The AI Boom Has a Fatal Flaw

Summary

Jeff Currie, former Goldman Sachs global head of commodities research, argues that a commodity supercycle that started in 2020 is accelerating, driven by underinvestment, deglobalization, electrification, and fiat currency debasement. He recommends overweighting commodities via indices, precious metals, and capturing oil's backwardation, while warning that AI stocks are overvalued and energy equities are deeply undervalued.

• Currie sees a multi-year commodity supercycle beginning in October 2020, with supply-side 'revenge of the old economy' and three demand pillars: deglobalization, electrification, debasement.
• He advises a 3–10% portfolio allocation to commodities, with more during supercycles, and prefers products that preserve the scarcity premium/roll yield.
• Precious metals (gold, silver) are extremely bullish due to fiat currency debasement and central bank reserve dynamics.
• Oil offers attractive returns through backwardation and positive roll yield even if spot prices stay flat, highlighting a scarcity premium in products.
• Energy stocks are undervalued at only 3% of S&P 500 market cap and are expected to materially outperform as the supercycle re-rates old-economy assets.
• AI/technology stocks are overvalued relative to hard assets, and Currie suggests rotating out of them toward commodities and energy equities.