When gold goes up too quickly, it makes me uncomfortable because it usually signals something else going on in society that will negatively impact the rest of my portfolio.

Doomberg

Doomberg, shares his nuanced, and at times, stark views on the current state of the global energy markets. The discussion, covering a wide array of topics from oil prices to the green energy transition, provides a sobering lens on what many deem to be one of the most critical issues of our time. Doomberg’s insights are particularly relevant for those in the mining and exploration sectors, where energy inputs and outputs are central to profitability and long-term success.

A Controlled Oil Market

Doomberg opened with a candid assessment of the oil market, describing it as a “managed market.” He pointed to OPEC’s efforts to maintain control over prices, stating that while many believe OPEC only works to keep prices high, they also have an interest in keeping oil within a defined range. “OPEC does not want $150 oil either,” he explained, “They’d like to keep it in the $70 to $90 range and closer to $90 if they can.”

Despite these efforts, Doomberg was clear that oil’s price trajectory is far from straightforward. Should oil prices dip below $70, he sees a significant risk of further declines, with $50 a potential floor. Yet, breaking through that $70 barrier would require either a significant loosening of OPEC’s discipline or a true economic recession in the United States, which Doomberg thinks the U.S. government will go to great lengths to avoid, at least before the next election.

Natural Gas: Abundant and Underappreciated

Moving to natural gas, Doomberg highlighted a persistent glut in the U.S. market, contrasting it with tighter supply conditions in Europe. “There’s still a glut in the U.S., and yet, overseas, we have relatively tight conditions driven by geopolitical risks, particularly with the war in Ukraine,” he said. However, he was quick to point out that this abundance, especially in North America, has kept natural gas prices low, benefitting industries that rely heavily on it. “We’re going to see a boom in data center construction using natural gas,” he predicted, referencing the energy-intensive demands of the tech sector.

Coal: Weather Dependent

Coal, another critical energy input for many industries, is also in an unusual position. Doomberg explained that China’s vast coal inventory and its weather-dependent energy mix can swing global markets. “China toggles between hydroelectricity and coal, depending on the weather, and that can be difficult to model as an investor.” While coal prices have remained flat, the potential for sudden shifts due to changing weather patterns adds an unpredictable layer to the equation.

Gold: Caution Despite the Run

On the topic of gold, Doomberg took a more philosophical tone. “I don’t trade gold,” he emphasized, “I save it.” For Doomberg, gold is not about capturing short-term price movements but rather about preserving wealth. He pointed to its recent price surge—up 25% since earlier in the year—as a signal of broader instability in the financial system. “When gold goes up too quickly, it makes me uncomfortable because it usually signals something else going on in society that will negatively impact the rest of my portfolio.”

Though he continues to hold a substantial position in gold, Doomberg was cautious at current price levels. “I wouldn’t be particularly bullish at this price point,” he warned, noting that such rapid price movements often precede a pullback.

Uranium: Bullish, but Watch the Risks

Uranium remains a key focus for investors eyeing the energy transition, but Doomberg offered a stark warning: “There’s a risk of a major nuclear incident in the Russia-Ukraine war.” While he acknowledges the bullish case for uranium, particularly with the global push towards nuclear power, he noted that geopolitical risks could quickly derail this narrative. “We are one major military shelling of a nuclear power plant away from another Fukushima,” he said, cautioning investors to factor this into their risk models.

The Green Energy Transition: More Rhetoric Than Reality?

Perhaps the most contentious part of the discussion centered around the so-called green energy transition. Doomberg was unequivocal in his skepticism. “Show me a price chart that says we will meaningfully undergo an energy transition,” he challenged, pointing to the fact that fossil fuels still account for 83% of global energy consumption. He was particularly dismissive of the idea that battery technology breakthroughs are just around the corner. “We’ve been three years away from solid-state batteries for at least four decades,” he quipped, highlighting the slow and incremental nature of progress in energy storage technologies.

Doomberg’s view is that much of the narrative surrounding green energy is driven by government spending rather than market realities. “The government is going to waste an enormous amount of money chasing these unicorns,” he said, emphasizing that while governments may pour cash into renewable energy projects, the underlying demand for oil, gas, and coal remains unchanged.

“Any oil or gas not burned in Europe or the U.S. will be burned somewhere,” he stated, underscoring the global nature of energy demand. For Doomberg, the green energy transition narrative is often more about optics than substance, especially when viewed against the backdrop of actual energy consumption patterns.

The Final Word: Caution in the Energy Markets

In summarizing his outlook on the energy markets, Doomberg remained cautious across the board. “We’re certainly not in anything remotely like an energy crisis anymore,” he said, pointing to abundant supplies in oil, gas, and coal. However, he also noted that geopolitical risks, particularly the war in Ukraine, could quickly change this calculus.

For investors, Doomberg’s message was clear: stay informed, be cautious, and don’t get caught up in the hype surrounding the energy transition. “Price is truth,” he concluded, “but even in a managed market like oil, that truth can be elusive.”

As the global energy landscape continues to evolve, Doomberg’s insights offer a valuable, grounded perspective for those in the mining and exploration sectors. Whether it’s oil, gas, coal, or uranium, the energy markets are far from settled, and investors would do well to proceed with caution.

In a world where governments and markets often seem to be working at cross-purposes, understanding the true dynamics at play is more critical than ever.

Doomberg Interview

This is a very brief summary of what was a lengthy interview. Don’t rely on this summary. Watch the full interview which is linked above.

Please note that this guest has not paid for the creation of this content. The Resource Talks interview rules are simple.
The companies, albeit paying or non-paying, get no questions upfront, no questions off the table, and no editing rights.

The information provided herein is general & impersonal in nature and meant for entertainment purposes only. The reader acknowledges and agrees that the information does not constitute a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy. The author is not a licensed investment advisor. He is just another talking head on the internet. He might own shares of companies mentioned in this publication. Always assume he doesn’t know much more than a potato does. The mining & exploration space is among the riskiest sectors to invest in. The risk of anything mentioned in this publication is 100% loss of capital. If you don’t read the official documents provided by the company on http://www.SedarPlus.ca, you will lose all of your money.