I don't get this description of silver as "yield bearing." Same could be said for just about any raw material? the lumber that goes into apartment buildings. Steel in factories. etc.
That's a really interesting post and to me it seems like it could be partially true.
However
First of all, the big problem is extrapolating AI demand. We have seen those extrapolations not only with fiber optics in 2000s but also with say oil and gas demand. I'm from Russia and I saw those investment banks reports about how bullish they are about Gazprom at 250/share because China would need more oil that's nowhere to find. Even before war it just got back to 200+ in 2021 with ruble being 70% cheaper.
Another important thing I got from Alex Stahel who discussed energy grid in EU in detail after the outage this year. Solar panels generate direct current. This is important because our grid runs on alternating current. It can be transformed, but the problem is that CAN NOT have more than 25% of you grid to be on Solar electricity. Otherwise there is an exponentially increasing risk of outage vecause solar panels can not damp spikes in the grid.
(Fwiw the spike in the EU was a big one and it was damped by French nuclear stations, because they are massive and have very big capacity for dampening. If not for the French grid that is 60% nuclear - the outage was so strong that it would have reached all the way to Netherlands and Poland blacking out all EU)
It is not realistic to power AI data centers exclusively on solar. They need consistent baseboard electricity 24/7/365, which solar cannot provide. In North America, that means natural gas will have to do the heavy lifting. It does not matter whether states are freaking out about emissions.
There is no way nuclear can scale quickly enough to meet current demand for AI data centers. They take 10-15 years to build. We cannot put AI on hold for that long.
Only natural gas plants can be scaled up fast enough and provide 24/7/365 electricity at a reasonable cost.
I don't get this description of silver as "yield bearing." Same could be said for just about any raw material? the lumber that goes into apartment buildings. Steel in factories. etc.
That's a really interesting post and to me it seems like it could be partially true.
However
First of all, the big problem is extrapolating AI demand. We have seen those extrapolations not only with fiber optics in 2000s but also with say oil and gas demand. I'm from Russia and I saw those investment banks reports about how bullish they are about Gazprom at 250/share because China would need more oil that's nowhere to find. Even before war it just got back to 200+ in 2021 with ruble being 70% cheaper.
Another important thing I got from Alex Stahel who discussed energy grid in EU in detail after the outage this year. Solar panels generate direct current. This is important because our grid runs on alternating current. It can be transformed, but the problem is that CAN NOT have more than 25% of you grid to be on Solar electricity. Otherwise there is an exponentially increasing risk of outage vecause solar panels can not damp spikes in the grid.
(Fwiw the spike in the EU was a big one and it was damped by French nuclear stations, because they are massive and have very big capacity for dampening. If not for the French grid that is 60% nuclear - the outage was so strong that it would have reached all the way to Netherlands and Poland blacking out all EU)
So, we buy solar panels?
How does one position for that bet? LEAPS OTM on SLV?
It is not realistic to power AI data centers exclusively on solar. They need consistent baseboard electricity 24/7/365, which solar cannot provide. In North America, that means natural gas will have to do the heavy lifting. It does not matter whether states are freaking out about emissions.
yes you need batteries too obvi.
nat gas is clearly the flex load. nuclear has a role to play as well obviously, that's why I don't say solar for 100% of the data center need.
But adding utility-scale batteries only makes the problem worse by DRASTICALLY increasing the cost.
https://frompovertytoprogress.substack.com/p/utility-scale-batteries-are-as-expensive
And most AI data centers are not going to be in places with high solar radiance.
Natural gas is not just for flex load. It is also the most cost-effective baseload electricity generator in North America.
https://frompovertytoprogress.substack.com/p/the-wonders-of-ccgt
There is no way nuclear can scale quickly enough to meet current demand for AI data centers. They take 10-15 years to build. We cannot put AI on hold for that long.
Only natural gas plants can be scaled up fast enough and provide 24/7/365 electricity at a reasonable cost.