In this Article:
- Russian Oil Exports Vs. the World
- The all-seeing orb is cashing up…
- Tesla opens its first European factory in Germany
- NVIDIA’s $1 trillion opportunity…
On Monday, we had a look at some of the latest government shenanigans with respect to soaring gasoline prices. I also shared my predictions for even more “stimulus” in the form of gas tax relief to partially offset the spike in gasoline prices primarily caused by inflation.
While the government may continue to try to blame rising oil and gasoline prices on Russia, the prices had already been soaring prior to the war breaking out.
Inflation is a monetary policy phenomenon. It’s the result of grossly irresponsible money printing, and it hurts everyone, especially those in lower income brackets. The Russia/Ukraine crisis simply added some more short-term volatility.
The reality is that, on a global level, Russia provides a relatively small percentage of the world’s oil exports – only 8%. The conflict has resulted in about 3 million barrels of oil a day being removed from the global markets.
It’s not that much, but it does create a short-term supply shock because it happened so suddenly. Countries that were importing Russia’s oil have to look to other oil-producing countries to increase production in order to cover the shortfall.
The impact of the shortfall is obviously felt the most by countries that are heavily dependent upon Russia’s oil (and natural gas). It’s even worse for countries that don’t have the ability to increase any domestic production.
But something interesting has been happening…
While the sanctions by NATO countries have banned the purchase of Russian oil for refinement, there is a loophole.
Trading companies have been purchasing the Russian oil and storing the oil in Europe (of all places) for future refinement. This is possible because purchasing oil for the purpose of storage isn’t prohibited by the sanctions.
In this regard, the supply shock isn’t as bad as it has been made out to be. But there is a far more serious dynamic at play that very few are talking about…
Since the outbreak of conflict, Russia’s oil exports have declined dramatically. Russia as a country is energy-independent. It has far more oil and natural gas than it needs.
But there is a larger problem that concerns the rest of the world. It doesn’t have anywhere to store its production.
The sanctions have resulted in excess production in Russia. The trading companies in Europe can only buy and store so much oil for future refinement. That means that Russia’s storage facilities and pipelines are at full capacity. I don’t think it will be long before wells shut down because there is no place to put the oil.
Some might think, “Great! Serves them right!” But there are other implications…
Once these wells shut down, or freeze, new wells must be drilled. It could take years, or even a decade, before Russia’s production returns to 2021 levels.
And that means much higher prices for oil in many parts of the world for an extended period of time. I believe that Europe will eventually see $200 a barrel.
Only countries that have the capacity for domestic production will be able to keep oil below $100 a barrel. Prices in the $120–150 range will be considered normal.
The U.S., however, is fortunate to have strong domestic production capabilities. And as I predicted on Monday, I believe that the current administration will have to ramp up domestic production and likely ban oil exports in the interest of keeping oil, and thus gasoline prices, down.
It will be entirely political, but it will happen nonetheless. This will, of course, come at the expense of other countries who would like to purchase excess production.
It has never been more obvious that we need energy-producing technology that will meet the world’s energy requirements in a fully decentralized manner, where no one country can have such an outsized – and negative – impact on the global economy.
The three most critical and fundamental needs of the human race are food, potable water, and energy. Yes, love and friendship count, too. But without food, water, and energy, there wouldn’t be a human race.
Limitless, abundant, and clean energy across the planet can bring abundance in both food and water (think desalinization). Imagine a world in which there would be no need for any geopolitical conflict caused by the need for energy. Sources of energy have been the driver of war for centuries.
The answer is, of course, the power of the Sun – the nuclear reactions that literally sustain life on Earth by making the planet habitable. It’s time for the world to step up and make nuclear fusion a reality.
Carbon-free, emission-free, abundant, and limitless power… Some forms of which don’t produce any nuclear waste at all.
If we don’t solve the problem for clean, utility-scale, baseload energy production, we’re going to be suffering decades more of geopolitically-driven pain and suffering largely caused by the puppet masters toying with our own life and liberty.
The all-seeing orb is cashing up…
We talked about Worldcoin and its all-seeing orb back in November. This creepy project is moving forward faster than expected…
For the sake of new readers, Worldcoin envisions creating a global monetary system.
Worldcoin’s plan is to scan everyone’s retina to create a unique biometric identity. That identity then becomes a digital wallet for the project’s cryptocurrency, Worldcoin (WDC).
The device that scans retinas is “the Orb.” It’s a silver orb that looks like the palantir “seeing stones” in The Lord of the Rings movie series.
Worldcoin is aggressively pushing the Orb on consumers. The project’s goal is nothing short of capturing every eyeball on the planet. And Worldcoin is giving away “free” WDC to everyone who scans their retina as an incentive.
“Orb operators” are also incentivized to sign people up by awarding the operators WDC for their services. Worldcoin reports that the “best” orb operators can sign up about 1,000 people a week with a single orb.
Well, Worldcoin just raised $100 million in a WDC token sale… at a $3 billion valuation. That’s steep given the project is still in its early stages.
Among the institutions that purchased WDC tokens were crypto-focused powerhouse venture capital (VC) firm Andreessen Horowitz, Coinbase Ventures, and Digital Currency Group (DCG). In addition, LinkedIn founder Reid Hoffman personally invested in Worldcoin’s token sale.
This is a powerhouse of backers. I’m a bit surprised to see them investing in Worldcoin at a $3 billion valuation… especially considering the privacy issues around taking biometric data from people.
Of course, Worldcoin’s mission sounds very altruistic. It’s all about global financial inclusion. And its website is even set up as a ‘.org’.
But to me, this is the same pitch we got from Facebook (now Meta). And we know how poorly Facebook has treated its users’ data.
So I’m very skeptical. And I don’t believe for a moment that our biometric information will be kept “safe.” I absolutely recommend readers stay as far away from Worldcoin’s Orb as possible… Please don’t look “deep into its eye.”
Still, we will need to keep a close eye on this project going forward. Worldcoin’s cryptocurrency, WDC, might just be a good speculation at some stage.
And with $100 million in new funding and powerhouse backers, Worldcoin is setting itself up to gain some serious momentum…
More evidence that decentralized manufacturing is the future…
Tesla just opened its first European factory in Germany last week.
This is a remarkable development given all the chaos unfolding in Europe right now. And it clearly demonstrates the major shift in manufacturing we have been tracking in The Bleeding Edge…
As we know, people hold the German auto industry in high regard. German-made cars are typically associated with high quality and attention to detail.
However, Germany is also known for high labor costs. Labor unions are very strong in the country. The average workweek for German auto workers is just 35 hours per week. I can’t imagine what that would feel like… A light week for me is 70 hours.
The high costs and relatively low hours make it expensive to manufacture in Germany. Yet Tesla plans to produce half a million vehicles every year in this new factory.
In other words, Tesla’s automation technology has made it economical to produce cars in high-cost markets for the first time in decades.
And this allows Tesla to manufacture much closer to its target markets. This is the decentralized manufacturing trend that has been gaining steam over the last several years.
For the last several decades, nearly all manufacturing has been centralized in China and Southeast Asia. Then companies would ship the finished goods to consumers in the U.S. and Europe. This makes for complex supply chains that, as we discovered, are subject to major disruption.
Tesla is breaking that cycle. We are witnessing a dramatic shift towards decentralized manufacturing and something called reshoring.
And it’s all thanks to automation. Robotics and artificial intelligence (AI) can now boost productivity and make manufacturing economical in the West again.
This is a trend that will accelerate for the rest of this decade.
And we’ll continue to find ways to profit as the trend continues.
NVIDIA’s $1 trillion opportunity…
NVIDIA just held its annual GPU Technology Conference (GTC).
To me, this is one of the most important conferences of the year. I always drop in to listen to CEO Jensen Huang’s presentations.
And Huang’s presentation this year was certainly special. He announced NVIDIA’s new AI semiconductor architecture. It’s called the Hopper chip family – named after computer scientist Grace Hopper.
The Hopper chips are designed to replace NVIDIA’s Ampere chips. And get this – the first Hopper-based chip, H100, provides nine times the performance of its predecessor. This is a revolutionary step forward.
The new chip uses 4 nanometer (nm) processing technology. And it consists of 80 billion transistors. That’s 68% more than the Ampere chips.
So the Hopper chips represent almost a magnitude jump in performance. And that opens the door to a massive market opportunity.
With this new product, Huang said the company is targeting industries with $100 trillion in revenue. And he believes NVIDIA can capture 1% of that.
In other words, NVIDIA has a $1 trillion-a-year opportunity.
Here’s the breakdown of where NVIDIA thinks this $1 trillion in revenue will come from:
- $300 billion – Automotive industry
- $300 billion – Data center applications
- $150 billion – AI for enterprise software
- $150 billion – AI software for the Omniverse (NVIDIA’s word for metaverses)
- $100 billion – Gaming industry
And what stands out to me most is how far NVIDIA has come since I first recommended the company in February of 2016. That was at a small conference focused on high-net-worth investors and family offices.
At the time, NVIDIA was considered to be just a video game tech company. Its graphics processing units (GPUs) were primarily used almost exclusively for gaming.
But I knew that NVIDIA’s GPUs would ultimately enable AI and machine learning applications at scale, as well as power autonomous vehicles. That was my pitch in 2016. NVDA was trading around $24 per share at the time.
Fast forward to today, and my predictions all came true. NVDA trades around $283 a share. Anyone who bought on my original recommendation in 2016 is now up 4,290%.
And subscribers to The Near Future Report are up 721% on my official recommendation in that publication. (If you’d like to learn more about joining us, go right here for more information.)
This is such an incredible success story. NVIDIA is a textbook example of what’s possible when bleeding-edge technology is applied to explosive growth markets.
What’s more, NVIDIA’s new chip architecture will lead to incredible breakthroughs in the field of AI and machine learning in 2023 when Hopper becomes widely available. I can’t wait to see what comes from this.
Editor, The Bleeding Edge