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Commodities Companies: Oil and gas producers, gold, copper and silver miners and bulk agriculture producers tend to rise and fall in value along with the price of the commodities they produce. Some people refer them to “mean reverting value" or "commodity stocks”. In the oil business – it's referred to “boom and bust cycles”. When a boom occurs in a commodity price, the market normally responds with oil companies drilling more wells and investing in the oil infrastructure to boost production capacity. If this then overshoots demand, oil or gas prices start to rapidly decline in response. As more projects start up, costs rise as shortages of equipment and skilled people hit the industry. This eats into profits and reduces efficiency – but the price can be so high that huge profits can still be made. But if very large profits are made, host governments often increase their taxation – they take a large slice of the pie. So even in boom times, western oil producers often have high but disappointing profits. Add to this the OPEC cartel that sets production supply for the OPEC countries – around 32 million bbls of the 97 million produced in the world, then its always difficult to predict whether prices will rise or drop. OPEC remains a legal cartel 0 about the only legal cartel in the world because output is set by the Oil Ministers of the respective countries that join OPEC - with support from Russia that is not formally joined up to OPEC. Because this commodities market is of course manipulated by OPEC - this makes prediction the oil price based on simple supply and demand dynamics even more difficult.

Gold and Silver: Now let’s switch to gold and silver producers. A similar story takes place in this industry. It's difficult to predict gold prices. They tend to drop when interest rates rise – because savers get a more decent rate for their idle cash. But when the currency printers are going at full blast and interest rates are very low – gold prices tend to rise sharply. But despite the gigantic currency printing and ultra-low interest rates – gold prices have only risen from £1350/ounce to $1800/ounce – pretty meagre considering the circumstances. The other times gold often rises is when there is a massive deflationary panic period – but gold actually dropped in March 2020 at the height of the COVID-19 panic – presumably people were forced or elected to liquidate assets in desperation – and gold was one of them, along with Bitcoin.

Digital Gold vs Gold: Most gold miners have mining processing costs of $800-1100/ounce – so with gold at $1800/ounce returns are good and activity has stepped up. Gold production should rise, but as it does – if demand does not increase – prices could actually drop. The other angle to gold these days is that many people believe that Bitcoin is eating away at golds overall $10 Trillion market value – as a "digital safe haven" store of wealth. People call Bitcoin “digital gold”. This investment angle is not likely to go away – most likely it will get more significant. The upside is investing in high quality gold miners that prosper when gold prices rise – or rocket one day. But investors have been waiting for years to seek out high returns in the gold mining business – most small gold miners destroy value. The largest have large market caps already – and might rise faster than the gold price but they have not given stellar returns like many of the high tech companies like Amazon, Tesla, Facebook, Twitter, Google or Apple. The largest gold miners have a tenth of the market cap compared to these giant players – and frankly people would laugh if you ever suggested a gold miner could get to $1 Trillion value like most of these 6 companies have.

In Summary – gold prices are likely to rise as currency printing continues and fiat debasement continues with it – as a hedge against serious inflation. But just for example – on 13 July 2021 – the Fed advised inflation was 5.4% - another shocking month, but the gold price did not budge from $1810/ounce.

Metals – Copper, Nickel, Tin and Rare Earths: Metal prices such as copper and nickel tend to rise far higher when the economies are booming and crash down when there is a major recession or slow down in economic growth. Fiat currency printing tends to stimulate commodity prices – like oil, gold and copper as well. However, we have some interesting conditions for copper, tin, silver, nickel and rare earth prices at the moment because of the combined massive monetary stimulus and the start of what many people believe is a super cycle of growth cause by the electrification of so many things – electric vehicles, solar, wind and the renewables boom. Below is handy table showing which metals are required for which renewable energy business. For sure, - wind, solar and electric cars are going to boom – so if you invest in the successful miners that supply the batteries and electric cables with raw materials – its likely to be a lucrative investment. Its certainly worth researching.

High Technology: Finally – we want to describe how these industrial sectors compare with the technology sector. Below are some example of technology sub-sectors that have seen gigantic growth in the last 20 years:

• Crypto Assets – Bitcoin, Ethereum
• Artificial Intelligence – Tesla, Google
• Data Analytics and Cloud Computing – Google, Amazon, Microsoft
• Social Media – Facebook, Twitter, Instagram, TikTok
• Retail Internet Shopping – ebay, Amazon
• iPhones and Apps – Apple, Samsung
• Quantum Computing
• Gnome-DNA Biotech
• Electric Cars – Tesla, Nio, VW
• Energy storage-Batteries
• Renewable Energy – solar, wind, hydrogen - Dong, RWE, ITM Power

Adoption Curve: These technology companies tend to start small with early adoption, then they hit the 8-10% adoption curve then go ballistic in sales, adoption and market penetration. For example, Crypto Asset adoption globally is around 6% - its just about to hit the sweat spot of 8-10% when there is exponential growth. Electric cars are the same – overall adoption globally is around 6% - with some countries running at 25% (Norway) whist many African countries are down at the 0-5%. Electric cars are about to hit their sweat spot. This is also true of solar power and wind power. This is one reason why we are so bullish on mining of copper, nickel, tin and rare earths – all required to produce renewable energy and electric cars and batteries.

Breakthrough: When a technology starts to break out into the high growth adoption – it normally goes from 105 to 70% global adoption with 5-8 years. This is when fortunes are made. But if there are ten companies vying for stop spot, normally one of them gets hold of say 40-50% market share because they have the best technology, platform and network – then they crush the opposition. Examples are Apple, Facebook, Amazon, Google – the so call FANG stocks. So the big question for all investors is – can you spot the next FANG stock to invest in. If you spot it early and hold onto it – you will make huge profits. For examples, you might bet on Nio – which is a successful Chinese electric car manufacturer - it could be huge one day. Many Americans are investing in Telsa – because they think they could dominate electric car manufacturing. In Europe – people often invest in Volkswagen because they believe in their long term electric vehicle manufacturing strategy.

So we hope we have give you a summary about why commodities tend to go in cycles that are mean reverting – whilst technology companies often go meteoric in growth and continue to boom as adoption increased from 10 to 90% - with the most dominant company often destroying most of the competition – getting 50% or more market share like Amazon, Google, Apple and Facebook.