AI Shuts Down Without This Substance
AI Shuts Down Without This Substance
In the summer of 2024 — long before the mainstream caught on — we warned that AI was becoming “the monster that ate the power grid.”
In the summer of 2025, the Department of Energy issued a report warning of a 100X increase in the risk of rolling blackouts by 2030 if the grid couldn’t keep up with AI’s exploding power demands.
As midyear 2026 approaches, here’s what’s changed: not much.
Yes, the grid’s capacity is growing again after staying static from roughly 2011–2023. But it’s nowhere near enough to keep pace with the buildout of AI data centers, which are proliferating like rabbits.
Utilities in many parts of the country are warning that during episodes of extreme heat or cold, surging demand could overload their systems. (Great timing with an El Nino bearing down this summer…)
Today we’re delving into what could be the single-most profitable way to play the trend.
“We need copper to live a modern life,” Paradigm natural resources pro Matt Badiali reminds us.
“If you want the lights to come on when you flip the switch… you need copper. If you want to use ChatGPT or any other AI for that matter, you need more copper.”
The power grid runs on copper… and so do those data centers.
Lately copper prices have been hovering near all-time highs of $6.50 a pound. But don’t get the wrong idea. Matt says there’s much more upside from here.
That’s because he’s seen previous copper bull markets — like the one that began at the tail end of the 2008 financial crisis. Here’s a chart of the giant copper producer Freeport-McMoRan (FCX) along with the spot price of copper and the S&P 500.
“Coming out of the crash,” says Matt, “Freeport’s shares ran 400% from January 2009 to January 2011. The price of copper exploded 225% higher.”
How does that compare with now? Take a look…
“Freeport’s shares didn’t start to rally until the lows in April 2025,” says Matt. “Since then, they rose about 130%... well below the performance from 2009. And copper prices are only up about 45%...
“That leaves us plenty of room for bigger gains.
“And even if the copper prices stop rising for now, copper producers are about to generate massive cash flows,” Matt goes on. “This will be the start of a massive round of consolidation, exploration and development.
“And it won’t be enough.
“It takes nearly two decades to take a copper discovery to production. And thanks to nearly a decade of underinvestment from 2012–2023, there have been far too few new discoveries.
“According to the analysts at S&P Global, new discoveries fell 90% since 1990. Since 2021, only six discoveries meet the ‘major discovery’ criteria. And all the new production scheduled to come online between now and 2030 will only cover about 80% of expected demand.”
As with gold miners, there are copper miners that fall under the category of “majors” and “juniors.” The majors are the big operators, and the safer bet for steady gains. The juniors carry more risk — but also more upside.
For majors, Matt says look at the Sprott Copper Miners ETF (COPP)... and for juniors, the Sprott Junior Copper Miners ETF (COPJ).
Matt’s bottom line: “If you don’t have exposure to copper yet, you should get some now.”
Peace Slipping Away Already?
U.S. oil futures are up modestly: If peace was at hand yesterday between Washington and Tehran, it’s slipping away some today.
In the near term, the problem is Lebanon.
This should come as no surprise if you’ve been keeping up with our daily missives — but Iran’s military is underscoring its red lines in a new statement warning of a “harsh response” if Israel doesn’t halt its ongoing assault on Lebanon.
On Monday a senior Trump administration official said Israeli withdrawal from Lebanon is not a condition of the U.S.-Iran agreement.
Today, Bloomberg published what it says is a text of the deal — it still hasn’t been officially released by either side — and it calls on both sides “together with their allies” to declare an “immediate and permanent end to the war on all fronts, including Lebanon.”
Meanwhile, Donald Trump said the agreement is “not final.”
“It’s a memorandum of understanding, and if I don’t like it, we’ll go back to shooting at them, dropping bombs on their heads.”
He didn’t make clear whether that means the tentative deal is still subject to change… or whether he was referring to the 60 days of talks that are supposed to follow the signing ceremony for the tentative deal on Friday.
Whatever the case, he’s clearly feeling the heat from his supporters: The president is “facing a backlash,” says the Financial Times. “Tehran Accord Draws Doubts From Hawks” is the headline on The Wall Street Journal’s front page.
Because God forbid he do anything to displease Mark Levin and Laura Loomer.
“I lean to the conclusion that the U.S. has no intention whatsoever to abide by the terms Iran is dictating,” tweets the military analyst Will Schryver.
“They just don’t know what else to do at the moment. So they’re buying themselves a few days to ponder the problem.”
But let’s say the follow-on talks proceed for 60 days starting Friday, as advertised. Then what?
“I find it hard to believe that the discussions will lead to anything,” writes “Bernhard,” the mysterious and often-perceptive analyst behind the Moon of Alabama site.
“It is difficult to foresee what will follow in September after they fail. Trump will not want to bomb Iran just two months before the midterm elections. Iran will be reluctant to again block the Strait of Hormuz. That makes it likely that the conflict will stay unresolved and continue to simmer.”
Amid this backdrop, U.S. oil futures sit at $77.71 — up more than 2% from yesterday’s three-month lows.
It being Wednesday the Energy Department has released its weekly inventory figures. For the week ended last Friday, 17.2 million barrels of crude were drawn from U.S. stockpiles. That’s both private-sector inventories plus the government’s Strategic Petroleum Reserve.
In other words, 2.2% of the entire inventory of crude oil in this country was taken out of storage in a single week.
As Big Oil executives emphasized last month, it’s this record drawdown of inventories that’s helping suppress the oil price.
The problem is that we’re approaching “tank bottoms” soon… and it’s going to take weeks to reopen the Strait of Hormuz even if the tentative U.S.-Iran deal goes through.
The New Guy at the Fed
The stock market is treading water ahead of the Federal Reserve’s next announcement — the first under new chair Kevin Warsh.
It’s due for 2:00 p.m. EDT. On the one hand, it will be no surprise: The Fed will stand pat, keeping the benchmark fed funds rate steady at 3.75% — where it’s been for the last six months. The Fed rarely delivers surprises with its scheduled proclamations; the decision is telegraphed days if not weeks in advance.
You might think the Fed is inclined to raise interest rates in light of the soaring inflation rate — from 2.4% in January to 4.2% in May.
But our Jim Rickards says Warsh and a majority of the Fed’s Open Market Committee expect the inflation rate to ease — now that some sort of U.S.-Iran deal is (supposed to be) in the offing and energy prices will (presumably) climb down.
“If oil prices had remained at $100 per barrel or higher, the Fed would likely raise rates. No one expects the Fed to cut rates. With oil prices falling sharply, the best course for the Fed is to do nothing.
“There may be some dissent by FOMC members who want the Fed to raise rates. But most of the FOMC will support Warsh in holding rates steady for now.”
On the other hand… once the announcement is made, Warsh will hold his first press conference as chair.
He’s an unknown quantity. Traders will be watching closely for every wave of the hand and every pause for the right word, in hopes of divining Warsh’s intentions for the next FOMC meeting at the end of July. And probably the three additional meetings before year-end.
Any surprise could take markets for a ride, one way or another. Jim Rickards will join us tomorrow for a full breakdown.
For the moment, the S&P 500 is flat — just over 7,500. The Nasdaq is slightly in the red, the Dow slightly in the green. SpaceX is down 5.5% and back below $200 a share.
➢ One economic number of note: Retail sales jumped 0.9% last month, a number so high that no one among dozens of Wall Street economists saw it coming. Of course the number was skewed by rising gasoline prices. Worse, as we can’t emphasize enough, these figures are not inflation-adjusted. If you take inflation into account, U.S. retail sales have been pancake-flat for five years.
When AI Makes Stuff up, Continued
Go figure: A major consulting firm has been called out for a report about how companies use AI. Seems many of the examples were… made up by AI.
From the Financial Times…
A KPMG report on how AI is being used by businesses across the world exaggerated adoption of the technology with bogus case studies that appear to have been based on AI hallucinations.
The October report, “Redefining Excellence in the Age of Agentic AI,” made numerous false claims about the use of AI by organizations including the Swiss bank UBS, the U.K.’s National Health Service and the public transit groups Swiss Federal Railways and Transport for London
The report said UBS “integrates AI agents across investment advisory, risk management and compliance monitoring… These agents operate within a composable platform co-developed with Microsoft, enabling personalized, efficient and compliant financial journeys.”
I mean, c’mon, the language sounds as if it’s AI-generated too, right? (Not that consulting firms are known for their sterling prose, but still…)
The hallucinated examples were first spotted by a research group called GPTZero — which called out another report last month by the consulting firm EY (formerly Ernst & Young).
GPTZero’s CEO Edward Tian says these errors “poison the well of information.” Gee, ya think?
Mailbag: European Visitors Paid to Post?
After we took note last Friday of all the foreigners visiting the United States for the World Cup, expressing wonder at the sights of this vast land, we heard from a skeptical reader.
“I strongly suspect that these ‘Europeans’ who have shown up en masse are paid actors.
“They all seem to be reading from the same script: They all profess an amazement at Buc-ee’s Beaver Nuggets, enormous quantities of smoked meats, clean bathrooms, the Waffle House and twerking cheerleaders.
“I believe that the former football (real American football) player J.J. Watt is behind this. He has admitted to bankrolling ‘Freddy’ the German ‘tourist’ who started this narrative. I believe they are being paid to promote good old-fashioned American values, since, let’s face it, our national mood is in the ****ter.
“I hope you can see past this psyop.”
Dave responds: Thanks for bursting your editor’s bubble. Apparently at least one podcaster and some other observers on social media are one-upping you — suggesting the U.S. government is behind it all.
Come to think of it… it is a little suspicious in light of all the stories about how foreign tourism to the United States has dropped like a rock since the start of Trump’s second term… to say nothing of the stories this spring about disappointing numbers of hotel bookings in the World Cup venue cities.
But doggone it, it’s still fun to see America through the eyes of “Freddy” — astonished just sitting in the stands at Jordan-Hare Stadium on the Auburn University campus and thinking, The European mind cannot comprehend this.
