Bob Elliott

The author believes that after a recent speculative washout, the underlying bullish factors for gold, such as currency debasement, make it an attractive long position.

"The typical outperformers [in war environments] are gold and commodities... most investors are radically underweight war related assets." Geopolitical risks (specifically Iran/Middle East) are escalating. Portfolios are currently over-indexed to bonds (which suffer in war/inflation) and under-indexed to hard assets. Oil and broad commodities act as the necessary hedge. LONG. Strategic overweight required for diversification against conflict risk. Global recession crushing demand; peace treaties in the Middle East.

"The typical outperformers [in war environments] are gold and commodities... most investors are radically underweight war related assets." Geopolitical risks (specifically Iran/Middle East) are escalating. Portfolios are currently over-indexed to bonds (which suffer in war/inflation) and under-indexed to hard assets. Oil and broad commodities act as the necessary hedge. LONG. Strategic overweight required for diversification against conflict risk. Global recession crushing demand; peace treaties in the Middle East.

"Software companies are leeches to real economy businesses... to the extent that we have tools that basically make it more available for real economy companies to... wean themselves off of institutional software, they will accrue more profits." AI is not just a tech play; it is a margin expansion play for non-tech companies. As "Real Economy" (Industrials/Manufacturing) firms use AI agents to replace expensive B2B software contracts, their bottom lines will improve significantly. LONG. Betting on the users of AI technology rather than the software vendors. AI implementation costs proving higher than expected; economic slowdown reducing industrial output.

"In the Korean economy, you've had incredible earnings growth. You still have low PEs far lower than what you're seeing across much of the developed world." The US market is priced for perfection (US exceptionalism). Smart money is "de-dollarizing" by seeking value in foreign markets where earnings are growing but multiples haven't expanded yet. Korea is explicitly named as a prime example. LONG. A value rotation away from the US into high-growth, low-valuation emerging markets. Strengthening US Dollar (hurts emerging markets); global trade wars.

"In the Korean economy, you've had incredible earnings growth. You still have low PEs far lower than what you're seeing across much of the developed world." The US market is priced for perfection (US exceptionalism). Smart money is "de-dollarizing" by seeking value in foreign markets where earnings are growing but multiples haven't expanded yet. Korea is explicitly named as a prime example. LONG. A value rotation away from the US into high-growth, low-valuation emerging markets. Strengthening US Dollar (hurts emerging markets); global trade wars.

"What is clear is that there is going to be a radical investment in compute capacity, data centers, etc... the people who are providing the picks and shovels... are going to be winners." While software applications (SaaS) are at risk of disruption, the underlying infrastructure required to run AI (chips, hardware, data centers) has guaranteed demand regardless of which specific AI model wins. LONG. The safest way to play the AI boom is through the hardware infrastructure. Overbuilding of capacity leading to a cyclical downturn in semi demand.

"What is clear is that there is going to be a radical investment in compute capacity, data centers, etc... the people who are providing the picks and shovels... are going to be winners." While software applications (SaaS) are at risk of disruption, the underlying infrastructure required to run AI (chips, hardware, data centers) has guaranteed demand regardless of which specific AI model wins. LONG. The safest way to play the AI boom is through the hardware infrastructure. Overbuilding of capacity leading to a cyclical downturn in semi demand.

"Software companies are leeches to real economy businesses... to the extent that we have tools that basically make it more available for real economy companies to... wean themselves off of institutional software, they will accrue more profits." AI is not just a tech play; it is a margin expansion play for non-tech companies. As "Real Economy" (Industrials/Manufacturing) firms use AI agents to replace expensive B2B software contracts, their bottom lines will improve significantly. LONG. Betting on the users of AI technology rather than the software vendors. AI implementation costs proving higher than expected; economic slowdown reducing industrial output.