Monthly rollup | June 2025
- Jun 30
- 7 min read
Stocks Mentioned Apollo (APO), B2Gold (BTG), Eldorado Gold (EGO)
Highlights
June 11, 2025
As the commodity bull market progresses, resource-rich nations will attempt to move up the value chain and build downstream expertise.
As the multi-polar world continues to de-globalize and diplomatic relations fracture, countries will attempt to re-shore processing capacity for critical minerals.
Everyone knows the mining space is hot. The next trend: refining.
June 15, 2025
The South Pars field is shared between Qatar and Iran. An attack on this field makes Israel's Tamar and Leviathan gas fields vulnerable.
Now that everyone has priced in higher oil prices, the next trade is nat gas, LNG and fertilizers.
The Middle East (and Israel itself) is a low cost source of fertilizers due to abundance of nat gas. That supply is going to get squeezed.
June 17, 2025
Is the US Dollar going the way of the British Pound?
Going away on vacation helps me think through the bigger picture. A little history lesson to better understand what's happening with the dollar.
On November 18, 1967, UK PM Harold Wilson devalued the pound from $2.8 to $2.4 - a 14.3% single day drop.
The devaluation did not happen in a vacuum. It was entirely foreseeable.
The UK was struggling with a huge trade deficit plus a decrease in the global demand for the pound as a reserve currency. The Bank of England took out loans from the Fed, other central banks, and the IMF to prop up the pound, but market forces were too powerful and the BoE's intervention was doomed from the beginning.
Wilson bit the bullet and devalued the currency, but the pound continued to come under severe pressure.
By 1973, the BoE hiked interest rates to 11.5%, the housing market crashed, and the price of British Consols (perpetual bonds with no set maturity date) fell 70%.
It was still not enough to stop the bleed, and the UK resorted to more stringent capital controls.
Looking at the US situation today, it is hard to ignore the parallels.
The US is facing massive trade and fiscal deficits just as capital is fleeing the country and the dollar's role in international trade and central bank reserves is declining.
The Fed is under pressure to hike rates to curb inflation even as 7% mortgage rates have collapsed the housing market and bond yields are soaring.
The US situation is actually worse. The BoE borrowing dollars to prop up the pound is normal; the Fed borrowing Swiss Francs and Euros to prop up the world's reserve currency will cause panic.
The Fed's swap lines are intended to help other central banks. Tapping them to prevent dollar depreciation will only make foreigners dump their dollar reserves faster.
In other words, the Fed is fracked (and not in the good way pioneered by Mitchell Energy).
A run on the dollar appears inevitable, but keep in mind that the sterling crisis played out over a decade. This is a long-term macro trend, not a short-term trade.
June 20, 2025
Apollo (APO) just signed the largest GBP denominated private credit transaction on record. So much for the dollar milkshake theory.
How much worse can things get for the dollar? In 1978, Jimmy Carter had to raise debt in "hard currencies" like Swiss Francs and Deutschemarks when foreginers said nein to the dollar.
It can get that worse. Or beyond that.
June 21, 2025
In the 1980s, Norwegian billionaire John Fredriksen made bank by transporting Iranian crude during the Iran-Iraq war. Now, tanker owners are making bank transporting and storing Middle East crude.
Less refining = more crude exports. A win for countries like China and India.
Steer clear of US Treasuries
Tax day is over, and the US Treasury general account only has a balance of $384 billion. Interest on the national debt is $1.1 trillion.
4 months of interest payments is all it would take to make the Treasury broke. The Treasury needs to borrow $5 trillion to fund the fiscal deficit, and an additional $9 trillion to roll over debt maturing within the next 12 months.
The new debt will have a coupon rate of 5%+, which means interest payments on the new debt alone would be $700 billion+ a year.
Tax receipts were high in 2023 and 2024 due to the unusually buoyant stock market and wealth effect. The tariff-induced recession will bring down receipts, compounding the deficit problem.
While foreigners continue to buy US treasuries, the falling dollar and economic shocks like the ones felt by Taiwanese insurers and Japanese banks highlight the asset-liability mismatch facing foreign institutions.
Since 2008, the Fed has printed money to buy the debt, doing "whatever it takes" to keep the welfare-warfare state humming. But Powell doesn't like Trump and he doesn't want to go down in history as Jerome Burns for Trump's sake.
The Supreme Court doesn't like Trump either, given Trump's direct defiance of the judiciary, and won't let Trump fire Powell.
Other countries facing similar debt situations sold assets to raise cash.
India under Modi sold big stakes in state-owned enterprises to rein in the deficit. New Zealand in the 1980s fired government workers and opened up the economy. African nations borrowed from China in return for awarding infrastructure projects and mining licenses to Chinese firms.
Nations where the central bank was controlled by the government simply printed money and hyperinflated their way out of the debt. Some, like Argentina and Brazil, with external debt in foreign currencies, simply defaulted and dealt with the consequences.
These options aren't available to the United States of America.
Scott Bessent will have to keep increasing the coupon to raise the needed proceeds, while strategically employing buybacks to smoothen the yield curve and take the pressure off holders of off-the-run treasuries.
Bessent's job is actually getting more complicated by the admin's open hostility to the Fed. Bond vigilantes don't like to see in-fighting, and this will only make them demand a commensurate risk premium. The ratings downgrade couldn't come at a worse time.
By constantly attacking Powell, the Trump admin is scoring an own goal.
For global investors, the message is clear: steer clear of both the USD and USTs.
June 23, 2025
The last time Germany tried to bring gold home from the New York Fed, they faced a wait time of 2 years - their gold had been lent out to bullion banks during the last bear market (2012-15) and never repaid.
Everyone pretended as if the gold was still in the vault, until the repatriation order came in. Germany actually gave up and kept the pretense going.
With gold now in a raging bull market and it being obvious Trump changes his mind on a daily basis, the calls to empty out central banks' gold holdings at the NY Fed will only intensify.
The first movers will get their gold. As always, it pays to panic early.
June 25, 2025
Foreigners are selling dollars, Trump wants to print more
FOMC voting members Bowman and Waller are gunning for a rate cut next month, sending the Nasdaq higher, yields lower... and the dollar lower.
Why is the dollar lower? Because smart money isn't buying in to this.
Not only are foreigners selling US assets, they are taking the ball and going home. Hence, the dollar sell-off.
Forget the milkshake and pour yourself a beer. The dollar is done. The Plunge Protection Team cannot fight the market for too long - stocks are done too.
As for bonds? Let's see. Maybe the next FOMC rate cut vote will be 11-1, with Powell being the sole dissenter.
Remember, the Fed can always print unlimited money to prop up the bond market so taking a leaf from Powell, my bond call will be 'data dependent' i.e. dependent on money printer go brrr risk.
The New York Fed’s custody holdings of U.S. Treasuries and other assets have seen a significant decline. The holdings dropped by $17 billion last week and have plummeted by $48 billion since late March, coinciding with the onset of the trade tensions sparked by President Donald Trump‘s tariffs, reported Fortune.
June 27, 2025
When asked why he robbed banks, notorious bank robber Willie Sutton simply replied, “Because that's where the money is.”
From the new Mining Code in 2023 to issuing arrest warrants for mining executives over tax disputes to finally just expropriating assets, Mali has completed the transition to a no-go zone for Western capital.
This is why B2Gold (BTG) overpaid for Sabina Gold & Silver. They had no choice but to diversify. Same reason Eldorado Gold (EGO) bought Integra Gold in the previous cycle, after seeing the writing on the wall in Greece.
Riding a resource bull market isn't as easy as it looks. Avoiding pitfalls is a big part of the job.
Gold: Keep riding the trend
After an incredible run, a summer pause wouldn't be the worst thing. Gold is not a momentum asset but a long-term store of value. Going by recent history, bottoms are formed when the CCI drops just a bit below the current level.
If it drops $500, I'll simply covert my CHF to gold and be happy for the buying opportunity. $2800/oz gold won't last, IF it even happens.
There are all sorts of reasons to second guess a powerful uptrend. I ignore them all and focus on the trend and fundamentals.
June 29, 2025
Egypt went from being an LNG exporter to an LNG importer due to the war and recently signed contracts to procure $8 billion worth of LNG (160 cargoes).
If Israeli flows resume, that's a lot of cargoes which will be re-routed to the global market.
I didn't foresee this, but I did avoid buying stocks of LNG carriers when freight rates spiked.
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Good Trading!
Kashyap
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