Over the weekend, President Trump made his feelings about Ukraine&rsquo;s President Zelensky clear.
On Truth Social, POTUS wrote a lengthy post about Zelensky and the war. Needless to say, he is furious that Ukraine keeps striking Russian oil infrastructure. It&rsquo;s contributing to higher prices worldwide.
Before the war, Russia was the second-largest diesel exporter. But Ukrainian drones keep blowing up the country&rsquo;s refineries, tankers, and oil storage.
Here&rsquo;s an excerpt from Trump&rsquo;s Truth Social post:
<blockquote>
[Zelensky] could have made a better deal two years ago than he can now. His country is in shambles, a large portion of his land is lost, his oceans and seas are gone, and his male population is low, wounded, and/or dead.
</blockquote>
Harsh but true. Ukraine is running out of options. Weapons, food, energy, and money are all in short supply. Blackouts in Kiev are common. Zelensky&rsquo;s thug-squads roam the streets abducting scarce civilians to fill the trenches.
It is likely that 900,000 Ukrainian soldiers have been killed in action so far. Overall the population has fallen from 41 million pre-war to around 28 million today (mostly due to migration).
Zelensky just demanded another $155 billion from the EU, but European governments have problems of their own right now.
However, if Zelensky doesn&rsquo;t get the money, the country collapses and a new refugee crisis begins. Then Europe ends up paying for it anyway. They are stuck.
The war is not going well for Ukraine. Despite occasional successes, Russia intercepts more than 99% of Ukraine&rsquo;s long-range drones (provided by the EU). Up to 300 drones are launched for a single successful attack on Russian infrastructure. It&rsquo;s not sustainable.
It&rsquo;s going to be a cold and brutal winter in Ukraine. I hope the war ends soon for the sake of its people.
The only positive way to spin this is Trump&rsquo;s statements give me hope that we can finally repair our relationship with Russia.
<h2 class="centered subhead" style="text-align: center;">A Missed Opportunity</h2>
In 2000, Russia tried to join NATO.
A young Vladimir Putin pitched Bill Clinton on the idea, and apparently Slick Willie was initially open to it.
But once President Clinton talked with his &ldquo;advisors&rdquo; (bosses), the answer became clear. Nyet. No deal. Putin continued to pursue NATO for a while, but didn&rsquo;t get anywhere.
If Russia had joined NATO, the world would be a very different place today. For one thing, Putin&rsquo;s alliance with China would never have been necessary.
But America&rsquo;s deep state chose another path. And they drove Russia directly into the waiting arms of China.
<h2 class="centered subhead" style="text-align: center;">NATO&rsquo;s Expansion</h2>
When the Soviet Union collapsed in 1991, much of Eastern Europe was thrown into chaos.
Suddenly, 15 new independent countries were born.
America didn&rsquo;t waste time. Russia could not join NATO. It would be swallowed by it.
The map below shows the expansion of the NATO military alliance. Note how most countries joined in 1990 or later, as the USSR disintegrated.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4k5lY3i5osvxc5PDJY2eRU/24d3ce8dd7f1256917660de98b74393b/dr-img1-10-19-26.jpg" alt="image 1" />
Since this map was published, Finland and Sweden also joined NATO in 2023 and 2024.
NATO&rsquo;s goal was simple. Surround Russia, choke it off economically, break the country up into parts from within, and take it over.
In 1999, the great Pat Buchanan wrote:
<blockquote>
&ldquo;By moving NATO onto Russia&rsquo;s front porch, we have scheduled a twenty-first century confrontation. &hellip; America will face a hellish dilemma: risk confrontation with a nuclear-armed Russia determined to recreate its old sphere of influence, or renege on solemn commitments and see NATO collapse.
Offering NATO memberships to Estonia, Latvia, Lithuania, and, as some urge, Ukraine is rashness bordering on madness.&rdquo;
</blockquote>
Buchanan&rsquo;s prediction came true, of course. The man has an uncanny track record.
<h2 class="centered subhead" style="text-align: center;">The Failed Ukraine Project</h2>
Ukraine was to be the cherry on top of NATO&rsquo;s expansion. The country was to be NATO&rsquo;s front line of defense (and offense) against Russia.
To this end, Obama&rsquo;s State Department executed a <a href="https://www.bbc.com/news/world-europe-26079957">coup</a> in 2014. The Maidan Revolution, which installed a pro-Western government.
But the plan to expand NATO to Ukraine (and Georgia) has been active for a long time. In 2008, NATO officials stated it plainly at the Bucharest Summit:
<blockquote>
&ldquo;NATO welcomes Ukraine&rsquo;s and Georgia&rsquo;s Euro-Atlantic aspirations for membership in NATO. We agreed today that these countries will become members of NATO.&rdquo;
</blockquote>
This was the last straw for Putin. He simply could not allow Ukraine to join NATO, a country just 280 miles from Moscow. That&rsquo;d be like us letting China build missile silos in Mexico.
By the time Putin invaded, a NATO training center in Ukraine had already trained 45,000 Ukrainian soldiers to alliance specifications.
The war Pat Buchanan predicted happened. It has been a horrible tragedy. Ukraine has probably lost 900,000 soldiers killed in action. Russia has probably lost 190,000. These are my best estimates based on open source analysis. Neither side will confirm anything officially.
So&hellip; what now?
<h2 class="centered subhead" style="text-align: center;">A Russo-American Partnership?</h2>
Earlier this month, Trump signed an energy deal with Russia. Putin got sanction relief, and we (hopefully) will be getting 300,000 tons of diesel, to start.
Is this the beginning of a new chapter with Russia? I hope so. Throughout history, Russia has proven to be a good ally and a bad enemy.
The country wants a productive relationship with the U.S. And in those rare instances in history where we worked together, amazing things have been accomplished.
The International Space Station is Exhibit A. Neither country could have done it alone, but together we built something truly remarkable.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3FDfr5jsgjOJgyouCncKpl/60c5d42e38ea8f1f821d7a28f8a8d171/dr-img2-10-19-26.jpg" alt="image 2" />
The ISS. Source: NASA
But powerful forces have consistently spoiled any progress.
Is a breakthrough possible now? I think so. Russia has proven it is not going to be defeated militarily. We&rsquo;re not going to overthrow Putin, and if we did, someone not as nice would replace him. Reality is setting in.
Interestingly, a trade envoy for Putin, Kirill Dmitriev, posted the following message on X recently:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6p3aG5L6411NbkwMz7hsWu/a961728c5d05cdf84dad45c3c847971d/dr-img3-10-19-26.jpg" alt="image 3" />
Source: <a href="https://x.com/kadmitriev/status/2111210293921792284">X</a>
An image of an American Eagle and a Russian bear facing off against the UK and EU? Now that&rsquo;s provocative. The post got more than a million views, and 6,300 likes.
The screenshot shows an article by James Kunstler <a href="https://www.zerohedge.com/geopolitical/things-have-changed">on ZeroHedge</a>. It&rsquo;s an interesting piece about how Russia might make a better ally than the EU or UK.
The article hints that modern Russia is the new Europe. And that modern Europe is the new USSR:
<blockquote>
Europe is now tyrannized by the unelected EU commission, much as the old Soviet Union was tyrannized by its politburo. An Orwellian switcheroo has occurred.
</blockquote>
Kunstler also points out the mess the UK finds itself in:
<blockquote>
And outside the EU - which it voted to exit in 2016 - you have our so-called "mother country," Great Britain (the United Kingdom) committing suicide in the most extravagant way, turning over prime ministers like they were jacks in a game of whist, jailing their own people for impure thoughts, while allowing the wholesale rape of its womenfolk by foreign invaders.
</blockquote>
Wow&hellip; I don&rsquo;t agree with everything Kunstler says in his piece, but it&rsquo;s fascinating food for thought.
The idea of starting a new chapter with Russia is gaining traction. Because it makes all the sense in the world.

dr-hero-img-10-19-26

mobile masthead DR

Hard-hitting economic news and market commentary. Each issue features biting market coverage, expert commentary, and in-depth analysis… along with a warm dose of humor and some skepticism.

Daily Reckoning

A New Chapter with Russia

While the war with Iran might be nearing a resolution, the war in Ukraine is heating up.
Whether this is the next stage in escalation, or the grand finale remains unclear. But lessons continue to emerge from this conflict, and world powers are beginning to act on them at scale.
Ukrainian long-range drones continue to hammer Russian energy and military sites. Targets up to 1,700 kilometers inside Russia are being hit.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3yx4YBpnAW4bdA1134DOXP/088bce5531abda0f6aac7dc6c36f9e06/dr-img-10-15-26-1.jpg" alt="image 1" />
A Ukrainian long-range drone. Source: <a href="https://www.ap.org/news-highlights/spotlights/2025/a-ukrainian-startup-develops-long-range-drones-and-missiles-to-take-the-battle-to-russia/%23defb8a6696-4">AP</a>
These strikes are causing serious economic damage to Russia, not to mention the environmental harm. Here&rsquo;s a screenshot of recent fires at Russia&rsquo;s Rosneft facility on the Black Sea after Ukrainian drone attacks.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/uJoQR3v7QYsk64dRUYDv1/08b7dfe9668b770ee728f0c4e29c40c8/dr-img-10-15-26-2.jpg" alt="image 2" width="510px" />
Source: <a href="https://x.com/runews/status/2046129975665770876">X</a>
Earlier this week, President Trump expressed his anger at Ukrainian President Zelensky, "It's time for Ukraine to get a NEW PRESIDENT!"
Ukraine&rsquo;s strikes are hammering Russia&rsquo;s fuel production, and causing shortages worldwide.
On the front lines, short-range drones are now Ukraine&rsquo;s primary weapon holding back Russian advances. Most of these are small drones with anti-tank RPG warheads attached.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/50hyzc7ZyxsSXXBSmgGL7w/e949dbbd6279a7e5ecde9fb08981fedf/dr-img-10-15-26-3.jpg" alt="image 3" />
Crude, but highly effective. There are also bomber drones which drop grenades, mortars, and improvised munitions. Interceptor drones roam the skies, looking to foil enemy attacks.
Both sides are using <a href="https://x.com/GrandpaRoy2/status/1994286890913325413">flamethrower drones</a>, which drip molten thermite to melt anti-drone netting and ignite enemy structures.
Meanwhile Russian long-range drones and missiles are increasingly hitting military sites in the capital, Kiev (Kyiv). And across the rest of the country. Glide bombs are devastating the front lines. And Russia is using at least as many short-range drones as Ukraine is.
It is estimated that up to 15,000 drones are being used in Ukraine per day. And that up to 90% of casualties are caused by these terrible little machines.
Traditional maneuver warfare is extremely difficult in these conditions. Advances crawl forward at a snail&rsquo;s pace.
Tanks and IFVs are increasingly irrelevant on the battlefield. Even artillery, the &ldquo;God of War&rdquo;, has become an afterthought.
In just a few short years, this new class of drones have changed warfare forever. The question is: are American defense contractors ready for this new world?
<h2 class="centered subhead" style="text-align: center;">Petraeus&rsquo; Warning</h2>
Former Army General and CIA Director David Petraeus is <a href="https://x.com/clashreport/status/2058992487553990804">out</a> with a new warning about drone warfare. I&rsquo;m not a fan of the man, but what he says here is true.
<blockquote>
&ldquo;We have not remotely learned all the lessons we should have from the war in Ukraine.
That is the future of war right now. Ukraine is using 10,000 drones a day.
Ninety percent of the casualties on the Russian side are caused by drones. Tanks can&rsquo;t manoeuvre anymore. They can&rsquo;t survive. Armored vehicles can&rsquo;t survive.
And by the way, there&rsquo;s more coming. Within a year or two, we&rsquo;re going to see unmanned systems that are not remotely piloted.
In the future, we&rsquo;re going to see autonomous systems &mdash; truly autonomous &mdash; that do not require a pilot to remotely operate them.
Then you face drone swarms. And that is something for which we really don&rsquo;t have a solution.&rdquo;
</blockquote>
<h2 class="centered subhead" style="text-align: center;">Weapons Giants Fall Behind</h2>
America&rsquo;s largest defense contractors, Lockheed Martin (LMT) and Northrop Grumman (NOC), have traditionally focused on gigantic programs. The F-35, naval ships, helicopters, cruise missiles, and big drones costing $30-90 million a piece.
These contractors have been forced to build their supply chains and manufacturing around getting support from specific political districts.
Elon Musk has been especially critical of U.S. defense firms, singling out manned fighter jets like the F-35 as &ldquo;obsolete in the age of drones.&rdquo;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6wMymcaLeJOCuYRJ5LkOGc/5f702ad2e80173c2f1c02a37457f5a44/dr-img-10-15-26-4.jpg" alt="image 4" />
Source: <a href="https://x.com/elonmusk/status/1861070432377737269">X</a>
I&rsquo;m not sure fighter jets are obsolete just yet. But tanks and other traditional weapons systems do seem to be moving in that direction.
The point is that making cheap disposable &ldquo;kamikaze&rdquo; drones at scale is outside the wheelhouse of big defense firms.
Now that the U.S. military wants low-cost attack drones, they are doing something unusual: going to smaller firms in search of innovation.
<h2 class="centered subhead" style="text-align: center;">New Drone Depots</h2>
The U.S. military is converting 6 Army depots into drone production facilities across the country. <a href="https://thedefensepost.com/2026/10/09/us-mcalester-plant-drone-munitions/">Defense Post</a>:
<blockquote>
The McAlester Army Ammunition Plant (MCAAP) in Oklahoma is adapting its munitions production to support modern drone warfare through a new partnership with Perennial Autonomy.
</blockquote>
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/25I1P7gcB76vPepbZALRbb/ba413af3068307dc0595c09a44d8a76a/dr-img-10-15-26-5.jpg" alt="image 5" />
They&rsquo;re partnering with various private companies to build drone manufacturing capabilities domestically. Beefing up our drone production base is key to modernizing the military.
Especially because the government&rsquo;s requirements call for doing it without any Chinese parts.
That in itself is a huge challenge, because today China makes about 85% of the world&rsquo;s commercial and personal drones. China&rsquo;s supply chains are already incredibly developed, and it will take time to build out our own. The vast majority of Ukrainian and Russian drones used are either Chinese, or built with Chinese motors, batteries, servos, and other parts.
<h2 class="centered subhead" style="text-align: center;">The Drone Dominance Program</h2>
It&rsquo;s been nearly 5 years since the war in Ukraine began, and the disruptive potential of drone warfare became clear.
The U.S. Department of War is now beginning to ramp up drone programs. In Iran we saw the debut of the LUCAS attack drone, based on Iran&rsquo;s Shahed-136.
Now the American military is looking to build 300,000 attack drones by 2028. That may sound like a lot, but it&rsquo;s 15 days of supply for Russia and Ukraine.
The Drone Dominance Program (DDP) is a fascinating development. The Department of War is tearing up the old playbook of 10-30 year development cycles and trying something fresh.
Dozens of companies were invited to participate in a series of trials. Various drones are tested for accuracy, speed, resistance to electronic warfare, and other objectives.
And the Department of War has an online leaderboard showing the top performers:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/25UBGwMcpfBFp2XRnN0IsL/64a59d33cd80cf3914aebc33f8d735e0/dr-img-10-15-26-6.jpg" alt="image 6" />
Source: <a href="https://drone-dominance.io/leaderboard.html">Drone Dominance official site</a>
Note the complete absence of any big defense contractors. The leading performer, Skycutter, is a small private U.K. company with plenty of frontline experience in Ukraine.
We are early in this new age of drone warfare. But it is set to shake up America&rsquo;s stale defense contracting business. New players are emerging.
The legacy defense giants have been slow to adapt to this reality. They remain focused on cash cow programs.
And for a while, that playbook will work. But the future of warfare looks like it will be dominated by unmanned systems. And the big, slow, expensive drones they make today are clearly not cut out for this new world.
American defense giants have coasted for decades on gold-plated billion-dollar contracts. They have failed to produce effective hypersonic missiles and affordable attack drones. Their reign won&rsquo;t last forever.
I&rsquo;ll be watching to see which companies emerge as leaders in this new tech. Many of them are private startups at this point, so aren&rsquo;t investable (yet).
But disruption is finally coming to the defense industry. It&rsquo;s about time.

dr-hero-img-10-15-26

The Future of American Drone Warfare

Yesterday we explored the archaic concept of long-term investing.
In a world where the average investor holds a stock for 3 minutes, I believe it&rsquo;s wise to be contrarian here.
Today, we&rsquo;re going to cover my favorite forever investments. Stocks I plan to hold for the next 10 years or longer.
Without further ado, let&rsquo;s get started.
<h2 class="centered subhead" style="text-align: center;">Oil &amp; Gas</h2>
At its peak back in 1980, the energy sector (oil and gas) made up a whopping 30% of the S&amp;P 500. Today it&rsquo;s about 3.5%.
I first <a href="https://dailyreckoning.com/billy-bob-vs-stop-oil-lunatics/">posted</a> the chart below back in June of 2025. Energy has since moved up to about 3.5%. Still a drop in a bucket.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6AvfPlAdQj2mGoreHvCkni/77b5fa4f27b9786aa6961b279a83e1fc/dr-img1-10-14-26.jpg" alt="image 1" />
Source: <a href="https://x.com/TaviCosta">Tavi Costa</a>
Meanwhile, the Magnificent 7 tech giants make up 35% of the S&amp;P 500. Out of a 500-stock index, just 7 of them make up 35%. And if you combine the top 41 AI companies, it moves up to 49% of the entire index. Talk about concentration risk&hellip;
The 3% stat got my attention. And as I dug in, I realized that the world hasn&rsquo;t invested nearly enough in oil production over recent decades. Large oil discoveries have plummeted by about 60% since the early 2010s, when shale was booming.
There&rsquo;s a widespread perception that oil is the past, and green energy is the future. This is bogus. Oil demand is still rising, and alternative sources are nowhere near ready to replace it.
Much of the world&rsquo;s easy oil has already been extracted. Additionally, the green new scam and other ESG mandates have caused many asset managers to quit oil and gas entirely. They call it divesting.
I call it an opportunity.
<h2 class="centered subhead" style="text-align: center;">Oil Picks</h2>
No surprise here. My favorite long-term oil stock remains Petrobras (PBR or PBR.A).
Brazil&rsquo;s Petrobras is the cheapest major oil company in the world, by far. And there is some political risk with the government owning a big chunk of the firm.
But I believe the juicy dividend yield and low price more than make up for the potential downsides. Besides, Brazil is experiencing a stock market boom and if they mess with PBR shareholders, that&rsquo;s going to end. Additionally, it looks like the country will soon have a conservative/capitalist president.
To be clear, I wouldn&rsquo;t aggressively buy Petrobras here. It has more than doubled since we first <a href="https://dailyreckoning.com/trading-the-trade-disruptions/">featured</a> it last year, and we&rsquo;ve been banging the drum on this stock for 18 months.
But if the wars in Iran and Ukraine end, and the price drops, that&rsquo;ll be an ideal time to pounce. Petrobras can profitably sell oil at $35/barrel. As a bonus, they&rsquo;re insulated from chaos in the Middle East. In fact, the company benefits from it. They also operate 11 oil refineries.
My plan with this one is simple. Reinvest the dividends and let it grow for decades.
If you&rsquo;re looking for a safer U.S. oil stock, ExxonMobil (XOM) is also solid. I own that one too.
And if you belong to any of Jim Rickards&rsquo; services, keep a close eye on their energy picks. Jim and Dan are on fire lately. These guys understand this sector like few analysts do.
<h2 class="centered subhead" style="text-align: center;">Emerging Markets (EM)</h2>
Long-suffering readers are rolling their eyes right now. Emerging markets, again?!
Yes. I enjoy buying growing companies at under 10x earnings, with 5% yields and <a href="https://dailyreckoning.com/buy-the-dip-in-vale/">irreplaceable</a> assets. And the only place you can reliably do that today is EM. The S&amp;P 500 yields a pitifully small 1% today. That&rsquo;s a giant red flag for me. Too expensive.
I&rsquo;ve talked enough about Brazil lately (<a href="https://dailyreckoning.com/viva-brasil-a-3x-in-the-making/">read this</a> if you need to get caught up). So I&rsquo;ll make the pitch quick. The iShares Brazil ETF (EWZ) is the simplest way to play it. I plan to hold my Brazil positions for years to come, and hopefully longer.
Caveat: if our Brazil picks pull off a 4x in 4 years, it may make sense to take some profits early. Still, I hope to hold some of my Brazilian positions essentially forever (namely PBR and VALE).
My other favorite EM &ldquo;forever investment&rdquo; is the Cambria Emerging Shareholder Yield ETF (EYLD). This is a unique &ldquo;shareholder yield&rdquo; ETF. It selects companies based on their total shareholder yield, which is a combination of dividends, buybacks, and debt paydowns.
The fund owns 108 companies from across the world, but they are concentrated in Asia. Vietnam, South Korea, Taiwan, and about 16% China. These are mostly industrial companies that don&rsquo;t even trade in the U.S. So it offers excellent diversification.
I&rsquo;ve owned this fund for more than 8 years. Even when EM wasn&rsquo;t doing well, it always generated a nice yield, which I reinvested in more shares. The dividend yield is around 4.3% currently, and the expense ratio is 0.6% per year.
I plan to buy more EYLD in my 401k throughout this year.
Those are my favorite forever investments today. If I add anything else to the list, you&rsquo;ll be the first to know.

dr-hero-img-10-14-26

My Favorite Forever Stocks

Last week, our friend Sean Ring called silver a &ldquo;busted flush&rdquo; on the <a href="https://d2z65klgtz99km.cloudfront.net/PPG-App/">Paradigm app&rsquo;s Daily Feed</a>:
<blockquote>
Silver is a busted flush. Now comfortably trading under $60, silver waits for today's inflation data. It's expected to be higher than August&rsquo;s numbers.
The market seems to be trading off the Fed&rsquo;s expected response, which, if anything, is to increase rates to fight inflation. That&rsquo;s putting pressure on silver and gold, but silver is suffering more.
If trading continues today the way it started, we will have a new daily downside target of $47. That matches is a long-term monthly downside target as well. Of course, that doesn&rsquo;t mean silver will hit the target. But that&rsquo;s the point it will move toward.
</blockquote>
For those who don&rsquo;t play poker, a busted flush isn&rsquo;t great.
A few readers have written in to ask what I think about Sean&rsquo;s take. So here&rsquo;s my reply.
Sean&rsquo;s been right. He sold his silver miners back around <a href="https://rudeawakening.info/posts/take-the-money-and-rotate">February 9th</a>, when silver was trading at $83 an ounce. It&rsquo;s $58 today.
He sold, I stayed long.
Throughout 2025, Sean and I were on the same page on silver (and miners). We were bullish.
But we have different time horizons. I plan to hold my silver for at least the next 10 years. I believe it&rsquo;s going to be a chaotic and inflationary period. And I don&rsquo;t want to have to worry about timing the market too much.
Plus, most of my precious metals investments are in taxable accounts, or storage facilities. So whenever I sell, I have to pay about 40% capital gains taxes on short-term positions, and 20% on long-term investments (over 1 year). Add in fees and commission on physical silver.
Tax efficiency is critical. If all your positions are in protected retirement accounts, that&rsquo;s great. But not all of us are in that boat.
In terms of miners, some of my positions are still up 3x from when I bought them in the spring of 2025. I&rsquo;ve taken about 25% profits, but am still holding the majority of my shares. I want to hold some of these juniors until they become senior miners or are acquired.
Even with today&rsquo;s oil prices, and the fall in silver prices, miners are printing money.
Everybody&rsquo;s situation is unique. I like to hold long-term. Sean is an excellent investor and trader, and his system works for him. He utilizes a lot of technical analysis, which isn&rsquo;t something I use much.
The point is: multiple approaches can work.
<h2 class="centered subhead" style="text-align: center;">Trading vs. Investing</h2>
I&rsquo;ve been clear to readers about what my personal plan is. Hold my silver and other precious metals investments for the next ~10 years. I believe owning PMs and other hard assets is going to be key for wealth preservation going forward.
Long-time readers know we wrote more than a <a href="https://dailyreckoning.com/silvers-3x-upside/">dozen</a> <a href="https://dailyreckoning.com/silver-the-closer-metal/">articles</a> about why silver was a strong buy in the <a href="https://dailyreckoning.com/bathwater-baby-and-silver-2/">$30s</a>.
And in January of this year, when we got up to the $90s, here&rsquo;s what I wrote in <a href="https://dailyreckoning.com/silver-faqs/">Silver FAQs</a>:
<blockquote>
Is it Too Late to Buy?
This is the toughest question.
Let&rsquo;s take a look at the 1-year silver chart.
</blockquote>
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/67mPVoIJBlrcO4oKJHznYk/002de1e48cf465757f7d0a6898f5a07a/dr-img1-10-20-26.jpg" alt="image 1" />
<blockquote>
What a doozy&hellip; Textbook parabolic move.
So lately, when people ask if it&rsquo;s too late to buy, my answer is probably (for the short-term). I realize that&rsquo;s not satisfying, but it&rsquo;s what I see.
Over the long term, you guys know there&rsquo;s no bigger silver bull than me. Silver is a unique metal, in that it is both industrial and monetary. And demand on both sides is absolutely booming.
But this move just seems like too much, too fast.
So it would be reckless to recommend readers/friends buy here. I suspect we&rsquo;ll get a better chance to buy silver sometime in the next 5 months.
</blockquote>
Silver went on to reach $121 an ounce briefly on January 29th.
<h2 class="centered subhead" style="text-align: center;">Longer-Term: We&rsquo;re Both Bullish</h2>
It&rsquo;s important to note that Sean doesn&rsquo;t think silver is a bad long-term investment. He&rsquo;s simply being patient and waiting to buy the dip on miners.
Here&rsquo;s another post Sean made on our app&rsquo;s <a href="https://d2z65klgtz99km.cloudfront.net/PPG-App/">Daily Feed</a> on October 2nd:
<blockquote>
As I wrote yesterday&lsquo;s Rude, my price target for silver is somewhere around $56. After a brief rally today, we&rsquo;ve crashed back down because the markets don&rsquo;t think Warsh is going to back down.
I think he&rsquo;s going to wind up hiking in either October or December and the market somewhere is going to break&hellip; as a result, the FOMC will start ferociously cutting in 2027.
We are getting very close to wanting to buy back into the silver miners. Again.
</blockquote>
So long-term, Sean&rsquo;s not bearish on silver or silver miners. He&rsquo;s simply trading the charts as he sees them. And it&rsquo;s been working, so good for him.
Personally, I take more of a long-term strategy. And both methods can work. It all depends on your preferences. Are you more of a trader, or a long-term investor? Are you investing in taxable accounts, or 401ks and IRAs (tax shelters)?
<h2 class="centered subhead" style="text-align: center;">Inflation Insurance</h2>
Jim Rickards&rsquo; target for silver is $200 an ounce. He says it could get there next year. I concur. But I don&rsquo;t really care if it takes until 2028, or even later.
Silver is a huge part of my inflation insurance package. And I expect inflation to remain problematic for many years to come. That will drive demand from investors, which was lacking for much of the past decade.
With silver, of course, we also need to consider industrial demand. Solar panels, electronics, weapons systems, medical applications. All are going strong. Solar panels are an especially bright spot.
The current energy crisis is driving countries around the world to install massive solar panel installations, and each panel contains 4 to 20 grams of silver.
Take a look at the size of China&rsquo;s largest solar project:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5lBi6bGCo8TcDdauWAQmg2/3d0f7610bcc83479fa1333e5803d0128/dr-img2-10-20-26.jpg" alt="image 2" />
Source: <a href="https://www.admiddleeast.com/story/worlds-biggest-solar-farm-goes-live-in-china-5gw-can-power-an-entire-country-for-a-year">Architecture and Design</a>
It took a mountain of silver to build that. And solar demand isn&rsquo;t slowing down anytime soon.
<h2 class="centered subhead" style="text-align: center;">Intermission</h2>
In summary, silver mania isn&rsquo;t over. This is the intermission. No investment goes straight up, nor should it.
But that doesn&rsquo;t mean we have to try to trade it. You can, certainly. But personally, my goal is to hold investments I believe in for many years. It&rsquo;s what works for me.
If timing the market works for you, that&rsquo;s fantastic. Just make sure you consider tax implications, and have the experience necessary to trade in and out. Or have someone to guide you, like the top-notch experts we have here at Paradigm.
If you&rsquo;ve been waiting to buy silver, now is a fine time. We might go a bit lower over the short-term, but my confidence over the next 2-5 years is extremely high.
Silver will hit $100 again, then $200, then $300, and beyond. And I&rsquo;ll be along for the ride.

dr-hero-img-10-20-26

The Great Silver Debate

Most investors have horror stories from their early trading experiences. I certainly do.
My weapons of choice were trashy penny stocks and 10x leverage.
No, my investing career did not begin in a blaze of glory. But the truth is, almost nobody&rsquo;s journey does.
For better or worse, mistakes are how we learn.
<h2 class="centered subhead" style="text-align: center;">A Glimmer</h2>
Before my writing career, in the early 2000s, I ran a one-man marketing consultancy. My specialty was building Google advertising campaigns for small companies.
It was a nice little business. And I got to know Google&rsquo;s systems very well. They had a truly revolutionary product, and most people didn&rsquo;t realize it.
Google IPO&rsquo;d in 2004 at a split-adjusted price of $2.13 per share. I ended up buying in 2005 at around $5.25 per share.
As the years went on, I bought more Google on dips. I knew this company was going to be a monster, because I worked with their products every day. I fell in love with GOOG.
In the end, I held onto those Google shares for 15 years, selling (too early) in 2020. At one point Google was over 60% of my portfolio. But that was fine, because I knew the company inside and out.
This is what I mean by &ldquo;marrying&rdquo; a stock. You buy a company you understand deeply, and add to it on dips. This is the ideal stock market relationship.
Warren Buffett famously said his ideal holding period for an investment is &ldquo;forever&rdquo;, and the older I get, the more sense it makes.
<h2 class="centered subhead" style="text-align: center;">Lessons</h2>
After those first few years of &ldquo;investing&rdquo;, I had to stage an intervention with myself.
I looked at the results from my IRA (long-term) account and compared it to my trading account. The difference was stark.
One was growing steadily, and the other appeared to be some sort of black hole for money.
Truth is, I had no business trading back then. I was in my early 20s and didn&rsquo;t have the knowledge, patience, or skills required. This is the biggest mistake investors make, especially new ones. Frequent trading by amateurs almost always leads to account implosion.
For the next 7 years, I didn&rsquo;t trade at all. Only long-term investments. And it worked.
Eventually I started dabbling again with trading, but with caution and strategy this time. Here&rsquo;s how I maintain balance these days.
<h2 class="centered subhead" style="text-align: center;">A Smarter Path</h2>
In 1960, the average holding period of a stock investment was 8 years and 7 months. Today it&rsquo;s just 7 months. Almost nobody holds investments long-term these days.
This is one of those times where it pays to go against the grain.
I believe that the core of every portfolio should be long-term positions.
When you hold investments for long periods, it gives them time to compound without taxes constantly interrupting the gains. And it removes human emotion from the equation, which is a great thing in the investing world.
About 83% of my portfolio today is in long-term investments. The other 17% is cash, which I use to fund occasional trades. But an individual trade is never more than 1% of the total, and usually far less.
Regarding &ldquo;long-term&rdquo; investing, some of you are thinking &ldquo;I don&rsquo;t have that much time to wait&rdquo;. I understand. Inflation is problematic, the job market is terrible, and the future uncertain. A lot of people have catching up to do.
But don&rsquo;t go out and risk everything on half-baked ideas. If you&rsquo;re determined to trade, take advantage of the experts we have here at Paradigm Press.
We have world class traders here, and they&rsquo;ll make your trading journey far more enjoyable. Attempting to do it on your own is going to be tough sledding. The tuition to become a successful trader on your own is steep. Most people never make it.
But don&rsquo;t forget about the long haul part of your portfolio. Statistically, that&rsquo;s where most of the magic happens.
This week we&rsquo;ll discuss which stocks I consider to be marriage material today.

dr-hero-img-10-13-26

Settle Down and Marry a Nice Stock

A tiny ETF is up 5,081% (51x) since the beginning of the year.
It&rsquo;s a niche fund that owns oil tanker freight futures. So when the cost of shipping crude oil rises, so does this ETF.
And since the war with Iran, the cost to rent a tanker has gone vertical.
In 2025, the average rate to book a VLCC oil tanker was about $65,000 per day. Today it has risen to $1.6 million.
<h2 class="centered subhead" style="text-align: center;">A Simple Trade</h2>
The ETF is the Breakwave Tanker Shipping ETF (BWET). As I mentioned, it owns futures contracts which track the cost to ship oil around the world. Here&rsquo;s a look at their top 5 holdings.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/21HaP0kF5PJWR0IgaO6q8V/30c6f94e45b03ba89d52e15ef8be2548/dr--img1-10-10-26.jpg" alt="image 1" width="540px" />
Source: Breakwave
And please, don&rsquo;t go out and buy BWET now. It&rsquo;s already up 51x this year, and whenever the Iran and Ukraine situations get resolved, the fund is practically guaranteed to crash. It may go higher first, but eventually gravity will return. I mean, just look at the chart.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3oU715iIMqpucLcYQBdQ0O/7028cdb0aa910db07d6da2a50bd09f34/dr--img2-10-10-26.jpg" alt="image 2" width="540px" />
In hindsight, however, BWET was an obvious trade. We knew early on that Iran had significant anti-ship missile capabilities, and wrote about it frequently. Their strategy depends on preventing tankers from freely crossing the Strait of Hormuz. We knew this <a href="https://dailyreckoning.com/jim-rickards-most-surprising-iran-takes/">early on.</a>
Oil tanker rates were bound to rise along with the danger of transiting the Strait of Hormuz. As soon as they started blowing up full VLCC tankers, that should have been the cue to look for ways to play the shift.
BWET was the ideal play. All it would have taken to find it was a simple AI query. &ldquo;Hey ChatGPT, how can I bet on rising oil tanker rates?&rdquo;&nbsp;
AI can be an extremely valuable research tool. Just don&rsquo;t ask it what to buy, or when. AI is NOT good at generating unique ideas, and even today&rsquo;s top AI models are horrible traders. You need to provide the spark. But for brainstorming and research, it can be a very useful tool. I view AI as a valuable research assistant, but never a stock picker.
Anyway, missing the tanker trade has inspired me to perform better and deeper research when these earth-shaking events like the Iran war happen.
They always bring opportunity. And sometimes, it&rsquo;s downright massive.
<h2 class="centered subhead" style="text-align: center;">What&rsquo;s Next?</h2>
The world is in a crazy place today. War, inflation, AI disruption, debt, trade and currency wars. We&rsquo;re essentially living in the scenario Jim Rickards laid out in his books and other work over the past 15 years.
But amongst the chaos, there exist rare opportunities for investors.
Here are 4 earth-shaking events I&rsquo;m watching closely.
<ul>
<li>Ukraine will lose the war against Russia, probably next year.</li>
<li>The global debt situation has reached a tipping point. Yields are soaring.</li>
<li>AI will disrupt white collar work in unprecedented ways.</li>
<li>America&rsquo;s higher education system will die and be reborn over the next 15 years.</li>
</ul>
The implications for each of these are huge.
Let&rsquo;s think about the Ukraine vs. Russia war quickly. When Ukraine loses, the world will change. NATO put its full support behind Ukraine. Tanks, planes, bombs, missiles, drones, refugee support, directly funding the government, covert on-the-ground assets, and most importantly &ndash; intelligence, satellite and recon (ISR) assistance. Without our eyes in the sky, Ukraine would have lost in the first year.
Between NATO and Europe, about $650 billion has been spent to support Ukraine during the war. When Ukraine loses, and the scale of it all becomes apparent, I believe it will speed the breakup of NATO, and possibly the EU as well.
More than a million lives will have been wasted. And Russia will end up with Ukraine&rsquo;s most valuable territories.
Confidence will be lost in European and NATO leadership, as it should. Fortunately President Trump has distanced us from Ukraine somewhat, and tried to take a more even-keeled approach to ending the conflict. But the Ukraine war truly began in 2014, when Obama&rsquo;s intelligence services executed the Maidan Revolution (coup). NATO is deep in this war.
I&rsquo;m still searching for how to trade the end of the Ukraine war. It&rsquo;s a sad situation all around. But as investors we have to distance ourselves from emotion.
Some of these other earth-shakers are easier. The debt crisis trade is pretty simple, and we&rsquo;ve been discussing it for years now. Hard assets, foreign stocks, precious metals. That&rsquo;s more of a decade-long investment than a &ldquo;trade&rdquo;, for me at least.
The bigger point is this &ndash; I&rsquo;m going to look even harder for big idea opportunities. When the world is changing this fast, there are inevitably some incredible opportunities for those who are paying attention.
Of course, I&rsquo;ll share the best ideas with you all as I find them.

dr-hero-img-10-10-26

Earth-Shakers: Trading Big Ideas

In the fall of 1917, there was an outbreak of meningitis among soldiers at Fort Riley, Kansas.
Doctors from the Rockefeller Institute sprung into action. They began an experimental vaccination campaign using 3 strains of meningococci bacteria.
The bacteria was heated to 149 degrees fahrenheit to kill it, while leaving the material intact to trigger an immune response. That was the theory, anyway.
4,792 soldiers started the vaccine series, and 3,702 finished it. There were some nasty side effects, and the dose was halved midway through the trial.
A few months later the first cases of &ldquo;Spanish Flu&rdquo; broke out. Fort Riley, Kansas happened to be ground zero. <a href="https://www.history.com/this-day-in-history/march-4/first-cases-reported-in-deadly-influenza-epidemic">History.com</a>:
<blockquote>
Just before breakfast on the morning of March 4, Private Albert Gitchell of the U.S. Army reports to the hospital at Fort Riley, Kansas, complaining of the cold-like symptoms of sore throat, fever and headache.
Soon after, over 100 of his fellow soldiers had reported similar symptoms, marking what are believed to be the first cases in the historic influenza pandemic of 1918, later known as Spanish flu. The flu would eventually kill 675,000 Americans and an estimated 20 million to 50 million people around the world, proving to be a far deadlier force than even the First World War.
</blockquote>
Some of you may be thinking, &ldquo;but the Spanish Flu was viral, not bacterial&rdquo;. The consensus today is that the vast majority of deaths were caused by secondary bacterial infections. The despicable one, Tony Fauci, even co-authored a <a href="https://pmc.ncbi.nlm.nih.gov/articles/PMC2599911/">paper</a> on it:
<blockquote>
&ldquo;The majority of deaths in the 1918&ndash;1919 influenza pandemic likely resulted directly from secondary bacterial pneumonia.&rdquo;
</blockquote>
Was a bacterial vaccination campaign at ground zero, just before the start of the 1918 pandemic a coincidence? Perhaps.
But there are lots of coincidences out there.
<h2 class="centered subhead" style="text-align: center;">Lyme (Disease), Connecticut</h2>
In the 1950s, the U.S. Army established a biological and chemical research facility on Plum Island, New York.
They studied tick-borne diseases on Plum Island. We know that from government-published papers and articles. We don&rsquo;t know much about exactly what they were doing. But there was classified Cold War biological research happening.
And it just so happens that the disease was first discovered in Lyme, Connecticut. Just 7 miles from Plum Island, as the duck (carrying a tick) flies.
RFK Jr, President Trump&rsquo;s Secretary of Health and Human Services, believes Lyme disease likely came from Plum Island. Here&rsquo;s a transcript from a podcast interview where he discussed it:
<blockquote>
And the idea that this may have been is highly likely to have been a military weapon. And we cannot say 100% for sure.
But we do know that they were experimenting with ticks there and that the ticks, as you show, are an epidemic because of what happened in Plum Island and the other labs.
Deer ticks and other species of ticks, lone star ticks, whatever.
We also know they were experimenting with diseases of the kind, like Lyme disease, at that lab and putting them in ticks and then infecting people, testing them with bird vectors.
</blockquote>
Another coincidence? Kind of like how scientists were tinkering with coronaviruses at the Wuhan Institute for Virology at the time of the outbreak. And how they had multiple lab staff infected with a mysterious flu-like disease in late 2019.
<h2 class="centered subhead" style="text-align: center;">COVID-19 and Beyond</h2>
Unfortunately, reckless biological research was not limited to the 20th century. For example, Covid-19 was certainly an engineered virus. Even the CIA now admits it was likely a lab product.
I won&rsquo;t rehash the whole story here, but it was clear from early in the pandemic that this was a product of a highly sophisticated operation involving American and Chinese scientists. Paid for mostly with American tax dollars, by the way. Courtesy of Fauci and his gang of firefighter-arsonists.
For a while, it looked like Fauci and company would get away with claiming Covid had a &ldquo;natural origin&rdquo;. The Biden admin went to extreme lengths to censor anyone who didn&rsquo;t toe the line on social media. Researchers who didn&rsquo;t play ball got no funding.
This time, the truth managed to wriggle its way out of their slimy grip. But how many times have we been fooled in the past? More than a few.
Yet reckless biological research continues. Madmen around the world are doing ridiculous things like aerosolizing ebola.
They&rsquo;re genetically-engineering viruses to make them able to infect humans. Gain-of-function research to make pathogens more deadly. And now, AI promises to make genetic engineering even easier.
In 2012, scientists in the Netherlands modified H5N1 bird flu to enable airborne transmission between ferrets (mammals, like us). Here&rsquo;s a snippet from the <a href="https://pmc.ncbi.nlm.nih.gov/articles/PMC4810786/?utm_source=chatgpt.com">paper</a> they published:
<blockquote>
To address the concern that the virus could acquire this ability under natural conditions, we genetically modified A/H5N1 virus by site-directed mutagenesis and subsequent serial passage in ferrets. The genetically modified A/H5N1 virus acquired mutations during passage in ferrets, ultimately becoming airborne transmissible in ferrets.
</blockquote>
Creating new strains of pathogens in the name of&hellip; disease prevention?! What are we doing?
This madness has got to stop. HHS Secretary RFK Jr. has made some progress. But he&rsquo;s fighting an uphill battle against the bio-swamp, and there&rsquo;s much more work to be done.

dr-hero-img-10-08-26

Covid and Other Manmade Pandemics

It&rsquo;s rare to see a nation&rsquo;s stock market jump more than 10% in a day.
But that&rsquo;s exactly what happened in Brazil today. The EWZ Brazil ETF popped 13.67% higher.
What happened? Over the weekend, the right-wing presidential candidate won the first round of voting.
Flavio Bolsonaro, son of former president Jair, is now favored to win the runoff on October 25th.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/QtmFvN7tWd0Q9WIJtt5ei/a05ad3cebd7cab869ca84b9dfef51837/dr-img1-10-05-26.jpg" alt="image 1" width="540px" />
Former president Jair Bolsonaro, with his son and current candidate Flavio Bolsonaro. Photo credit: AP
Conservatives also made progress in Brazil&rsquo;s Congress.
For those who don&rsquo;t follow Brazilian politics, this is a big deal. Brazil&rsquo;s current president, Lula, is a hard-core socialist. Flavio Bolsonaro, meanwhile, is running on a capitalist and nationalist platform.
Flavio has promised to slash government spending, cut taxes, lower interest rates, eliminate bureaucracy, and improve management at state-owned companies (like Petrobras).
<h2 class="centered subhead" style="text-align: center;">Game of Thrones, Brazil Edition</h2>
Current President Lula and the Bolsonaros are arch-enemies.
Lula was convicted on corruption charges back in 2017, and spent more than a year in jail.
Jair Bolsonaro was stabbed in the abdomen back in 2018. He was charged with attempting a military coup after his 2022 defeat to Lula.
In 2024, Lula was supposedly the target of an assassination plot by the military.
In December 2025, Jair Bolsonaro was sentenced to 27 years in prison for attempting a coup. Jair alleged election fraud by Lula&rsquo;s party (sound familiar?).
Up until recently, it looked like Lula would easily win the upcoming election. But prediction markets are now giving Flavio Bolsonaro an 83% chance to win:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5OlPCBiQKwMERmv3e6Qppv/e152dd16f3fe98b15baf9aa986c8af4c/dr-img2-10-05-26.jpg" alt="image 2" width="540px" />
Source: Kalshi
If Bolsonaro wins, that&rsquo;d be a major bullish catalyst for Brazilian stocks.
Yes, politics in Brazil are&hellip; dramatic. But hey, that&rsquo;s the case everywhere these days.
<h2 class="centered subhead" style="text-align: center;">Still Cheap and Hated</h2>
I&rsquo;ve posted the chart below before, but it is worth reviewing again. It shows how Latin American (LatAm) stocks have performed vs U.S. stocks since 1985.
As this chart rises, LatAm stocks are outperforming. As it falls, America is winning.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6fHjl82lWvtRqr26Y0Pr1a/1b3a7958ca8f4349ed48b9de9d016da2/dr-img3-10-05-26.jpg" alt="image 3" width="540px" />
Source: <a href="https://x.com/TaviCosta/status/2039098582054105480">Tavi Costa</a> of Azuria Capital&nbsp;
For the past 15 years, it&rsquo;s been a massacre. American stocks have stomped everybody else.
But the cycle is turning. As I <a href="https://dailyreckoning.com/viva-brasil-a-3x-in-the-making/">wrote in April</a>, it appears we&rsquo;ve entered a new period of LatAm outperformance.
If it&rsquo;s anything like the last major bull market, this could go on for another 3 years, at minimum.
The chart below, via Morgan Stanley, shows the 2003-2007 LatAm bull market (blue) compared to today&rsquo;s move (red):
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3kA3rjYNg3OvurjN04wnTh/8ad15c28286a9e522a707a3f96018dd6/dr-img4-10-05-26.jpg" alt="image 4" width="540px" />
When emerging market stocks run, they really run. And Brazil remains my favorite EM pick. The easiest way to play it is the iShares Brazil ETF (EWZ). There is also a small-cap Brazil ETF worth owning (EWZS).
When we first bought Brazil back in <a href="https://dailyreckoning.com/brazilian-stocks-offer-8-yields-at-8x-earnings/">February 2025</a>, the market was down in the dumps. The index was trading at a P/E of just 8. The dividend yield was around 8%.
Socialist President Lula was firmly in charge. Investors had lost all faith in the country. But now things are looking up. Political change, a shift in investor sentiment, and valuations are still dirt cheap.
Brazilian large cap stocks trade at a trailing P/E of just 9.9. The forward P/E is 8.6. The dividend yield on EWZ is 5.5%, with room to move up.
With Brazilian stocks today, you get a dividend yield 5.5x higher than the S&amp;P 500. When we first bought in early 2025, the yield was almost 8x higher. The premium attached to U.S. markets today remains at silly levels.
Eventually, of course, there will come a time to lighten up on Brazil and other emerging markets. But my guess is we&rsquo;re at least 3 years away from that point, and hopefully much longer.
This EM outperformance cycle is just beginning. And Brazil still looks to be the best horse to bet on.

dr-hero-img-10-05-26

MBGA: Make Brazil Great Again

Over the past 4 years, the world has slowly woken up.
Investors have finally recognized just how unsustainable the debt situation is.
Governments have piled up IOUs steadily since the 1980s. But for a long time, it didn&rsquo;t seem to matter.
Mainstream economists told us it wasn&rsquo;t a big deal.
Nobel Prize-winning economist Paul Krugman is a prime offender here. The New York Times columnist has argued the following:
<ul>
<li>&ldquo;No, debt does not mean that we&rsquo;re stealing from future generations.&rdquo; Feb 2015</li>
<li>&ldquo;Large-scale deficit spending isn&rsquo;t just OK, it&rsquo;s the only responsible thing to do.&rdquo; Oct 2020</li>
<li>&ldquo;That is, to act responsibly, we must stop worrying and learn to love debt.&rdquo; Dec 2020</li>
<li>&ldquo;We weren&rsquo;t and aren&rsquo;t anywhere close to that kind of crisis and probably never will be.&rdquo; Dec 2020</li>
</ul>
Over the years he has ranted and raved about how debt is just money we owe to ourselves. It&rsquo;s no big deal!
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3USM4pgpH2Prpo6KvWscWp/82efc684926fdbabfba95ee33638a52f/dr-img1-10-02-26.jpg" alt="image 1" width="400px" />
This is the wisdom of the most influential economist in America.
Krugman seems to have assumed we&rsquo;d have low interest rates forever. Now that rates are soaring, he&rsquo;s changing his tune a bit.
But still, he <a href="https://paulkrugman.substack.com/p/what-are-bond-markets-telling-us?utm_source=chatgpt.com">assures</a> us there&rsquo;s no chance of a serious debt crisis, because we can always just print money to pay it off. That&rsquo;s reassuring&hellip;
<blockquote>
&ldquo;The truth is that even fiscally irresponsible nations very rarely have acute debt crises unless they borrow large amounts in foreign currency, because countries that borrow in their own currency can&rsquo;t literally run out of money &mdash; they can print more as needed.&rdquo;
</blockquote>
If a nation&rsquo;s debt causes it to print gobs of money, which results in problematic inflation, I&rsquo;d call that a debt crisis.
In fact, I would argue that no matter what we do, a sustained period of high inflation is unavoidable.
<h2 class="centered subhead" style="text-align: center;">The High Rate Path</h2>
The U.S. basically has two paths in front of it. One where interest rates stay high.
Peter Schiff recently <a href="https://x.com/PeterSchiff/status/2105652735165022417">summed</a> up the first option nicely:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6pJjQYlDC7jJd3FF7NJTG9/59dd58b1b90eb54549bd92a7d1f5d2fe/dr-img2-10-02-26.jpg" alt="image 2" width="540px" />
If rates stay high, the debt will rapidly snowball to $50 then $100 trillion. Peter&rsquo;s post got me curious, so I had an AI agent run the numbers. Here&rsquo;s what we have, assuming the fed funds rate rises to 8% and stays there:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1yNU8x1LTH4RitVlw40A2P/5433eb76e48ec5b273a02de0b664b1b3/dr-img3-10-02-26.jpg" alt="image 3" width="540px" />
So by 2036, total federal debt would rise to $89 trillion, from $40 trillion today.
Paying the interest on that debt would cost $6.2 trillion. That&rsquo;s more than the federal government&rsquo;s total revenue (taxes etc) in 2026, which will be around $5.8 trillion.
All that money would have to be printed.
If you extend the high-rate simulation to 2046, debt would reach a shocking $240 trillion.
And by the way, this projection uses government spending and revenue estimates (CBO). Those numbers are always too optimistic.
<h2 class="centered subhead" style="text-align: center;">The Low Rate Path</h2>
The other path is where the Fed and Treasury work together to get rates back down to near zero.
We had this for almost 10 of the past 20 years. After the housing crash of 2008, and during Covid. And I believe we will return to it.
I ran the same projection using AI, but it assumes the Fed drops interest rates to 1%, and they stay there for 10 years.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6ddxK9mbEqECbtvCaYO1D1/521521aca3b0d529e646331275d43677/dr-img4-10-02-26.jpg" alt="image 4" width="540px" />
In the low-rate scenario, debt &ldquo;only&rdquo; rises to $61 trillion, rather than $89 trillion. Interest costs would be a more affordable $1.3 trillion, rather than $6.2 trillion in the higher-rate world.
The difference between the high and low-rate scenarios would grow exponentially over time.
This is the choice facing our central bank and politicians. Technically, the Fed isn&rsquo;t supposed to concern itself with debt. Its mandate is to maximize employment, and minimize inflation.
But in the real world, they absolutely have to take debt into account. The tables above show why. The Fed certainly did during the <a href="https://dailyreckoning.com/gold-smells-a-rat/">financial repression of the 1940s</a>. That was yield curve control, and I believe we&rsquo;ll see it again.
<h2 class="centered subhead" style="text-align: center;">Real World</h2>
These projections are simplified. They don&rsquo;t account for inflation and a whole lot of other stuff.
But the exercise is worthwhile because it shows just how bad our debt will become if interest rates stay high. In fact, over the long run, inflation may be worse on the high-rate path. The debt snowballs.
We need lower rates. The country can&rsquo;t even afford these &ldquo;normal&rdquo; interest rates. Corporations, people, or governments. We all have too much debt.
Of course, we technically could stay on the high rate path. But we&rsquo;d have to cut government spending by 40%, raise taxes, and stamp out all the corruption. There&rsquo;d be a wave of corporate and personal bankruptcies within a few years, as refinancing at higher rates breaks the math.
It&rsquo;s not realistic. At least not yet.
Of course, artificially low rates have downsides too. Asset price bubbles, savers get robbed, and higher inflation. There&rsquo;s a reason they call it financial repression.
But it&rsquo;s more palatable than the alternative.
So I continue to believe that they&rsquo;ll force interest rates back down towards zero within the next year or two. Even as inflation remains too high. It&rsquo;s the path of least resistance.
It&rsquo;s an extreme step, yield curve control. So it might take a painful catalyst to get us there. But I have no doubt it is the destination.
This is why we spend so much time talking about hard assets, inflation hedges, and monetary policy.
Owning them is going to be key to thriving during the next decade.

dr-hero-img-10-02-26

All Roads Lead to Inflation

In the energy world, all eyes remain on the Persian Gulf.
Crude oil exports from the region are increasing. But by how much? That question is hotly debated.
An official White House account on <a href="https://x.com/RapidResponse47/status/2105679041093148968">X</a> quoted a WSJ article today around noon:
<blockquote>
"With flows through Saudi Arabia&rsquo;s East-West pipeline recently restored, the 10-day average of crude exports from the Middle East has rebounded to 17.5 million barrels a day, or 98% of prewar levels, J.P. Morgan analysts said."
</blockquote>
If JPMorgan is correct, this is a major breakthrough. A return to 98% of pre-war crude exports would mean the U.S. strategy is working.
But 98%? Again, call me skeptical.
Earlier this week, a separate source said oil exports from the region returned to 93% of pre-war levels in September. The problem with that claim is that Saudi Arabia&rsquo;s primary pipeline was down due to drone strikes for about 2 weeks in September. That alone accounted for about 5 million barrels per day.
The source of much of this new data is tracking firm Kpler. They use satellite images and on-the-ground reports, among other data collection methods.
It&rsquo;s important to note that Kpler says the September data is both &ldquo;provisional&rdquo; and &ldquo;preliminary&rdquo;. So it&rsquo;s essentially an educated guess.
Notably, Kpler also reports that Iran&rsquo;s oil exports dropped to zero last month, from a peak of over 2 million barrels per day in February.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2wC70phRXOfRHZhdxMJDwp/71ad9cafbfd4785b4c5394e42f8fccc7/dr-img1-10-01-26.jpg" alt="image 1" width="540px" />
This claim looks solid. No oil tankers have been spotted filling up at Iran&rsquo;s Kharg Island in a long time. It looks like their exports are finally cut off. This starts the clock ticking on an economic time bomb, but the fuse may burn for a year or longer.
And it seems that only oil exports are increasing. Bloomberg reports that liquified natural gas (LNG) shipments out of the Gulf are still only about 20% of pre-war levels. Refined fuels are similarly low.
Despite all the good news about oil exports, Brent crude moved up 3.29% as of 12:30pm ET today. Murban crude, which is the UAE&rsquo;s oil benchmark, moved up 5.46%.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3GC1XpwsGiYJWDY5KFqUU8/9744835988379f06759d4d40406e00a2/dr-img2-10-01-26.jpg" alt="image 2" width="350px" />
Source: OilPrice.com
The market isn&rsquo;t fully buying this &ldquo;98% of pre-war levels&rdquo; story. At least not yet.
Oil prices are still 55-70% higher than pre-war. This could be partially a transit and processing issue. It takes a while for oil to be refined into usable products, then shipped to its destination.
But there are three other factors we must consider.
<ol>
<li>The optimistic data on oil exports from the Middle East could be wrong</li>
<li>Iran continues to hit tankers transiting Hormuz with anti-ship missiles</li>
<li>At any time, a volley of drones and missiles aimed at oil infrastructure could spoil the party (again)</li>
</ol>
<h2 class="centered subhead" style="text-align: center;">Data Wars</h2>
Tracking and measuring oil flows is trickier than it may seem. Oil is escaping the gulf today partially through a huge network of ships which transfer oil from one tanker to another.
Many of the tankers &ldquo;run dark&rdquo; with their AIS tracking systems turned off. So measuring exports requires detailed analysis of satellite imagery.
Even from space, a picture can tell analysts how much oil is in a tanker. They simply measure the shadow, and can tell how full it is by how deep it sits in the water.
But the problem is, there&rsquo;s been heavy censorship of satellite images over the Persian Gulf since early March.
So it&rsquo;s difficult for anyone to confirm Kpler&rsquo;s data.
<h2 class="centered subhead" style="text-align: center;">A Cornered Animal?</h2>
One issue about all of this bothers me most. Iran is still hitting tankers and ships with missiles and drones in Hormuz.
For now, at least some brave captains and crew appear to be pushing through. But how long will shipping companies take the risk? The monetary rewards are great, but there&rsquo;s a chance that Iran just keeps firing missiles at adversarial tankers.
My fear is that even if our strategy is working, Iran could ramp up attacks on tankers and pipelines. Like a cornered animal, they are most dangerous when seriously threatened.
If they feel like they have no way out, another wave of infrastructure destruction becomes likely.
Don&rsquo;t get me wrong, more oil is getting out of the Middle East, and that&rsquo;s a good thing. But for now, I remain cautious.
I believe the reports saying we&rsquo;re back at 90%+ of pre-war oil exports are far too optimistic. The U.S. just told France and Germany to release their emergency diesel stockpiles, or they&rsquo;ll stop getting diesel exports from us.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2KzrHfeQkWE8lLULRKaimB/24489a616165a7df0b66136f369a76a0/dr-img3-10-01-26.jpg" alt="image 3" width="540px" />
Source: <a href="https://x.com/Reuters/status/2105631352036970841">X</a>
Would we be doing this if exports were truly back to normal levels? I doubt it.
And at any time, a few missiles or drones on Saudi Arabia&rsquo;s pipeline could set exports back 30% again. And if Iran ramps up attacks on tankers transiting Hormuz, then we&rsquo;re back in an ugly spot.
Then there&rsquo;s the Houthis in Yemen, who have been firing missiles at Saudi oil infrastructure over the past month. Things have cooled down a bit on that front, but could fire back up at the drop of a hat.
In short, we&rsquo;re not out of the woods yet. The increase in oil exports is good news, but we don&rsquo;t know how much is truly getting out. And it may not last.
Some readers may be wondering why I&rsquo;m spending so much time monitoring the situation in the Middle East.
The outcome will greatly impact our positions in gold miners and oil producers. Gold miners thrive in a low oil price environment, and oil stocks are the inverse.
This is why I recommend owning some of both, at least for now. There will come a time to take profits on oil stocks, but I don&rsquo;t think we&rsquo;re there yet.
My base case is that oil exports via Hormuz and the broader Gulf region remain crippled for far longer than most analysts currently project.

dr-hero-img-10-01-26

Lies About Oil

The S&amp;P 500 is sitting just below a fresh all-time high.
Yet 59% of the companies in the index are down more than 20% from their highs. That means 59% of S&amp;P 500 companies are in a bear market.&nbsp;
And it gets crazier. 41% of stocks in the index are down more than 30% from their highs! And 17% of the companies are down more than 50% from their peak.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3d1ZFKhIdATURGVYBr1nOK/76be2eb262328524434cd14125d0294d/DR-issue-093026-1.jpg" alt="59% of S&amp;P 500 companies are in a bear market." width="540px" /> Source: <a href="https://x.com/DonDurrett/status/2104282417683145089">Don Durrett</a>
This situation is possible due to the market cap-weighting used by the S&amp;P 500.
Let&rsquo;s take a look at the 10 largest companies in the index. Note the weight column, which tells us what percentage of the index that company makes up.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2E7g48bhVxogQAxOG89quo/8a33352cd69e3721fa2d12c3bedb6c63/DR-issue-093026-2.jpg" alt="10 largest companies in the index." width="540px" />
Nvidia (NVDA) alone accounts for almost 8% of the entire S&amp;P 500. The top 3 companies (out of 500) make up about 20% of the index.
So the S&amp;P 500 can perform extremely well in periods where most of the index is struggling or down. The big boys can drag up the market with their outsized weights and gains.&nbsp;
This is essentially where we are today. Over the past few years, the big AI winners are holding up the entire market.
But make no mistake. This bull-bear market is highly unusual. Yes, it has happened before. I asked ChatGPT to find previous instances, and show market returns in the following 12 and 24 months. Here are the results:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3FrxuYff09zK677pAo2k5u/d3105a6bdf4c8aa2c0726459d595f039/DR-issue-093026-3.jpg" alt="market returns in the following 12 and 24 months results" width="540px" />
The September 1972 incident was followed by a market crash. The March 2000 one too. Only the May 2023 instance was followed by positive returns (I should note that the returns were very impressive in this case.)
Historically, when a tiny group of companies begin to dominate the market, it&rsquo;s not long until a crash. The chart below, via Bank of America research, shows concentration bubbles throughout history.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5kS7PO4ywR1QDLPfusfo5x/ec9ce199f36355e3e9ad94c928cc8d86/DR-issue-093026-4.jpg" alt="Bank of America research, shows concentration bubbles throughout history" width="540px" />
The 10 biggest AI players now make up 41% of the total U.S. market cap. This is the exact same level that top tech stocks hit in 2000.
<h3>Weak Market Breadth</h3>
Breadth measures how many stocks are participating in a stock market move.&nbsp;
Currently, only 44% of S&amp;P 500 companies are trading above their 200-day moving average:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/Zqsbh7zaO07TEGyJVv4UD/444bd7a847d53538a3c466b6b58b835d/DR-issue-093026-5.jpg" alt="44% of S&amp;P 500 companies are trading above their 200-day moving average" width="540px" /> Source: <a href="https://x.com/Barchart/status/2104720867951350190">Barchart</a>
That&rsquo;s the worst since March 2026, just after the war with Iran began. As you can see on the chart, back in mid-August, 72% of companies were above their 200-day moving average.&nbsp;
And note how sharp the drop is in the chart above. That&rsquo;s just&hellip; ugly.&nbsp;
<h3>Opportunities Outside the S&amp;P 500</h3>
For the past 15 years, the S&amp;P has performed spectacularly. Largely due to the crazy-good performance from big tech and AI.
But the downside is that this index is now heavily weighted towards tech giants. If the AI train slows down, things could get ugly for the standard stock benchmark a while.&nbsp;
It&rsquo;s funny, because the S&amp;P 500 is supposed to provide diversification, and sometimes it does. Not today.&nbsp;
This trend has reinforced my belief that we should all own some companies outside the S&amp;P 500. And since S&amp;P 500 companies make up about 80% of the entire U.S. stock market, that really leaves only domestic small-mid caps and foreign stocks.&nbsp;
For example, there is only one single gold miner in the S&amp;P 500. That&rsquo;s Newmont (NEM), the world&rsquo;s largest precious metal miner. Great company, I own it.&nbsp;
But almost all the other big gold and silver miners are headquartered outside the U.S., so they can&rsquo;t be part of the S&amp;P. If you own the S&amp;P, you have almost zero exposure to gold miners.
Fortunately you can buy all the top gold miners by purchasing an ETF like the Vaneck Gold Miners ETF (GDX). Or you can follow the advice of experts like the ones we have here at Paradigm Press. Jim Rickards, Dan Amoss, Byron King, and Matt Badiali are all excellent at picking precious metals stocks.
<h3>Emerging Markets</h3>
Since U.S. tech has done so well over the past 15 years, many other asset classes have been forgotten. Emerging markets are one of them.&nbsp;
Long-time readers know I&rsquo;ve been extremely bullish on Brazil for the <a href="https://dailyreckoning.com/brazilian-stocks-offer-8-yields-at-8x-earnings/">past 18 months</a>. It&rsquo;s a commodity-heavy economy, trades at rock-bottom valuations, and everyone hated it up until about a year ago.&nbsp;
Buying Brazilian and other emerging market stocks is actual diversification for most investors. Buying the S&amp;P 500 today, however, is essentially a bet on AI.&nbsp;
Many investors believe they are getting broad diversification by buying the S&amp;P. But in today&rsquo;s conditions, they&rsquo;re not.&nbsp;
So if you&rsquo;re all-in on U.S. stocks, consider diversifying into the emerging market world a bit. A few funds I like include the Vanguard Emerging Market ETF (VWO), the iShares Brazil ETF (EWZ), or the Cambria Emerging Shareholder Yield ETF (EYLD).&nbsp;
If and when the AI trend slows down, having true diversification will pay huge dividends. That&rsquo;s what I&rsquo;m positioning for today.&nbsp;

DR-issue-093026-Featured

Frankenstein’s Bull-Bear Market

Is the Strait of Hormuz open or closed?
Depends who you ask.
Oil bears will tell you that oil is flowing through the Strait, back at 80-93% of pre-war levels. Here Bloomberg oil specialist Javier Blas says Gulf crude oil exports are back to 80% of normal:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4zR5KCZeZkL8ADXFyivZ3o/bbe91cc206d04d6c631f6a607e0e583e/dr-img1-09-28-26.jpg" alt="image 1" width="540px" />
Javier is a widely followed energy reporter. But he tends to operate from an &ldquo;everything&rsquo;s going to be alright&rdquo; perspective.
If Javier&rsquo;s data is correct, it means oil is flowing through Hormuz at high levels. Call me skeptical. But let&rsquo;s examine the evidence.
Here&rsquo;s what the Strait looks like currently. It is essentially divided into two paths. The northern route, controlled by Iran. And the southern (Oman) route, controlled by the U.S.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4Alguvxl0m4VlWHT9YZG0R/8559d6d95bf7b242eba04ac5c0612d63/dr-img2-09-28-26.jpg" alt="image 2" width="540px" />
Source: Financial Times
Ships passing through the southern Omani route are often escorted by U.S. fighter jets, which can shoot down and jam drones and missiles.
The Omani path has apparently been dredged out by U.S. forces, to make it passable for large tankers.
And surprisingly, it appears the U.S. soldiers are sometimes on board the tankers. <a href="https://x.com/NBCNews/status/2104531591192093139">NBC News</a> just reported:
<blockquote>
Eight U.S. Marines were injured two weeks ago when an Iranian cruise missile attacked the ship they were operating on in the Strait of Hormuz, according to three U.S. officials.
The Marines were not on a U.S. Navy ship, according to the officials. The officials declined to define what type of ship it was, instead referring to it as a maritime vessel.
</blockquote>
Importantly, it was not a U.S. Navy ship. And thankfully all 8 marines were able to return to duty.
But this is a big story. The timeline really jumps out: &ldquo;two weeks ago&rdquo;. Why is it just coming out now?
What role do U.S. soldiers have on a ship crossing the Strait of Hormuz? Are they the crew? Or just providing defense assistance? We don&rsquo;t know, and the details are sparse. But something&rsquo;s happening here.
<h2 class="centered subhead" style="text-align: center;">Information Wars</h2>
It is clear that more oil is sneaking through Hormuz than at the beginning of the war. But exactly how much is a hotly-debated matter.
Before the war, there was about 20 million barrels of oil per day flowing through this chokepoint. Today? I&rsquo;d guess 7 million, at most.
Some of that shortfall was being made up via Saudi Arabia&rsquo;s East-West pipeline, but that was hit by drones a few weeks ago, and is only now becoming operational again.
And we need to keep in mind that the newly-repaired pumping stations could be hit again at any moment.
The world&rsquo;s energy situation remains precarious. And at any time, the war could re-escalate. This is why I can&rsquo;t get on board with oil bears who are predicting $60 a barrel by the end of the year.
In order for me to get bearish on oil, I have to see a path to resolution to this conflict. And there&rsquo;s still nothing in sight.
<h2 class="centered subhead" style="text-align: center;">Iran Tells a Different Story</h2>
Iranian news agency Fars reported that over the weekend, Iran struck 19 ships in the Hormuz area with anti-ship missiles. At least one video of a burning ship in the area was posted, but the &ldquo;19 ships&rdquo; claim is unverified for now.
We&rsquo;ve <a href="https://dailyreckoning.com/iranian-missiles-target-the-petrodollar/">covered</a> Iran&rsquo;s anti-ship capabilities in detail before. This picture sums up their strategy:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1doEwKDIWx8UpS0sn1FVyH/5163a90978cae2b7e3c10fe4fa9fcab9/dr-img3-09-28-26.jpg" alt="image 3" width="540px" />
Source: <a href="https://nationalinterest.org/blog/buzz/not-netflix-iran-unveils-underground-missile-city-tv-180415">National Interest</a>
Thousands of anti-ship missiles, hidden in reinforced tunnels and underground bases across the coast. It&rsquo;s a very difficult challenge.
<h2 class="centered subhead" style="text-align: center;">Who&rsquo;s Right?</h2>
So who are we to believe? The oil bears, who say that Middle East exports are returning to normal, or the bulls who say it&rsquo;s not?
Personally, I continue to side with the skeptics. I&rsquo;m bullish on oil, and bearish on a resolution to this war anytime soon.
We don&rsquo;t have a good read on how much oil is actually getting out of the Middle East at this time.
Additionally, there are just so many ways the situation could go sideways from here. A few drone strikes, and the East-West pipeline goes down again. A few oil tankers struck, and ship owners may refuse to run the Strait.
Every time we hear about a deal &ldquo;just around the corner&rdquo;, it turns out to be <a href="https://dailyreckoning.com/the-iran-deal-deception/">another mirage</a>. So when the market continues to react to every supposed peace proposal, I just shrug.
I don&rsquo;t think Hormuz will return to normal traffic levels until we reach a deal with Iran. At the current pace, that&rsquo;s going to take a long while.
I worry that all the celebration over a miraculous recovery in oil shipments is premature. The data is far from clear.
So I&rsquo;m staying long oil for now. If that changes, you&rsquo;ll be the first to know.

dr-hero-img-09-28-26

The Strait Debate Gets Heated

In the hard asset world, gold miners hog the spotlight.
And for good reason. Precious metal stocks can be a great way for investors to hedge against inflation and monetary chaos. And during a bull market, they can soar like few other sectors.
But the mining world is more than just gold and silver. Today we&rsquo;re going to look at my favorite industrial metal miner. Long-time readers will recognize the name.
Yes, I still own gold and silver miners. But companies focused on &ldquo;boring&rdquo; industrial metals like iron tend to have steadier earnings. And they pay juicier dividends, too.
<h2 class="centered subhead" style="text-align: center;">Back to the VALE</h2>
In June of 2025, I wrote a piece titled <a href="https://dailyreckoning.com/8-yields-from-brazils-iron-giant/">8%+ Yields from Brazil&rsquo;s Iron Giant</a>.
In it, we covered Vale (NYSE: VALE), a highly profitable iron, copper, and nickel miner.
At the time, Vale was trading at $9.86. Iron ore prices were low, Brazilian stocks were in the dumps, and the company was still recovering from the 2019 <a href="https://en.wikipedia.org/wiki/Brumadinho_dam_disaster">Brumadinho dam disaster</a>. It was a horrible accident where a dam holding back mine tailings broke, killing more than 270 people, and causing widespread environmental damage.
But Vale is now at the tail end of paying for that disaster. Management has spent more than $4 billion shoring up dams, adding containment structures, and instituting better processes. They took responsibility for the accident, and it cost the company dearly. But the worst is now behind them.
We got lucky with the timing of our Vale writeup, because the stock rose from $9.86 in June 2025, to a peak of $17.94 in April 2026. That&rsquo;s a 81% gain, at the top. Plus about 7% in dividends.
But now, the stock has fallen back down to $13.65. And that looks like an excellent buying opportunity to me. I plan to add more next week.
Here&rsquo;s why&hellip;
<h2 class="centered subhead" style="text-align: center;">Irreplaceable Assets</h2>
Vale was founded in 1942 by the Brazilian government. Its purpose was simple: supply iron ore to the Allies fighting World War II.
America and its allies wanted access to Brazil&rsquo;s rich and pure iron. The low-phosphorous metal was needed to make high-grade steel for artillery, guns, tanks, and armor-piercing shells.
The iron ore deposit was indeed rich and pure, but the location was remote. They needed railways and other infrastructure to transport it. So the U.S. Export-Import Bank supplied $14 million in financing.
By the end of WW2, the company had only shipped a fraction of the desired ore.
But the foundation of a giant had been laid. A unique railway, a rich mine, and valuable ore.
Today, Vale operates two major railways which are essentially impossible to replicate. Building new rail projects is extremely difficult, and this could not be repeated in the modern world.
Vale operates a vast transportation network. 610 locomotives, 35,868 rail cars, and more than 1,200 miles of railroad. It doesn&rsquo;t have to pay exorbitant fees to the railway owner. It is the owner.
The company also owns massive ship terminals, piers, loaders, etc. It even owns a number of power plants to juice up its infrastructure.
And this is on top of its primary assets: rich mines, mineral concessions, and expertise.
I can&rsquo;t even imagine how much it would cost to build another Vale today. An unfathomable amount of money, and at least 30 years.
That&rsquo;s why I love this mining giant. It&rsquo;s irreplaceable.
<h2 class="centered subhead" style="text-align: center;">Long Haul Investment</h2>
I plan to own Vale for at least 10 years. Longer if things go well.
It&rsquo;s an ideal dividend-reinvestment stock. I auto-reinvest the dividends back into the stock automatically using a DRIP program (all brokers offer these). This allows for steady compounding.
The next 10 years is sure to be a chaotic period. Inflation, war, and debt crises.
In such an environment, I want to own a lot of hard assets. Companies with inflation-resistant assets, strong cash flow, and preferably big dividends.
Vale fits the bill nicely. It has the potential to be the biggest miner in the world one day.
In 2025, Vale CEO Gustavo Pimenta stated that the company &ldquo;has to be the biggest mining company in the world because we are sitting on the biggest mining endowment in the world.&rdquo;
That&rsquo;s the size of this opportunity. Here&rsquo;s to hoping they hit that target.

dr-hero-img-09-25-26

Buy the Dip in VALE

The U.S. economy relies heavily on AI for growth.
Today we&rsquo;re going to take a look at how it could all go wrong.
Goldman Sachs says roughly half of current S&amp;P earnings growth is due to the AI boom. Much of the rest is due to high spending from top earners, which is due to soaring stock prices.
So most growth flows back to AI, directly or indirectly.
At the heart of the boom is AI data centers. Absolutely massive projects that require tens or hundreds of billions of dollars to build.
These data centers are being paid for using&hellip; creative methods.
Let&rsquo;s look at Oracle&rsquo;s massive Jupiter data center in New Mexico. Well, technically Oracle (ORCL) will be the tenant. The owner/developer is a division of Blue Owl Capital (OWL), with financing from a bunch of banks.
Once the data center is up and running, Oracle plans to sell most of the computing power to ChatGPT developer OpenAI.
Here&rsquo;s a picture of the site from July:
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/5dOAqiRje8S9uwh7BIXciU/03195f2dfb082e699a07dfc00b37ac39/dr-img1-09-24-26.jpg" alt="image 1" width="540px" />
Source: <a href="https://www.oracle.com/news/announcement/project-jupiter-2026-07-28/">Oracle</a>
It&rsquo;s a massive site. 1,400 acres. 2.45 gigawatts of electricity (enough to power about 1.8 million American homes). The total cost is expected to reach $165 billion.
And as you can tell, it&rsquo;s located in a very dry desert. Which could be problematic, seeing how much water data centers require for cooling. But there are other problems to worry about before we get to the drought issue.
First, the site may open later than expected. They need a natural gas pipeline to power their Bloom Energy (BE) fuel cells, and it&rsquo;s been delayed and redirected multiple times.
The project is too large to connect to the local electrical grid, so they need to generate all their own power on site. That will require a new pipeline, and a ton of Bloom&rsquo;s fuel cell generators.
For Bloom Energy, it will be roughly 30x larger than any other installation. Can they scale up production in time? So there&rsquo;s delivery risk here, too.
The Jupiter data center complex was originally set to open in 2028. Now it looks like the gas pipeline may be further delayed. Local opposition to the project is growing.
There&rsquo;s a risk the site doesn&rsquo;t open on time. And if it doesn&rsquo;t, who pays for the delay? That&rsquo;s the heart of the issue.
<h2 class="centered subhead" style="text-align: center;">Force Majeure</h2>
Today, Oracle declared force majeure. This is a legal term that means something beyond their control is preventing them from fulfilling their contractual obligations.
In essence, they&rsquo;re saying that if the data center doesn&rsquo;t open on time, they don&rsquo;t want to pay rent.
<a href="https://finance.yahoo.com/markets/article/oracle-stock-drops-as-the-company-moves-to-shield-itself-from-costs-linked-to-controversial-data-center-133351264.html">Yahoo Finance</a>:
<blockquote>
Oracle is taking steps to limit its financial exposure to a massive data center planned for New Mexico as the project faces opposition and regulatory hurdles, according to a Bloomberg report.
The company has notified the project's developer, a unit of Blue Owl Capital (OWL), that it is invoking a force majeure provision, according to people familiar with the matter.
According to the report, Oracle is seeking to delay payments if the project, dubbed Project Jupiter, is delayed and the facility does not come online in 2028 as planned.
</blockquote>
It appears that Oracle is expecting significant delays at Jupiter. This may not sound like a huge deal, but it is. A big chunk of the economy depends on these data centers for growth and higher earnings.
Now, delays are popping up in data center projects around the country. There&rsquo;s not enough electricity or water. Getting the proper permits can take many years. And locals are pushing back hard in many areas.
What we&rsquo;re seeing today at the Jupiter site could happen at many other projects in the near future.
<h2 class="centered subhead" style="text-align: center;">Is Oracle the Canary?</h2>
In January of 2025, Oracle announced the Stargate program. A bold $500 billion plan to build gigantic data centers to fuel the AI boom. At first, shares soared higher.
But over the past year, Oracle shares are down about 55%.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4pZjeyGwQeouwtS7pGH4z7/e244776a205f927aeafddfd565b35a27/dr-img2-09-24-26.jpg" alt="image 2" width="540px" />
The stress is showing up in Oracle&rsquo;s debt and credit rating, too. <a href="https://www.ft.com/content/bd441859-6c94-4874-894f-9362c1703127?syn-25a6b1a6=1">Financial Times</a>:
<blockquote>
However, efforts to offload the debt to a broader group of investors have hit a wall due to concerns around Oracle&rsquo;s massive borrowing and declining creditworthiness. The debt secured a private investment-grade rating from credit rating agencies.
Oracle&rsquo;s corporate credit rating currently sits one notch above junk following a downgrade from S&amp;P in July. Banks were now forced to hold more Oracle-linked project debt on their balance sheets than initially planned, the people said.
</blockquote>
Oracle is a big company. The current market cap is $437 billion. They&rsquo;re all-in on data centers and AI.
Oracle has disclosed $288 billion of future lease commitments. That&rsquo;s why it&rsquo;s so important they declared force majeure today. What happens if there are more delays?
If they continue to struggle, the stress could spread to other hyperscalers. Widespread data center delays are possible, which would cause serious problems all the way up the chain.
All the data center hyperscalers (Microsoft, Google, Amazon, Oracle, Meta, SpaceX) are using similar unconventional financing (though not as aggressive as Oracle). They&rsquo;re doing it to keep most of the debt off their balance sheets, so that if something goes wrong, they won&rsquo;t be fully liable.
But all these big tech companies have plenty of exposure. They&rsquo;ve already committed to trillions of dollars in leases and equipment purchases.
If more data centers start to see delays, or even cancellations, that could signal the end of the party. It would affect the entire AI ecosystem. Semiconductors, hyperscalers, AI model leaders. Up and down.
We&rsquo;ll be keeping a close eye on this story. Much depends on the outcome.

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A Wrench in the Data Center Machine

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Articles by Adam Sharp