Global Perspectives with AuAg
We have long said that central banks will cut rates because they must. That means they don’t have the control they seek to project; instead, they are forced to act to keep the financial system afloat. That Trump would push the process so hard from his side was somewhat unexpected, yet logical, as he wants to pursue expansionary policies and views the relatively high interest rates as a significant brake. It’s also the case that the costs of the United States’ growing debt are soaring and have become its largest line item. This, in turn, fuels the annual budget deficits around 6–7%, necessitating taking on even more debt to make the system function.
The problem is that confidence in the U.S., its central bank, and its governance could fall so low that cutting short rates won’t help. We will likely see some form of quantitative easing (QE) ahead. The trend is clear: rates are heading back toward zero, and Switzerland, for example, is already there.
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We see energy production as a key to success. Those who can produce the most energy will be the strongest in the future. Human progress has a very high correlation with our ability to generate energy. A major shift is underway in Sweden, where the policy is now more positive toward nuclear power. That view is further reinforced as the government removes the ban on uranium extraction. It’s genuinely positive that Sweden is becoming part of the solution for Europe.
However, when it comes to building new nuclear power plants, China is totally dominant. China is constructing 29 new reactors; after that, India, Egypt, Russia, and Turkey are building 18 new plants. The rest of the world combined amounts to 15.
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Rockets in space and missiles for national defence have often made the headlines over the past year. Funds investing in defence stocks have also performed well, as everyone recognises the trend of increased spending on defence and weaponry.
We see that, after the enormous need for metals for the large data centres being built and the capacity expansion in power grids, there is now a significant need for high-tech metals in both expanded investments in space rockets and all types of weapons. All these trends create demand for metals and their unique properties at levels we have never seen before.
We’ll close the monthly letter by reminding you to meet the entire AuAg team and the companies we are major shareholders (AyA, First Majestic, McEwen, GoGold) at Sweden’s major “mining event.” Let’s meet on 8–9 October in Stockholm. We have so much to look forward to during the rest of 2025!
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