Read more

Read more

I have made some recent moves in the AIA Dividend Portfolio and my personal portfolio, which I want to share before the November issue comes out.

I believe we're entering the endgame of the AI bubble. Higher interest costs and the realization that cash flows will not be sufficient to service the debt they've taken on are driving this view, and many of these companies are still taking on debt as they race toward insolvency.

High energy prices and higher rates are beginning to chip away at economic conditions.

The repercussions could be a debt-default cycle and a steep economic decline as we experience a short-term deflationary impulse.

See the change below.

Read more

Why Europe Is Burning

So what’s going on in Europe?

No, I don’t think it’s the beginning of Eurozone Crisis 2.0. Those with good memories will recall that the first Eurozone crisis began in 2009 with a Greek debt crisis that spread to other countries. As we shall see, the recent wave of protests has indeed coincided with a French debt crisis that also threatens to spread to other members of the Eurozone. However, if the European Central Bank (ECB) learned anything from the events of 2011–2012 it was that it must stand ready “to do whatever it takes to preserve the euro”—the immortal words of ECB president Mario Draghi in July 2012. If French bond yields go up much higher—say by another 100 basis points (1 percent)—then the ECB has the tools to intervene and stabilize the market.

No, rather than a financial crisis, what we see today is more like synchronized political crises in multiple European countries. France will elect a new president on April 18, and it looks as if the far-right Marine Le Pen could finally win at the fourth attempt. In Spain, the leftist prime minister Pedro Sánchez has just called snap elections for November 29; I expect him to lose. In Germany, Chancellor Friedrich Merz lurches from crisis to crisis as the far-right Alternative für Deutschland keeps winning regional elections. In Italy, Giorgia Meloni needs an election soon, before any more of her coalition’s supporters defect to Roberto Vannacci’s authentically fascist Futuro Nazionale.

Pretty decent article on what is happening in France. Basically, it comes down to promising more benefits than we can pay for. Many analysts and politicians have warned about this for years. It now seems the day of reckoning is arriving.

Combine this with a culmination of consequences due to decades of dumb policies (green agenda, deindustrialization, immigration from the Third World). People are now reacting by voting for center-right and right-wing parties.

EU leadership should hope for a warm winter, as it faces a serious risk of a major energy crisis this winter.

By the way, Europe began drawing down gas storage today.

I have taken a position that will likely benefit from the EU’s impending gas shortage.

This is just another example of what I warned about: volatility in social, financial, economic, and political spheres.

Housing Is Collapsing, Wall Street Hasn’t Noticed

The cracks in the U.S. housing market are becoming increasingly difficult to ignore.

Over the past 48 hours, we’ve received a series of housing reports that paint a troubling picture of an economy struggling under the weight of elevated rates, as I have been predicting would happen.

And perhaps most concerning, this deterioration is taking place just as the Federal Reserve contemplates additional tightening. I wanted to take this morning to review the latest data and explain what implications this could eventually have for the market.

Pending home sales plunged 7.3% in September, dramatically worse than economists expected, pushing contract signings to their lowest level since records began in 2001.

According to ZeroHedge, the deterioration was widespread across the country, with pending sales falling 9.2% in the West, 8.2% in the South, 6.5% in the Midwest, and 4.2% in the Northeast. Every major region experienced a decline, suggesting that the weakness is not confined to a handful of overheated housing markets.

Higher interest rates hurt housing prices and sales. Why are interest rates moving higher?

Repercussions of the pandemic money printing, exacerbated by the unforced error of attacking Iran and the subsequent artificial energy supply contraction.

I find it amusing that all these problems were caused by government intervention in the markets through bad policy, yet most people clamor for more government.

We will keep finding profit-making opportunities caused by government folly.

Coreweave: The canary in the coal mine

CoreWeave carries roughly $50 billion in debt. It has guided to $35–$39 billion of capital spending this year, against expected revenue of about $13 billion and an expected loss of around $2.1 billion.

That means it’s spending roughly three dollars for every dollar it brings in, and borrowing much of the difference when the risk-free rate is above 5%. Its CEO told employees in a memo that markets can sometimes “misunderstand and act irrationally.”

Maybe. But Gartner’s Will Sommer put the bigger question plainly: “our research indicates enterprise and consumer AI revenue will be insufficient to support profitable returns” on planned AI spending.

The quote above is from Steve Blumenthal’s weekly email from CMG that I get. I believe AI is here and is a useful tool. Nevertheless, I think this bubble will eventually burst. I like to buy undervalued and less-followed sectors. It has allowed me to beat the S&P for many years.

When Debt and Equity Markets Disagree: The Curious Case of CoreWeave

CoreWeave is cooked and appears to be one of the canaries in the coal mine for the whole AI “over-exuberance,” as Alan Greenspan described the previous internet and telcom bubble in the 1999-2000 period.

That’s it for this week.

Regards,

John Polomny

Subscribe now

One of the reasons yield curve control will happen sooner than people think

With $40 trillion in outstanding debt and annual deficits of nearly $2 trillion, the Treasury and the Fed will have to resort to monetary debasement to make the math work. That will be bullish for hard assets. The government simply will not be able to absorb higher rates on its large and growing debt pile.

The whole West is running unsustainable deficits. The US is just the worst offender.

The Global Monetary Reset Is Here (you don’t have much time)

Danny at Capital Cosm interviewed me this week, and we discussed Scott Bessent's news about Judy Shelton and what it could mean for monetary policy. We also discussed the current geopolitical situation and how it creates opportunities for both short- and long-term trading and investing.

Regarding Judy Shelton, here are some of her views:

Judy Shelton is a longtime advocate of sound money and restoring gold's role in the monetary system. Her appointment gives those ideas a voice inside Treasury, but it does not establish that the administration has adopted a monetary reset.

Treasury announced her appointment on October 9, 2026. Her formal title is Counselor in the Office of the Secretary, advising Scott Bessent on currency policy, particularly financial conditions in China.

Her central argument is that money should provide a dependable measure of value and preserve purchasing power. She believes discretionary central banking and an unanchored dollar give governments too much latitude to erode that value. In her view, gold can impose external discipline on monetary policy.

She also favors a smaller Fed balance sheet, less central-bank influence over credit markets, and reducing or eliminating interest paid on bank reserves. She argues that stronger production and productivity can restrain inflation more effectively than suppressing economic activity through high interest rates. Consequently, she can favor both monetary discipline and lower interest rates—her version of sound money does not simply mean permanently tight policy.

Her original 2012 proposal involved medium-term, zero-coupon bonds; her more recent version emphasizes a 50-year instrument. This would initially be one category of Treasury debt, rather than immediate gold convertibility for every dollar. cato.org

The underlying mechanism is straightforward: investors would have protection against dollar depreciation relative to gold. Shelton believes that commitment could attract buyers and make monetary debasement more costly for the government. Her broader ambition includes international monetary arrangements with a renewed gold anchor.

Good luck with that. The bottom line is that we spend more than we take in. Until Congress addresses that (as of now, there is zero interest in reigning in spending), this is, in my view, just more PhD coffee clutch talk.

Yield Curve Control Playbook

The St. Louis Fed has a paper on its website describing how YCC works and how it was used before, primarily right after WWII.

YCC in the U.S.

The U.S. incurred massive debt expenditures to finance World War II, and the Fed capped yields in order to keep borrowing costs low and stable. In April 1942, short- and long-term (25 years and longer) interest rates were pegged at 3/8 percent and 2.5%, respectively. These rate caps were largely arbitrary and were set at approximately pre-1942 levels.

As the U.S. continued to incur debt, the Fed was obligated to keep buying securities to maintain the targeted rates—forfeiting some control of its balance sheet and the money stock. The public generally preferred to hold higher-yielding, longer-term bonds. Consequently, the Fed purchased a large amount of short-term bills, which also increased the money supply, to maintain the low interest rate peg.

After the war ended, FOMC members grew more concerned with addressing the rapid inflation that materialized. However, President Harry S. Truman and his treasury secretary still favored a policy that maintained YCC (which also protected the value of wartime bonds by implying a price floor). By 1947, inflation was over 17%, as measured by the year-over-year percent change in the consumer price index (CPI), so the Fed ended the peg on short-term rates in an attempt to combat developing inflationary pressures.

In combination with rising debt from the U.S. entering the Korean War in 1950, the peg on longer-term rates contributed to faster money growth and increased inflationary pressures. In 1951, annualized inflation was over 20%, and monetary policymakers insisted on combating inflation. Against the desires of fiscal policymakers, interest rate targeting was brought to an end by the Treasury-Fed Accord in March 1951.

They have done it before, and they will do it again.

Global Stock Market Valuations

Quite a few emerging markets I've discussed in the newsletter and in my videos are cheap. Brazil, Chile, and Colombia, for example. What is expensive? The US and Taiwan. Two markets that are tied to the AI buildout. Sell overvaluation and buy undervaluation.

Uzbekistan continues to be a great opportunity

The IMF projects Uzbekistan’s economy to grow by 7.8% in 2026

The International Monetary Fund projects Uzbekistan’s real GDP to grow by 7.8% in 2026, after 7.7% in 2025, and by 6.5% in 2027, according to the World Economic Outlook of October 2026. The IMF projects world growth at 3.1% in 2026 and growth in the Caucasus and Central Asia at 5.2%. Among the economies of the Middle East and Central Asia, only the Kyrgyz Republic has a higher projection for 2026, at 9.0%. The projection for Kazakhstan is 4.4%.

Inflation is projected to slow to 6.9% in 2026 from 8.8% in 2025 and to 5.7% in 2027, measured as the annual average of consumer prices. Unemployment is projected to decline to 4.3% in 2026 and 3.8% in 2027 from 4.8% in 2025.

The current account deficit is projected to widen to 5.1% of GDP in 2026 from 3.9% in 2025 and to narrow to 4.6% in 2027. The Middle East and Central Asia region as a whole is projected to contract by 0.3% in 2026, which the IMF links to a longer closure of the Strait of Hormuz, with output of the region’s oil exporters falling by 3.8%. For the Caucasus and Central Asia, the IMF names commodity prices, remittances and reform momentum as the sources of growth.

I have been investing in Uzbekistan since 2000. The economy has grown as the government has continued economic reforms. Now it is getting easier to bring capital into Uzbekistan. The stock market is up massively this year, and I think this is just the beginning.

That’s it for this week.

Regards,

John Polomny

Subscribe now

Commentary

As you all know, one of the primary ideas I invest in is contrarian, ignored, or busted-out countries, industries, and stocks.

While thinking about this month’s newsletter, I recalled a recent Rick Rule interview in which the host asked what he thought was currently “hated.” I don't exactly recall what he said, but the question stuck with me, and I have been contemplating it as I prepare this month's letter.

Many of my previous ideas and investments seem to have moved from hated and ignored to less hated, or even mainstream.

So what is “hated” and off investors’ screens?

One place that is still ignored and no one talks about is Africa.

I would not say it is hated, but basically no one cares. Apathy and indifference describe it best.

Longer-term subscribers will recall my ill-fated entry into Africa several years ago via Helios Africa, which was/is a Fairfax Financial investment vehicle. The story is long, but it was initially a bust and seems to be turning now. This article is not about that.

I think the current indifference towards Africa gives us an opportunity to take another bite at the apple.

A Real Opportunity?

Africa is overlooked partly because investors often treat it as a single troubled jurisdiction. Headlines about conflict, corruption, sovereign defaults, and currency collapses can obscure progress elsewhere.

Practical barriers reinforce that neglect: small stock markets, limited liquidity, uneven financial disclosure, and the difficulty of researching unfamiliar businesses. These obstacles can discourage large institutions even when individual opportunities are attractive.

However, this can work to individual investors' advantage, as information is scarce and markets are difficult to access. This is definitely a small pond that no one is fishing in.

That creates an attractive opening for patient investors, although neglect itself is no proof of undervaluation. Some discounts accurately reflect weak governance or an inability to move money in and out.

Is Demography Destiny?

Demographics provide a powerful starting point. The United Nations projects that sub-Saharan Africa’s population will increase roughly 79 percent to 2.2 billion by 2054. The World Bank estimates that more than 620 million people will enter Africa’s labor force by 2050.

While many developed economies contend with aging populations, African countries have an opportunity to expand their productive workforce and domestic markets for decades. Housing, electricity, food distribution, communications, healthcare, and financial services could all benefit from that expansion.

However, the demographic dividend must be earned. It emerges when healthier, better-educated workers find productive employment, and the balance between workers and dependents improves.

Without sufficient jobs, rapid population growth can increase poverty, migration pressures, and political instability.

Rising GDP can also disguise disappointing progress per person. The World Bank’s April 2026 forecast put sub-Saharan African growth at 4.1 percent, while warning about debt burdens and structural constraints.

Refroms

Economic reform supplies the potential catalyst. Nigeria has removed costly fuel subsidies and liberalized its foreign exchange arrangements. These changes seek to reduce distortions, improve public finances, and restore investor confidence.

The Dangote refinery is a strong example of how reforms and investment can drive positive outcomes. Kenya may now replicate this.

Nigeria’s Dangote says refinery IPO demand ‘enormous’ as Kenya project advances

Aliko Dangote said on Tuesday that investor demand for his ongoing Lagos refinery share ‌sale was “enormous”, as the Nigerian pressed ahead with plans for a $16 billion refinery in Kenya that would extend his energy empire across Africa.

Dangote, Africa’s richest man, earlier this month launched a $1.6 billion initial public offering in the refinery to fund a doubling of its capacity to 1.4 billion barrels per day. The deal is being marketed as a “people’s IPO” ​and would be Africa’s largest.

“Demand is there, enormous demand. In fact, I didn’t know the depth of our capital markets until now, ​really, because we have never tested it,” he told reporters in Nairobi.

He did not provide specific investor demand ⁠figures for the offer, which is scheduled to close on October 13.

The deal, which is underwritten for $400 million by Dangote’s lead financial advisers, could raise ​as much as $2.1 billion if oversubscribed.

Before the Dangote refinery in Nigeria, the country exported crude oil and imported 90-95% of its refined products.

In June 2026, the IMF concluded that reforms had improved macroeconomic outcomes and resilience, while emphasizing that living conditions remained difficult. This captures the central tension; policies that improve long-term investment incentives can initially raise household costs.

Ethiopia offers another example. Its reform program is addressing foreign exchange constraints, monetary policy, public revenues, and conditions for private enterprise.

The IMF’s July 2026 review reported stronger-than-expected macroeconomic outcomes, but also highlighted security risks, political pressures, and exposure to higher fuel and fertilizer costs. The potential reward is meaningful where liberalization allows productive businesses to expand.

For investors, the best approach is to examine businesses solving essential bottlenecks: power supply, mobile connectivity, payments, logistics, food processing, and storage. We need to look for demand supported by paying customers, sound balance sheets, trustworthy management, and defensible cash flow.

This month’s portfolio additions focus on two of the above businesses: mobile connectivity and food processing and storage.

Mobile connectivity has become essential worldwide, especially in Africa, as smartphones have leapfrogged traditional forms of telephony in providing phone and internet access to populations.

Food processing and storage is a huge opportunity, as an estimated 30-40% of harvests go to waste due to a lack of storage and transportation.

I have two portfolio additions that are taking advantage of these opportunities.

Read more

Read more

Chris Puplava: Markets Can’t Ignore This Energy Shock

Stocks are flashing warning signs beneath the surface. Financial Sense CIO Chris Puplava examines how narrowing market leadership, rising energy costs and renewed rate-hike expectations are testing the rally. With consumer stocks weakening and a corporate buyback blackout approaching, he favors keeping cash available for a deeper pullback—while remaining cautiously optimistic that easing geopolitical tensions could support a year-end rebound.

Scott “the house” Bessent thinks he is bigger than the market

Every time the media dubs one of these idiots a nickname, it usually means they're at the top for reputation or ascendancy.

Remember Anthony “the science” Fauci or Alan “the maestro” Greenspan?

Meanwhile, ten-year rates have broken their 40-year downtrend and are in a defined uptrend. At what point does “the house” capitulate? And is capitulation yield curve control?

Meanwhile, the root cause of the problem is only getting worse.

Protecting Your Portfolio in a Troubled World

Another conversation with John Polomy of Actionable Intelligence Alert

The conversation I had a couple of weeks ago with John Polomy of Actionable Intelligence Alert picked up where we left off last time in the Soviet Union. It ended in some avocado orchards in California, and somehow made complete sense the whole way through.

In John’s telling, the institutions we’ve spent our lives assuming are permanent, such as the dollar’s reserve status, US military primacy, and the two-party establishment, are not laws of nature. They’re arrangements. And arrangements evolve to protect themselves, not you, and tend to work right up until the moment they don’t.

John sees military and fiscal overextension followed by a culminating event that seals an empire’s end. He points to Iran, revealing something the Pentagon would rather not say out loud. A handful of drones and missiles can now neutralize the kind of power projection that once required nothing more than showing up with a carrier group. That genie is now out of the bottle.

I had a great conversation with JeremyMckeown of “Hypernormal Times”. I like Jeremy’s work, and he sends an excellent daily email that covers the major themes in the news. I enjoy his style and thinking. Definitely worth subscribing to his work.

Saudi east-west pipeline hit by Iraqi militias. Oil and refined products soar. AIA Weekly 9.12.26

Things are heating up in the ME, and the administration seems to have no answers. Can diesel hit $10 per gallon?

That’s it for this week.

John Polomny

Commentary

“The inconceivable is absolutely conceivable when the survivability of the state is threatened.“~ Russell Napier

The above snippet is from the usdebtclock.org site. It gives real-time data on the US debt situation.

If you have been following along here or my YouTube channel for any period of time, you know I have been railing on and on about the out-of-control US government spending and growing debt pile.

This debt pile is increasing at an ever-faster rate, and we are in a so-called great economy according to our leaders!

I harp on this not because I am some kind of dollar-collapse Cassandra; it is because I know there are only a few possible outcomes to this issue, and only one is likely.

1. The government will voluntarily cut spending and live within its means. This will lead to a decline in the debt-to-GDP ratio over time. Not likely, as a large and growing share of spending is now on transfer payments like Social Security and Medicare, which are ramping up as the Boomer generation retires in large numbers. There is zero appetite among voters or their elected representatives for reforming these programs or cutting discretionary spending.

2. Outright debt default. Zero chance, as this would lead to the collapse of the dollar and a deflationary depression. This would be the end of the US Empire.

3. Monetize the debt. As the debt pile grows and creditors become anxious about the US's ability to pay its debts and/or prudently manage its fiscal affairs, they will demand higher interest rates to compensate for the increased risk of nonpayment and/or of being paid in a debased currency.

Unfortunately, and backed by historical precedent, governments have chosen the perceived easy way out: monetization of their debt. The US and other Western welfare states will eventually choose this route also.

They will likely do this via QE and “yield curve control”. Yield curve control is a monetary policy in which a central bank targets a specific interest rate on long-term government bonds and buys or sells bonds as needed to maintain that rate.

The FED will set an arbitrary interest rate and then use QE (printed money) to buy enough bonds to keep the rate at that level while allowing inflation and nominal growth to exceed the controlled rate.

The US already did this once before, after WW2.

The Federal Reserve Bank of St, Louis has a paper on its site that explains this process well.

The U.S. incurred massive debt expenditures to finance World War II, and the Fed capped yields in order to keep borrowing costs low and stable. In April 1942, short- and long-term (25 years and longer) interest rates were pegged at 3/8 percent and 2.5%, respectively. These rate caps were largely arbitrary and were set at approximately pre-1942 levels.

As the U.S. continued to incur debt, the Fed was obligated to keep buying securities to maintain the targeted rates—forfeiting some control of its balance sheet and the money stock. The public generally preferred to hold higher-yielding, longer-term bonds. Consequently, the Fed purchased a large amount of short-term bills, which also increased the money supply, to maintain the low interest rate peg.

After the war ended, FOMC members grew more concerned with addressing the rapid inflation that materialized. However, President Harry S. Truman and his treasury secretary still favored a policy that maintained YCC (which also protected the value of wartime bonds by implying a price floor). By 1947, inflation was over 17%, as measured by the year-over-year percent change in the consumer price index (CPI), so the Fed ended the peg on short-term rates in an attempt to combat developing inflationary pressures.

In combination with rising debt from the U.S. entering the Korean War in 1950, the peg on longer-term rates contributed to faster money growth and increased inflationary pressures. In 1951, annualized inflation was over 20%, and monetary policymakers insisted on combating inflation. Against the desires of fiscal policymakers, interest rate targeting was brought to an end by the Treasury-Fed

Basically, the FED would be the buyer of last resort for US Treasury debt. This could lead to a situation where the 10-year rate is trading at 3% while the inflation rate is higher, say, 4% or higher. This inflation, coupled with nominal GDP growth, would lead to the slow but steady inflating away of the debt in nominal terms. Of course, it could also lead to massive inflation (see the WW2 example above).

One might counter this and say, "Well, I am not a fool; I will not buy these bonds, as they are simply certificates of confiscation." I am being paid less in interest than the inflation rate. I can do math and do not want my purchasing power to erode.

The US Government, which by this time will be desperate for revenue, has a whole bag of tricks for people smart enough to avoid buying their bonds.

Economic Historian Russel Napier has written about this.

Napier believes the authorities will eventually shift the burden from central banks to regulated savings institutions.

-Higher liquidity requirements requiring banks to own government securities.

-Preferential regulatory treatment for sovereign bonds.

-Pension rules requiring minimum allocations to domestic government debt.

-Insurance solvency rules favoring government bonds.

-Tax advantages for government securities.

-Restrictions on foreign investment or capital movement.

-Government guarantees that steer bank credit toward politically favored sectors.

-Pressure on retirement plans to invest domestically.

The government does not necessarily announce: “You must finance our deficit.” Instead, it changes the regulations (Congress makes the rules) so that owning government bonds becomes practically unavoidable.

Napier said in a 2023 interview that governments would increasingly need to control both the banking system, the source of most money creation, and the savings system in order to suppress the yield curve while inflation remained elevated. He pointed to public discussion in Britain about directing pension-fund investment as an early example.

Just in time for this issue:

In Brussels, they are counting on redirecting the private savings of Europeans toward patching holes in their own economy. The head of the European Commission, Ursula von der Leyen, publicly called the bank deposits of EU residents “lazy.” But the commission found an interesting proposal to put the people’s accumulations at risk.

Ursula von der Leyen, President of the European Commission:

“In Europe there are savings. Unfortunately, these savings are idle. €10 trillion of household savings at present remain on bank deposits. And a significant part of European savings is invested outside our continent. Europe must now make these savings work for the good of its business. We have put forward proposals on securitization, investments of banks and insurance companies, and also on the integration of our markets and their supervision. Together they can unlock up to €470 billion of additional investments.”

These monthly issues just seem to write themselves!

The point being that these governments are desperate for money. Expect higher taxes, inflation, confiscations, capital controls, and anything else they can think of to strip mine you of your money.

The good news is that this is not likely to happen next week or even next year, but the trend is certainly in place. Remember the first priority of any organism is to preserve itself and expand. That includes government: it exists to continue to live and grow, not for the benefit of the people it governs, unfortunately.

What I am Doing

I think the first thing one needs to do is determine if the scenario laid out above is plausible. I believe it is the future regardless of who one votes for. Nevertheless, the reader will have to determine for themselves if they trust governments with their sordid histories or their own eyes and ears.

If one has the means and wealth to do it, one should consider diversifying globally, as Doug Casey has said over his career.

Live in one country, hold citizenship in another, bank in a third, invest or operate a business in a fourth, and keep assets in a fifth.

The original “Three Flags” concept is generally attributed to investment writer Harry D. Schultz. Casey became one of its best-known advocates and expanded it into his philosophy of becoming an “International Man.”

This is excellent advice for the person wealthy enough and willing enough to execute this type of plan. How realistic is it for the average AIA reader? Not very likely.

Most people don't have sufficient wealth to attract top advisors, and this space is infested with shysters and scam artists.

Most people do not want to fly around the world, set up banking, brokerage, and gold custodial accounts all over the place, and then try to manage it all. A Family office with a billion dollars? Yes. Guy who sold his HVAC business for $ 2 million? Not likely.

So what can we do?

I believe we can gain some insight into a possible solution from the 1996 and 2000 Libertarian Presidential candidate Harry Browne. Who was Browne? He was an American writer, libertarian political activist, and investment advisor. He was the Libertarian Party’s presidential nominee in the U.S. elections of 1996 and 2000, running on a platform that advocated abolishing the federal income tax, privatizing Social Security, ending the war on drugs, and drastically reducing the size and scope of government.

He also came up with something called the “Permanent Portfolio.”

Harry Browne’s Permanent Portfolio is built around a deceptively powerful proposition.

Because nobody can reliably predict the next economic regime, investors should own assets that collectively prepare them for every major regime.

This is genuine diversification by economic exposure and not simply owning hundreds of securities that all depend on rising asset prices and easy credit.

Browne generally advocated periodically rebalancing and returning the portfolio toward its 25% allocations. His work has been implemented using annual rebalancing or tolerance bands; commonly, rebalancing occurs when a component reaches approximately 35% or falls to 15%.

I think this basic framework is sound. My intention is to expand upon the basic concept and improve on it. For example, I want less exposure to bonds due to the reasons articulated earlier in the article. This is especially true given that I expect persistent inflation and the government to institute yield-curve control.

This new portfolio will be dubbed the AIA Permanent Portfolio.

This will not be a one-issue, one-and-done type situation. It will likely take a while to complete my thinking on this subject and find suitable portfolio components.

It is also not a get-rich portfolio. This is better suited for those with accumulated wealth who want to preserve it over the long term during what I expect to be a very tumultuous economic, financial, and political period.

It is impossible to know the future in detail. I hope that I am wrong and the leadership class will reform itself, but that is highly unlikely. Nor do I think that the things required to fix these issues are even politically possible, and the things that are possible will not be sufficient to change our course.

As always, we take things as they are, not as we wish them to be.

Let’s get to work.

Read more

Oak Bloke Interviews Actionable Intelligence Alert

The Oak Bloke and I chatted on his livestream about a variety of investing subjects.

Jeff Currie on Commodities

Doug Casey: Debt Can Topple Empires

Of course, this is not the first time in history this has happened. There is nothing particularly special about the US. It is another empire in a long list of empires that will eventually be replaced by something else.

The one thing I would keep in mind with this type of discussion is that just because something is certain does not mean it is imminent.

No one can put a time frame on these events, making them difficult to act on. Remember what Adam Smith said,

“There is a great deal of ruin in a nation,” meaning that countries possess a remarkable capacity to absorb economic shocks, political blunders, and hardships without completely collapsing.

Nevertheless, the die is cast, and this should be taken into account in your financial planning.

Although we are getting close to the precipice.

Uranium Making a Move

Argentina back on my radar

The current reading? The cycle bottomed around 2020 — the deepest trough since the Great Depression — and has turned sharply upward. The projection based on Capital Market Assumptions datasets points toward a peak somewhere north of 12% annual returns by 2028–2030.

FDW Capital wrote an article back in April about the commodity supercycle and how Argentina will benefit. I have become more confident in Argentina and have begun re-entering via the ETF (ARGT).

Brazil and Argentina, specifically, now offer something that is genuinely scarce in global commodity markets: political accessibility combined with world-class reserves. A lithium deposit in Argentina, a deepwater oil field in Brazil — these are not subject to the geopolitical risk premium that now shadows Middle Eastern barrels, Russian metals, or Chinese rare earth supply chains.

This is a structural re-rating argument that goes beyond cycle timing. Even in a scenario where commodity prices disappoint, the relative attractiveness of Latin American producers versus their geopolitical alternatives has permanently shifted.

Plus, the Vaca Muerta shale is going to provide a tremendous wind in the sails of Argentina.

Discovered in 2010, Vaca Muerta sits in Neuquén province and holds the world’s second-largest technically recoverable shale gas reserves (308 Tcf per the EIA) and the fourth-largest shale oil reserves globally. For over a decade, chronic political instability, capital controls, and punitive export taxes kept this titan dormant. Under Milei’s reform program — particularly the RIGI large-investment incentive scheme — the formation is now producing at record levels and attracting every major oil company on earth. This is no longer a story about potential. It is a story about execution.

We have run this playbook in other countries before. As economic reforms take hold, positive economic results lead to better per capita economic outcomes and are eventually reflected in markets. It will not be linear, and there will be volatility, but the trend is in place.

That is it for this week.

John Polomny

Subscribe now

GEORGE NOBLE | The Fed will take the easy way out. They will have to print!

There is only ONE way out of $40 trillion in government debt, and it runs straight through the printing press.

I sat down with Gary Bohm on Metals and Miners to walk through why the Fed doesn’t hold the cards here. Mr. Market holds them, and Mr. Market is about to force the issue:

Interest expense is now the second-biggest line item in the entire federal budget, we are running $2.5 trillion deficits while the economy is still fine, and rates cannot fall when the demand for capital from government borrowing and the hyperscaler capex boom is the largest we have seen in decades.

You cannot suppress yields without debasing the currency, and you cannot let them find their real level without blowing up the bond market.

I also explained why energy is the single most mispriced corner of this market.

The paper barrel market is 40 to 50x the size of the physical market, the SPR sits at 43 year lows, and energy is barely 3.5% of the S&P while heading toward 20% of its free cash flow. That gap does not stay open forever.

And I laid out why gold sentiment hitting literal ZERO three weeks ago was the signal, why the miners are set up to lead this move, and why the entire AI buildout is shaping up to be housing bust 2.0.

The easy way out is to print, and they always take the easy way out.

Bessent Went There

It took the US 200 years to reach its first $1 trillion in debt. It took 95 days to add its last.

After several weeks of build up, today the Treasury announced that total public debt surpassed $40 trillion for the first time, after jumping by over $60 billion in one day, and has now surged by $1 trillion in just over three months, and by a third of the total in less than five years, as US lawmakers continue to ignore calls to contend with historically wide fiscal deficits.

The largely expected news came just hours after Treasury Secretary Scott Bessent unexpectedly announced the Treasury’s latest attempt to rein-in long-term borrowing costs from multi-year highs, the most important component of the growth in debt. The Treasury stunned the market when it said, just two weeks after the latest Refunding Announcement where it should have made this change, that it was ramping up the support for longer-dated securities by “increasing, by at least double, the size of liquidity support buyback operations for longer-dated nominal coupon securities (the 10-year to 20-year sector and the 20-year to 30-year sector).”

Gold and Bitcoin are up

Both of these are sniffing out the upcoming QE operations in my view.

What’s Your Freedom Number?

Benjamin Demase, aka the Royalty King, gives out the secret sauce on how he created and manages an option strategy or “business” to allow himself to live the life he chooses without being wed to the 9-to-5 grind.

This is by far the most common question I receive from readers who fancy building a borderless income stream of their own by running a one-man hedge fund, as I have. The answer to such a question is inherently personal and therefore necessarily nuanced, but nuanced does not mean unknowable. So today I am going to do something slightly unusual for this publication and write the answer as a recipe: from ingredients to step-by-step method along with a dash of my personal notes. By the end you will have your own number, and you will understand why each input belongs in the dish.

I retired from a 9-5 job a couple of years ago. I have adopted a similar strategy in my personal investments (I wish I had started earlier!). It has exceeded my expectations. It can work for you also if you so choose.

More Good News on the Venezuela Oil Industry

BP joins Big Oil return to post-Maduro Venezuela

Major development — Venezuela’s energy opening is accelerating. On August 14, BP secured a license to explore and develop Phase 2 of Venezuela’s offshore Loran gas field, partnering with the UAE’s XRG/ADNOC and Qatar-linked UCC. The project contains roughly 4 trillion cubic feet of recoverable gas.

Washington and Caracas Negotiate a Revival of Venezuela’s Oil Production

This follows a U.S. Treasury delegation traveling to Caracas on August 10 for talks specifically focused on reviving Venezuelan oil production.

Why this changes the strategic picture

The pattern is becoming clearer: Washington is moving beyond merely controlling Venezuelan oil flows after Maduro and toward reintegrating Venezuela into the Western-led energy system.

BP now joins Shell and Chevron in the reopening of the Venezuelan energy sector. The offshore gas projects are particularly significant because Venezuelan gas could ultimately be exported through Trinidad’s existing LNG infrastructure rather than requiring Venezuela to build an entirely new LNG system.

The geopolitical implication is more important than the individual BP project. The Trump administration appears to be implementing a three-part strategy:

U.S. political leverage → Western capital and technology → rapidly rising Venezuelan energy production.

How is this investable? I added a speculative position in the AIA Portfolio that has the potential to re-enter the Venezuelan oil industry by acquiring an existing producing oil field and applying capital and basic oilfield techniques to increase production. No exploration risk; just apply capital and know-how and rinse and repeat.

That’s it for this week.

John

Subscribe now

Read more

Horizon Kinetics Q2 2026 Commentary

These guys are some deep thinkers. Even though Murray Stahl has passed, I am happy to see that the deep thinking is still present.

When things are this skewed, one must wonder if a reversion to the mean is coming sooner rather than later. I suspect that energy will not remain at just three percent of the S&P.

Comments on Landbridge, a company that I own via my holdings in FRMO Corp.

LandBridge embodies just the sort of rare hard assets, profitability, and business persistence that we seek. It now has over 300,000 acres of strategically assembled surface acres in the Delaware Basin of Texas. It is from that land position that its current and future revenues will emanate. Its core business for the time being is leasing its land for water transportation, treatment, and remediation, which largely manifests as a royalty-like fee based on the volumes of water that are either piped across its acreage or stored in its subsurface pore space.

Moreover, the company’s water handling and storage contracts, which typically run for 10 years, contain inflation escalators. Based on typical inflation indices such as the CPI, one can already anticipate 12% or greater revenue growth, which requires no capital spending by Landbridge. Then, as demand for pore space increases in future years, new contracts are likely to be priced higher than the current roughly $0.11 per barrel, which would add to the revenue growth rate.

Looking ahead, LandBridge was the first company to introduce the concept of “powered land” as a strategy to facilitate the development of private power generation and transmission, and ultimately large-scale data centers. LandBridge’s contiguous surface land has the latent potential to capture developments from the data center itself, related roads, power lines, wind and solar, carbon capture, and water, all of which generate recurring, high-margin “royalty-like” revenue streams. It’s important to note that because LandBridge acreage lies above a significant aquifer, the company can supply the water necessary for oil and gas drillers. Aquifer-based source water is priced in the $1/barrel range, though some of the gross revenue is shared with water handling companies that extract it from LandBridge’s acreage. Again, LandBridge takes a royalty-like interest in it.

This is an example of the type of company I am looking to add to my new “Permanent Portfolio”.

I have discussed this a few times in the past. I am looking to create a portfolio of scarce, non-replaceable assets. Management like Landbridge’s that knows what it owns and how to maximize the optionality of its assets is an example what I am seeking.

More to come on this.

One way many of these land banks will monetize their land is by hosting power plant projects. These can be renewable projects and steam plants (gas turbine, coal, or nuclear). A side benefit for many of these land companies is that they have large water resources they can control and use as cooling water for the power plants and data centers that will be hosted.

Robotti Value Investors Q2 2026 Letter to Investors

The stock market has a long history of obsessions, and currently it is artificial intelligence. In the span of a few years, AI has gone from a research curiosity to a fundamental driver of the market: capital spending measured in the hundreds of billions, valuations that embed decades of flawless execution, and a daily news cycle in which every announcement, new model, new chip, or new data center can move hundreds of billions of dollars of market value. Over time, markets have experienced euphorias driven by railroads, radio, conglomerates, the internet, and housing. Each was built on a real and durable change in the world. Each also taught the same lesson that the significance of a technology and the returns to its most celebrated stocks are two very different things.

(skip)

For investors, this is where it gets interesting. The market has bid the recognized beneficiaries of AI to prices that leave little room for disappointment, while the physical economy that must be built to realize any version of the AI future remains largely ignored or valued, in many cases, as though the last decade's indifference will simply continue. One does not need to predict which model wins, or whether today's spending proves too much or too little, to observe that the demand for machines, materials, energy, and infrastructure is rising, straining supply that cannot quickly respond. That asymmetry, where enthusiasm concentrates in one place while necessity accumulates in another, is precisely the kind of gap between narrative and reality where we have always done our best work. It is also the backdrop for everything that follows in this letter.

If you believe in investing in value or sectors that are out of favor, then Bob Robotti is your guy.

Circle Of Competence

As many of you know, our team at Smead Capital Management has studied the thinking and investment careers of Charlie Munger and Warren Buffett. In today’s Go-Go artificial intelligence-dominated stock market, we’d like to walk you through the concept of the Circle of Competence.

Charlie Munger’s concept of the circle of competence is a mental model that states you must know the exact boundaries of what you understand and stay within them to avoid costly mistakes. It is not about how large your circle is, but how well you define its edges.

Smead Capital Management has some wise words on the circle of competence investors should cultivate, a concept championed by Charlie Munger.

Nothing stops this train

We are entering the final stages of the US empire. Many empires in the past succumbed to too much debt and military overreach. This is what is happening to the US.

People often ask me in interviews if I am bullish on precious metals. Yes, the course is set, and this will continue until we get a crisis. The establishment will try to pull rabbits out of the hat to preserve the status quo. However, no matter what they do, decline is inevitable. Expect more money printing and the FED to become the buyer of last resort for US Treasury securities.

You will not vote your way out of this decline. Prepare accordingly.

John Polomny Says Copper Could Hit $12 as the AI Bubble Bursts

Steve Barton interviewed me for his channel “In It To Win It”.

That is all for this week.

John Polomny

Subscribe now

Housekeeping

You will note a bit of housekeeping below in the AIA Portfolio.

I let some scope creep into the portfolio and added some names that did not necessarily meet the criteria for inclusion in the AIA Portfolio.

Some of the other names simply have not performed as anticipated. Time to sell and recycle cash back into ideas that have more potential upside.

One name, Technip FMC, is being sold after a 700%+ run. It has been one of our best performers, but potential upside is limited in my view, and so we part ways with one of our top returners, and I look to recycle capital into new ideas.

Lots of stocks removed from the portfolio.

Commentary

I want to re-emphasize the thesis behind the AIA Portfolio.

I am looking for companies that can potentially have 3x-10x moves over three to five years.

We have had a couple of these in the portfolio already, and I have noticed some similar characteristics.

The main characteristic seems to be that any company that does multibag needs years for that to happen. Again, anything between 3-5 years is what I have experienced.

Another trait of multibaggers is that they are capital compounders that are discovered early on and spend years earning above-average returns and investing those excess returns back into the company.

The other type of company is one that has blown up or been mismanaged, and the price has collapsed.

Then an event occurs, such as new management taking over, business improving, or, in the case of a commodity producer, the market for the underlying commodity cyclically bottoming and then turning up.

My job is to try and find these companies. They are actually few and far between.

The other type of company I am looking for is what is called “event driven”. These are special situations that come up. These can be spinoffs, bankruptcy reemergence, legal outcomes, changes in management, etc. Basically, some event that changes the trajectory and prospects of the company.

Two things to consider

I have spoken many times in the past about why it is important to be an engaged and active investor.

All of the Western democracies are facing a plethora of problems.

They are all in huge amounts of debt.

They have huge social responsibilities including health care and retirement burdens.

They cannot pay these obligations.

They have large populations of elderly people who will be expecting these benefits to be paid.

My view is that because people vote for free stuff and the politicians respond to this desire by voters to, as Bastiat said, “seek to live off of each other,” there is only one potential path.

All roads lead to inflation.

Here is the problem

I have talked about this ad infinitum. It does not matter who you vote for; you will get more spending. The political class responds to what the people want, or they are out of a job.

The bet is that because it is not a problem today, the problems can be put off for another day. It has worked brilliantly and will continue to work until it doesn’t.

Inflation is insidious even if the FED were to meet its fake 2% goal.

Our goal is to stay ahead of this inflation and to actually build wealth.

The other part of this that I wanted to mention is scarcity.

I want to try and identify things that are scarce. Things that we need to survive but that can’t be created out of thin air or by government fiat.

Scarcity that is created by government interventions into the economy by dumb policies, regulations, war, etc.

Well, that's it for now. I have an interesting way to buy into the re-emergence of the Venezuelan oil industry. It is a potential multi-bagger. Check it out below!

Read more

Austrian economists would be proud

At this pace, Argentina is on track to eliminate inflation within one to two years.

Yes, there has been pain in Argentina, but I would suggest that overall the situation for the majority of people has improved. The goal now is to move from economic triage to real and lasting economic growth.

One of my views is that the continued growth of the Vaca Muerta shale basin in Argentina is acting as a big tailwind to Argentina’s economic recovery and growth.

Argentina’s Oil Production Soars as Vaca Muerta Breaks New Records

-Argentina posted record oil production in May 2026 as Vaca Muerta continues to drive rapid growth.

-Billions of dollars in investment from YPF and private producers are accelerating shale development and new infrastructure.

-Analysts expect Argentina’s oil output to reach 1–1.5 million barrels per day by 2030, strengthening its role in global energy markets.

Argentina’s massive shale oil and gas boom is going from strength to strength. The economically crisis-prone South American country yet again reported record monthly oil and natural gas production for May 2026. This couldn’t come at a better time for Argentina and South America. Rising global geopolitical risks, notably due to war in the Middle East, and domestic economic hazards hold the potential to derail the significant economic gains Argentina has made over the last two years.

Ministry of Economy data shows May 2026 oil production hit an all-time high of 887,227 barrels per day. This represents a 0.6% increase month over month and is an impressive 19% greater than the same period a year earlier. Natural gas output also rose to 5.5 billion cubic feet per day, which was just shy of the record 5.7 billion cubic feet daily reported for July 2025. Indeed, May 2026 natural gas production was 5.4% greater than a month prior and a stunning 11% higher year over year.

It is the massive shale boom underway in the 8.6-million-acre Vaca Muerta formation that is responsible for this solid production growth. For May 2026, shale oil comprised 70.6% of Argentina’s total oil production, while shale gas made up 69.8% of total output. Those ratios are at record highs for shale oil and gas as a proportion of Argentina’s total hydrocarbon output. This is a game changer for Argentina, which recently overtook Colombia to cement its place as South America’s fourth largest oil producer.

The opening of the North Sea oil and gas fields was a tremendous boon for the Thatcher government, which is often ignored when discussing the UK’s recovery during her tenure as Prime Minister.

Wealth transfer

Google reports its first quarter of negative cash flow. Is this still a company that deserves a premium valuation?

The companies are shifting to debt to continue their buildouts.

When has piling on debt to invest in a commodity-type investment worked out long term? I guess they will continue to borrow and build until the money runs out. We have seen this movie before: fiber, shale, housing.

Trump accounts are a great idea

This is the way forward. To get young people to stay invested in society, make them owners so they are vested in a good outcome. This is a great first step, and I hope people will take advantage. Time is the greatest asset a person has, and as Einstein said, compound interest is the eighth wonder of the world. The McKinsey paper discusses it in depth.

Emerging markets are outperforming

-Emerging markets stocks may be entering a longer-term rebound, supported by stronger fundamentals and attractive valuations.

-EM tech leaders are becoming key players in the global AI value chain.

-Korea and China offer opportunities, though selectivity remains important.

-Resource-driven markets may benefit from AI-related infrastructure demand and stronger commodity cycles.

If you have been following AIA for a while, you know we have been on this trend for a while now. These shifts in relative outperformance of emerging markets over developed markets usually have a long wave of 8-10 years. Still lots of meat on the bone in my view.

That’s it for this week.

Regards,

John Polomny

Subscribe now

AI Needs More Natural Gas Than America Has

Matt Smith joins us to explain why the United States may be approaching a historic natural gas shortage—and why the market is not yet pricing it in. After 18 months of bottom-up research across producing basins, pipelines, processing infrastructure, LNG exports, and AI power projects, Matt argues that the country could begin drawing down gas storage at unprecedented rates as early as 2028, with major implications for electricity prices, hyperscaler economics, and the American consumer.

In June, Matthew wrote a letter to a small group of confidants laying out the full case behind his natural gas forecast. He has allowed us to publish it. You can read the full letter here: https://colossus.com/wp-content/uploa...

From the letter:

By 2030, we are likely to exhaust working natural gas storage. The fuel everyone thinks is abundant is not.

By 2029 and 2030, natural gas will be in frighteningly short supply relative to structural, incremental demand for the fuel. This does not portend a modest price increase.

Certainly a contrarian thesis. Nevertheless, a worthwhile read in my view. As a generalist investor, I don’t have the expertise to refute this, but it’s worth keeping on my radar screen. My main thesis going forward is scarcity.

The U.S. oil reserve is at a 40-year low - but the government says there’s still plenty of breathing room

Energy Department says operational minimum for the storage caverns is about 70 million barrels, a level far lower than oil industry estimates

Crude stockpiles in the U.S. Strategic Petroleum Reserve have fallen to a more-than-40-year low. Above is a facility at the Bryan Mound site in Freeport, Texas.

Commodity experts on Wall Street have long been fixated on the risks associated with U.S. emergency crude-oil supplies running too low. The Department of Energy says they’ve got it all wrong.

The U.S. Strategic Petroleum Reserve, the world’s largest publicly known supply of emergency crude oil, has fallen to a more-than-40-year low. That’s set off alarm bells on Wall Street.

With U.S. commercial crude inventories and supplies in the SPR falling again last week, there’s “less breathing room” in terms of supplies at a time of “intense global uncertainty,” said David Russell, global head of market strategy at TradeStation, in emailed commentary. “The SPR draws can’t continue forever.”

We shall see. I am staying bullish oil until I see Iraq and Kuwait resume full export capacity. That is my canary in the coal mine, if you will.

Trump says we are good, so take that for what it is worth.

https://youtube.com/shorts/jjdAy3z8Nrc?si=jnowdp7nzvtPkcp0

An interesting and useful gold stock timing tool

The folks over at Incrementum, the publishers of the annual “In Gold We Trust” chart pack, have come up with something I find interesting.

The Incrementum Active Aurum Signal times our exposure to gold mining equities in three modes: Offensive, Neutral, Defensive. It turned Defensive ahead of the Q2 drawdown.

Positioned before the fall, holding cash to act while others digest the loss. The miners bore the brunt of the correction, their leverage to the metal cutting both ways: in March, gold fell 11.52 percent while the GDX miners fell 20.78 percent.

We do not read that as a verdict on the companies, but as a dislocation. These are businesses carrying the healthiest balance sheets the sector has seen and margins at record levels, now priced well below what that strength deserves. That is why the desk is raising cash to buy, not to flee.

Following the recent correction, the sector’s previously overbought condition has shifted into a short-term oversold reading. Against this backdrop, exposure is being rebuilt cautiously and selectively, while maintaining a disciplined focus on risk.

The results of this active approach are reflected in the strategy’s track record. From 15 February 2024 to the end of June 2026, the active strategy gained 144.1%, compared with an 88.7% increase in gold in euro terms. Annualized volatility was 22.2%, close to that of gold at 20.4% and materially below that of GDX at 38.2%, while the Sharpe ratio of 1.92 was higher than for both comparators.

It appears the indicator catches most of the moves in the GDX. I ran it through AI, and this was the conclusion.

The IAAS appears to be a thoughtful and potentially valuable tactical risk-management framework. Combining contrarian market indicators with mining-margin fundamentals is more defensible than relying on a single technical indicator.

Nevertheless, the evidence does not yet justify accepting the reported 9.76% CAGR as a reliably achievable historical result. The correct interpretation is:

A promising proprietary allocation model with internally consistent and economically plausible backtest results—but not yet an independently verified source of alpha.

The most persuasive future evidence would be publication of a timestamped monthly signal history, exact execution rules, complete net return series, rolling-period results, and several more years of genuinely out-of-sample performance.

That’s it for this week.

John Polomny

Subscribe now

Your Social Security benefits could be cut by a quarter in 2032. Here’s what to know

Americans’ Social Security benefits will have to be cut by roughly a quarter in six years due to depleted funds, according to a June 9 report from the Social Security Board of Trustees. That’s months sooner than the group had estimated in 2025.

For years, the trustees and experts have been warning about Social Security’s unstable financial footing. An aging population, low birth rates and worsening income inequality have driven the program to pay out more in benefits than it takes in from taxes.

“The program has been paying out more in benefits, more than it takes in in revenues, and that creates the financing gap that can’t go on forever,” said Shai Akabas, vice president of economic policy at the Bipartisan Policy Center.

What I find amusing about this whole discussion is that many people just did not prepare for old age and retirement.

You see it in the comments of any article or video on this subject. I paid into this, so I am entitled.

As I have pointed out many times, this is not an insurance policy, a retirement account, or an investment plan. This is a welfare transfer payment subject to policy changes mandated by Congress. This was already decided in a Supreme Court case in 1960, Flemming versus Nestor.

Flemming v. Nestor (1960) was a landmark Supreme Court case that ruled Social Security benefits are not a contractual right, establishing that Congress can alter or terminate them, even for those who have paid into the system. The Court upheld the termination of benefits for Ephram Nestor, an immigrant deported for past Communist Party membership, finding that the Social Security system is a social welfare program, not a private insurance contract, and that the termination did not violate his Fifth Amendment due process rights.

Life circumstances and bad luck do cause some people to end up indigent. This is what the program should be based on.

The vast majority of recipients just didn’t make good choices over their working lives. They are now reliant on a program whose future rests on the whims of politicians.

Yes, this will get fixed, but only at the last minute. We will likely see a combination of higher taxes, higher retirement ages, higher income thresholds for taxation, and, if that is not enough, the government will monetize the debt it issues to cover the expense.

It all goes back to the root problem that the French economist Bastiat determined back in the late 19th century.

“The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else”

This mindset leads to moral and economic decay, as it encourages dependency rather than self-reliance. He believed that such attitudes ultimately harm society by fostering a culture of entitlement rather than one of responsibility and productivity.

Bottom line: structure your life so you are not dependent on the state.

What Old Money Knows That You Don’t | John Polomny Ep 123

John Polomny returns to The Royalty King Report — and quite a bit has happened since December. Maduro removed. The Strait of Hormuz “double closed.” Oil round-tripping back to the mid-sixties. Gold pulling back from $4,000+ while central banks keep accumulating.

John’s argument: none of the specifics were predictable, but the volatility was. We are in the endgame of the post-WWII order, drone and missile technology has obsoleted the aircraft carrier the way the carrier obsoleted the battleship, and the world is resolving into three zones of influence — the Americas, Eurasia, and Asia. The question is not how to predict it. The question is how to position for as many potential futures as possible.

In this conversation we cover:

Why the U.S. Navy can no longer keep the sea lanes open — and what that means for oil

Doug Casey’s three-flag rule: bank in one country, live in another, invest in a third

What multi-generational “old money” families actually do differently (timber, time horizons, and the Mulliez family motto)

Why the passive index is now the risk, not the safe option

Amerigo Resources and the Walter Schloss playbook: debt → dividends → buybacks

The exchanges correction: why quality croupiers going on sale is the whole game

Gold’s remonetization, the Cantillon effect, and why the central banks are telling you the answer

Oil manipulation: SPR drains, record shorts, and a $75 crack spread screaming for crude

Uranium’s silent all-time high in the term price — a growth industry with no new mines

Copper, the AI capex bubble, and what happens when the money stream ends

Land, water rights, and the hidden assets nobody is valuing

I am pivoting capital to “permanent capital”.

Cole Smead (Smead Capital) — 25% ROE at 2x Book: Finding Value in Canadian Energy

This episode we are joined by Mr. Cole Smead - CEO of Smead Capital Management - a registered investment advisor headquartered in Phoenix, AZ with offices in Jersey City, NJ and London, UK., with assets of approximately $6 billion under management.

Cole Smead, CFA is Chief Executive Officer and Portfolio Manager where he oversees all activities of the firm. He is the final decision maker for all investment decisions in the firm’s international equity portfolios.

Cole has been with the firm since its founding in 2007. Prior to joining Smead Capital Management, he was a Financial Advisor with Wachovia Securities in Scottsdale, AZ. He is a member of the CFA Institute.

Among other things we learned about 25% ROE at 2x Book: Finding Value in Canadian Energy.

Interesting comments on valuations in Canadian Energy, in particular Cenovus (CVE).

Former AIA portfolio holding MEG Energy was bought out by Cenovus.

That’s it for this week.

John Polomny

Subscribe now

Commentary

Portfolio returns for Q2 2026

The AIA Portfolio was up +7.73% versus +14.05% for the S&P 500

The AIA Dividend Portfolio was down -5.83% versus +14.05% for the S&P 500

YTD returns below.

AIA Portfolio

AIA Dividend Portfolio

Although the Dividend Portfolio was down for Q2, both portfolios are still ahead of the S&P for the year.

One of the things I have been doing recently to generate cash is buying shares of several consumer-staple companies. Things like Campbell Soup (CPB), General Mills (GIS), ConAgra (CAG), and Clorox (CLX). These stocks are bombed out and out of favor. Many of them are decent dividend payers.

I have also been writing covered calls and cashed covered puts on these types of stocks. I am doing it in a tax-deferred account, creating a snowball effect. They are not that volatile, and I am keeping to shorter expirations. Rinse and repeat as cash pile grows.

I am not doing this in the AIA Portfolio because it is not within its mandate, which is focused on asymmetric upside.

Investing in Cannibals

Not actual cannibals, but companies that consistently buy back their own shares.

One historical example is Teledyne and its legendary chairman, Henry Singleton.

Singleton was not a stock promoter. He was an engineer and mathematician, trained at MIT, who co-founded Teledyne with George Kozmetsky in 1960. The company began in electronics and control systems, but Singleton quickly realized that the real opportunity lay not simply in building a single operating business. It was to build a machine for compounding capital.

In the 1960s, Teledyne became a classic conglomerate, but with far more discipline than most conglomerates of that era. At the time, the stock market loved “growth” conglomerates, and Teledyne’s stock became highly valued.

Singleton used that expensive stock as currency. He issued shares to buy smaller companies at much lower earnings multiples, effectively trading overvalued paper for real operating businesses.

By the late 1960s, Teledyne had acquired roughly 130 companies across aerospace, defense electronics, specialty metals, hydraulics, insurance, consumer products, offshore drilling equipment, and other industrial niches. Teledyne’s stock rose from about $15 to $65 in 1965, giving Singleton the currency to accelerate acquisitions.

The key point is that Singleton was not empire-building blindly. He was arbitraging valuation. When Teledyne traded at 40x–70x earnings, he issued stock; when acquisition targets could be bought at lower multiples, the deals were accretive to continuing shareholders. But when the conglomerate boom ended, and acquisition prices became too high, Singleton stopped. That was the first important lesson; he did not need to keep doing what had worked yesterday. He changed when the facts changed.

Then came the part that made Singleton a legend. In the 1970s bear market, Teledyne’s stock collapsed, and its P/E fell below 10. Wall Street had lost interest in conglomerates. Singleton concluded that the best acquisition available was Teledyne itself.

Starting in 1972, he began large stock buybacks. From 1972 to 1984, Teledyne completed eight common-stock tender offers and one preferred-stock tender offer; over that period, more than 85% of the common shares were retired, and including open-market purchases, the total repurchase reached more than 90% of shares.

This was radical at the time. Buybacks were not yet a standard corporate finance tool. Many observers thought Singleton was admitting that Teledyne had run out of growth. In reality, he was shrinking the share count while the underlying businesses continued to generate cash. That caused earnings per share to explode. The buyback math was simple but powerful; if the business is worth more than its stock price, every share repurchased increases the remaining shareholders' ownership interest.

Singleton’s philosophy was not “financial engineering” in the modern negative sense. It was rational capital allocation. He cared less about reported quarterly earnings and more about cash flow, return on capital, and per-share value. He once explained his approach by saying, “Just buy very good value,” and the market would eventually recognize it.

The stock performance was extraordinary, though the exact figure depends on the measurement period. One study says an investor who bought Teledyne in 1966 earned a 17.9% annual return over the next 25 years, turning $1 into about $53, compared with roughly 6.7x for the S&P 500. Another summary says that under Singleton’s leadership, from roughly 1961 to 1990, Teledyne compounded at about 20% annually, versus about 11% for the S&P 500.

The best results came during the buyback phase. Shareholders who held Teledyne from the first 1972 buyback gained about 3,000% by 1983. That is the key to the Teledyne story. Singleton used an overvalued stock to buy businesses, then used business cash flow and debt to buy back undervalued stock. He did not seek growth for its own sake. He sought per-share value.

Teledyne’s lesson is that capital allocation can be as important as operations. Henry Singleton built the company, stopped acquiring when deals no longer made sense, and bought aggressively when his own stock was cheap. This allowed the math of shrinking shares plus growing cash flow to work for the patient shareholder.

The reason I have related the Teledyne story is that I think this month’s Portfolio addition might be in a similar situation with a manager that understands capital allocation and the power of buying back one’s own stock.

Read more

Kopernik Global Investors Commentary (June 2026)

Certainly, the next 30 years will be much worse given the comfort level the government has with perpetual $2 trillion deficits. Over the past century, the dollar has lost over 99.5% of its value relative to gold. It would be shocking if the next century isn’t much worse (if such a thing is possible). Devaluation is said to be endemic to all systems, especially democracies. Scottish historian Alexander Fraser Tytler was correct, “democracies can only last until the voters discover that they can vote themselves largesse from the public treasury.”

While inflation continues to erode the value of dollars, there are other worrisome signs for debt holders. During this millennium to date, we’ve witnessed increasing signs of politics trumping rule of law. At various times, mortgages have been forgiven, and student loans and rents have been deferred. LME (liability management exercises) have become commonplace. (Time doesn’t permit a discussion of these travesties so you may want to google them or read Jim Grant’s many great discussions on the topic.) Certainly, in the overdone private credit arena, the increasing usage of gates in recent months (a gate provision allows fund managers to limit or halt investor withdrawals during redemption periods) suggests a reallocation of wealth is underway. When times get tough, the powers that be do what they feel they must. As for the rest of us, Caveat Emptor.

Dave Iben and the folks at Kopernik are some of my favorite analysts to follow. They are value investors and have stayed consistent in this over the years. Good read and a great follow.

2026 Emerging Market Performance

It is interesting to note that several South American markets are performing. As the political landscape shifts toward a more market-friendly government (hopefully), market perception will shift, enabling capital flows into these markets.

We might be looking at a decade of outperformance in Latin American markets.

A blast from the past

I mention this as I pick on these 1999-2001 internet bubble stocks, with Pets.com as one of the most egregious examples.

A reminder of what commodities travel through the Strait

Many resources besides oil and gas travel through the Strait of Hormuz. In particular, the price of sulfur has doubled since the conflict began.

Margin debt is making new highs

In the past, when margin debt reached the levels it is at currently, the market has been at a top and then suffered a subsequent big drawdown. Does this mean the market has topped? No, but as I have stated before, I deal in probabilities.

Time Arbitrage & Fourth Grade Math (Mike Alkin)

The bottom line is that nuclear power is growing, but the uranium supply is not keeping pace with demand.

Yes, the stocks fluctuate due to sentiment and liquidity, but we are in a bull market, and uranium will move higher over the next decade.

That’s it for this week. Thanks for subscribing.

Best regards,

John Polomny

Subscribe now

“I’m A Buyer Of Oil Here” | Jeff Currie

It has been three months after the outbreak of the US/Iran war, and the world is still dealing with the ongoing effects of an oil price shock.

Not only is that having an inflationary impact on the prices of many goods & services, but it’s also raising increasing concerns of the availability of oil supplies.

Could the world soon start experiencing an inventory shortage of oil -- the essential fuel that enables global commerce?

Or will the recently announced peace deal between the US and Iran allow us to avoid that fate?

To find out, we have the great good fortune to talk today with Jeff Currie, Executive Co-Chairman of Abaxx Markets.

I think, in the longer term, Jeff Currie will be right with respect to higher commodity prices. The consensus is that the Strait of Hormuz will open and everything will go back to normal.

However, when I look at the Memo of Understanding, there are many ways this can go off the rails.

In my view, this is a strategic defeat for the US. This is a worse outcome than the JCPOA that Obama negotiated and Trump canceled.

The bottom line is that the Trump administration was weeks away from seeing the possibility of higher oil prices as strategic reserves were depleted. I think someone finally got the President to understand what the potential for $ 100-plus oil prices would mean for the economy and the election in November.

In typical Trump fashion, he is spinning this as a great deal.

I have no idea what will happen, but Iran comes out great in my view. They get a stoppage in hostilities and a chance to come up for air, rearm, and prepare for the inevitable resumption of hostilities.

Not sure how anyone can argue this is a win for the US and Israel.

The IRGC maintains control and will now be cashed up for round two whenever that comes.

The US has been shown to be a paper tiger, and its vaunted Navy has been shown to be obsolete by the emergence of drones (air and sea) and sophisticated missile technology.

China, Russia, and North Korea are watching.

The continued decline of the US empire.

The abundance illusion

An article by Jeff Currie on commodities.

In February 1977, Jimmy Carter addressed the nation from the White House library wearing a cardigan sweater. The thermostat had been turned down. The message was unambiguous: energy is finite, security is earned, and comfort has a cost. Two months later, in what became known as the Moral Equivalent of War (MEOW) speech, he named the program to build a secure domestic energy base the ‘energy transition’ — a term that had nothing to do with the environment and everything to do with what happens when a foreign power controls your fuel supply. Nixon had already launched Project Independence; Ford had signed the Strategic Petroleum Reserve (SPR) into law.¹ Carter was naming the security imperative every serious government already understood in private: the most irreplaceable input to the modern economy was also the most geopolitically exposed. The press named it MEOW and Congress ignored him.

When Carter told Americans the energy shortage was a crisis, the admission was honest and politically fatal. His political successors drew the obvious conclusion, and thus the abundance illusion was born: never admit to scarcity. Fear may drive policy, but greed is what gets the votes. And thus the template became reassure markets with words and hundreds of millions of barrels from strategic reserves and hope that talking down prices would bridge the gap until supply returned and the problem quietly resolved itself.

It has worked for every US Administration since Bush Sr. The inventory buffer became the policy. Consume the insurance, call it abundance, and avoid the pain of rebalancing. The hard work Carter asked for — building the physical capacity to never need the buffer — was quietly abandoned. The energy transition gradually became an environmental project, eventually losing much of its security logic and curdling into a polarised fight over green and brown that has lasted a quarter century.

That template is being applied again today — and markets have accepted it. Prices have fallen nearly 20% from their 2026 peak. A Goldman Sachs survey of 839 institutional investors conducted between June 1 and 3, 2026 found a record two-thirds expecting oil prices to fall further — the most bearish reading in the ten-year history of the poll. The same bearishness is visible in energy equities sold to pre-war lows and long-dated futures pricing a swift return to normality. This confidence has created both physical and financial destocking in hopes of buying lower in a matter of weeks — the abundance illusion reproducing itself one position at a time. China’s decline in crude imports has become the consensus explanation — the world’s largest importer facing “demand destruction,” the market rebalancing rationally. It is a compelling narrative, but in my view it is also wrong.

Great article on resource market potential.

Datacenters Are the New Shale Oil…

I’ve now written two pieces on the economics of AI datacenters (Piece 1, Piece 2). Nothing shakes me from my view that these are deeply negative ROIC investments. Yet, hyperscalers have continued to plow ahead and build them anyway.

First, they’ve used up most of their annual cash flow, then they’ve taken on debt to fund them, and now Alphabet (GOOG) has even resorted to its first major equity issuance since 2004 (with Meta reportedly considering one as well now). Despite their desperation to build datacenters, I haven’t seen a single financial model that shows one with a positive ROIC. It’s sort of surreal to watch, as any sane human would long ago have reversed course. But no, these guys are simply in a never-ending race to build datacenters.

The only recent historical comparable that I can think of is last decade’s shale patch. While I’m not involved in datacenters, I did have a unique window into shale through my frequent calls to shale CEOs, pleading with them to stop drilling wells with negative ROICs at then-current strip prices. I see a lot of the datacenter mentality, through the lens of those calls. Let me combine a few dozen of those shale oil CEO calls, and build you a composite collage of the typical conversation.

I discussed this in last Saturday’s Weekly Update video. I, along with others, have been pointing out for a while that many of the MAG7 are no longer the high-margin, asset-light businesses they once were.

They are not building data centers or power plants, which require large capital investments. The problem is, where are the profits? We have seen this before: growth in a revolutionary new industry with no profits. It goes on until it can’t. I am not sure we have reached that realization yet, but I think it is coming. Then the crash and the reallocation of capital, which hopefully is into our favored sectors.

Why Uranium Must Go to $120/lb | Guy Keller’s ASX Uranium Outlook

In this episode of LEVRD, Matt sits down with Tribeca Investment Partners' Guy Keller for a deep dive into the uranium market, nuclear energy, and the ASX-listed uranium sector.

Despite uranium equities suffering a brutal sell-off over the past 12 months, Guy argues that the fundamental supply-demand picture remains extremely strong and that uranium prices ultimately need to move significantly higher to incentivize the next wave of mine development.

The discussion covers everything from Chinese investment in uranium projects and utility contracting, through to the outlook for some of the ASX's largest uranium companies.

That’s it for this week.

John Polomny

Subscribe now