Bushels 🌾 Barrels 🛢 & Bullion 💰

A commodity fund manager’s burner account. “Bulls make money, bears make money, pigs get slaughtered”

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

America Celebrates 250 years (and the end of Pax Americana)

This note is about the US and the implications of another war in the Middle East, but first, some history:

In 1956, Britain and France conspired with Israel to seize the Suez Canal from Egypt’s Nasser. It was a classic imperial move, the kind that had worked for a century. Except this time, Eisenhower said no. He threatened to dump U.S. holdings of sterling on the open market, which would have collapsed the pound overnight. Britain folded within days. France folded with it. That moment, more than any other, marks the true end of British imperial primacy. Not the World Wars, not the independence movements, not the Commonwealth. The moment a U.S. president made a phone call and the pound buckled. Reserve currency status doesn’t just reflect economic power. It is economic power, and when it goes, everything goes with it.

It is also worth noting the bitter irony that in 1956 it was Israel’s adventurism that helped expose the limits of British power and accelerate the pound’s decline. History has a way of rhyming.

The pound’s vulnerability at Suez didn’t emerge overnight. It had been building for decades, through two world wars that bled Britain fiscally dry, through the steady accumulation of the world’s gold by the United States, and through the slow recognition that the guarantor of global trade had changed addresses.

Bretton Woods in 1944 formalized what was already true: the dollar was now the anchor of the global monetary system, convertible to gold at $35 an ounce, with every other currency pegged to it. It was an elegant system. It was also a system that required the United States to run perpetual trade surpluses and maintain fiscal discipline, neither of which proved politically sustainable.

By the late 1960s the U.S. was spending heavily on Vietnam and the Great Society simultaneously, and foreign central banks, led by a deeply skeptical De Gaulle, began converting their dollar reserves into gold at an accelerating pace. France literally sent warships to New York to bring gold home. On August 15, 1971, Nixon closed the gold window. The dollar would no longer be convertible. Bretton Woods was dead.

What replaced it was Kissinger’s deal: the petrodollar. The deal struck with Saudi Arabia in 1973 and 1974 was simple and profound. Oil would be priced exclusively in dollars. In exchange, the U.S. would provide security guarantees to the Gulf monarchies. You want energy, you need dollars. You need dollars, you hold Treasuries. You hold Treasuries, you finance American deficits.

The gold standard was replaced not with nothing, but with oil and aircraft carriers. It worked because it rested on one non-negotiable guarantee: America would secure global trade routes, keep the sea lanes open, and ensure the free flow of energy to allies and adversaries alike. The Strait of Hormuz. The South China Sea. The Red Sea. These were never just geography. They were the load-bearing walls of the entire dollar architecture. And this is the thing people consistently fail to appreciate: commodities and geopolitics have always been linked. Most wars throughout history are, at their core, about securing access to resources. Energy. Grain. Metals. The players change. The underlying logic never does.

Fast-forward to February 2022. Russia invades Ukraine. The U.S. and Europe respond by freezing $300 billion in Russian sovereign reserves. Swift expulsion and asset seizures. Just like that, we answered a question every central bank on earth had been too polite to ask out loud: what happens if America decides your dollar reserves are no longer yours?

Biden gave them the answer. Loudly. This was not just a sanctions regime. This was a fundamental break in the trust architecture that underpins reserve currency status. The dollar’s value as a reserve asset was always partly about neutrality, the assumption that it was beyond politics. We torched that assumption. Every non-Western central bank quietly updated its threat model that week. If it can happen to Russia, it can happen to anyone who finds themselves on the wrong side of Washington.

Subsequent uses of financial sanctions against various actors only compounded the damage, each one further eroding the perception that the dollar was a neutral settlement medium rather than a political weapon.

The de-dollarization trend and the de-globalization trend are not separate stories. They are the same story. When the guarantee of free trade breaks down, countries retrench. When the reserve currency gets weaponized, countries diversify. When the hegemon’s will to enforce the rules-based order wavers, everyone starts making contingency plans. We are now deep inside that dynamic.

The Houthis have been attacking commercial shipping in the Red Sea for over a year. Iranian proxies armed with Iranian-supplied missiles. The U.S. response has been airstrikes that changed nothing. Global shipping rerouted around the Cape of Good Hope, adding weeks and billions in costs.

The Strait of Hormuz carries roughly 1/5 of the world’s petroleum liquids and it is now de facto under the control of the IRGC.

When asked about it, the current U.S. administration has been explicit: that’s other countries’ problem. Let that sink in. The Strait of Hormuz, the single most important chokepoint in the entire petrodollar architecture, the physical artery through which the dollar’s claim to reserve status is literally pumped, and the position of the United States government is a shrug. If the U.S. cannot credibly guarantee the Strait stays open, the petrodollar system loses its central physical premise. You cannot price oil in dollars if you cannot guarantee the oil moves.

At the same time, Trump has made clear he wants to withdraw from NATO commitments, remove troops from Germany, and generally signal that the American security umbrella is no longer a given but a transaction. NATO without credible U.S. commitment is just a bureaucracy.

U.S. troops in Germany are not just a tripwire against Russian aggression, they are the physical embodiment of the guarantee that underwrites European confidence in dollar-denominated trade and finance. Remove them and you don’t just weaken European security. You weaken the entire signaling architecture that tells the world the American system is worth buying into.

Meanwhile in the Pacific, the U.S. has drawn down defensive assets across Southeast Asia, leaving Taiwan and Japan increasingly exposed at precisely the moment China is conducting its most aggressive military posturing in decades. Every ally in the region is asking the same question Europe is asking: is the guarantee real? And they are all beginning to arrive at the same uncomfortable answer.

Meanwhile we are signaling to Europe and to Ukraine that support has a political price and an expiration date. Every one of those signals is read by every finance ministry and central bank on the planet. The question they are all asking is whether the guarantee is real. The answer is becoming less clear by the month.

Here is what makes this moment uniquely dangerous and what most mainstream commentary refuses to confront directly. The United States government has, to a degree without modern precedent, allowed its foreign policy in the Middle East to be effectively captured by a foreign government.

The unconditional support for Israel, regardless of the conduct of its military operations, regardless of the cost in American credibility, regardless of the alienation of Arab partners whose cooperation the petrodollar system literally depends upon, has gutted America’s ability to act as a neutral and trusted arbiter of global order. And, to be clear, I am not arguing that American interventionism is the right path forward. But unconditional support of Israel, executed recklessly, is absolutely disastrous.

Eisenhower could call Britain and France off Suez in 1956 because the world believed America was acting in the interest of global stability rather than a particular ally. That credibility is gone. When the U.S. vetoes ceasefire resolutions at the UN while simultaneously claiming to be the guarantor of a rules-based international order, the cognitive dissonance is not lost on the Global South, on Arab oil producers, or on the central banks quietly reducing their Treasury holdings. A hegemon that cannot be trusted to act with even a semblance of neutrality is not a hegemon. It is an Israeli puppet. And puppets do not get to set the terms of global finance.

So what fills the void? Not the yuan. Not yet, anyways. China’s capital account is closed. There is no deep, liquid, freely convertible yuan bond market for the world to park reserves in. The yuan cannot replace the dollar for the same reasons the dollar couldn’t have replaced the pound in 1930, the institutional architecture doesn’t exist yet, and China is not trusted. You don’t replace a weaponized reserve currency with someone else’s weaponized reserve currency.

But here is where it gets interesting: countries that want to transact with each other in oil, in commodities, in bilateral trade, don’t need a reserve currency. They need a settlement medium. And gold, the asset with no counterparty, no issuer, no sanctions risk, is reemerging as exactly that. Central bank gold demand has hit multi-decade highs three years running. Russia and China conduct the overwhelming majority of their bilateral trade in national currencies supplemented by gold reserves. The BRICS have advanced a hybrid digital settlement mechanism backed by physical gold, now in pilot phases for cross-border transactions. India, the Gulf states, and much of the Global South have followed suit in various degrees. This is not theoretical. It is happening. Gold makes structural sense in a fragmented world because it cannot be frozen, it cannot be sanctioned, and it has no political allegiance. It is the asset that sits outside the system, which is precisely why every nation building a parallel financial architecture is accumulating it. The 1970s swap of gold for oil as the dollar’s backing was always a political arrangement. We are watching its reversal in slow motion.

Here is the strategic reality the West refuses to say out loud: Russia, China, and Iran understand supply chain vulnerabilities in ways that Western governments, captured by short-term political cycles and decades of globalization orthodoxy, have consistently failed to. China has spent 20 years building commodity self-sufficiency. Domestic rare earth processing. Long-term oil contracts with Russia, Iran, and Saudi Arabia priced outside the dollar. Port infrastructure from Djibouti to Pakistan to Sri Lanka. Control over the processing of the critical minerals, lithium, cobalt, rare earths, that every advanced weapons system and clean energy technology depends upon. The Belt and Road isn’t an aid program. It’s a parallel trade and settlement architecture being built in plain sight. Russia, despite sanctions, has reoriented its entire commodity export infrastructure eastward and built payment systems that bypass Swift entirely. Iran has spent decades developing asymmetric capabilities specifically designed to threaten the chokepoints the petrodollar depends on. These are not accidents. These are strategies. Coherent, long-horizon, supply-chain-aware strategies pursued by adversaries who understood that the real battlefield was always logistics and monetary architecture, not just military hardware.

And here is the painful corollary: the United States’ ability to respond militarily or industrially to a major conflict is far more constrained than the public appreciates. Decades of offshoring have hollowed out the defense industrial base. Shipbuilding capacity is a fraction of what it was in World War II. Ammunition production, exposed dramatically by the Ukraine war, is running well below what sustained high-intensity conflict would require. And critically, the United States is dependent on China for the processing of the rare earth minerals and critical materials that go into precision munitions, electronics, and advanced weapons platforms. We have, with remarkable lack of foresight, handed our primary strategic adversary leverage over our ability to rearm. If a serious conflict erupts in the Taiwan Strait or the Persian Gulf, the supply chain constraints on the U.S. military response would become visible very quickly, and that visibility itself would be destabilizing in ways that are difficult to fully model.

Now layer on the fiscal reality. The United States is running deficits in excess of $1.8 trillion annually, carrying over $36 trillion in total debt, with interest payments now exceeding the entire defense budget. The Iraq War cost an estimated $2 to $3 trillion over two decades. A serious military confrontation in the Persian Gulf or Taiwan Strait, against a near-peer adversary with the capability to sink carrier groups and disrupt satellite communications, would cost multiples of that, and would need to be financed at interest rates far above the near-zero environment that made the post-2008 debt accumulation painless. There is no fiscal headroom for another generational war. The bond market knows this. Foreign central banks know this. And adversaries who have studied American fiscal trajectories know this too.

The drive toward de-globalization flows from the same source as de-dollarization, as countries unwilling to depend on American guarantees that seem less ironclad than before race to onshore supply chains, secure friendly energy sources, and develop parallel payment rails. China and its partners embraced this with characteristic foresight. The West, still deeply integrated into just-in-time global networks and politically unable to have honest conversations about strategic dependency, is playing catch-up. We are way behind. And we are distracted.

2026 is the 250th anniversary of the United States. This moment may well be remembered not as a celebration of enduring liberty but as the year the long arc of American hegemony reached its visible inflection point.

Previous reserve currency transitions followed a consistent pattern: military overextension, fiscal deterioration, loss of trade route control, erosion of allied trust, and the emergence of a credible alternative architecture. Check, check, check, check, and check.

The American empire was always an empire of systems, financial, military, institutional. Its genius was making those systems feel like global public goods rather than instruments of U.S. power. Free trade. Dollar liquidity. Security guarantees. For a long time they were both. When you start weaponizing the systems, when you subordinate them to the interests of a single foreign ally, when you shrug at the Strait of Hormuz and pull troops from Germany and leave Taiwan exposed, you reveal the seams. And once seen, they cannot be unseen.

The Strait of Hormuz is not a shipping lane. The Red Sea is not a regional conflict. Taiwan is not a sovereignty dispute. NATO is not a relic. They are all load-bearing elements of the same structure. The world is watching whether the guarantees are real. The dollar’s premium, the “exorbitant privilege”, is priced on the assumption that they are. If they’re not, that premium disappears, and with it the ability to run deficits, export inflation, and fund ourselves at the expense of everyone else.

Course correction remains possible. First, the US must start divorce itself from Israel. That will require a regime change here, not overseas. Next comes strategic investment in domestic industrial capacity and critical mineral independence, through a foreign policy that can again be trusted to reflect something broader than the interests of a single lobbying apparatus.

But the momentum toward self-reliance and alternative arrangements gathers strength with each passing disruption. The commodities markets, ever pragmatic, are already casting their votes.

250 years in, the American century may be ending not with invasion or defeat, but with the quiet, devastating withdrawal of trust.

That’s how empires end.

[Nogi @nogimaresuke5]

This is how they feel about all non Jews https://t.co/JvQsLIwVPi

[Rushi @rushicrypto]

Greenland is now asking Trump to invade, hoping to secure a deal similar to the one Iran got.

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

So bullish.

The rest is noise.

And I was just refreshing gold equity valuations with a refreshed (lower) price deck… they are so cheap. Even around $4,000/oz they’re printing cash.

[The Kobeissi Letter @KobeissiLetter]

World central banks are incredibly bullish on gold:

45% of central banks said they plan to buy gold over the next 12 months, the highest reading on record, according to the World Gold Council survey of 74 central banks.

This percentage has more than doubled since 2020 and marks the 3rd consecutive annual increase.

Emerging market and developing economy central banks led the increase, with a record ~53% of this group planning to add gold, up from 48% last year.

Overall, 89% of central banks expect global gold reserves to increase over the next 12 months, the 2nd-highest reading on record.

Central banks are buying the gold dip.

[The Kobeissi Letter @KobeissiLetter]

Is gold setting up for a short squeeze amid the Iran deal?

Gold funds posted -$2.3 billion in outflows last week, marking the 4th consecutive weekly outflow.

This brings the 4-week average of outflows to -$2.0 billion, the 2nd-largest on record.

This is only below the -$3.5 billion 4-week average record seen in February.

Meanwhile, the largest US gold-backed ETF, $GLD, has seen -$2.2 billion in outflows so far this month, on track for its 4th consecutive monthly withdrawal.

Year-to-date, $GLD has seen -$8.1 billion in outflows, on track for the first annual withdrawal since 2023.

Conditions are ripe for a short squeeze.

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

Petrodollar = ☠️

[The Hormuz Letter @HormuzLetter]

BREAKING: Iran says the US has agreed to permanently hand over the Strait of Hormuz to Iran under their full sovereign authority, with Iran collecting tolls called "service fees" from all commercial ships after a 60-day waiver period. The opening is planned for Friday, after the signing, per Fars.

With pre-war Hormuz traffic at 30,000 vessels and 7.6 billion barrels of oil per year, this could generate $10+ billion in annual revenue for Iran, and comes on top of the $300 billion in reconstruction funds directly sent to Iran.

This also directly contradicts Trump's claim of a "toll free opening of the Strait of Hormuz" under no fees.

[FischerKing @FischerKing64]

I hate to break it to you - but the United States is an absolute, incoherent shitshow.

The idea that we have ‘representative government’ is ridiculous. If that were true we would not have wasted billions killing Iranians for no reason at all. Some people wanted this - but the voters who elected this government did not.

Let’s go further. When Trump goes to China - he brings our ‘great billionaires’ with him. I can’t think of any more obvious symbol that we live in an oligarchy that does everything it can to manipulate outcomes - and that voting is a bit of a joke. It’s like he’s bringing with him ‘the ruling elite.’ Because that is what he did.

We have at least 40 million illegal aliens living here. Our business ‘leaders’ engineered this by bribing politicians to keep the border open - because they wanted to pay low wages and make mucho $$ for themselves. When people objected because their incomes were falling - the business leaders accused them of racism and funded Barack Obama to become POTUS.

The USA is $40 trillion in debt - and no one has a plan to solve that problem. Absolutely no one. This will blow up one day - and it will destroy normal people who save in dollars - because the unspoken plan is to destroy the currency and save the rich and destroy the rest. But people who own our homes - like Blackstone or Blackrock - won’t care because their assets will follow inflation. Everyone else will be reduced to paupers renting from them - their bank accounts gone.

The United States today is hopelessly dysfunctional. It lacks a coherent population that can even agree on anything. It is bankrupt - but the rest of the world is propping it up because they are also scared of what happens when the dollar collapses. It doesn’t have any smart leaders - and we have to watch insiders doing oil trades to make $$ on the Iran war - and the administration itself sells shit coins. Our foreign policy is a total joke - not strategic in any way at all. It is driven by special interests, and then not even followed through. And people are actuality making money on it - pump and dump coming straight from the White House.

This is a hell of a way to celebrate 250 Years! At least we can have a cage match on the White House lawn that degrades our entire history and underscores just how bad and ridiculous things are!

Thank you for your attention to this matter! Enjoy the circus! If you’re lucky you will be dead when the music stops!

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

@tuvidux My assumption is Mexico would have to put up strong barriers too. Honestly haven’t looked at it closely enough to have a strong view. What do you think?

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

This was so contrarian at the time

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

If you’ve owned gold miners, I’d take those profits and buy copper miners. And other inflation hedges. Maybe some energy, I like refiners.

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

@tuvidux Seems like something could be negotiated with Mexico unilaterally whereas Canada talks are frozen.

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

@tuvidux Still baffled by how well steel equities have worked, but I am not as surprised steel prices have held up with tariffs and a manufacturing resurgence.

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

March. I said this first in March. I’ll repeat myself yet again. Invest accordingly.

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

I’ve said this over and over and y’all are still not getting it.

This ends two ways. One is the US invades Iran. The other is Iran, through the IRGC, controls the Strait of Hormuz.

I remain long of gold and energy equities.

[The All-In Podcast @theallinpod]

LIQUIDITY: Dan Dreyfus on the Future of Critical Minerals

-- Copper as the next AI bottleneck

-- Investing in the commodity supercycle

-- Dollar debasement

-- Blue collar boom, rebuilding American infrastructure

(0:00) Dan Dreyfus Presents: The Future of Critical Minerals

(0:33) America's "Capital Light Era" is over, rapid supply/demand shocks

(5:40) Impact of China cutting off the US from critical minerals

(8:18) Copper's Rise: The next 18 years need as much as the last 10,000

(12:00) Dollar Debasement: $140T in debt and why hard assets win

(13:50) The Grid is Dying: Blackouts, bottlenecks, and the craft labor crisis

(19:10) How to invest in the commodity supercycle

Thanks to our partners for making this possible!

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[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

I’ve said this over and over and y’all are still not getting it.

This ends two ways. One is the US invades Iran. The other is Iran, through the IRGC, controls the Strait of Hormuz.

I remain long of gold and energy equities.

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

@JohnLeFevre The wealthier you get the more you realize how many more people there are with a lot more money.

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

I go to Europe for a few weeks at a time every few months, drink and eat whatever I want, going from business lunch to business dinner to airport lounge, and every time I come back having lost 5-10 lbs.

I also normally exercise 3 or 4 days / week, whereas in Europe maybe I’m walking a bit more.

I’ve been investigating this for years and the one thing that is definitively different about Europe is the lack of seed oils. Besides that, I’m still not sure.

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

@calvinfroedge What do you think of $JBS

Seems like it would fit your thesis

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

This has absolutely nothing to do with commodities, but as a parent I found it to be very insightful

[Hannah Spier, MD @hannahspierMD]

https://t.co/hYzOP4rOhm

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

Noticing a lot less 🌈 logos, what happened?

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

I’ve been frustrated by the market for a few months now and I’m seeing a lot of the same from others who I respect and consider smart.

The market rewards humility and conviction. I think this is a time where conviction is rewarded. So I’m doubling down on energy equities.

[Bushels 🌾 Barrels 🛢 & Bullion 💰 @BuBarrelBull]

This is not even satire.

[Fixed Income Guy (top 0.1% on bloomberg) @FICMBondTrader]

Standard NYC finance internship class:

-60% girls (applications were 90% dudes)
-75% minorities (applications were 95% white)
-25% white slots are reserved slots for nepos and/or jews
-99% ivys / 1% state school
-the 1% state school kid outperforms the whole class