A sector full of nightmares and fairy tales

Matein Khald

I have been fascinated by the global commodities markets ever since I lost a semester’s tuition at Penn trading silver futures at EF Hutton. Family folklore tells me that my ancestral clan traded physical commodities in British India for generations and the Great Depression plus General Yamashita’s assault of Fortress Singapore devastated my paternal grandfather’s godown/inventory, though cousins in Paris and Dubai are still among the leading traders of ammonia, urea and rock phosphate in the Gulf. My own career has encompassed deal hunting for a natgas venture in West Siberia to surreal business trips to the ultimate frontier provinces of black gold like Angola, Nigeria, Azerbaijan and petrohub from Oslo to Houston and Aberdeen to Singapore.

A Wharton classmate who was the son of the late Saudi oil minister Sheikh A.Z. Yamani taught me about oil futures trading when the New York Merc first opened its West Texas crude, gasoline, heating oil and jet fuel contracts. The son of the legendary Haji Ashraf, the greatest gold dealer in the history of Dubai and COMEX, taught me about the intricacies of spread trading in the yellow metal. It is impossible to have a feel for commodities without a nervous system attuned to the pulse of global currencies, monetary policy, fund flows and geopolitics.

Lord Keynes said, teach a parrot to say supply and demand and you will make an economist out of him. I say give a Dubai kid a trading line and a Reuters screen (Bloomberg was to enter my life much later in New York) and you make a goldbug/FX junkie out of him. I learnt more about economics, terror (Dad paid the Ivy League tuition that was gutted with a margin call in silver short squeeze), psychology and risk in the futures pit than I ever learnt in any classroom.

My life has coincided with two tragic nuclear reactor meltdowns in Chernobyl and Fukushima, the horror in Japan that killed 18,000 people and led to dozens of reactor shutdowns in Japan and Germany as well as a brutal 10 year bear market in Uranium that saw spot prices plummet by 70% and many miners unable to produce. Yet Putin’s invasion of Ukraine and the clean energy revolution tells me that a new paradigm will change everything in this sector in the next three years.

Uranium is mined in some Godawful locales that include Russia, Western China, Kazakhstan and Uzbekistan. The world has 100+ nuclear plants to be constructed in the next three years guaranteeing a supply deficit that makes some miners potential five baggers or more. This sector is known for both nightmares and fairy tales in the twilight netherworld of Wall Street, so definitely not for widows, orphans and coupon clippers. Yet, as Bob Dylan once crooned, The times they are a-changin. It is tough to go gaga over a radioactive metal that helped destroy Hiroshima/Nagasaki in August 1945 and is coveted by all the world’s rogue regimes. Yet the world cannot decarbonize without nuclear energy either.

Also published on Medium.