SharperDingaan

There is little doubt that BTC is under co-ordinated assult, by significant CB's. El Salvador threatened the Chinese monetary regime, and the globes 'failed state' citizenry, had to be taught a lesson - don't use BTC as an inflation hedge, 'cause the volatiity could wipe you out. Sure it can ..... just like monthly currency devaluation in the teens! Yet despite best efforts, it has not been possible to drive BTC < USD 29K/BTC? Worse still. it has pretty much established USD 29K/BTC as the 'real' value - which was NOT the plan! Sh1te!! El Salvador was a problem for 'everyone', because BTC gave the citizenry an alternative beyond 'dollarization'. Now you just need enough USD to buy food - ONLY when you need to (bank account = BTC walllet). Less transactional demand for USD, less wealth to steal (cans of food), and harder to steal, period!. Hacking the wallet doesn't help, if you don't ALSO know the private key. Something must be done! China maintains two currencies for a reason - and that requires bullet proof capital controls. Before BTC, smugglers routinely swam with the fishes as a warning to others, and 'leakage' was 'containable' to a select few. BTC screws up the gig - and is as much appreciated as a pig in a synagogue. Something must be done! Yin/Yang remain alive and well - the CME thanks you for your hedging business ? And the more corrupt the environment, the better BTC works. SD

Hate to tell you this, but there is nowhere near the overhang that you might think. Lot of existing DUCs will not get into production, as there has been too much ingress, and no majors are going to front the cash to restart a written down oil field. The oil is there, but it is 'shut-in' - and wil remain so for a very long time. New money is going into EV's, national grids, and charging stations. Transport fleets are switching over from gasoline to electric, at an accelerating rate, as mass production further lowers prices. The majors have maybe 10 years to extract as much wealth as possible, with production coming from the cheapest wells first. Producers, and producing nations, will be trying to asset strip as much as practicable, and at as high an average oil price as possible. A price kept there by NOT 'reinvesting' in new production, and running down existing production as rapidly as profitably possible. Blowdown mode, at profit maximization. Big oil, like big tobacco, doesn't go away - it just gets smaller, and looks different. SD

Little different approach ... We simply download the monthly power points and save them as we would any other other file. Similarly, SEC .pdf docs are downloaded, highlighted as needed, and similarly saved. Word docs for 1 page earnings, peer metrics, risk mangement write-ups, etc. Excel for data extracters, and the heavy lift inclusive of VBA, macro's, etc. All pdf docs are searchable, and write-ups express the view/outlook at the time. Anything we do after that is just analytics. Open what we need, as we need it, with very little 'remembering' required. Lot of 'housekeeping', so it forces portfolio concentration. If we're working too much, we have too many stocks in the portfolio. SD

The scenarios assume CB's can maintain inflation within the scenario range - when we still have a world with negative interest rates that have never happened before. CB's have no precedents to refer to, no playbook, and have to do this by the 'seat of their pants'. Very, very fragile. The advantage with the commodity approach, and ongoing hedge reassessment, is that its ALSO antifragile. Somebody screws up, you make a killing. If they get it right, you still do well - just slower. SD

The only people who want 30 yr bonds are the issuers paying todays interest rate, and speculators trying to short them. The buyers are either insitutions dynamically delta hedging, or life insurers - unable to CF match and avoid inflation hedging altogether. SD

We had a recent discussion with our employees as to their preference around new hires - do we go with maximum hours possible and overtime, or add a new person? Almost universally, the preference is to delay new hires as long as we possibly can - so that staff can put as much in the bank as possible. As soon as we start paying overtime, we will begin feeding cost push inflation. SD

This is the whole reason you buy the maximum house you can afford (even at an inflated price), finance it with a fixed rate long-term mortgage, and simply live in it. The house price rises with inflation, while the mortgage either stays the same or gets smaller. Sell upon the refinancing date, and the inflation difference is monetized into cash. SD

Oil as the inflation hedge makes a great deal of sense over the short-medium term. All else equal, as inflation devalues the USD, the USD denominated oil price rises. You also have the strong likelihood of incremental demand outstripping incremental supply for at least 12-18 months. 18 months out - simply change the hedge instrument to something more appropriate, if inflation is even still a problem. SD

At USD 70 WTI, PR netbacks are almost the same as those of Cardium. The chinese partner would more likely want a majority interest with sales proceeds contributed to new drilling. Plus a right of first refusal on OBEs minority portion, as/when OBE opts to sell. If the 55% stake is worth 200M, 100% is worth 364M (200/.55). To take the existing chinese stake from 45% to 55%, they must pay OBE 36.4M for the additional 10% of PR. OBE contributes the 36.4M as their 45% portion of new drilling costs, and the Chinese partner puts up 44.4M to make a total of 80.8M (36.4/.45). That will fund 1-2 rigs for a year, produce more flowing barrels for both parties, and drop OBE's debt/EBITDA like a brick - as additional earnings are booked from those additional barrels. Just another indicator as to how far off the mark todays market analysts actually are. SD

Tombstone marker: Jun-18-2021 current price of CAD 3.92, USD 71.35 WTI Per OBE Deck: CAD 6.72 if priced at peer comparables, CAD 13.38 if priced at 2P USD 65/WTI How long did it take to cross CAD 6.72, and CAD 13.38? What was the sequence of events? SD 210616-Obsidian-AGM-Presentation-F-UD.pdf

Much more sophisticated burn barrel ... and partly a version of this https://www.wish.com/product/5ddcca1ed691bc1d59935c1f?from_ad=goog_shopping&_display_country_code=CA&_force_currency_code=CAD&pid=googleadwords_int&c={campaignId}&ad_cid=5ddcca1ed691bc1d59935c1f&ad_cc=CA&ad_lang=EN&ad_curr=CAD&ad_price=29.00&campaign_id=6493229759&exclude_install=true&gclid=EAIaIQobChMIlILgosGh8QIVx8DICh3CXgeyEAQYAiABEgLHQPD_BwE&hide_login_modal=true&share=web Thermal difference creates an electric current. Within the tower, constantly blow air over the flame (in the same direction), and you will also get a rotating rising air mass (tornado) that can drive turbines. Recirculate some of the hot exhaust air over the flame, and you both wind speed acceleration, a much cleaner burn, and high volumes of super hot dry air for downstream use. Build out of concrete, inject the hot exhaust air deep underground, minimal net CO2 production. Very, very usefull for SAGD oil extraction. Burn garbage vs gas for heat, inject super hot air + steam down hole, generate enough electricity to power your complex, lower your carbon footprint, and get paid for safe garbage incineration. Concrete silos are cheap to build, the tech is off the shelf, and 24/7 reliable production. SD

Almost never talked about is the performance of solar panels as it gets hotter (rapid decline). The metric should be cost/Kw versus cost/solar panel - 'cause to double production from an EXISTING facility, it is often merely a matter of periodically misting the panels - to both cool them down and remove the dust. Never mentioned in the wind bucket are the 'tornado's in a silo' which are continuous power generation and more reliable. Contained in a concrete silo, garbage burned at the bottom, hot water produced at the top, and power generation in the middle. Hotter the burn, the better it works, and they can be put in the city itself (dressed up to look like office buldings). Paid for the garbage, paid for the incineration, paid for the hot water, quick to ramp power generation up/down. SD

Re gold miners. Prettty much any one of these https://www.fool.com/investing/the-10-biggest-gold-mining-stocks.aspx Freeport has the advantage of also being a dominant copper producer, and strength on the unsavoury side of the third-world mining business. Our commodity preference is o/g, simply because it is well within our circle of competence. NA deflation very likely is the case - long term, and for many of the reasons posted. But 'transitory' inflation will be high, and for at least 1-3 years. Global (China) trade artifically lowered prices in NA, and environmental costs were never part of the end price paid. Security of supply is now back on the table, and it is going to cost more for just about everything. As we are currently seeing. Todays $100 grocery bill is $200 in 9 months, $250 in 18 months. Sure, the inflation rate is mathamatically declining over time (deflation), but to main street - groceries cost 2.5x more than they used to (inflation). To continue eating, you must charge more for your labor - cost push inflation, and opportunities. SD

The great thing with Inflation are the pair trades. Gold miners print money. Fixed costs remain largely unchanged, whereas contribution margin rockets upwards as the gold price increases. The more 'fear of inflation', the higher the margin goes, and the higher the share price. Whereas the value of financial assets drop like a brick, as the rising yield lowers PV (price of the asset). Long commodities, short long term bonds. Ideally on the SAME company, to net out the credit risk ? Main street reacts to TODAY's inflation, CB's react to TOMORROW's inflation. Hence, the pair trade is really a play on the horizon differences, and the difference in 'views'. The specific vehicle chosen is largely secondary (it just needs to be a commodity company). Re Joe/Jane investor? sell the bond fund/ETF, buy the commodity fund/EFT. Everyone selling their bond fund/ETF, forces the portfolio to sell, flooding the market with incremental supply. All else equal, price drops and yields rise - pushing the 'inflation' line, pushing the price of the gold miner still higher. Bond losses avoided, commodities gains made, and no day-to-day investment 'upkeep' required! SD

Very smart thing to do ..... A number of companies will be desperate for re-financing, should market interest rates turn up quickly, &/or in a material way. Last time around, even the great GS had to come knocking on BRKs door - offering a very attractive convertible. Electic cars, and US energy infrastructure very much in need of a serious upgrade - where do you think people are hoping that the incremental equity, supporting the incremental debt, is going to come from ? SD