The Rollercoaster in Silver and the Rapid Rise of AI-Driven Defence

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The original plan for today was a little “self pat on the back” about the silver price roaring up 9% for the week and getting back to the highest it’s ever been...

And maybe a quick revisit of our silver thesis and silver stocks.

With the upwards momentum of the week we kinda just assumed silver would keep going up last night and have hit a NEW all time high when the session closed this morning.

Then we woke up to silver being down by 3.3% for the day.

(This is why we write these notes on Saturday morning and not Friday arvo - a lot can and does happen on Friday night while most overseas markets are still open...)

Despite last night's session, silver is still up over 5% for the week, and is STILL above the two previous all time highs it hit in 1980 and again in 2011.

But instead, today we are going to write about emotions and autonomous AI robot war dogs.

Going hard on a macro theme (like we have with silver, gold and US critical metals) will come with many ups and downs that are out of your control.

(including excessive consumption of related news and incessant refreshing of precious metals prices)

And while we take multi-year views with our Investments, and try to tell ourselves that monthly fluctuations don't matter in the bigger scheme of things...

We still get all the emotions from the daily gyrations in our chosen themes.

For example - here is the silver rollercoaster over the last seven months, with the last 8 weeks being especially, lets say “eventful”:

Yes it's been a rollercoaster over the last 8 weeks, but this week was certainly a “good bit” of the ride - and bodes well for the week to come (we hope).

Here are all the silver stocks we are Invested in, click on the link to read out Investment thesis for each one:

SS1, MTH, WCE, RCM, AVM, IVR, JBY - also now joined by explorer PFE.

Gold follows a similar price chart to silver over the last 8 weeks, delivering us similar emotions...

We have been bullish gold almost 3 years now - current positions are (click on link to read our Investment :

KAU, JBY, TTM, HAR, MTH, RML, AVM and explorers BPM, PUR and TG1

US critical minerals has also delivered an emotional roller coaster over the last 8 weeks.

Following the US critical minerals macro theme is more about tracking what news is coming out of the US and other countries, compared to precious metals where you can just stare at the silver or gold price to know how you should be feeling at any given moment.

And like precious metals, the US critical minerals theme seems to be back on the upward trajectory after a few soft weeks.

First there were many months of build up with China slapping on export controls of critical metals to the USA.

The USA responded by throwing government money and attention at urgently building domestic critical minerals supply.

Then the Trump-Xi meeting happened a few weeks ago and sentiment (and stock prices came off) came right off.

Had a long term trade deal been agreed?

World peace declared and critical metals to now flow freely from China to the USA?

Had the USA suddenly decided to fully trust that China would never withhold critical metal supply as leverage again? and suddenly put their US critical minerals self sufficiency plans in the bin?

Turns out no - it was a just 12 month truce.

And with the “China will withhold critical metals supply as leverage” genie now out of the bottle, the US still appears to still be racing to fund and build its domestic critical minerals supply ASAP.

Overnight we saw the US DoE has allocated another US $355M that companies can apply for to “expand domestic production critical metals” (after announcing $1BN in August):

(Source)

(Source)

So despite the “12 months truce” with China, it doesn’t look like the US government is slowing down at all...

“Applications due by December 15th” is an extraordinarily tight deadline - telling us they mean business and want to move fast.

We accelerated adding exposure to US critical minerals stocks over the last month, focusing on projects for critical minerals required for military and advanced technologies, located inside US borders:

SS1, RML, LKY, PNN, AW1, LSR - also now joined by PFE,

...and ION for critical minerals recycling

LKY looks like they have been busy in the last 254 hours, here is LinkedIn post from a few hours ago from LKY’s strategic advisors in Washington DC:

(Source)

LKY CEO Kerrie Matthews appears to have been walking the halls of the Whitehouse waving around LKY’s “first 100% USA sourced and processed antimony ingot in decades”.

(antimony is a critical input into various military applications)

We recently wrote our views that the next global super power will be the country that wins the race in:

• Artificial Intelligence (AI)
• AI-driven defence
• Autonomous war robots and drones
• Quantum computing, and
• Advanced energy technologies.

To win this race the country needs:

1. To be the most technologically advanced in each area
2. To have capability to rapidly manufacture each technology at large scale, and
3. The raw materials and inputs (critical minerals) to manufacture at a large scale

Right now, the USA dominates in (1) advanced technology.

China dominates in (2) manufacturing capacity and (3) raw materials and inputs.

We listened to former US national security advisor Anne Neuberger on the Goodfellows podcast this week, who talked about how the US is thinking about defense (and offence) in the “wars of tomorrow”:

(watch it here)

And even stepping down a few rungs from the lofty boffins at the US Hoover Institute think tank, we saw that even the Herald Sun here in Australia is talking about China’s AI powered robot dog army today:

(source: Herald Sun)

The Australian is also giving it a mention:

(Source)

Here’s a video of an AI robot war dog battling an AI war drone - terrifying stuff but at least its less likely that humans will get in the line of fire in these “future wars”... (one positive take away from all this)

(watch it here)

So it's looking like whoever has the biggest and best autonomous robot army with the best AI will win...

The US is going to need a lot of critical metals to rapidly build its own competing AI drone and AI robot dog army.

And we don't think China is going to hand over the critical mineral supply to the USA needed for them to build it...

Have a great weekend,

Next Investors