Doomberg's Commodity Warning and Why You Should Stock Up on Canned Food

Commodity supply projects are capital-intensive, multi-year, low-return-on-capital undertakings; any economic uncertainty causes capital to freeze, preventing new supply from coming online when prices spike.

“the supply and demand doesn't get just get turned on with a switch these are actually asset intents low return on capital projects that require huge engineering and technology prowess to even pull off if you mix in the slightest of economic uncertainty capital freezes up”

Replacing coal-fired electricity plants with natural gas is environmentally better because natural gas burns cleaner, produces more electricity per unit of CO2 emissions, and has far fewer toxic byproducts, making it a rational intermediate step toward decarbonization rather than an endpoint.

“replacing coal-fired electricity plants with natural gas is better for the environment it burns cleaner you produce more electricity for the same amount of co2 emissions far less toxic byproducts”

Higher fertilizer costs force farmers to either reduce planting (cutting crop supply) or demand higher food prices; combined with supply chain disruptions, this threatens food security in emerging economies where food price inflation equals death for billions at the margin.

“if you're an american farmer who paid you know two hundred dollars for your fertilizer last spring and you budgeted 300 and the bill comes in at 12.50 maybe you're not going to buy fertilizer maybe you're going to plant less crop for sure your margins are going to get squeezed or food prices have to go up”

Natural gas price spikes in Europe (to $30+ per million BTU) destroy the economics of chemical manufacturers like BASF who operate on much lower costs; they will declare force majeure on supply contracts and cease production rather than operate at a loss.

“ask basf in germany what's it like to be sitting there with 30 per million btu natural gas and trying to be a chemical producer right”

Just-in-time supply chains were broken by pandemic lockdowns and subsequent inflation; corporations now must rebuild working capital and inventory buffers, which creates an additional deflationary impulse as businesses stockpile.

“we've written a lot about the just-in-time supply chain crisis and we do think that major corporations uh many have said it before it's almost a cliche now but from just in time to just in case uh does give an inflationary pulse as businesses rethink how much working capital they need to you know safely operate their facilities”

Once Sprott creates liquid trading opportunities and price discovery in uranium, the efficient market hypothesis suggests uranium will eventually be cheaper than it would have been in illiquid markets; Sprott is creating efficiency that lowers long-term prices.

“as people are able to hedge as people are able to um prepare for seasonality and free buy and things like that the efficient market hypothesis basically which is true you know um as at least this applied in this context is that in the long run sprott will make uranium cheaper than it would have been otherwise doesn't mean that it's going to be cheaper than it is today”

China responded to its energy crisis (driven by European LNG demand spike) by restricting phosphate exports to preserve domestic energy supply for manufacturing, illustrating how energy constraints cascade to other commodities and trigger nationalist supply-hoarding behavior.

“china responding to its energy crisis echo from europe decided to ban the exports of phosphates”

Managing constraints (identifying bottlenecks and optimizing around them) is the foundational principle of operations management in heavy industry; supply chain disruptions are constraints that amplify when growth or supply shocks occur, creating opportunities for traders who identify emerging constraints.

“you can't you have to manage your constraints and um you know if you're talking about huge billion dollar projects and suddenly you can't get copper that throws a wrench in the whole supply chain and so we look for arbitrage situations and we look for situations where growth and or supply shocks create new constraints that the market doesn't quite see”

Capital expenditures by oil and gas majors have increased slightly over last year but remain far below levels from the 2000s boom period; oil markets lack sufficient exploration and reserve replacement activity to support current production levels without drawing down existing reserves.

“if you look at the capital expenditures of the majors there they might be up slightly over last year but they're nowhere near where they were uh in the go-go days um josh um from bison research his last name is escaping me um he he's put out some pretty fascinating pieces uh of questioning whether opec's access supply does even exist”

Vancouver port disruptions (floods, railway damage to Canadian National) threaten global coking coal supply; coking coal is critical for steel production, and port delays are creating supply constraints and shipping backlogs that are being under-reported in mainstream media.

“we had the mudslide and the floods they have this um ongoing series of drenching rain these storms just seem to keep pouring in from the pacific canadian national is having a lot of trouble getting the railroad um rebuilt and people in the us might think that that's not a big deal but vancouver is a very important critical infrastructure port a lot of the world's coking coal seaborn coking coal comes there which feeds steel plants you know supply chains are tough but i saw there were more than a dozen coal ships out at sea waiting to be filled”

Three-Mile Island accident did not injure anyone; it catalyzed industry-wide adoption of much safer reactor designs, making modern nuclear power plants significantly safer than historical designs.

“the three-mile island accident which by the way didn't injure anybody that accident really spooked the industry and they went into overdrive on new safe designs”

Household prepping is insurance against supply chain disruption; just as households insure their homes against fire (unlikely), they should maintain 30-45 days of consumable inventory as insurance against supply shocks.

“i pay insurance on my home every year i've paid insurance in my home every year i've had one so have you at the end of the year when my house hasn't burned down i don't bemoan the fact that i paid that insurance bill right um and so why why wouldn't i happily pay my insurance well the the home is a physical entity it's an important one important asset on my balance sheet but so too is the health and well-being of my family”

When facing a choice between freezing (due to lack of natural gas) or burning coal (producing CO2), people choose to heat their homes; this practical human behavior breaks abstract environmental policy commitments.

“when you short the country of natural gas and you got a big giant pile of coal right there and your choice is i'm going to heat my house and kick out a few more molecules of co2 or i'm going to freeze the choice is easy”

A billion people on Earth lack sufficient energy access to enjoy reasonable lives; energy policy should begin from a 'human first' perspective that acknowledges this, rather than restricting supply based on ideology.

“there's you know a billion people on the planet that don't have access to a sufficient amount of energy to enjoy a reasonable life um and we're talking about restricting energy supply uh to um impact co2 emissions”

The fossil fuel industry is a critical input into virtually all goods and services produced globally; price spikes in natural gas snap through delicate supply chains and produce cascading failures in packaging, food preservation, transportation, and manufacturing.

“the fossil fuel industry the energy and gas sector as you would call it is also the key input into virtually everything that we see and use in our daily lives and we wrote a piece called where stuff comes from just to like show people that you know if you snap a whip uh on natural gas in europe that's going to snap through very delicate supply chains”

Nuclear waste disposal is a solved technical problem that can be safely managed (Yucca Mountain project), but remains an unsolved political problem due to Nevada senator Harry Reid's opposition; describing it as 'technical' is misleading.

“nuclear waste is a solved technical problem it can be done it's not a challenge it's political you don't want to do it in yucca mountain well you could do it in yucca mountain but you know harry reid was a senator from nevada and he put put that project on ice but don't tell me it's a technical problem”

Wind and solar are intermittent power sources that cannot serve as baseload power because the wind doesn't always blow and the sun doesn't always shine; successful grid operation requires baseload sources like natural gas, nuclear, or coal.

“they replace the nameplate capacity with intermittent power producing technologies like wind and solar which is great except they don't they're very poor uh base load power they're not baseball power they're intermittent power because the wind doesn't always blow and the sun doesn't always shine and uh natural gas and nuclear and coal are base load powers”

Putin effectively controls European natural gas prices due to his monopoly on pipeline supply; this geopolitical leverage is the most important factor determining European energy policy and prosperity in the near term.

“putin is the um is is the the fed chair for natural gas prices in europe and asia right”

Nuclear energy is demonized by environmentalists despite being the cleanest, safest, and most economical way to produce baseload electricity; Germany and California are closing nuclear plants at the very moment they face energy crises, demonstrating the failure of ideology over pragmatism.

“nuclear energy is very demonized by this very same people who proclaim to care about the planet and abating co2 emissions that there is no cleaner safer more economic way to produce the electricity that we americans enjoy in the world enjoys than through nuclear power and yet we are setting about the process of not only not building out nuclear energy here but letting existing nuclear energy facilities um go offline”

Europe's energy crisis was predictable and preventable because utilities had historically low storage heading into winter, relying on pipeline imports from Russia at the precise moment they were phasing out domestic fossil fuel production and replacing it with intermittent renewable power.

“it was all very predictable i was listening to podcasts in the summer where people were pointing out that they were heading into the fall with the least amount of storage they've ever had that this was going to be a huge crisis”

Doomberg comes from a heavy industry background with decades of combined experience among partners in a bespoke consulting firm; this industrial vantage point provides unique insight into commodity markets that differs from pure trading or financial analysis perspectives.

“in real life we run a bespoke consulting firm um the the partners in our firm all come from heavy industry and combined we have several decades of experience in the what people would call the commodity sector uh we write about markets we observe markets we're not traders and we don't give investment advice but we come at the markets from a technology science and you know managerial experience background in the real world”

Government SPR (Strategic Petroleum Reserve) releases are optical/political responses to commodity price pressures rather than genuine solutions to supply constraints; releasing reserves temporarily lowers prices but does not address underlying supply deficit.

“you know they're they're back in you know they're back on the uh control again right oil's falling they're saying hey you know what we might do more of an spr release right so it's really this whole trade for me”

Commodity market pricing sends real signals to entrepreneurs and producers about where arbitrage opportunities exist and where investment is needed; traders who understand these signals can position ahead of physical supply responses.

“it's really interesting that um you know how you say that the market is sending signals right like the the there are real signals now to entrepreneurs you know in the commodity space regarding these price differences that are happening in the arbitrage opportunities”

Plug-in hybrid electric vehicles are a superior transition technology compared to full battery electric vehicles because they consume fewer rare earth minerals (lithium, cobalt, nickel) per vehicle, reducing mining pressure and environmental impact during the EV transition.

“in the car space that you just talked about we think plug-in hybrids are a better transition technology because it uses less batteries which means you rely less on nickel copper lithium and all that the green metals as they're trying to relabel themselves for full battery electric vehicles”

Europe is in a geopolitically weak negotiating position with Russia ('poker with a seven-deuce offsuit vs Putin's pocket aces') and must hope for warm weather or face serious consequences including rolling blackouts, manufacturing shutdowns, and potentially the dissolution of the EU as nations pursue nationalist energy policies.

“germany still thinking it has cards to play they're sitting at the poker table with a seven deuce off suit um you know putin is sitting there with pocket aces and they go all in uh he's gonna call your bluff”

The Biden administration canceled the Keystone pipeline while simultaneously requesting OPEC to produce more oil, which is logically self-defeating because it cedes control over U.S. energy policy and therefore sovereignty to actors who are hostile or unreliable.

“we are going to seed the control over our energy policies and energy is life so we're going to concede control over our lives to people who don't like us and that's bonkers and we're already seeing the binding administration backtrack on it”

The combination of lockdown-driven deflation, fiscal stimulus, reopening inflation, and supply chain constraints creates a volatile cycle where each reopening produces worse inflation than the previous one, not temporary spikes.

“the original lockdown triggered a huge deflationary air pocket in the economy then our response to the opening of you know the combination of fiscal monetary response and then the reopening of the economy and the speed with which that happened created an inflationary pulse there's a huge debate as you know in the inflation deflation camp”