Pierre Andurand keeps losing as his outlandish bullish wagers that oil would reach $140 by year-end 2023 failed to become a reality.
Pierre Andurand’s flagship fund, Andurand Capital Management, lost 55% of its wealth under management in 2023, making it the worst 12 months for the fund in its history.
Pierre Andurand keeps losing, betting on a pipe dream
In a piece entitled, “Pierre Andurand racks up losses,” dated April 2023, almost a year ago, we wrote. “But with the global economy on the edge of a cliff, these higher prices Pierre Andurand is betting are unlikely to be driven by demand.
A global recession equals less demand for oil,” and we added, “Fundamentals, a rapidly slowing global economy, rising corporate layoffs and a collapse in business investment are the reasons for demand crushing and prices sliding.”
“Pierre Andurand’s flagship fund, Andurand Capital Management, lost 55% of its wealth under management in 2023, making it the worst 12 months for the fund in its history”
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So unless collapsing demand is offset by supply cuts or supply disruptions, natural disasters and war, prices could fall further,” we wrote almost a year ago.
Indeed, fast forward and the price of a barrel of oil, year to date, has remained stable compared to an ounce of gold over the same period.
But the price of a barrel of oil measured compared to currencies has moved higher along with nearly every other asset due to the relentless debasement of fiat currencies.
As the global economy continues contracting, the current dynamics that support oil prices today are supply disruptions through the war in Europe, the recent attacks on Russian energy infrastructure and the Middle East war, and attacks on oil tankers in the Red Sea.
Demand for oil in the war economy, which is now being talked about openly in Europe, may not be enough to offset the decline in economic activity in the civilian economy. WW3 battlefield is space-age, digital and automated. Drones are more energy-efficient and effective than gas-guzzling tanks. Silicone chips could become hotter than oil. The war economy could push up the demand for metals, particularly those used to manufacture missiles, small arms ammunition and heavy artillery.
“fast forward and the price of a barrel of oil, year to date, has remained stable compared to an ounce of gold over the same period”
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Demand for rare earth metals used to manufacture chips could get hotter.
Equally, commodities used to manufacture the satellite dish, the eyes of a modern battlefield could boom with each side attempting to blind the other.
Back to the theme of Pierre Andurand keeps losing; is the commodity trader moving into metals?
“Copper demand growth expected to accelerate due to:
1) energy transition (solar, wind, EVs)
2) data centres (generative AI, other AI, cryptos…)
3) increase in military equipment production
While mining supply is expected to reach a peak in the coming 2 years.
And we started the year with very low inventories,” Xed Pierre Andurand in March.
The three reasons why demand for copper is likely to expand, from an increase in military equipment production, should be cited as Andurand’s first reason. Bullet jackets are manufactured, using gilded metal or copper-coated steel.
“households are battening down the hatches and going into survival mode”
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The amount of this wretched ammunition used in the Ukraine war has shocked even the top brass. Ukraine’s real losses should be counted in millions, according to a high-ranking Polish General.
Frankly, with nations now openly preparing for war and the living standards of people collapsing, environmentally sustainable ethical investing could be on the back burner as people are struggling to put a roof over their heads and food on the table.
So households are battening down the hatches and going into survival mode.
Moreover, based on the number of unsold new cars, people are not splashing it on new EVs as the cost of credit and the rising cost of living crushes demand.
Demand for luxury goods has also decreased.
We could see falling prices of non-essentials while prices of essentials go higher.
“Overnight, it costs Cubans five times more to fill up their tank”
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Could food commodities buck Pierre Andurand’s losing trend?
“What a move on Cocoa year to date. From under $3000/ton to $9,345/ton in about a year. But it is still much lower than the 1976/77 high which is $28,000 in today’s dollar. $9,345/ton is $9.345 a kilo, and 65 cents per 100g tablet of 70% chocolate,” he wrote on X March 2024.
So stagflation in essentials means higher food prices, bearing in mind if investors like Pierre Andurand, commodity speculators, keep pouring capital into food commodities to make a fast buck, speculative capital inflows into food commodities could push prices much higher.
But spiralling food prices could add to further geopolitical instability.
The 2010 Arab Spring revolution was triggered by high bread prices.
In 2024, Cuba is in crisis as the war in Europe and the Middle East has disrupted the supply of food commodities and energy, resulting in the government abandoning subsidies due to a dollar shortage.
Overnight, it costs Cubans five times more to fill up their tank.
Developing countries heavily reliant on food and energy imports could become politically destabilized due to the rising cost of essential commodities.
Pierre Andurand keeps losing, but the famous commodity trader has seen better days.
His flagship fund typically enjoyed a good run since the post-Covid rebound in oil prices, with returns of 154% in 2020, 87% in 2021 and 59%.
Pierre Andurand is the founder and Chief Investment Officer of Andurand Capital. Pierre Andurand was previously Chief Investment Officer at BlueGold, a global commodities hedge fund managing over USD 2 Billion at its peak, which Pierre co-founded with Dennis Crema in 2007 and launched in 2008.
