversation. Jeff, I'm sure most people in the Wealthion audience read the paper, see your name, you're quoted quite a bit.
But what they don't know is how you got to the commodities business. You can see from your bio that you're a University of Chicago PhD, very impressive. You end up on Wall Street. Most people there end up in the stock business, the bond business, the M&A business. You ended up in the commodity business. Tell us about that.

**Jeff Currie** (1:42)
Well, I studied price theory and I was fascinated by prices from day one and how prices are determined in commodities. That's the basis of all the Marcellian supply and demand curves. But how I really got into this, just to be honest, I came out of school in 1990 in the middle of Gulf War I. Oil prices at 40, global economy in a recession. The only thing hiring were the big oil companies. I was doing price fixing cases with them.
That's how I ended up with the oil side of this. But how I ended up on Wall Street was it was just a confluence of events because it was just right then when the commodities started becoming a part of the big investment banks and trading and everything like that. So it was just right time, right place. I guess you could say it in one. But I will say this. When I finished school, my PhD, I literally was the only person on the planet Earth who knew anything about oil because it was just the last thing on it. In fact, people were looking and going, Jeff, why didn't you go into aquaism in bonds? But yeah, no, it ended up in a sweet spot because then you have that China super cycle.

**Steven Feldman** (2:58)
Well, certainly if you're looking to be an expert in something and scarcity matters, that's scarce. There's a lot of equity analysts, a lot of strategists, but the people with true expertise in commodities is few and far between. As an investor, commodities is not typically front and center. In fact, it's even more problematic in some ways. It's almost like ignored for long periods and then it lurches back because of macro events.
Is it true that as an investor, you see it that way? Is there certain times that are going to be in that it hibernates or is it just because it's under covered or the fees are low for the whole street that it doesn't get more attention? Why is it not front and center in investors' brains and front and center in their portfolios?

**Jeff Currie** (3:51)
I think it's that point you're saying is when it moves and it's capturing the headlines, that's when it's in focus.
And you put these super cycles like the ones in the 70s, the one in the 2000s, and I argued you're in it right now, another one, it forces it to be front and center again. And I would argue this super cycle started back in October of 2020 And if you just take a weighted average of one of these indices, it's just a line going straight up over the last six years. It doesn't feel like it because oil went down and then came up, went back down. But if you start looking at the rotation between everything from gold to silver to copper to aluminum to live cattle, coffee, cocoa, it's just each one goes up. But we've put the trend over it is an upward sloping in the overall indices. So, you know, I think we're in one of those periods where the world's focused on it. I will say this, that the greatest amount of focus I've seen to commodities in this entire decade started around the, it was late November when silver and gold really started to take off. And from that point forward, all the way up till the ceasefire, I think it was April 8th, that big rotation out of the new economy into the old economy and owning these hard assets was the trade that was working. And then all of a sudden ceasefire happens. We went on a terror on the Nasdaq and commodities got crushed.