Wasif Latif, Co-Founder, President & Chief Investment Officer at Sarmaya Partners, stops by the Energy News Beat and Energy Impacts Podcasts – With Stu Turley, and David Blackmon for an in-depth look at the global oil and gas financial markets.
1. The performance and investment strategy of the Sarmaya Partners ETF called “Lens”. Wasif Latif, the co-founder and CIO of Sarmaya Partners, discusses how the Lens ETF has performed very well since its launch, up over 50%, by investing in stocks and commodities related to the “return to tangibles” investment theme.
2. The outlook for the energy and commodities markets, including oil, natural gas, copper, and precious metals like gold and silver. Latif believes there is a looming supply deficit in these commodities due to underinvestment, which will lead to higher prices in the coming years.
3. The challenges and limitations of the renewable energy transition, particularly the reliance on technologies like lithium-ion batteries that have significant constraints. Latif argues the transition to renewable energy will take much longer than commonly projected.
4. The geopolitical tensions and supply disruptions impacting energy and commodity markets, such as the recent incidents involving tankers and oil platforms. Latif discusses how these short-term events are often “noise” that don’t change the underlying supply-and-demand fundamentals.
5. The broader macroeconomic and policy environment, including high inflation, rising interest rates, and increased government intervention, which Latif believes will be favorable for tangible assets and commodities over the long term.
The Oil and Gas Global Markets Finacial Update https://t.co/Ci1q8an5uX
— STUART TURLEY – Energy Podcast Host (@STUARTTURLEY16) December 12, 2025
Wasif Latif, Co-Founder, President & Chief Investment Officer at Sarmaya Partners, stops by the Energy News Beat and Energy Impacts Podcasts – With Stu Turley, and David Blackmon for an in-depth look at the global oil and gas financial markets.
1. The performance and investment strategy of the Sarmaya Partners ETF called “Lens”. Wasif Latif, the co-founder and CIO of Sarmaya Partners, discusses how the Lens ETF has performed very well since its launch, up over 50%, by investing in stocks and commodities related to the “return to tangibles” investment theme.
2. The outlook for the energy and commodities markets, including oil, natural gas, copper, and precious metals like gold and silver. Latif believes there is a looming supply deficit in these commodities due to underinvestment, which will lead to higher prices in the coming years.
3. The challenges and limitations of the renewable energy transition, particularly the reliance on technologies like lithium-ion batteries that have significant constraints. Latif argues the transition to renewable energy will take much longer than commonly projected.
4. The geopolitical tensions and supply disruptions impacting energy and commodity markets, such as the recent incidents involving tankers and oil platforms. Latif discusses how these short-term events are often “noise” that don’t change the underlying supply and demand fundamentals.
5. The broader macroeconomic and policy environment, including high inflation, rising interest rates, and increased government intervention, which Latif believes will be favorable for tangible assets and commodities over the long term.
00:00 Intro Return to Tangibles
01:11 ETF LENS is by Sarmaya Partners
03:35 Is the world oversupplied with oil
06:10 Geopolitical Risk to Oil
07:09 Shale Boom and Break-even for Oil
10:06 Companies looking for exploration locations
11:38 Policy impacting prices
16:58 Market Cycles
20:21 Markets like Copper
23:42 Global Markets and deindustrialization
27:15 Grid complexities of AC vs DC
28:56 Renewables impact on Energy
37:30 Investing and day trading
41:45 Recycling and Copper
48:20 Nuclear and AI
Follow Wasif on LinkedIn https://www.linkedin.com/in/wasiflatif/
Check out https://sarmayapartners.com/
Check out the Substack: https://sarmayakar.substack.com/
Full Transcript:
For additional Slides and materiel The Energy News Beat Substack
Stu Turley, Energy News Beat Podcast Host [00:00:06] Hello everybody, welcome to the Energy Newsbeat Podcast, as well as the Energy Impacts Podcast. Let me introduce my co host today, David Blackman. How are you today, mister Blackman?
David Blackmon, Energy Impacts Podcast Host [00:00:18] Man, I’m just fantastic. It’s a beautiful day in Texas.
Stu Turley, Energy News Beat Podcast Host [00:00:22] I’ll tell you what, you can’t beat that. I’m loving it being here in Abilene, but we’ve got a special guest. We’ve got not just a Wassif, we’ve got the Wassif Latef. He is the president and CEO of Samaria Partners, a very good friend of the show. How are you today, Wassif?
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:00:40] Doing great too. Great to see you and great to be with you and likewise David, you as well. Looking forward to it. Great to see you.
Stu Turley, Energy News Beat Podcast Host [00:00:47] I’ll tell you what, this is an exciting time as we roll through this. Wassif, you have got a lot of great things going on. Every time you come on the Energy Newsbeat podcast, you’ve got great stories. You’ve got great things going on the finance. And because I can say this because I’m actually an investor in lens. What is lens, by the way?
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:01:11] Lens is our ETF. That is the Sarmaya thematic ETF that pretty much gets the the the exposure to the thesis that we’ve been talking about, which is the return to tangibles, that the world is coming back to commodities, broadly speaking. And then what we do is we actively manage the exposures through investing in actual equities like stocks. So that’s our a vehicle and our ETF. And it’s been doing really well since we launched it this year.
Stu Turley, Energy News Beat Podcast Host [00:01:42] Is it up about fifty percent or something like that? I mean, look at that. That is a stock chart right there. I’m over here kind of looking at this bad dog and it’s got a run rate. I like stock charts with run rates.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:01:54] Yeah, it’s it’s been great. You know, it’s through yesterday, it’s up 54%, but who’s counting since the launch. It’s it’s been really gratifying and and great to see our thesis come to fruition. And one important thing to think about is that number one, we invest in stocks primarily, with a couple of direct commodity exposures like gold and silver, but the primary focus is on stocks because with stocks, you can get operating leverage, you can get financial leverage to the commodities. Nice. It’s a contract period portfolio. And then more importantly, it’s actively managing the exposure. So you know, a long time ago when we started the strategy, it was more energy heavy. And over the past years have been more precious metals heavy. And we’ll actively adjust those weights. And yeah, you know, we’re looking forward to the time when we’ll we’ll get more energy heavy again because things are looking really attractive there at this point.
Stu Turley, Energy News Beat Podcast Host [00:02:49] You know, before we get started on on some of your key information, I wanna just ask this and open this up because I in my old age of of being really, really old, I can remember four or five years ago we had a tanker that got hit in the Red Sea.
Speaker 4 [00:03:09] Mm-hmm.
Stu Turley, Energy News Beat Podcast Host [00:03:09] And we had a twenty dollar spike. Yeah.
Speaker 4 [00:03:13] Yeah.
Stu Turley, Energy News Beat Podcast Host [00:03:13] Two days ago, the US seizes a Venezuela tanker. The same morning a Luke oil platform in the Caspian Sea gets hit by Ukraine drones, two other Russian tankers get hit, and the oil and gas market goes.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:03:31] Yeah, yeah.
Stu Turley, Energy News Beat Podcast Host [00:03:32] Well, what’s going on?
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:03:35] Well, I think there’s a there’s a a broader narrative that the market and the world is drowning over supply of oil. That seems to be the narrative. And alongside of that, there are a lot of financial players who use futures in the market to express that. And and there’s some there’s some conversations and and research that that folks have pointed towards that say that many of the hedge funds and and sort of the quantitative and oriented strategies, when they follow trends, what they tend to do is, you know, short one side of the market and go long the other side of the market. So I think there’s a little bit of long short type of an exposure where people are short oil and energy type of names, while being long technology and AI names. And on days when you see that reverse, you can see that really begin to move in that direction. So all of that is to say in the in the day to day in the short run, there’s a lot of noise in the market that really doesn’t tell you the longer term trajectory of something.
Speaker 4 [00:04:39] Right.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:04:40] And so once in a while you get a headline that really impacts the markets, but a lot of times it’s noise. And so what we tend to do is we look past the noise because the noise can dissipate and ultimately the fundamentals will exert themselves. And when you look at it on a fundamental basis, we think that the market is on the wrong side, where the narrative says we have too much oil and we don’t have enough demand. And I think it’s the worst. We think that actually what’s going to end up happening is over the next several years, maybe starting as early as next year.
Speaker 4 [00:05:14] Yeah.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:05:14] Just fundamentally speaking, even even aside the geopolitical side of things, just looking at on a fundamental basis of how the world will continue to grow and build the future, we’re we’re we’re we are expecting that we will have more demand than the market is pricing in and less supply than the market is pricing in. So I we think that there’s going to be some upside, significant upside to energy over the coming years. And that is before any geopolitical type of events occur. So if you say, you know, we get another geopolitical event, that could be, you know, and even adding fire to the flame. The reason it didn’t do anything in this recent episode that you’re talking about is because I think the narrative and the short-term positioning and the noise is is just kind of ignoring.
David Blackmon, Energy Impacts Podcast Host [00:06:03] Couple of questions on this. First of all, just on what you just talked about.
Speaker 4 [00:06:09] Yeah.
David Blackmon, Energy Impacts Podcast Host [00:06:10] As we sit here today, really the only potential event that could cause a big spike in in prices would be for some event to shut down flow of oil out of the Persian Gulf, right? I mean, if you shut down the Strait of Hormuz, price would spike. But that, you know, one or two tankers in the Black Sea, the Venezuelan tanker, these things like that, they don’t make enough of a difference to global supply, right? I mean, to really cause markets to react. And then the second question I’d like you to address, we’re seeing companies on the first point you talked about, where we’ve got this looming deficit of oil, probably starting as early as mid-year next year. We’re seeing companies like ExxonMobil and Chevron BP and Shell now adjusting their capital budgets.
Speaker 4 [00:06:57] Yep.
David Blackmon, Energy Impacts Podcast Host [00:06:57] Reflecting that very proposition, they believe, you know, the demand supply is going to reverse itself pretty quickly here and they’re starting to invest more in their core oil and gas business, right?
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:07:09] Yeah, absolutely. That is so so critical. So, a couple of things to that, David. So you know, we we’ve lived through the shale boom and the bust of the 20 teens. And so that has been a big driver of psychology, just broadly for the market, but even for the energy sector itself. So with oil prices where they are, the the break even is not what it used to be 10, 15 years ago, number one. So the for the companies to actually make money, the price needs to be, you know, roughly 60 or a little bit north of that. For them to do well. But you know, the some of them will continue to be do okay at the current levels as well, around you know, bumping around 56, 58, 57 on WTI. But what has changed is because of that near death experience, and in some cases, actual death experience for CL players, those companies have been chastened. And you’re seeing at least in the majors, the CEOs and the leadership come out and say, we’re not going to drill at all costs. We will drill judiciously, and and and that’s one of the reasons why supply we think is actually going to be tapped or constrained over time. And so so so there’s definitely that they’re very judicious. Now, if we if we jump up to 120, 150 dollars a barrel. You know, then all bets are off because the profitability is really high. And I think there will be a lot of folks who jump in and continue to pump and produce oil, which is fine, because then the price will will be able to reflect that and the profitability is there. So number one, I think the the supply is not as robust because of they’re not drilling as as as much as they would in in the prior cycle. But also the the because of that, the in amount of investment that’s being made, you know, as you know, energy requires continuous investment, continued discovery. It’s akin to like the RD that maybe a pharmaceutical company may do. Yes, they’re making money today on some drug, but if they’re not pump putting in new ideas in the pipeline, eventually that’s gonna dry up. And this is similar to energy, where if they’re not continuing to either make new discoveries or or continue to maintain the the wells that they have, they’re just not gonna produce. So there’s a famous chart from our folks from folks in Exxon, it’s in one of our slide decks that that I shared with you, Stu, and in there. It’s the it’s the idea that even if you price in or factor in longer term growth from a demand perspective in in energy, the the current investment isn’t there to meet up with that that future demand. Right.
Stu Turley, Energy News Beat Podcast Host [00:10:06] We’ll we’ll get to that here in a sec. Let me does this play into the fact that there this this next question has got about 15 things in it. Sorry. The 80 percent ballpark of the world’s oil is coming out of fields that are depleted or on the rapid decline of depletion, we’re short trillions of dollars for getting those new wells coming online. I have just been seeing huge interest in Libya, Syria, Iraq. I I did not have on my bingo card even four months ago that we would be invited in, and President Putin yesterday said we welcome the United States oil and gas companies to work with us. I think they’re kind of maxed out, so I think there’s a change coming around the corner that the big oil companies, total energy. That’s the Oklahoma, Arkansas way to say total energy’s right. I I don’t know, but we’re seeing they’re going after Guyana, they’re going after Libya, they’re going after Iraq at that five dollar ten dollar oil where their costs are associated in that low, low range. Holy smokes. We’re seeing I’m seeing a resurgence just starting to roll. Is that what you guys are seeing?
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:11:38] Yeah, that’s a really good point. That the the there’s plenty of oil in the ground. We know that. Right. Venezuela, one of the largest oil deposits in the world, but their actual production is very, very low. Why? Because over the past several decades of you know, government policy and and in inefficient way of managing things and not really being focused on longer-term growth and project prospect and profit, their production hasn’t been there because they haven’t invested in it. And so the same thing with Russia, their their technology is not as robust as the US technology is. So you know, the the shale folks in the US, they don’t get the credit that they deserve of really being innovative and being able to drill oil where decades ago it wasn’t even possible. And because of that, we’ve had this incremental supply of oil that’s essentially helped provide this low cost energy, not only to the US but around the world. Because as you know, a lot of our oil actually gets exported, and we actually have to import other oil because of the way our refineries are set up. So we our refineries need, for example, the Venezuelan sludge or the Canadian sludge or the Russian sludge, because that’s where most of the sludge is produced, and our refineries are built for that. So so yes. And I think that’s where the market narrative is sort of missing. That the idea is that oh, OPEC is intentionally capping supply and they can decide to turn on the spigot one day and it’ll all be there, and therefore there’s too much supply on hand. Yes, they have the ability to produce, but the rate at which the world’s oil need is growing, which is you know percent and a half, two percent a year, you know, you project that out in several years, you instead of the hundred and one, hundred and two million barrels a day that you need, you’re gonna be in the 120 million barrel range. And so how do you how do you produce that? So, yes, the supply is currently there, but our our key thesis is the investment that’s needed for the future is not there. So companies like Exxon, they’re doing really good work because they’re in Guyana, they’re they they see the future and they’re building out their their supply capabilities. And and I think they’re probably be involved in some of the if if we get back into the Russian space and be able to help them produce more, I think Exxon’s gonna be a key part of that as well.
Stu Turley, Energy News Beat Podcast Host [00:14:15] I’ll tell you what, let me ask this question. This is a great slide. I let me let me add this slide here.
Speaker 4 [00:14:23] Mm-hmm.
Stu Turley, Energy News Beat Podcast Host [00:14:23] First gold, then copper. Now watch energy. I love this slide. And I believe you know who created this one because this leads us into the next slide, which is the the the next super cycling commodities, and that’s what you’ve got all your stuff, but give us your thoughts on this.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:14:46] Yeah, so props to Tavi. He’s he he’s built the slide and showing this, and and it’s it’s really really good. It it immediately you get the picture, right? That gold has has done extremely well. This is the miners of gold and the miners of copper, and they are beginning to see that breakout. And then the question is well, why hasn’t energy seen that breakout? And the way a lot of commodities work is that in the early stages of a commodity boom or a commodity cycle, you see it in pockets within commodities, it’s not across the board everywhere. And so we think that the next year, maybe the next two years, you could see that begin to come back to the energy space as well. And you saw that in 2021 and in 2022 for sure, when there was that immediate bounce back in the price of oil, and then that helped the energy stocks. And we think that that’s gonna occur for this space as well. And it goes back to the market’s realization that this is a real asset and a tangible that is essential for everything. So our sub theme on energy is called energy is life for a reason. It is the essence and the ultimate commodity ingredient that we have. And as a result of that, we think that once the market recognizes the supply and demand differences given the current versus the current consensus. And you begin to see a little bit of a rise in oil, you’re gonna see that big pop occur in the energy stocks. And then the and those are you know pretty heavily represented in our portfolio.
Stu Turley, Energy News Beat Podcast Host [00:16:29] You you something that’s really kind of funny. Yesterday I did a interview with Jack Prendelli, the author of the Merchants News Substack, and he is is was skiing in Switzerland, the Swiss Alps, yesterday when we were recording, and he actually used that slide. So that slide’s been around the world a few times.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:16:52] Oh really? That’s fantastic. That’s awesome. Really really great to hear that.
Speaker 4 [00:16:56] Isn’t that fun?
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:16:58] Yeah, that’s awesome. We we love our slides to be shared and and and used. You know, we we just hopefully that that the our logo was there and and and that was kind of representative of you know that we built this. But it this isn’t something that you know we we’ve created that the other folks haven’t shown. But when we built the slide, we wanted to show not just the rise in cycles, but also what happens after the rise. So no secular theme goes on forever. And this is just showing that every major market cycle has some kind of a secular theme that dominates that market cycle. And if you can, with the great degree of confidence identify that early on and build a focused portfolio that’s pretty much concentrated on that, then you should do really well. And so the way to read this, and I’ll go through this quickly, is you know, in the 70s it was gold and oil. In the 80s, it was Japan that really led the way. In the 90s, it was the internet stocks, and in the 2000s, it was anything tied to commodities and and emerging markets and Chinese growth. And then since the great financial crisis, we’ve been in this world where the the big secular theme over the past decade has been the technology companies and big mega cap tech. And we think that the next secular theme is a commodity super cycle. We’re calling it the return to tangibles, and we think it really began in 2021 when we were coming out of the lockdowns and and having all the supply chain shortages and oil came back. So this is to us the next big thing. And we think that it once these things start, they’re going to run for several years. And that’s what our portfolio is built on. And as I mentioned, lastly, you know, in the beginning of commodity cycles, it’s it’s pockets. So in 21 and 22, it was energy that really led the way. And then since 23 and 24, it’s been precious metals led by gold and now silver’s catching on and copper’s catching on. And eventually all of them will will move in in that higher direction.
David Blackmon, Energy Impacts Podcast Host [00:18:57] And m most of that’s being driven by energy, isn’t it? I mean, the need for energy, the demand for energy, not not just oil and gas. I’m just talking about electricity, power generation, the AI tech boom with all the data centers going in, creating all this new demand for power that you know, you have to have I mean, copper is in in everything, and so is silver, gold as well, and so so much of it’s just drilled driven by the the need for more energy.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:19:27] Absolutely, David. You hit it spot on that. You know, we when we say the word energy, different people think of it differently. When you’re talking about it from an equity investment standpoint, you think of like oil and gas companies. But the energy output itself that’s going to be electricity that’s needed and produced, that is still something that continues to be built out or needs to be built out. The AI data center need, just the energy need for AI technology, we think is going to be continually important. Now, you know, we also understand and recognize that there could be some overbuilding going on on the data center side itself. And that’s why we’re not necessarily fans of investing in technology companies or AI companies. We would rather invest in not just the picks and shovels, we’d rather invest in the stuff that those shovels are going to be picking up.
Speaker 4 [00:20:20] Yeah.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:20:21] That’s why we like commodities like copper, which is going to be beneficiary of the data center boom, like energy companies. So, yeah, that that’s really, really important. And as the world continues to build its future, that’s going to be the case. And one of the things, and this is a great chart about the US dollar, the US dollar has seen going back to the 1960s, periods of where it goes down relative to other currencies. That doesn’t mean the dollar’s gonna go away. We’re not saying de dollarization. This just means that over the past several decades, it’s pretty normal to go through a multi-year period where the dollar is depreciating versus other currencies and versus commodities, because all commodities are priced in dollars. So when the dollar goes down, commodity prices go up. So when you get into a full-blown declining dollar environment, which we think we’re in the beginning of, and in the last one, you’ve seen you know, not anywhere near 40 to 50 percent declines. And these are you know, over time, but when that happens, commodities generally tend to do well because they are priced in dollars. So when you get that earnest bear market in the dollar, you’re gonna see commodities do extremely well. And I think that will be when the full cycle kicks into high gear. It still feels like to us we’re in the early innings of this.
David Blackmon, Energy Impacts Podcast Host [00:21:49] Well that’s that’s disturbing. I guess. I don’t know. Heck, I don’t even know if that’s disturbing or not, but it doesn’t sound doesn’t sound optimistic for the dollar. Yeah.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:22:02] And I would point out that it’s it’s it’s it ha it has happened in the past. It happened in the 2000s in the chart. We had a 40% decline, and life was good, life was fine. So it isn’t necessarily a bad thing because it increases our competitiveness from an export standpoint. Right. So there’s pros and cons. And as investors, it just means that when you’re investing in markets and portfolios, that type of an environment generally means that non-US assets, commodity assets, real assets will outperform generally large cap type of assets or US centric assets. And so just from an investment standpoint, that’s that’s what it means. And and we think that that’s going to benefit it. Now, given the geopolitical and fiscal risks that are out there, we think, and this is an important slide to point that out. We do believe that we are in a higher inflationary world. And that’s why owning real assets or tangible assets, as we call them, is going to be beneficial. And that’s why we think it’s important to have things like gold, gold miners, silver, silver miners, and and some of the other metals in a portfolio to to benefit or or be a hedge in that type of an environment.
Stu Turley, Energy News Beat Podcast Host [00:23:21] This is another slide. Yeah, this sorry. This this slide I think is also very, very critical for Germany, for the UK, for the EU. When they are doing deindustrialization due to their energy net zero policies, they’re facing this one big time.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:23:42] Yeah, so when you take a step back, Stu, this is so your point is very, very important that we built this chart really with a US centric view, but you can look at this on a global scale as well, which is this is each quadrant will give you a combination of inflation and economic growth. And we think that we are squarely in the top half of this grid. In other words, whether we get an inflationary boom like the 1950s, or we get a stagflationary bust like the 1970s. In either case, we think that we are in the higher inflationary world. And what does that mean? That means sovereign yield, sovereign debt, sovereign bonds will be under pressure, and currencies would be under pressure. And as a result of that, inflation is gonna be an issue. And when you get that into that situation, then again, tangible assets, things like precious metals, they do really, really well. And history shows that. And to your point, this is global. So the Western world or the developed world, you know, they are facing high levels of debt challenges. But and you look at Europe, France, Japan. Yeah, and even just this morning I just saw news that the Netherlands is now going to start issuing more and more shorter term debt paper as opposed to longer term debt paper. In order to be able to to meet some of their rising interest rate challenges. So this is this is something that’s globally occurring with the developed world’s sovereign debt and as a result we think there’s a lot of tailwind still behind precious metals and we’re in the early innings of that cool david do you have any questions on that one Not on that. So so Stu, if I could, I know we’re we love energy. So if maybe if we could go to 12 and 13, that would be I know we’ve talked about that before. There we go. Yes, it’s a great reminder. It’s a great reminder that the world’s energy needs over time don’t decline. Yes, we get blips of small declines, and they’re generally tied to recessions or some kind of a crisis. So this chart is showing you since since the 1960s, the overall consumption of energy around the world has done nothing but go up. And we think that this doesn’t change. And for the past several years, you know, going back almost 14, 15 years, the the narrative because we had cheap energy, we had cheap cost of capital, there were zero rates, and and the technology boom was occurring. You know, the world and and the the basically the policymakers and and the overall consensus became we’re in the digital world, we’re good, we have we are now in a higher level, and we don’t need this ugly, dirty, grimy commodity stuff, and we’ll be fine. And what we’re saying is no, our world, whether digital or not, is built on commodities, and at the cornerstone, the foundation of that is energy. And so energy is like the most important thing. Everything is built on that. And when you see this, you can see that number one, it continues to go up. Number two. The highest components in here are still oil, natural gas and coal. And those are still driving the overall growth over time.
Stu Turley, Energy News Beat Podcast Host [00:27:15] You know, one of the things that I’m I’m really trying to wrestle with, one of my Substack articles this week was based on the war of Westinghouse versus Tesla of AC versus DC. And now that we’ve got wind and solar, we’ve spent trillions of dollars on wind and solar trying to put DC current on an AC grid that’s been built for a hundred years has caused a bit of a heartburn. And when you see Spain all of a sudden in that heartburn, have three seconds and it wipes out their entire grid, DC won that day. So besides being a great band out of was it the UK, the AC DC was a one of my favorite bands, you know, when I was younger, but it is a war that is now still going on, ACDC. And people need to understand that natural gas, coal, and nuclear are still king of the grid.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:28:19] Yeah, yeah. I I I love metal as well. I like A C D C. I think they’re Australian. But in any case, it it’s yeah, it it’s it’s great stuff. Right. Was it we’d have a separate podcast about our music taste as well and I think there’ll be a lot of great great conversation.
Stu Turley, Energy News Beat Podcast Host [00:28:35] Yeah, I think a whole other conversation. Sorry. But I l was who’s the the kid in the the lead guitar lead guitarist when he scoots across the stage on one leg. Yeah.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:28:48] Maybe he’s in his seventies or eighties by now, but
Stu Turley, Energy News Beat Podcast Host [00:28:53] He still dresses like a kid. I’m I’m I’m all in.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:28:56] Yeah, sorry. So but when you look at the slide, yeah, you can see the chart where you have the renewables at the top. And and we’re not saying that renewables aren’t going to grow. We think they will, because you know, countries like China, they they have an all of the above energy policy. So they are producing a lot of solar, they are expanding in that front, they are electrifying. What we’re saying is that type of a move in that direction will require two important things. Number one, you’re gonna need better technology to just think of it as like in broader terms. You’re gonna need better grid production. You know, the whole intermittency problem, you’re gonna need better storage capabilities, and and for that you’re gonna need batteries. And and so all of that stuff. So right now it is in in our view, it’s good for domestic household consumption. It’s not good for industrial production consumption. And and and so part of that’s been a challenge. And number two, you’re gonna it’s probably gonna happen much, much further out in time. So the idea that this is gonna happen by 2050, I think even the policymakers and and some of the folks who are leading this stuff are recognizing that that’s not a possibility. And we’ve been saying this for years. We’re not saying we might not have an energy transition, we’re just saying it’s gonna happen probably many, many decades after what the world thinks it will happen. So I think those are important things and and you know, as the world continues to build that out, they’re gonna need the commodities that we own. So if we’re gonna need batteries for solar storage or wind energy storage, right? You’re gonna need a lot of copper. If you’re gonna continue to build solar cells and panels like China is doing and India is purportedly doing, apparently, India is gonna be building a massive, massive solar location, which will be the size of a major city. All of that is gonna require a lot of silver, and silver is a big part of our portfolio. So what we’re saying is this is still new, this is in in the grand scheme of things, and it’s not gonna be anywhere near as big and as fast as the world has projected it to be, but it’ll control and it will still slowly continue to build that. In the meantime, what you’re gonna need in order to even build it is the oil and gas of today, in order to build that, and that’s that’s gonna be with us for decades.
David Blackmon, Energy Impacts Podcast Host [00:31:23] Yeah, no doubt about it. I you know, you gotta wonder what the future of lithium is talking about commodities, yeah, because it’s becoming pretty obvious that lithium-ion batteries technology is not what’s going to get renewables there. Yes. There’s just too many limitations and too many unexpected problems with lithium ion batteries. And so it’s gonna require a really a quantum leap in in battery technology that you know we we see it, you know, every once in a while there’s another one this week about iron and salt batteries in the Wall Street Journal being the next big thing. But but we see those stories, and you know, we s we seen it with solid state and metal metal, solid metal batteries. But you see the story saying, well, this is the next big thing, and then they don’t happen. And so this is a really tough nut to crack, obviously. But whenever it does crack, man, lithium demand is just gonna fall off the table, isn’t it?
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:32:22] Yeah, yeah. So those are some that’s a really, really good point, David, that the technology that we have today for batteries is probably not going to be the final technology that we end up with because it is still early days. You know, we have we have something that we’ve cobbled together and it works in the in a small scale and it’s not as efficient and it’s it’s not as ecologically friendly. So there needs to be some kind of a technological breakthrough that takes us to the next level. And to your point, this ain’t easy. This this is this is a lot of science that a lot of smart people in the world are are racing towards, and it could be decades before we finally have that breakthrough. Maybe it’s a few years, but we don’t know that. The other thing to think about is that whenever there’s a new technology that emerges that is going to be world changing, history shows that generally from the time it becomes apparent or comes onto the scene to the time where it’s readily adopted broadly around the world, it’s about a 30 year period.
Speaker 4 [00:33:32] Yeah.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:33:32] Jeff generally speaking. So whenever we get that breakthrough in battery technology, from that point until what we think is going to be mass adoption, it’s going to be decades. And so until we get to that space, you’re going to still need the carbon-based energy to be able to build that. So you know, we’re gonna have a green infrastructure feature somewhere sometime in the future in the world. It won’t be as early as the world had initially thought. Right. And more importantly, how are you gonna build it? You’re gonna build it with the commodities of today.
David Blackmon, Energy Impacts Podcast Host [00:34:08] Yeah, and and that’s just inescapable. And it it you know, we just see so much rhetoric around, well, we just gotta stop burning oil and we’ll be fine. You just can’t do that, or you’re never gonna get to where you want to go unless you want to take the Malthusian approach and and and get rid of about seven billion people of our current population. You know, I mean, you just can’t get there.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:34:30] Well, and and and Stu brought up the word deindustrialization, and that’s been happening in Europe. And you can see that, you know. I just saw this morning a really interesting chart that’s been going around of carbon emissions around the world. And yes, Europe’s emissions have gone down, and Germany’s led the way, US emissions have gone down, but China’s going through the roof. It literally exported them to China. It looks like going through the roof. So, what have we done? We have outsourced industrialization to the countries that are okay with using fossil fuels because that’s where they are in their economic development. And they, you know, that as I said, China has an all of the above policy because they want to go in the direction, but they know it’s not realistic, they know it’s not practical today. They’re building that over time, but for today they’re burning oil, cool. They’re burning natural gas and oil, oil to get there. So yeah, it is all we’ve done is we’ve pushed industrialization to to China and other emerging countries as as they build that out for us. So it just that urgent sense of dependency. And sorry, Stu, but just one last piece is that it it’s really important for us. That’s why our theme is called the return to tangibles.
Speaker 4 [00:35:51] Yeah.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:35:52] Because the pandemic and then the geopolitical world that we’ve entered since then has made the US especially, but also Europe realize that we need to have those capabilities. And so now we’re in a multi-sphere world where different regions are trying to rebuild those. And maybe they’ll succeed, maybe they don’t, because it takes many, many, many years. You need people, you need engineers, you need infrastructure. And in so doing, what’s going to happen? There’s going to be need for more and more commodities, copper, you know, you name it, that kind of stuff for it. So that’s why we build a portfolio that we have.
David Blackmon, Energy Impacts Podcast Host [00:36:30] Yeah. Thanks to the chance. Go ahead, Stu.
Stu Turley, Energy News Beat Podcast Host [00:36:34] Yeah, I’ll tell you what I love, Tom. Tom Mumford is absolutely a cool cat. If there’s an energy transition decades from now, it should be interesting to see what the technology that will drive an energy source may not currently have. Additionally energy addition, not transition. And Bashuk, way cool comment as well. Thought the renewables would be a larger segment already. Certainly is an eye opener for me. I I’ll tell you both of those are fantastic points. But I I think one of the biggest things that we you you just hit it out of the park, Wassif, with a few key points and the return to tangibles that your ETF lens is doing so well on. I’ve been really enjoying getting back into day training and really getting my charts all fired up and I’m over there going, You guys are on fire. I I kind of like that watching what you guys got going on.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:37:30] Yeah, well, thank you for the compliment. Really appreciate it. It as I said earlier, it’s it’s very gratifying and hardening to see the performance do really well. And and you know, it goes back to our approach, which is more actively managed, and we don’t set it and forget it. So a few years ago, the portfolio was more energy heavy. And about a year ago, we we still have energy. We like it. We have a very, very healthy allocation to it, both natural gas stocks, oil stocks, and some of the service companies around them. But what we did was we increase the weight to precious metals significantly because of what we saw happening with between the geopolitical environment but also the fiscal environment that we just talked about. And as a result of that, you know, inflation ultimately is the is the challenge when when large sovereign debt levels are facing down developed world countries, what are they gonna do? They most likely won’t default, they’re not going to have austerity. And so the last the last usual and history shows it the the normal thing to do then, not the normal, but the the more common thing to do then is to slowly inflate your way out of the debt. And when you do that, your your currency will be the outlet, and as a result of that, the precious metals of gold do do benefit from that. So our portfolio has a lot of gold, gold mining stocks, silver, silver mining stocks. And and copper mining stocks as well. So I do have a really interesting chart on copper, if whenever that might be of interest to touch on. Absolutely. What number? So if we go to slide 31, 30 and 32 would be interesting. So maybe let’s start with 31, maybe. So these are some you know really good charts on energy energy and gold and precious metals. So this is copper. So this is showing the projected demand for copper from different sources. And then the red dotted line is the current supply or the projected supply. And so the traditional need for copper is the dark green section. The energy transition requirement for copper is the light green bars, the section of the bars. And then the red dotted line, as I said, is the supply. So in our view, these are number one, these are estimates. You never know what you’re gonna get until you get there. So take that with a grain of salt. But to me, and and in our view is that it’s probably that the dark section, which is the traditional demand, is probably being underestimated, and then the light green section, which is the energy transition section, is probably being overestimated. But in any case, we think that the total bar will continue to grow. And the supply isn’t there. So if you go to the next slide, so that tells you that globally we’re gonna have a greater need for copper than there is supply there. So this is showing you the number of discoveries that have taken place. So each bar is the number of discoveries of copper deposits around the world. And they’re declining. We’re very, very low in actual discoveries. And the light green line is the price of copper. And so if you go to the next slide, that will be the kicker, which is this is the amount of time it takes from the time you discover a copper deposit all the way to the time where you’re actually producing the copper out of the ground and ready for use.
David Blackmon, Energy Impacts Podcast Host [00:41:14] Yeah.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:41:15] So currently it takes approximately eighteen years from the time of discovery to the actual supply being there. So the copper that we’re gonna need, the copper that we’re gonna need, let’s say in the next three to five years, should have been started fifteen years ago. Fifteen years ago, yeah.
David Blackmon, Energy Impacts Podcast Host [00:41:35] Hey, one question on the copper supply. Does that include recycling? Is that just strictly from mining new copper?
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:41:45] I think it includes recycling a little bit. Now, that’s a very good question, David. And and recycling will go up for sure. Because the price demands it and we’ll do it. And I’m sure we’ll we’ll start hearing anecdotal stories of copper theft and all that stuff as well. But recycling is is is sure to go up. It will go up, and there’ll be companies and innovations where people come up with newer ways of recycling, more efficient ways of recycling and and all of that stuff. And so but despite that, it’s gonna be a costly endeavor and it’s not gonna be as efficient, and there’s just not as much out there that you can extract to be able to meet the demand. So we think that just you’re you’re still gonna need real new copper to be mined.
Stu Turley, Energy News Beat Podcast Host [00:42:36] Tom brings up a great question here. Let me jump back. I went back two slides. We’ll catch back up. But Tom Mumford, wow, copper constricted by 2028. Does that spell opportunity for domestic mining? In a word, yes. But I think Wassif brings up a gigantic point, and that is we’re 15 years late to the party. The one thing on recycling, when you take a look at solar, wind recycling, or anything else, it is not happening. When you’re taking a look at recycling, I’ve seen some of the funniest clips on X where you see a trash man go up to the recycling bins and he just puts everything into the truck. Recycling is not happening. We recycle less than five percent of our solar panels that are taken offline. So how are we gonna get the copper out of that? Now the theft is another huge issue. So the copper mines that is some fantastic points, Wassof.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:43:39] Yeah, so number one, in our portfolio, we have companies that are both US domestic companies that are in this business of mining copper. And we have we have non-US companies on a global basis because this is a global phenomenon. And so this isn’t just our need, this is a global need. And so we we are looking at it on a global perspective. Our portfolio is actually half of it is non-US companies or non-US names because this is a global thing and it’s gonna be everywhere. And so we have that exposure in in our portfolio for sure. And then the other thing you bring about recycling is you know, the copper is in stuff that we recycle, but it isn’t a clean removal, right? It’s embedded in there, it’s like all this complicated, so it’s not a cheap thing to do. It is pretty expensive, it’s complicated, and yes, there will be innovation because the price will incentivize people to do it. But it it’s bottom line is it’s it’s still not going to be enough, and you’re gonna need more.
David Blackmon, Energy Impacts Podcast Host [00:44:47] Yeah, I was just curious because you know, you see it in the studies. People will say, Well, you know, we’re gonna need X amount of copper. But we you know, we can make up the difference between, you know, with with recycling and and it that always seems to me to be pretty specious it because, you know, recycling is is a much more complex and expensive endeavor than people want it to be.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:45:07] Yeah, yeah, and it’s happening and there are large companies that do it successfully. But to your point, it’s it’s just the sheer if you just look at brass tax, the total supply from the recycling is not enough to make up for the demand increase. That that to me is is the bottom line.
Stu Turley, Energy News Beat Podcast Host [00:45:25] We love Brian. Here’s a great comment. Didn’t a copper mine in Minnesota recently get killed under Biden because there was concern about cutting down trees as if Minnesota was short on trees. Way to go, Brian. We love Brian up in Canada. I I I I have to go look at that and
David Blackmon, Energy Impacts Podcast Host [00:45:43] He’s right. I mean, I can’t remember the name of the mine, but he’s right. It was a mine that was going to produce copper and a cup nickel and something else, and the Biden administration killed it.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:45:53] Yeah there’s there’s examples of that in in in alaska there there’s a large company with with a company there that’s trying to do it so you know ultimately human need will will get you where you need to go and and we think that that’s again return to tangibles it isn’t just the prices or the or the idea it’s actual policy policy is also returning to tangibles because these these items or or these natural resources are now going to increasingly become a matter of national security and so national security will trump all those other things and I think governments will will begin to and they already have they’ll be begin to allow those things to happen
Stu Turley, Energy News Beat Podcast Host [00:46:43] Well, so let me ask both you and David this question because I’m I’m seeing as I’m getting my trade day trader fix going again. You sit back and take a look at nuclear, love nuclear. I love the folks over at nano nuclear JU is the founder, and then I’ve interviewed also the president James, he is a cool cap, both of them running that company again, nano nuclear, they’re they’re getting their plant, they got two nuclear plants that are two nuclear facilities that they’re already starting, they’re getting their plants authorized at the same time, but they’re still years away from having a revenue stream coming in, and you’re talking about is the AI bubble going to be a AI bubble because everybody’s relying on nuclear? Well, I think Chris Secretary Chris Wright is doing the right thing, he’s providing loans to keep the nuclear going. But this brings up the biggest question and is AI setting us up for a bubble because if you take a look at Texas ERCOT, Texas ERCOT has a hundred and eighty watt gigawatts of nameplate capacity, and there’s now up to 230 gigawatts of applications to go onto the grid. How much of that is real? When you sit back and go, Are we facing a AI bubble? And that’s one of the day traders’ nightmares, you sit back and will that take the whole thing down?
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:48:20] Yeah, so a couple of really important thoughts. That’s a really good question because ultimately we’re investors and we want to think about how does this all exist. Yep. How does all of this discussion impact prices and ultimately our portfolio? So bubbles are on generally identifiable after the fact. Once they pop and they decline, people are like, oh, there was a bubble. Now, when you’re in it, it’s two camps. And people are like, Well, you’re definitely in a bubble because the fundamentals, the price are telling you that. Or there are those who say, No, the the growth and the story and and and the projections of what we’re seeing are are so strong and it’s it’s not gonna matter. In investing in the short and Warren Buffett said it best. In the short run, the market is a voting machine, in the long run, it’s a weighing machine. What does that mean? It means that in the short run, narratives, stories, the ideas, they really drive the market. But in the long run, ultimately the math, the physics matter. So when you’re starting with high valuations, longer term that leads to lower prices or challenging prices. So to answer your question, we think that the valuations in a lot of these tech names and AI names are stretched. Right. Are they in bubble territory? I guess that depends on the name or you know, the subpart. I think some companies are definitely in bubble territory and and some might be just rich. So when that happens, that’s going to be challenged. Now, how does that tie to nuclear? So whenever in in the fall of 2024, when the tech company started to say our data center needs are so big, we’re gonna start going into nuclear because it’s clean, it’s efficient. That sent the nuclear and uranium space you know, rocketing up. And even investors in uranium going back many, many years were big, big long-term bulls on uranium. We’ve owned you know the second largest uranium mining company in Canada, in the world, which is based in Canada, and it’s been a huge part of our portfolio and has done really well. However, when the technology and the AI boom took over, it felt like the nuclear story has been subsumed by the AI has subsumed it. And so we became conscious of that. So what we did was again coming back to our active manager approach, we reduced our allocation to the nuclear space. You know, you said you put your day trader hat on, just for our active approach, is let’s reduce that exposure. We still have it, but the it’s been subsumed by the tech stuff. And and you know, the tech stuff we think is a little bit frothy and it’s gonna be challenging. So whenever that steam comes out of it, you’re gonna see nuclear names. Drop and get challenged as well. And when that happens, we’re going to back up the truck and buy a lot of that nuclear, a lot of that uranium exposure back in the portfolio. But currently we’re very low weight because of its tie-up. So if you ask me, if you tell me any given day the technology and the AI stocks are doing X, I can tell you what the nuclear names are doing that day as well, because they’re pretty much tied the way they’ve been trading lately.
Stu Turley, Energy News Beat Podcast Host [00:51:47] They are. And so that’s why I that’s why I had an almost brilliant question.
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:51:53] No, that was a great question.
Stu Turley, Energy News Beat Podcast Host [00:51:56] Well, we’ve only got a few more minutes here, Wasso. What are you seeing coming around besides the return to tangibles?
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:52:03] So I think you know, I think we talked about the Stuart. So Stu, this is the world really began to change when we when we went through the pandemic and then the geopolitical stuff in 2022. Right. And the we basically crossed the Rubicon and the world is no longer the same. And those weren’t necessarily the the reasons why we did it, they were the triggers. So the kindling was there, the forest was dry, and the pandemic and the geopolitical escalation ended up being the the fire, the spark that started the fire. And so what do I mean by that? What I mean by that is that we are now, in our view, in a world where inflation is no longer coming down, we’re in a higher inflationary world, we’re in a higher geopolitically sensitive and escalation world, we’re in an era where you’re gonna have greater fiscal pressures on governments. We’re in a world where government control and government policy is going to have much more of a say and impact in business on how things are done, just like it was from the 1930s up until the night late 1970s. So there’s a lot of stuff from a policy standpoint that we’re in there, and whenever you get into that type of a situation, broadly speaking. Cost of capital goes up, cost of labor goes up, margins go down, and tangible assets generally tend to do better in that environment. So we think that we’re in this world and it’s gonna take a long time for to really come to light and and many, many people don’t even realize that. And by the time they realize it, I think we’ll be in, you know, the mid to late innings and and the portfolios that are invested in this today will will will do extremely well. Cool. David, anyway.
Stu Turley, Energy News Beat Podcast Host [00:53:59] That’s there.
David Blackmon, Energy Impacts Podcast Host [00:54:00] Oh, that all makes perfect sense to me. You know, it’s just another example of how energy just kind of impacts everything. And supply and demand for energy causes all these other things to pop or decline and and public policy is is a really key to all of it. And I think we’re kind of fortunate right now to have the people in charge of public policy that we do.
Stu Turley, Energy News Beat Podcast Host [00:54:25] Well, Wassif, we will have your LinkedIn in the show notes as well. And we’ve also got your ETF lens that I like and I’m following it, so I can say that. We’re also at SamariaPartners dot com. Are there any other places that people can get a hold of you?
Wasif Latif, Co-Founder, President & Chief Investment Officer, Sarmaya Partners [00:54:43] No, that’s that that’d be great. I’m also on Substack and and Twitter. They can just type in my name and it’ll come up and and you just please connect to me and reach out to me on LinkedIn.
Stu Turley, Energy News Beat Podcast Host [00:54:55] And also follow David Blackman on blackman dot substack dot com and also follow me and Michael on the energy newsbeat dot substack dot com and the energy newsbeat dot com. So with that, I hey, thank you guys very much. I really had a great time. I do appreciate everybody. Thank you. Thank you. Appreciate it.
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