“Deflationary Bust” A Risk From AI | Alex Gurevich’s Bull Case on Rates, “Perfect Trade” Potential in Japan, and The Risk of Artificial Intelligence Poses to Labor Market

Episode Summary

Executive Summary: Alex Guravich argues that precious metals are in a multi-decade cycle with platinum now his favorite, copper is underappreciated as an AI/compute infrastructure play, and AI will be deflationary in the near term by eliminating some white-collar activity but bullish over the long run. He sees the best macro trade as lower short rates and a steeper yield curve, while remaining cautious on oil and more interested in Japan and selected emerging-market/carry setups.

Main Topics: Precious metals rotation: platinum, gold, silver, palladium (Priority: 5/5): Guravich says platinum is his preferred metal because precious metals move in long, psychologically driven cycles; gold and silver have already rallied, and platinum/palladium are now catching up after years of underperformance. Copper and the AI/compute buildout (Priority: 5/5): He frames copper as a beneficiary of massive electricity and data-center/compute demand, arguing that the world will need far more power infrastructure than most people currently appreciate. AI’s near-term headwinds and long-term upside (Priority: 5/5): AI is expected to eliminate whole categories of informational white-collar work, depressing GDP and jobs short term, while eventually delivering large productivity gains and a singularity-like long-term future. Interest rates, duration, and the steepener trade (Priority: 5/5): His current macro view is bullish on short-term rates falling, but less conviction on the long end, implying a steeper curve. He favors long-duration exposure selectively and emphasizes asymmetric downside risk management. Japan as a stronger ‘perfect trade’ than the U.S. (Priority: 4/5): He sees Japan as a cleaner macro setup: BOJ hikes would likely strengthen the yen, while if rates stay low, Japanese bonds still carry well. He says the U.S. lacks similarly clear causality. Emerging markets and carry discipline (Priority: 3/5): He likes carry in places like Turkey, Mexico, and Brazil but warns that EM works only until it doesn’t; he prefers to enter after crises rather than after long periods of strong performance. Trade construction: dominant trades and necessity vs. sufficiency (Priority: 4/5): He reiterates his book’s framework: prefer broader, more robust trades that can win across more outcomes, rather than narrow bets that only work in one exact scenario.

Key Arguments: Precious metals, especially platinum, move in long cycles that often have little to do with business cycles or conventional fundamentals. Gold typically leads precious-metals bull markets, silver follows, and platinum/palladium often come later; the current rotation into platinum is therefore historically consistent. Copper is likely to benefit from AI-driven compute growth and the enormous electricity/data-center infrastructure required to support it. AI will likely destroy some pure information/research jobs entirely rather than simply making them more efficient, which could be deflationary and reduce GDP in the near term. Over a longer horizon, AI could still be enormously positive for productivity and economic growth, even if the transition creates a bust first. The best current rates trade is lower front-end yields, but the long end is less certain because fiscal stimulus and inflation could eventually steepen the curve. Options are most useful when the range of outcomes is wide; if the thesis is narrow or timing is uncertain, options help manage risk. Japan offers a more clearly structured macro trade than the U.S. because yen strength and bond returns are more directly linked to BOJ policy. Emerging-market carry trades can be profitable for long stretches, but the danger is that they eventually blow up after a prolonged run. A good trade should be “dominant”: it should work in more scenarios than the obvious trade and be tied to necessary rather than merely sufficient conditions.

Data Points: Platinum vs. gold ratio: Platinum is now less than half the price of gold - Used to argue that platinum is historically cheap and due for rotation. Gold-silver ratio: Expanded to around 120, then contracted back to the 40s - Cited as evidence of a precious-metals cycle moving through classic stages. Precious metals flat period: Platinum was roughly flat from the early 2010s until about 2023 - Explains why he maintained conviction despite long underperformance. Compute energy consumption share: Still in single digits of world energy consumption - He argues this share can grow dramatically as AI scales. Jobs automated away by end of decade: About 20% - His estimate for job displacement over the next decade. Transportation employment: About 3% of people employed - He says transport jobs are highly exposed to self-driving automation. Japanese bond carry: Around 3.5% yield - Part of his Japan trade thesis: bond carry remains attractive if rates stay low. Japanese funding cost: Basically zero / less than 1% - Supports the attractiveness of owning Japanese bonds against cheap funding. Emerging-market depreciation example: Turkish lira depreciated about 25-fold nominally - Despite huge FX depreciation, high carry made the trade still viable over time. Interest-rate scenario: Rates could go to zero in 1-2 years, then potentially rise later - His short-end bullishness now, with longer-term caution on the long end. Potential rate-move payoff: Roughly 10-to-1, possibly 20-to-1 in extreme options structures - Illustrates why options may be useful when outcomes are very dispersed. AI productivity timeline: 2030 is when energy bottlenecks likely start to be felt - His rough guess for when energy becomes a meaningful constraint.

Pivotal Quotes: "I am very positive on platinum, panides, palladium complex. My favorite metal is actually platinum right now." — Alex Guravich: Opening discussion of precious metals and his preferred metal exposure. "For the first time we facing certain sections of economic activity being entirely eliminated." — Alex Guravich: His core argument on AI’s near-term deflationary and labor-displacing effects. "I think the trade for me right now is long duration, bad on interest rates going much lower in the short horizon." — Alex Guravich: His clearest statement of current macro positioning.

Implications: Listeners should expect a macro regime built around AI-driven disruption, a stronger case for front-end rate declines, and selective opportunities in platinum, copper, Japan, and some carry trades. The transition may be messy before it becomes productive.