The media reported that Iran said it could reopen Hormuz within seven days if the US lifts its blockade, releases frozen funds and ends hostilities across the region.

Trump, very soon after the market closed, said Iran is running out of money, and that they are in a strong position, and bombing could resume after the midterms.

I have treated these talks as smoke and mirrors.

Neither government has publicly accepted the concessions needed to restart the June bargain.

US-protected oil traffic has given the US a belief that they do not need to concede any of Iran’s requests.

That makes further maritime escalation before year-end extremely likely in my view, even if the largest American strikes wait until after the November midterms.

The chance of Iran esacalating on its own timeline, should not be ignored now.

Washington’s wager

Trump set out the American strategy in a July 13 Truth Social post:

This article is free to read when you sign up with your email. In it, I answer:

• Why do I think the Iran peace talks are smoke and mirrors?

• How is protected tanker traffic changing the balance between Washington and Tehran?

• Why does that make renewed escalation extremely likely?

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That isn’t a confession. It’s the business model, and I’d rather explain it than have you find out by reading the scoreboard in December.

Thomas Edison tested thousands of filament materials before carbonised bamboo held a charge for more than a few hours. His line on his process was five words long: to have a great idea, have a lot of them.

Every investor worth their salt, I’ve ever met would nod at that.

But almost none of them run money that way. They run five or ten positions they can defend at a dinner party, each one a thesis, each one loved, and they wait. Then they wonder why the year produced nothing, and they blame the market.

The market didn’t do it. The flawed approach did.

Say one idea in ten becomes the kind of winner that carries a year. I think that’s about right for anyone doing real work, and it’s flattering for most. Now count the shots.

Five ideas in a year: a 41% chance you caught one. Twelve ideas: 72%. Thirty ideas: 96%.

The dinner-party investor with five loved names has a coin flip’s chance of owning the year’s winner at all, and he’s paid for that coin flip with all of his conviction. The person running thirty scruffy ideas through a decent process has nearly a certainty, and paid for it with a lot of small, boring, forgettable losses.

Peter Lynch owned 1,400 stocks at Magellan at the peak. People laughed at it then and still do. Lynch’s answer was that the person who turns over the most rocks wins the game, and he put up the best public record of his generation doing exactly that. He wasn’t smarter than the fund next door. He looked at more things.

Here’s what the losses cost. Take thirty ideas, each a 1% starter, and cut the ones that fail at a 10% loss, which is roughly where my exits sit. Twenty-seven failures cost 2.7% of the book across the year. One survivor that is 3xed to 3% of the book and triples pays for all of them twice over.

So my job isn’t picking. It’s throughput and discipline, in that order. Generate more than feels comfortable. Buy a small piece of ideas that earns a second look, so I actually want to watch it. Write down the date and the number that ends it before the first share is bought. Then let the calendar do the killing, and let whatever survives the calendar get bigger.

Four went in this morning. Each one would get laughed out of a committee, and I can give you the sentence that does it.

The first: “AI is going to eat this thing.” The market said it in February and the stock lost a third of its value in one session. The AI builders are now its largest customers, and last quarter it made an operating profit for the first time in its life.

The second: “The regulator rejected them three times.” The regulator rejected the building. The three letters said so, in writing, and found nothing wrong with the drugs. The building passed reinspection in July, and the three decisions are due in the first week of December. My base case says the shares are worth a fraction of today’s price and my bull case runs to double it, which is why it’s 1% and not 5.

The third: “It trades in a jurisdiction half your readers have sworn off.” Fine. It also trades below the cash in its own bank account, so you pay about $67 million for a business doing close to a billion dollars of revenue, and the founder who controls the votes has been buying it cheaper than I did. He’s also the reason it stays at 1% until a few specific things change.

The fourth: “It’s already up 150% this year.” It is. It’s also 93% below its 2021 high, and there’s an accounting charge of about $105 million a year that rolls off between this year and next and adds four points of margin without the business growing a dollar. Nobody’s priced that yet. They’re too busy looking at the 150%.

Everyone wants the tenth idea. Nobody wants the nine that bought it.

But the ideas are so good that they’re for our paid members only.

Babylon Burns is $399 a year or $49 a month. One idea that works pays for that a dozen times over, and the point of this letter is that you don’t get the one that works without paying for the nine that don’t. If you want a single ticker with a story you can repeat at dinner, this isn’t for you. If you want to watch thirty ideas a year go through a machine that kills most of them in public, and own the survivors before anyone’s calling them survivors, that’s the whole reason it exists. Substack gives you seven days to read everything and take your money back, so read the four dossiers first and decide after.

Find alpha or die tryin’.

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There was a time when we had statesmen who wanted the public to know the truth and who defended what was right morally. Those times are gone.

As Abraham Lincoln once said:

No man has a good enough memory to make a successful liar.

On September 19, Admiral Brad Cooper said U.S. forces had helped move more than one billion barrels of crude oil through the Strait of Hormuz “in the last couple of months”.

This isn’t up for interpretation, it is spoken word for word in a video.

A billion barrels in approximately two months implies an average above 16 million barrels a day.

But put that claim alongside CENTCOM’s earlier announcements and the arithmetic becomes considerably more demanding.

The final three weeks would have to average approximately 32 million barrels a day.

I checked the work on the GOVERNMENT supplied numbers, and the math doesn’t math.

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Breaking down CENTCOM’s numbers.

On July 20, CENTCOM reported that its forces had helped facilitate approximately 450 million barrels of crude oil since early May. I will link to everything so you can check for yourself. (CENTCOM release.)

On August 28,Cooper’s update: the vessels assisted by American forces had carried nearly 750 million barrels.

Think of those cumulative totals as odometer readings: subtract the earlier reading to find what moved in between.

750 million − 450 million = approximately 300 million barrels.

July 20 to August 28 is 39 days. The implied average over that interval is therefore:

300 million ÷ 39 = approximately 7.7 million barrels a day.

Keep those 300 million barrels in mind.

Now return to September 19.

Cooper described more than one billion barrels moving in approximately two months. Use July 20 to September 19: 61 days, with a dated CENTCOM reading at the beginning.

Under that reading, the 61-day window must contain at least one billion barrels.

Yet CENTCOM’s earlier figures account for only about 300 million during its first 39 days.

That leaves:

1,000 million − 300 million = approximately 700 million barrels.

And there are only 22 days left, from August 28 to September 19.

700 million ÷ 22 = approximately 31.8 million barrels a day.

The two-month average hides the extraordinary acceleration needed to make it work.

The final 22 days must average roughly four times the rate implied for the preceding 39.

Those are the barrels Cooper’s wording requires. Where are the daily figures showing that acceleration?

Before the Strait of Hormuz was impaired, 20 million barrels made their way through per day.

For their numbers to work, you need 22 uninterrupted days at 150% of prewar traffic.

That is a period when VLCCs were blown up by mines, missiles, and traffic was only moving through a thin Omani corridor.

A billion barrels since when?

There is a straightforward possible explanation: the billion-barrel figure was the latest milestone in the cumulative count that began in early May.

The problem is that the choice of words was deliberate to imply that it was in the past couple of months, which people extrapolated to the last 60 days, which as I believe I demonstrated above, is untrue..

That would follow naturally from the earlier readings:

450 million. Nearly 750 million. More than one billion.

Using one billion as an approximate total, early May to September 19 gives an average near 7 million barrels a day.

Compress the period to approximately two months and that becomes more than 16 million barrels a day.

Of course this is night and day, it’s the difference between 70% back to pre war conditions and half of pre-war flow

Anyone who understands anything about oil markets understands the difference between a 3-4mbpd gap and a 10 mbpd gap.

The cumulative would suggest 11mbpd coming out in the past 22 days, possible, although on the higher end.

A higher sustained flow means more supply reaching the market, less pressure on inventories and a weaker case for scarcity pricing.

If the billion-barrel count begins in early May, CENTCOM should correct the time description.

If it begins around July 20, the earlier readings leave approximately 700 million barrels requiring an explanation in the final three weeks.

CENTCOM should publish the starting date and the daily totals behind the announcement.

If one billion barrels genuinely moved in approximately two months, show where the remaining 700 million barrels fit.

Until then, the claim should not be treated as evidence that Hormuz flows have returned anywhere close to normal.

You don’t get to conveniently “slip up” and have all the stenographers on X and in the media repeat it without checking the work.

The public deserves better.

Patience is required, this conflict isn’t resolved, flows haven’t recovered nearly anywhere near to where they want you to believe.

And even if the flow is recovering somewhat, the inventories have been fundamentally impaired.

Patience is required through October.

As Nietzsche would say:

I am not upset that you lied to me, I am upset that from now on I can’t believe you.

And like Yogi Berra would say:

It ain’t over ‘til it’s over.

As Babylon Burns, we’ll light the cigars.

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Ten years ago the honest answer was: not many, not soon, and probably not on your plan. The therapists who took insurance were paid so little per session that most of the good ones stopped taking it.

If you lived outside a big metro, the nearest one who accepted new patients might be two hours away with a three-month wait. That was the state of outpatient mental health care in the richest country on earth.

Things have changed. It’s a very different world from when Tony Soprano went to see a shrink.

Over the past decade, 3 main things have changed, and together they’ve turned a cottage industry into an attractive investment proposition.

1. The first is an inflection in demand. 1 out of 5 American adults report a mental illness in any given year, and the share among people under 30 is higher and rising. The stigma that kept people from pursuing mental health related treatment has eroded extremely fast among generations entering the workforce, and they ask their employers for coverage the way earlier generations asked for dental.

2. The second is a change in the delivery mechanism. The 2020 lockdowns forced insurers to reimburse a video session at the same rate as an office visit. For the most part, that parity has held until today. Video sessions changed the business proposition of being a therapist significantly. A therapist in a rural county can now fill her calendar with patients from across the state.

3. The third is supply. The constraint in this industry is the clinicians, and specifically the administrative burden of being one. A licensed therapist running their own practice spends a large share of her week on billing and chasing claims. Many give up on insurance altogether and go cash-only, which shrinks the in-network pool further.

The alternative that’s emerged is salaried employment at scale: someone else handles the credentialing with a dozen payers, someone else runs the billing, the schedule fills itself from a web page or an app, and the clinician gets benefits and a predictable paycheck. For new graduates, for clinicians who don’t want to run a business, and for people who want to see patients and go home, it’s a better deal than the alternative, and the numbers of clinicians choosing it have grown every year.

The market is still almost entirely fragmented.

The largest employer of mental health clinicians in the country has a low-to-mid single-digit share of the profession. Then there are a few hundred regional groups and hundreds of thousands of solo and small practices.

This is a market prime for consolidation.

Why now?

The first attempt to consolidate this industry was a disaster. Between 2018 and 2021, private equity poured money into behavioural health roll-ups. The playbook was to buy regional practices at expensive multiples, stitch them together, and then go public.

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Joining for free it the easiest thing you can do to thank me, and it helps me more than you think it does. You’ll be exposed to my ideas, get some analysis and information for free, occasional stock picks, and it helps me feel good about myself.

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Yesterday, Kevin Warsh’s Fed increased its benchmark rate by a quarter point to a range of 3.75%–4%, arguing that tighter policy would bring inflation back toward its target faster.

But households are already absorbing a hit to their purchasing power. The Fed is adding borrowing costs to an economy where fuel costs are already squeezing budgets.

So Kevin Warsh is risking turning a cost-of-living crisis into a jobs crisis.

In August, consumer prices rose 0.4% in one month and 3.4% over the year. Gasoline prices jumped 3.9% over the month and 27.4% YoY.

Gasoline alone accounted for more than a third of the monthly increase in headline inflation. Core inflation, excluding food and energy, was lower at 2.4% year over year although it still rose 0.3% during August.

For a household buying the same amount of gasoline, a 27.4% price increase turns a $300 monthly fuel bill into roughly $380. That’s 80 bucks they’re not spending elsewhere.

And purchasing power is already slipping. Real average hourly earnings fell 0.1% in August and were 0.3% lower than a year earlier.

Real weekly earnings were still up 0.3% over the year, supported by longer working hours.

Workers were, on average, working more hours to stay slightly ahead on weekly purchasing power while earning less per hour after inflation.

That pressure has started showing up in spending, although the evidence is still uneven.

Inflation-adjusted spending in July was essentially flat, following a 0.4% increase in June.

Spending in dollar terms rose 0.2%, but that increase largely disappeared once price changes were accounted for.

The personal saving rate was just 3%. However, real disposable income rose 0.4%, so this was a spending stall rather than an across-the-board collapse in household income.

August’s retail figures then delivered a rebound: sales rose 1.2% following July’s revised 0.5% decline. Sales excluding gasoline stations increased 1.1%.

The evidence therefore supports a squeeze on purchasing power and an interruption in spending growth. It does not yet establish a sustained consumer contraction.

But that should offer us limited comfort.

The University of Michigan’s preliminary September consumer sentiment index fell to 47.8, from 51.7 in August.

Its expectations index dropped 11.1% in a month. Consumers’ assessments of their future personal finances and business conditions deteriorated sharply, with the survey’s director pointing to renewed fuel-price pressure and trade tensions.

The Conference Board’s August survey told a similar story. Its expectations index fell to 68.2, from 74.0.

Fewer consumers expected their incomes to rise, and more anticipated fewer available jobs.

The New York Fed supplied another warning: the average perceived probability of missing a minimum debt payment within three months rose to 13.2%, up 1.2 percentage points.

Households also reported worsening financial situations and harder access to credit. These are expectations and perceptions,, but they show pressure building before this latest rate increase.

Now add the rate channel.

Higher rates increase interest costs on variable-rate debt and make new borrowing more expensive. Existing fixed-rate mortgages do not suddenly reset. The pressure falls on revolving credit, adjustable loans as they reset, new borrowers, and businesses refinancing debt or funding expansion.

Businesses then face weaker customer demand alongside higher financing costs. Expansion becomes harder to justify. Hiring slows. Overtime gets cut. When revenues cannot cover costs, jobs go.

Your employer needs customers who can afford to spend. This connection between borrowing costs, spending, and employment is precisely how monetary policy works.

In 2006-08, they stopped hiking into the oil crisis.

The Fed’s previous tightening cycle ended in June 2006 at 5.25%. It held that rate until September 2007, then began cutting. There were no Fed rate hikes in 2007, in part because the oil shock intensified.

Average US regular gasoline prices rose from about $2.33 a gallon at the beginning of 2007 to $4.11 in July 2008.

The recession began in December 2007, before the autumn 2008 financial panic.

The 2007–08 oil shock materially weakened consumption, particularly purchases of domestic automobiles, and contributed to the recession.

The lesson is that expensive energy can deepen a slowdown even after the Fed starts easing. Households cannot instantly undo higher fuel bills, existing debt burdens, or lost purchasing power.

Preventing an energy shock from spreading into persistent inflation is a legitimate policy objective

But that does not eliminate the cost of the response.

A rate hike doesn’t produce a single barrel of oil. It restrains spending and financing across the economy while households are already paying more for necessities.

I say it’s like whacking the economy twice.

The warning signs are visible: falling real hourly pay, July’s spending stall, deteriorating confidence, and greater anxiety about meeting debt payments. August’s retail rebound shows consumers still have spending power… for how long?

Oil squeezes the household budget. Higher rates squeeze borrowing and business activity. Push both far enough, and the adjustment moves from what people can afford to whether they still have a paycheck.

That is the gamble the Fed is taking with Americans’ livelihoods.

We’ll stay nimble and positioned for this as always…

As Babylon Burns, we’ll light the cigars

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Babylon Burns portfolio moves

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Yes, I did say it was the BIG LONG, and I’m still saying exactly that.

(If you didn’t read that please check it out here)

It has been a month since we started the Babylon Burns portfolio, and so far it is doing just ok.

We’re up 2.5%, while being 80% invested and 20% cash, while the S&P 500 is heading lower (down 2.5% since August 15th).

My stock picks which are linked to my “The Big Long” theme, have driven a lot of those gains as they are up 9% in a month.

Now that’s a fine and dandy 1 month return, but with WTI crude oil breaking to $106 as I write this, up 29% in a month and up 4.8% today alone, members are asking why the oil stocks are not following the front contract of WTI.

That’s mostly because the number you see on the screen when you look up WTI crude oil doesn’t matter as much as you think it does.

If we look at the curve at close yesterday. The barrel for delivery next month was $101.54 (granted its higher today). The barrel for delivery in March was $84. The barrel for delivery a year out, September 2027, was $74.54.

So the market is telling you that if you want oil right now, you pay a hundred bucks, but if you can wait a year, it is $75

That $27 backwardation gap is the biggest thing in the oil market right now.

Now think about what an oil company actually is.

It is a pile of barrels in the ground that come out over up to twenty years. When you value that pile, you use the strip, the whole curve of prices for every year going forward.

And the strip says $75 next year and the low seventies after that. So the market is valuing your E&P stock on $75 oil. The extra $27 on the barrel it sells this month is a nice bonus for a quarter or two.

In the eyes of the market, it does not change what the company is worth.

As you can see throughout the conflict, the spread between front month and 12 months widened dramatically: this is the market saying that this isn’t going to last a year.

The 6 month shows a similar spread.

So what you’re seeing is the market saying that in 6 months oil should be $84 and in 12 months oil should be worth $75.

The cashflow over the next 12 months is the single biggest input into the valuation of an oil reserve (as it is the least discounted).

It is therefore natural that stocks move more in line with the 6-12 month segment of the curve, than with the front of it.

The behaviour since July has been different than it was in between Feb and June.

During the first spike, the price of oil stocks (as measured by XOP and XLE) were muted relative to the moves in the 6 and 12 month futures. The equity market was buying it even less than the futures market.

Now this has changed, and even the slower moving XLE has gained as much as the 6 month future has (assuming monthly rolling), this year.

For oil stocks to really rip, we need to see the curve flatten.

And I think they will.

It has now been revealed that the East-West Pipeline has sustained massive damage with 2 pumping stations taken out in attacks.

Saudis have been cancelling loadings for end of September, and word on the Street is they aren’t promising anything to customers before November.

Yes there is oil coming out of the Omani route, even if those VLCC tankers are constant targets of the Iranians who keep setting them on fire.

Maybe it’s 7mbpd. Maybe it is 10mbpd. Compared to 20 (22 if we take out the 2 from East-West now), that’s still a lot of oil that’s not coming out, and it is still a big problem

A 10-15mbpd gap isn’t solved by demand destruction of 2mbpd…

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Global inventories have seen 500-550 million barrels drawn out of global inventories.

The numbers in the US are bad too. Commercial crude down, gasoline, distillates down. A propane build doesn’t make up for this.

The US is talking about filling up the SPR now, which would be incremental demand and removal of supply from the past few months.

Look, the market is slowly coming to grips with what I’ve been saying since March:

This crisis ain’t over ‘til it’s over. Global inventories are flirting with stress levels. There will be no second chance.

Front contract might continue to spike, but more importantly, the back end of the curve will start to lift as we realize that a resolution isn’t just around the corner.

That’s what would drive the true returns in energy stocks. In the meantime we have to accept the front end of the curve pulling everything up, but in an increasingly backwardated manner.

My thesis is the same as it has always been: This conflict is harder to resolve, we’re not going back to pre-war flows, there is no quick source of new oil, the one that exists hasn’t come back.

So stay humble, and stay the course. Some things take time.

As Babylon burns, we’ll light the cigars.

I have a variety of picks that stem from this conflict from producers, to gas stocks, to chems, to Canadians, to Atlantic basin picks.

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Oil producers have pretty simple business models. You own a claim on the oil price they realize minus their costs.

This oil producer today has a cash cost of $11 per barrel of oil equivalent. Realized revenue per barrel isn’t encumbered by too many hedges.

Based on my valuation model it is currently priced for $67.5 WTI oil, which tells you everything you need to know about this: people think the current spike in oil prices will be faded and prices will return to pre-war levels.

Which is exactly how I’ve been positioning in energy since we got shut down this summer with a fake MoU which postponed the inevitable.

Sure torque to WTI or Brent is nice, and to a certain extent, all of our energy positions have some, but more important than that is: what stocks do just fine, if post conflict, whenever it ends, oil stays high for a sustained period of time, as a bid to refill reserves meets operational difficulties in restarting production.

These oil stocks have only partially rerated, even though they are now bringing in big boy cashflows.

Any more quarters of this means: more debt repayments, more reinvestment, more share buybacks, more dividends.

All the things that make good companies BETTER.

I actually would prefer a world in which oil remains longer for $80 to $100, rather than one where oil is way into 3 figures. I could make a lot of money from these cashflowing businesses, and we wouldn’t have to endure a tough transition.

But if we go up to crazy prices, the tail of the curve will be repriced higher, and this will be a winning trade.

The only thing that kills this is a resolution of the conflict.

The stock covered in today’s article is priced as if oil is going to be $67.5 forever. It is giving no consideration to the fact that WTI closed at $100 on Friday. If you believe that the conflict will last longer than they tell you, then this is worth way more.

Heck at $75 oil this has 25% upside. At $100, it’s a double. It’s a very well run company that buys back shares, pays a dividend, and has a steady trustworthy management team that have been around the block a few times.

But it is only for our paid members. I can’t give everything away for free, If you join Babylon Burns today, you will get access to:

• Reports every week covering the most important macro and stock level opportunities.

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• This gives you direct trade alerts.

• I have a track record of beating the markets documented on SeekingAlpha and through a hedge fund I’ve run (KPMG audited the accounts). While I can’t guarantee results, we will work relentlessly to find alpha or die tryin.

So join today. Substack gives you 7 days to request a refund if it’s not for you.

A single pick can pay for the subscription.

8 of our 31 portfolio positions are already up double digits.

Join us now, that way, when Babylon Burns, we can light the cigars together.

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THIS REPORT IS GIVEN TO YOU FREE OF CHARGE. ENJOY IT FROM START TO END. IF YOU ONLY READ ONE REPORT ON LABOR DAY, MAKE IT BE THIS ONE.

In an investment note written on January 16th to a Hedge fund client who was asking about silver I wrote:

Euphoria and overheating has historically led to compressions in the ratio, followed by correction across the board in precious metals. It is my belief that precious metals are likely no longer the best risk adjusted trade here.

Because of its high beta to gold, silver is at best a tactical play, one which seems now mostly done. Sure. another leg higher is always possible as flows squeeze it, but the general sentiment should be understood to be closer to the final innings than not.

The price per ounce squeezed a hard 30% over the next 2 weeks before topping out.

Yet, as members of Babylon Burns are well aware, during the past couple of weeks I have initiated a silver position and added to it in the past week.

Why?

This is what this report will look at in detail.

I am making this report 100% free. Today is the last day that you can join Babylon Burns at the discounted launch rate of $299. At midnight tonight (september 7th), the price goes up to $399.

This report gives you yet another taste of what to expect when you join Babylon Burns. If you want more of this, join us while the discount lasts.

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Silver stock to flow

When we think of a scarce asset like silver, it is important to distinguish two inputs to supply which will meet demand.

First there is the price of the flow, which has an economic clearing price based on whatever it costs to get an ounce of silver out of a mine or a recycling furnace.

Then there is the price of the stock, which is what it takes to persuade someone who is already holding an ounce of silver to give it up.

Every year the world uses more silver than it mines and recycles: 1.13 billion ounces against 1.09 billion in 2025, a gap of 40 million, forecast at 46 million this year.

The stock of silver is quite large compared to its flow (8-19x depending on how you want to count), and more importantly it’s massive compared to the annual deficit.

The World Silver Survey, which is issued every April, counts 19.3bn ounces of silver above the ground, of which 8.1bn are in bars and coins, of which 1.4bn are sitting in vaults.

A 46mn ounce deficit is 4% of one year’s flow of 1.09bn ounces, or 3% of the stock that is visible in vaults.

Given the massive stock, it is the nature of the silver holders which impacts the clearing price much more than the miners and producers.

Understanding who were and are the holders of silver is the foundational level of our analysis.

Who the sellers were

To understand how we accumulated such a large stock of silver, we need to take a little trip down history lane.

For a very, very long time, silver was money. Rome ran its empire on the denarius, before undergoing 250 years of debasement, gradually taking silver content out of its coinage and replacing it with copper washers.

Spain plundered Bolivia’s Potosi mine in 1545 and minted the silver into the “piece of eight”. It shipped so much of it to China, that the Ming rebuilt their entire tax system around it.

When the United States created their dollar in 1792, Congress defined it as 371.25 grains of silver and set gold at 15x the value of silver. (As a reference it was around 12x in Rome).

Over the world, and for over 2000 years, the ratio between gold and silver was set by law. Everyone held silver as savings.

Then, in no time at all, the world decided it was done with silver. After defeating France in 1871, Bismark’s unified Germany moved away from silver backed coinage and bought gold for its new Gold Mark.

The US dropped its silver dollar in 1873, India closed its mints to silver in 1893, and China was forced off of it in 1935 after the US bought silver at an sbove market price and drained China’s coinage out through its ports.

By then, every major country had demonetised silver, which left the world holding a monetary quantity of a metal which happened to no longer be a money.

Demonetizing silver pushed the gold to silver ratio from 15 to 30 by 1900, and nearly 100 by 1940.

We effectively witnessed the market repricing something which had lost its use. For the next 90 years, by and far, the supply of silver was institutions getting rid of a metal they no longer wanted.

The US Treasury, which had bought the world’s silver at above market prices, held 2.1bn ounces of it in 1958, and started selling from 1961. They took silver out of the coins in 1965, and stopped redeeming certificates in 1968. They emptied their stockpiles, until it was empty in 2002. By the time it, and other governments were done pressuring the price of silver, one of the largest industrial source of silver demand was disappearing: photography.

In 2000, photography demand for silver was a quarter of all silver fabricated that year, or 218mn ounces. Today the industry only uses 24mn ounces. The drop of 194mn ounces in demand is equivalent to adding a country larger than Mexico, the largest producer on earth.

So silver remained cheap: It underwent decades of governments liquidating their stock, and then of demand being curtailed.

In many ways, the marginal seller was indifferent to the price, they just needed to get rid of it.

But these sellers are gone. Government sales were 1.5mn ounces last year, down from 89mn in 2003. The demand destruction of photography has flatlined for years and won’t drop any further.

The stockpiles of indifferent sellers are now empty. Those who still hold silver today absolutely do care about the price.

Who is selling now

As you might remember, there is 19bn ounces of silver above ground, of which 8bn is in bar and coin form, and less of that still is in vaults.

So we can use the World Silver Survey’s market balance, subtract what went into exchange traded products, and we can infer the amountt the market had to draw from the non visible stocks on earth.

And we know more or less what price was paid to acquire this silver.

In 2020, the market drew 279Moz at an average price of $21. From 2021 to 2024 it drew between 137Moz to 205Moz a year, at a price of $22-$28.

In 2025, it drew 318Moz and paid $40 for it.

We can infer from this that the supply curve of silver holders has changed, from the indiscriminate sellers, to those who are interested in the price they get for their asset.

(A quick reminder: If you like this research and want to support me, today’s the last day to join Babylon Burns at $299 per year. Tomorrow the price goes up to $399. Offer expires at midnight tonight.)

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The mines aren’t stepping up.

Usually when a price goes up like it did between 2024 and 2025, new supply comes online to absorb the higher prices.

When it comes to silver though, the market doesn’t respond so cleanly because 3 quarters of the silver which is dug up is a byproduct of lead, zinc, copper, and gold mines.

These mines are making decision of what to dig based on the price of those metals, and silver is just a credit to their business. For example, Chile, which is one of the largest producers of silver on earth , gets nearly none of its silver from mines that were actively mining for silver.

The quarter of production which is primarily silver hasn’t responded either. Primary miners all in cost was $12.21 in 2025, which at the current prices is a 81% margin, yet their output still fell for the third year running.

Fresnillo, the largest silver miner in the world, cut its guidance in January and reported first-half output down 11% on thinner ore; the grade at South32's Cannington mine in Australia fell 18%; the biggest byproduct channel, lead and zinc, was forecast to grow 2% this year but instead shrank 3% in the first half.

The pipeline is thin and late: Panuco in Mexico, 10 million ounces a year from late 2027, is the only large primary project with a firm date before 2030, and Pan American's La Colorada Skarn will produce 16 million ounces a year from 2032 at a cost of minus $22.67 an ounce after its lead and zinc credits. The best new silver mine in the world will produce silver for less than nothing and cannot deliver an ounce for six years

And the cushion for pricing is thinning.

What’s more, the float of silver which gets traded to price the metal is thin and only a third of what it was a few years ago.

London Vaults hold about 907 million ounces, but two thirds of it belongs to ETPs. The market that sets the price every day runs on the rest, the free float.

It was nearly 700 million ounces in 2019. Then 331 million went into ETPs in 2020 and the deficits began, and by early 2021 Metals Focus put it at 360 million.

Every ounce that goes into an ETP is removed from the float without leaving the building, so investment demand does not just consume the deficit; it consumes the cushion that lets the deficit go unpriced.

By September 2025 the float was 136 million ounces, and the market found out what that means: lease rates, the cost of borrowing silver, went from under 1% to 35%-39% in a week.

When mining supply won’t move, indiscriminate sellers have left, and the float is thin (1.5 days of turnover today), then you have a market where a return of buyers set the price.

January was the perfect example of this.

By the end of 2025, Silver had doubled from the year before, and this drew in the speculative crowd. And it caught a bid. The retail crowd came in, and they came in big. They used leverage, and micro silver futures set volume records. The exchange launched a 100-ounce contract “to meet record retail demand”.

Options positioning reached 4 or 5 standard deviations above normal. India, which is the largest physical silver market on earth, purchased 147Moz of investment silver in 2025, of which half was through domestic ETFs which didn’t exist a few years earlier.

Silver went from $50 in October to $121 on January 29th.

The silver market is thin enough that it can be squeezed by retail investors only.

Of course, Kevin Warsh was named Chair of the Federal Reserve on the 30th of January, COMEX raised margin requirements, and SLV, the largest silver ETF, witnessed $3.5bn of forced selling in a day.

Silver fell 30% in a single session and 54% in under six months.

An interesting aspect of the crash in January, is how the physical market in SHanghai has adapted since.

Shanghai is relevant because its price is the one which refiners and households trade actual physical silver at. There is a 13% VAT which is a structural added cost to the London contract.

Prior to the paper squeeze, Shanghai was trading at a net discount to London when the VAT parity is considered. After the squeeze, it has remained within a 10-14% band, which is to say trading fairly. This is also a suggestion that the market is physically tighter than it was, as it is the buyer and not the seller who is eating the VAT.

Another way to think about it, is that below a 13% premium, nothing is being imported into China, as its not worth it. Into the crash and after it, there has been a marginal economic case to import Silver into China.

At the time of the crash, Managed money (think hedge funds trading futures), was net long only 38Moz in the weak of the peak, which was nearly nothing against the 500Moz at the 2017 high.

The speculative bid has mostly left the scene now. Open interest is down a quarter from January, and the non-US banks, who carry the structural short against the physical market, have cut their shorts from 262Moz to 132Moz in a year.

Bullion banks own silver that is sold to them by the miners the day it leaves the refinery. Now the bank owns silver, and it is happy to run a trading desk and earn a spread buying and selling silver, but it generally has no interest in participating in the direction of silver, so will sell futures against their metal positions.

So when the net short is drained, it is because it is silver which is leaving the visible system altogether.

The squeeze came when we added leverage to a market which was just too tight, and resulted in a distribution from the system, making the structural sell on silver suppressed further.

Where do we go from here?

This is a very good question, which I attempted first to answer with a model, which only ended up being indicative rather than prescriptive.

I attempted to model the price of silver based on the aforementioned survey. I used 2025 data of silver mined, recycled and used in the previous year as the baseline, and then improved their forecasts for 2026, based on data that was now available.

Then I had to consider how each category of silver supply and demand responded to price. What the data suggests is that scrap supply rises 0.16% for every 1% rise in price, jewellery falls 0.08% and silverware 0.44%, for solar I assume 0.3%.

What is impossible to be modelled is investor behaviour. The data shows that investors buy more on the way up, and then they buy more on the way down, as a different category of investor comes in at different stages. There is little prediction value in going back in the data here. It is not so obviously responsive to price as the other categories.

So what I can do instead is a guess and check: take a price level, scale the responsive categories from the 2025 level, assume a certain level of investment demand, and see whether the supply minus demand that results would equal the amount of stored metal which the scenario should allow out of storage.

If that doesn’t fit, we move the price until we find the equilibrium.

This gives us a few clear scenarios:

If nothing is released from old stocks, and that coin and bar demand is up 18%, as the survey forecasts, then we get a price of $67, in line with where we are today. If old stocks empty as they did in the past, the clearing price is considerably lower than it is today.

So the whole thesis hinges on:

The indiscriminate sellers have been depleted, and demand for silver will return from either institutional or retail crowds.

Let’s not forget that silver is the retail crowds way of playing gold, as it is still in the mind of many (mine included) a valid currency which has been demonetized. Silver has a beta to gold of about 1.4x. In many ways, silver is the leveraged gold trade. Nothing new there.

If the investors never return, the bear case is concentrated in the $42-$54 range. That’s 20% to 38% below today’s price, and is the shape of the downside.

But if the investor does return, it walks through an extremely small door, which can squeeze the price violently to the upside.

Every identifiable bar of silver bullion in London, New York and Shanghai is worth $89 billion at today's price: 0.38% of US M2, 0.22% of the federal debt, 1/326th of the gold stock, less than 2% of NVIDIA. The gold held by ETFs alone is 6x larger.

So the case for silver is effectively that it is gold’s little cousin, and that gold is being remonetized.

Gold is being remonetized

Silver will always be the cheap, retail oriented way to own the exact same trade.

Central banks have bought roughly 9,700 tonnes of gold since 2010, a quarter to a third of every year's mine output for four years running, and in the second quarter of this year they bought a record 289 tonnes into a 16% price fall.

I made the call on August 15th when we launched the paid version of Babylon Burns, that it was a good time to pick up gold miners, and our pick is up 21% in the past 3 weeks

I had previously written that I was waiting for the breakout, and it has happened.

I believe there is a good chance silver is next.

Silver's investor is not a central bank. It is the household in India and China, and the ETF buyer in the West, and both usually arrive after gold has moved, looking for the monetary metal they can still afford.

It happened in 2010 and 2011, when gold's run pulled silver to $48; in 2020, when 331 million ounces went into ETPs; and in 2025 and January 2026, when gold's rise to $5,600 pulled silver from $50 to $121.

To think we can have a gold run without a silver run, is to ignore 2,000+ years of human history.

Measured against the money supply silver sits at 11% of its 1980 level while gold has recovered to 42%.

Gold has been remonetized, but silver hasn’t.

The buyers are already in position. China is at import parity and rising. India is locked out by a duty and every previous Indian duty episode has ended the same way, with pent-up demand, grey imports and a reopening.

Western ETPs are 70 million ounces lighter than in January and hold none of the leverage they held then.

This is like timber waiting for a spark.

So how do we play this?

Of course you can buy physical silver.

Long term I think that’s a good idea. Silver coins are relatively cheap individually and make for a fun collectible. In a true shit hits the fan situation where our global currency goes tits up, having small denominations of precious metals will be a real edge.

But if we’re optimizing a portfolio of financial assets as a trade, something we can go in and out of quickly based on a change of winds, then what we want is pure play silver miners.

And if we’re playing a derivative of the price of silver, we don’t want a low cost silver miner.

We want the highest cost miner, that will give us the most torque on the movement.

Think about it, from today’s price, if silver moves back up to $122, that’s a 7.7x on margins for a producer with a cost of $55. For a producer with a cost of $12, the margin only goes up by 2.1x.

The clear caveat is that this then becomes a trade and not an investment, as we are building positions in companies we know are only viable if the price of silver pumps.

Why is fine, this is exactly what I’m looking for. Silver is breaking out and has retested the prior resistance line, if a run is going to happen, the downside is more protected now than it has been all year.

Later this week I will publish a standalone report on our current gold and silver investments along with new tickers we are adding to the portfolio.

As Babylon Burns, we’ll light the cigars.

If you want to receive my precious miner picks…

I highly encourage you to join Babylon Burns today.

If you join today, you will pay $299 for a year. If you join tomorrow the price goes up to $399.

I wanted to offer a launch price that was such a good deal that nobody could turn it down.

Since starting this publication, members have already made their money back from our picks, but more importantly, they get access to the Babylon Burns web app (mobile versions coming soon) which give them:

• a live traded portfolio with position sizes, stop losses, and targets

• notifications whenever I make a trade, so you can move as fast as I do.

• Monthly tear sheets of the portfolio performance. 100% transparency, no hiding or burying loser picks (we all know the BS artists who do that!!)

• My entire chart library, so you can follow the charts with my setups as they play out.

And of course you unlock all of the research which I have already published, and all the research which is yet to come.

If you don’t like it, Substack gives you a default 7 day refund period, no questions asked, I won’t even know why you cancelled.

If you join today it’s $299. By tomorrow it’s $399. No complaining, no whining, no asking me if I can slip you in at yesterday’s price.

I’ve been in the investment letter business for a while, and someone always pushes his luck after I clearly communicated the deadline. The answer always has been and always will be: NO PUEDO.

If you enjoy my research, if you feel like it can help you make sense of markets and become a better investor, then I highly suggest you subscribe today, and enjoy the price while it lasts.

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Author’s note: You only have a couple days left to join Babylon Burns at the launch special price of $299 instead of $399, saving a full $100 on your annual dues. After September 7th at 11:59PM, the price goes up and you can no longer get the discount.

Join now and lock in the special price of $299 before the offer expires. You get Substack’s no question asked 7 day refund policy if you don’t like it.

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I recently got this question by a member of Babylon Burns, and as I was typing out my answer in the comment section, I realized that the answer was getting long enough to warrant a full post.

Furthermore, I could use some graphics to support the case 'I’m making.

This was the question:

And here is my answer:

Great question, but I have to push back on both of these frames.

The first is that I am “so reliant” on technical analysis.

I think it is quite clear from the depth of the reports which are written that I am looking for situations with superior fundamentals, clear catalysts AND, yes a good chart.

The Jeet Kune Do of Investing

I think one of the greatest limitations of investors, is they get married to a style. For a long time, that was also true in Martial Arts. Bruce Lee’s Jeet Kune Do, which was a philosophy more than a martial art, was to take from each style what works, and discard what doesn’t.

In modern day mixed martial arts, it is now expected that fighters will be proficient in striking, groundwork and wrestling. Before the UFC, that wasn’t the case.

Interestingly enough, taking what works, was also Soros’ approach to investing.

I came into the investing world through the school of Graham and Dodd.

My parents were thrifty consumers, and the idea that you could buy $1 for $0.60 always appealed to me.

A repository of Warren Buffett’s investor letters made for my fundamental education in stock market investing.

There are a few things I’m obsessed with in life, but none that have quite captured my soul as much as investing.

Over time, I’ve studied, traded, implemented investing strategies which were inspired by Peter Lynch’s or O’Neill’s GARP approach, Mandelbrot’s work on the fractality of stock markets, Jim Roger’s macro trading insights, event driven investment, and classical technical analysis.

Along the way there is quite a bit that I’ve learned and tried that I have also discarded.

The fact that we can point to successful investors in most of these styles suggests that there is something true about each of them.

The complete investor doesn’t limit himself to one way. His only limitation is no limitation.

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So why technicals?

Some people think technicals are just la-la-land lines, but they are a ledger of all past transactions.

They tell us where market participants have bought, where they have sold, and in what quantity.

And looking at these things gives us a very good understanding of market structure.

And to be clear, I’m not looking at the hourly or minute charts, I’m looking at 1 day or 1 week candles, which reveal buyer and seller behavior over months to years.

And no they are not a crystal ball, they are not a prediction of what will happen, they are a description of what might happen. They give us insight into seller exhaustion, buyer excitement, the balance of power between the bid and the sell.

So as investors we kind of have two options: do all the fundamental and catalyst work and ignore the technicals, or incorporate the technicals to have an extra last mile view.

Timing matters. A double over 1 year is a 100% return, but over 7 years it’s only a 10% annual return.

And using technicals takes a certain level of humility.

It is like saying: I have this idea, I believe there are catalysts which can unlock value, but I respect that my knowledge and information is partial and likely biased.

So you look to the left and to the right, to see what others are doing. Ignore what they are saying, look at what they are doing with their money: that shows up in the order book, in volumes, and in the candlebars on a chart.

The way I see it is you can invest in a great narrative and a great valuation with a shitty chart, or you can invest in all those things and in a great chart.

To me it’s a no brainer.

Now, let’s look at a couple real world examples since I launched Babylon Burns.

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Leonardo (DRS): stopped out of the position

DRS supplies the electronics inside other platforms, naval electric power and propulsion, sensors, mission systems, so it gets paid on hulls and airframes it never has to build. Naval electric propulsion is bolted to a submarine and surface-combatant program Washington can't stop funding. Margins are inflecting and demand should be strong for years to come.

That’s a great narrative, a great story, a great business, and it’s difficult to fault it.

When we initiated the position the stock was forming a classical symmetrical triangle.

Pure technicians will tell you to not trade formations and only breakouts, but here we were approaching the apex of this formation, which suggested that buyers were coming back to the market at successively higher levels while supply remained resting at the same level.

The stock broke out of the formation alright, but to the downside.

Given that we had predicted this as a possible outcome that would nullify our thesis, we put in a stop loss at $42, and got stopped out. Given the chart was giving us just limited conviction, we had only sized at 1%.

A 5% loss on a 1% position is an 0.05% hit to the portfolio, which as we can agree is nothing.

“It’s not how often you’re right or wrong, it’s how much you make when you’re right, and how much you lose when you’re wrong".

The stock has gone down to $36. Without technicals you’d be reassuring yourself that nothing fundamental has changed, that maybe you should double down, that either way you should hold.

Technicals give us the answer: If this is a good idea, let’s revisit it later.

Love to lose, take a small loss and move on. To have a great idea have many, and you miss all the shots you don’t take.

AVAH: Textbook breakout

Another stock which I covered here (you can read the article by clicking this link),

is a good example of when the trade goes our way.

We initiated it at $9.09, and I added to the position on the way up.

The stock broke out of the triangle, then retested (the resistance becoming support), before a big leg up.

The stock is up 50% since then: Great, amazing, self pat on the back.

There are two lessons:

a. first all the catalysts I had identified in AVAH were supported by its price action, making it easier to get involved.

b. second, we know what we might expect from here.

A quick look at the structure now shows that we could maybe see a retest around the $10 level.

Everytime AVAH has run beyond it’s trend line, it has slowly consolidated before moving up. So if AVAH came to retest the long term trend line and stayed above it, then I’d just view it as an extra opportunity to add rather than panic that my gains are being given up.

Wrapping it up:

Technical analysis is a tool, and it should be included in the analysis. It doesn’t replace or remove the other concepts: valuation, quality, fundamentals, macro rotation, sector rotation, currency impacts, binary events. All of those are and must be part of the analysis.

Technical analysis is another arrow to your quiver, and it answers the timing question a lot better than many other ways of viewing stocks. I believe it would be a shame to not use it.

Join Babylon Burns today and get all of the following:

• All of the research reports I’ve already published.

• Weekly or twice weekly reports on the best opportunities for investors.

• A web application (annual members only) with the live portfolio.

• Trade alerts every time I add to or cut a position.

• Sizing, stop losses, everything about how I run my portfolio

• more awesome features being added every week.

And if you join before September 7th at 11:59PM ET (this is not a drill), you pay only $299 instead of $399 for your annual membership.

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Oh by the way did you check out our tear sheets?

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During the past 3 months, I’ve published a lot of content here, both free and since 3 weeks paid. As you probably know I am running a launch discount where you can join for $299 instead of $399, so long as you sign up before September 7th at 11.59PM ET. From Tuesday, after Labor day, the price goes up.

So today I wanted to address some of the questions which have been asked the most often.

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What does a subscription to Babylon Burns include?

You get all my research on finding alpha in these markets where we have no choice but to do things differently in the past. We’re on an unavoidable route to global fracture and devaluation of currencies, and relying on a 60/40 portfolio or index investing is likely going to lead to subpar results from here.

Annual members also get access to the web application we built so you can see the portfolio live, receive email alerts for trades, and at the end of each month receive the tear sheet of the portfolio so you can follow along.

Below is a preview of the August one:

I read the free posts. Why pay?

I give some stuff away for free, but all of my picks, the position sizing, the trade timing, the stop losses, the entries and exits, are for paid members only.

One good trade could literally pay for the whole subscription many times over.

Is this a tip sheet?

No a tip sheet is two words: a ticker, and buy/sell.

This is global equity research + macro all wrapped into a model portfolio where you can see how I size, trade, and manage risk in real time.

What’s the track record?

The book is three weeks old, I think we’d be getting ahead of ourselves.

My personal track record is that the 3 portfolios I’ve managed at the Dividend Freedom Tribe have beaten the S&P 500 despite being invested in a diversified portfolio of conservative dividend stocks.

As a CIO of a small systematic macro hedge fund, we’ve produced market beating returns since inception (KPMG audited our returns).

I believe we will do quite well with Babylon Burns, even if I’m pretty sure I’m not allowed to promise anything of the sort.

Who are you?

Sam Kovacs, born in the UK, grew up in Luxembourg and France, have lived in Canada, Indonesia, and the UAE, which is currently home. I am somewhat of a perpetual traveller spending a lot of my time between Cape Town, Bali, HK, Morocco and Europe.

I got a BBA at HEC Montreal, and a Masters of Economics at Sciences Po Paris. I never had a proper “job”, I launched my first business out of my student flat and never looked back.

What does $299 buy?

($399 from September 8th onwards)

You can expect research to go out every week covering either stock picks, a macro dossier, or portfolio updates. I will drip content at the cadence needed to follow the strategy.

Why pick annual instead of monthly?

Monthly is $49, which is $588 a year, and it doesn’t include the web app. Annual is $299 until Monday, includes the app, and is generally the better experience. I’m not interested in managing monthly access to the web app.

Why is the price going up?

$399 is the price of the newsletter.

$299 was the launch offer, set on August 15 to run through Labor Day so the people who backed the publication before it had a record got in under the sticker price.

Everyone who joins at $299 renews at $299. Everyone who joins Tuesday pays $399 and renews at $399. That’s $100 a year of savings right now.

Is the deadline real?

Yes. The checkout price changes at 11:59 PM ET Monday. I set the date on August 15 and I’m not extending it. Don’t message on Monday asking for the discount, it won’t be there.

What if it’s not for me?

Substack refunds in full within seven days. Read the archive, open the web app, decide.

I’m retired and my first priority is not losing money.

That is also my approach to investing: don’t lose money. However this is an equity investing strategy and equities carry risk and come with no guarantees.

I’m not in the US.

Neither am I. The portfolio currently holds NYSE, NASDAQ, TSX, TSX Venture, AIM, and OTC listings. Interactive Brokers covers all of them from almost anywhere in the world. This is a global equity strategy. It currently has a US bias, but that could change very fast.

How much time does it take?

The time it takes you to read a weekly report, the odd trade alert, and chose whether you’re going to act on it.

Do you own everything you write about?

Yes. Entries and exits go into the web app the day they happen. I cook what I eat and eat what I cook.

What happens when you’re wrong?

I sell and move on.

Is this investment advice?

No. It’s my portfolio, my scenarios, and my exits, published as I make them.

How many people are in?

Just over 500 paid members since August 15.

What happens at midnight Monday September 7th?

The price goes up to $399.

As Babylon burns, we light the cigars.

So if you are convinced by the depth and breadth of my research and want to be a part of this community before the price goes up, click through below and join the Substack today.

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My wife and baby are resting but right now I cannot, and will not, because the price of oil is making a move, which if confirmed, is setting up the next big bull leg in what I’ve called “THE BIG LONG”.

(I wrote a full article on the thesis).

Ever since making its highs back in March and April, Crude oil has been in a descending trend, as you can see above.

This formed a line of resistance which held up 4 times, as volume trended lower throughout.

Every rally since March has been capped. Today WTI is pushing 88, above the line for the first time in six months, and Brent settled $92.13.

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The suppression tool is nearly out

I explained how the price of oil gets manipulated and suppressed by the US government in a separate article (which you can read here).

Among floating oil, producer hedging, and other factors, the SPR drain has been a source of supply that’s been keeping a tab on oil prices.

The Strategic Petroleum Reserve’s short term peak occurred at 415 million barrels on 20 March. It was 289 million on 21 August. That’s 125 million gone in 22 weeks, 40.6% of design capacity, and the lowest level since November 1982.

The release rate has halved, from 8.9 million barrels a week in May to 4.5 now.

On Saturday President Trump announced the reserve gets refilled with Venezuelan crude “very shortly.” The SPR can’t store Venezuelan heavy oil. Even if it could, Venezuela only produces 1.25 million barrels a day in total against a hole north of 400 million. Any meaningful increase would come a decade from now.

The whole announcement reaked of desperation and nobody bought it.

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Yet nobody is long!

This is the part that still tells me everyone is asleep at the wheel and only just waking up.

Managed money net length in WTI was 84,020 contracts last week. That’s 12th percentile of the decade. Crude went from $56 in January to $119 in March, dated Brent printed $140, and speculative length peaked for the whole year at 99,887 contracts in April.

The fast money never showed up. Everyone has always faded this conflict, and the situation never resolved.

This means that there is no wall of underwater longs waiting to sell into strength, because the position was never built.

The bag has no holder, so upside resistance is becoming very limited.

What the technicals reveal about the price.

Technicals are sometimes La-La-Land lines. Sometimes they reveal market structure.

Multiple touches on a descending resistance line means supply is overpowering demand at ever lower prices. That’s the textbook read and it tells you nothing about the seller.

Resistance is resting supply.

Whether the resistance line holds depends on whether the source of supply is:

A. a replenishing pool, or B. a depleting pool

With oil there are both types.

Oil coming out of Hormuz is a replenishing pool. It went from being a 20 million barrel a day pool to a 5 to 10 million barrel a day pool. The replenishment is impaired. Producers hedging forward production is somewhat replenishing too.

Floating barrels, the SPR, and trapped longs from the prior spike are all depleting pools. I’d argue the coordinated blue pilled sellers who believe the admin’s headlines are a depleting pool as well, since their trust in their overlords eventually wanes.

So the question is whether we’re in a market structure dominated by sellers from a depleting pool or a replenishing pool.

The volume gives you the indication. Every hit of the resistance has come on volumes that are declining.

That suggests supply exhaustion, especially taken together with the higher lows, because buyers are coming in on ever more shallow pullbacks. $67.04 on 2 July. $74.24 on 5 August. $79.62 on 26 August.

Today’s break came on the lightest volume in weeks, which is what we can expect like when the pool has run dry. Whether we retest the line before ripping remains left to be seen, but THE BIG LONG has never been in such a good position.

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Babylon Burns Launch Discount Ends on September 8th (Tic, Toc, goes the clock)

It is not too late to pick up the founding rate at $299, against $399 from September 8th.

When you join today, you’ll receive all my oil picks, all the research I’ve published so far in the past 3 months, and the model portfolio which has already produced plenty of picks which are paying off.

You’d probably have earned back your membership dues by now already.

Plus, if you sign up to the annual membership, you’ll get automatic access to the web application (mobile app to follow soon), giving you in real time notifications every time I make a trade.

You’ll see when our positions get stopped out, when I add to positions, when I take profits.

It’s the perfect companion for membership which seeks to give you insight into how I, as a portfolio manager, run a global equity book.

So join now, it’s risk free, Substack give you 7 days to get a refund if it isn’t to your suiting.

Are you seriously gonna miss out on THE BIG LONG for less than $1 a day?

So, moving towards today’s transactions. I’ve been adding to some of the 16 names which I gave away , and adding 2 lesser known positions which I think are looking very good.

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A year on, initial denial rates rose to 11.6%. In managed Medicaid, 44% of inpatient claims are denied on first submission. Kodiak puts hospital revenue leakage at $48.4 billion against $38.6 billion the year before, so 25% more money lost during the year of the pledge, out of an industry running 1% margins.

One business sits at the intersection of this trend, and I’ve been buying it. It’s profitable, it has customers renewing at 97% and spending more every year they stay, and management has beaten and raised guidance nine quarters running. The stock’s down 40% because the sponsors who took it public own a third of it and can’t stop selling. And I’m now seeing a supportive technical setup which is getting me interested in initiating a position.

That’s the idea I’ll be presenting today.

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I believe this stock has somewhere between 47% and 100% upside. The street just rerated this to outperform and raised their targets, and I agree with them

If this trade goes our way, I believe there is a very good chance that we make at least $400 for every $1,000 invested in the stock.

By the way, if you join Babylon Burns today, your annual dues would be less than that. Until September 8th, we’re running our launch discount where you get to lock in $100 in savings and pay only $299 instead of $399 if you join Babylon Burns now.

Substack give you 7 days to ask for a refund, so it’s totally derisked for you. All it really takes is for one good pick to pay for itself, and members have already fully paid for their membership through picks I’ve layed out here.

So join today, unlock today’s pick and my review of all recent movements in the portfolio. You’ll get all my past research, and if you pick the annual plan, access to the web-app which presents the entire portfolio, my chart library, and gives you in real life trade alerts so you know when I’m increasing or cutting positions.

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Everyone I respected thought I was an idiot. The company owned local television stations, and by 2020 owning local television was supposed to be a slow-motion funeral. Cord-cutting was real. The audience was aging. The obituaries wrote themselves, and the crowd had already moved on to anything with the word “streaming” attached.

The stock was Nexstar, ticker NXST, and I bought it at around $80 a share, as it was recovering from its pandemic lows.

I sold this year at roughly $180. That’s 2.25x my capital on the share price alone. Along the way the company paid me a dividend that started at $0.56 per quarter and finished at $1.86, so I collected close to $31 a share in cash while I waited, which is nearly 40% of what I paid, handed back to me in installments that grew every single year.

Add it up and I made about 2.6x my money in six years, a little over 18% a year compounded, on a business the smart crowd told me was dying.

Put $100,000 in 2020 and you walked out with roughly $263,000, and for the last stretch of the hold you were collecting a 9.3% cash yield on your original cost, still rising.

Nobody wanted it, and that was the whole point

Nexstar was boring, and it was tainted. Local TV carried a stink of decline that kept generalist money away, and the sell-side barely bothered to cover it.

The people who owned it were the people who’d owned it for years. That gap, between what a thing is worth and how it makes people feel, is where the whole game is played.

Because underneath it all, the economics were extraordinary. Nexstar converted a torrent of its revenue into free cash flow, held its leverage roughly steady, and did one thing with the cash, relentlessly, through good years and bad: It bought back its own stock.

In 2020 there were about 46.7 million shares. By the end of 2025 there were 30.7 million. The company retired roughly a third of its shares in five years.

If you shrink the share count by a third and the business simply holds its ground, each remaining share lays claim to a third more of the same earnings.

The stock can go “nowhere” for years, the pundits can keep reading the last rites, and the owner who does nothing but hold keeps waking up with a bigger slice of the same pie.

Add a dividend that more than tripled on top of that, and you get an 18% CAGR on a stock everyone left for dead.

If you can find a business which has:

Extreme cash generation, a relentlessly shrinking share count, steady leverage, and time, then shareholders are in an extremely good position.

That’s it. That’s the machine. It isn’t complicated, and it isn’t a secret, which is exactly why it keeps working: it’s too boring for anyone to get excited about.

All I had to do was buy a wonderful cash machine that the crowd had mistaken for a dying one, and then sit still while it ate its own shares.

I’m looking at the same setup right now

There’s a business I’ve been building a position in that rhymes with Nexstar so closely it’s uncanny.

The market has decided this company’s best days are behind it, that something younger and shinier is going to eat it alive, and so the crowd has walked away and left the price reflecting the fear instead of the facts.

It throws off an enormous amount of free cash flow. It trades at a low multiple against that cash. And management is doing the one thing I care about most in these setups: taking that cash and retiring stock, aggressively, while nobody’s watching.

The reason I won’t give you the name yet, or the industry, or a single identifying number, is that the full write-up is the work I do for the people who subscribe, and it isn’t fair to them to hand the whole thing away.

But I’ll give you the one difference that makes this better than the Nexstar trade, and it’s a big one. Nexstar really was in a declining industry. Local TV is shrinking, and I still made 2.6x my money because the buyback machine was strong enough to overpower the decline.

The business I’m looking at now is not shrinking. Whatever you want to believe about its growth rate, and the crowd believes it’s roughly zero, the underlying business has a real tailwind behind it and is not going away.

So I’m running the same play I ran on a melting ice cube, except this time the ice isn’t melting. The market is misreading a growing company’s cash-flow story as a dying one’s, and it’s pricing the two the same.

Why this is closer to arithmetic than to a bet

Forget growth for a second, the way I forgot it with Nexstar.

Take a business throwing off, say, a 10% free cash flow yield that spends most of that cash buying back its own shares.

Hold everything else flat, and the share count falls by something in that neighborhood every year, which means earnings per share climb by a similar amount before the company grows by one dollar. That’s the floor. That’s what you get if the business does nothing but exist.

Now put even mid-single-digit growth on top of a shrinking share count, and you’re compounding in the mid to high teens, from a starting multiple low enough that a re-rating alone could hand you a second engine of return. I’m telling you those numbers because they’re mechanical.

The one thing the arithmetic assumes is that the company keeps converting cash and keeps retiring stock at roughly the current pace, which is precisely what it’s doing and precisely what it did all the way through the years everyone ignored it.

Wall Street has already written this company’s obituary. Nobody on the Street is going to get fired for avoiding a name everyone agrees is yesterday’s story, so the name stays cheap long after the story stops being true. I’ve made money on this setup time and time again: on a business the market had buried alive.

What to do about it

I’m putting my own money into this the same way I did with Nexstar, and I’ve written the whole thing up inside Babylon Burns: the company, the exact math, the price where the buyback engine does the heavy lifting. If you want to own the compounding machine before the crowd remembers it exists.

If you join today you can still benefit from our launch discount where you can join and lock in the price of $299 per year. On September 8th, that goes up to $399 per year.

I’ve been in this industry for a while now. I know how this goes. On September 9th, invariably, someone is going to email me asking for the discount, and the answer will be no.

I believe I’ve been very generous in giving away 2 months of content for free, and keeping a discount window open for 3 weeks.

If you’d rather not seize a good deal when life presents you one, there is not much more that I can do.

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“To have a great idea, have a lot of them.”

-Thomas Edison

Edison said that about inventing.

I think it’s the most important idea anyone could have written about investing, but nearly none of the pros run money like this.

You can’t just wake up and stumble on a ten-bagger. Well maybe some people can, but the odds of you picking 8 stocks and those being the biggest winners are quite low.

The great winners rarely look special the day we buy them, and the names we’re most convinced of can disappoint just as often as throwaway positions.

You need to audition a lot of stocks. Those that seem good enough, you can give them a shot in your portfolio. The research mechanism is quite dull, going through dozens and dozens of duds, finding something you like, buying it, only to realize you shouldn’t own it and be back where you started.

It’s a big part of the job.

It usually goes something like this:

A stock or an idea catches my eye. Maybe it’s a stock chart. Maybe it’s an insider transaction. Could also be a line in the FT about a shortage, a subsidy, a rule change, or whatever. Sometimes it’s my wife buying the same things again and again.

If there is a narrative that holds, decent financials, a valuation which isn’t too horrendous, and a chart which is agreeing with us, then I’m willing to build a small position.

The edge isn’t in finding ideas. We all come across a good idea sometimes. Heck I could throw darts at a list and come up with a good stock idea. It’s what you do with the position when it starts to work, and what you do with it when it just doesn’t work.

Because this is the part people get exactly backwards.

When the thesis keeps playing out as you anticipate, and the price validates, you don’t just sit on it, you add. Then you add more.

You let a position which you started out at 1% grow to 3% then 5% then 10%, and if it runs to 15% by itself, whatever.

That’s how you get to the concentration which all the greats tell you is required to generate alpha.

Everything in the human nature fights this, which is why so few do it.

The ego wants to book the win and feel smart, so it sells the thing that’s working.

It’s Klipp’s paradox. You gotta love to lose, hate to win. But humans love to win and hate to lose.

So the pull the flowers and water the weeds.

Human nature can’t stand being wrong, so it doubles down on the thing that’s failing.

You need to learn to invert that mindset. Love to lose and hate to win.

What does that mean?

If you love to lose, you’re quick to realize your losses and move on. If you hate to win, you’re in no rush to cash in those gains (and instead add fuel to the fire).

And in the pursuit of alpha you need to be willing to look far and wide. Sometimes I have a theme I want to express, like the Hormuz disruption I wrote about on Monday, the ageing America theme I wrote on Tuesday, or the rearmament theme I wrote about on Wednesday.

But then I come across a lot of stocks that just don’t fit anywhere. These are the misfits.

This article is about them, and I’ve got quite a few to introduce you to.

One's a trucker, one's an insurer nobody wanted, one runs the plumbing behind shareholder votes. And a few more oddballs.

Nothing ties them together except that each one, on its own, made me stop and look twice, and I liked what I saw.

One of the picks I’ll An insurer nearly everyone had written off, which was bad at underwriting for years and then all of a sudden became good. It came off a screen of ugly financials reaching new highs.

If it keeps plugging, this could be an easy double in coming years. It just posted a record quarter, and the market has re-rated it but not nearly enough.

I’ll spell it out to you below, along with a handful of other picks which top off our portfolio.

Plus if you join now, you can use the days ahead to catch up on the 4 other reports where I shared my full portfolio.

This is an amazing time to join Babylon Burns at the discounted rate of $299.

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Nothing about my method is difficult or a secret.

Edison gave the concept away in a sentence, and Richard Dennis said you could print his trading rules in the newspaper and no one would follow them.

Audition wide, kill most ideas cheaply, press the few that work until they’re too big for comfort.

Find alpha or die tryin’.

I’ll run you through these positions rapidly as I’ve done for the past week, which will then give you a full review of the current positions in the portfolio. In coming weeks I’ll add and remove positions as time goes by, and you’ll be notified here and through the web-application.

Some of these updates will be lighter than I had anticipated, but quite frankly as we’re approaching the end of this first week, I’m a little smoked from all the work that has been done. I nonetheless want to cover these names so you can finish the week with the entire portfolio.

PayPal ($PYPL).

• Position size: 2%

• Stop loss: $50

Ten years ago, if you paid for something online without typing in your card number, you were almost certainly clicking PayPal. It was THE button.

Then Apple built its own button, and Shopify built one, and a dozen one-click checkouts showed up that didn’t exist back when PayPal had the field to itself.

The stock has fallen more than 80% from its 2021 peak. It’s climbed off its early-2026 lows since, but it still trades at a fraction of its former self, and the market still treats it as a decaying business.

Top line is growing at 5% which isn’t explosive, and it retires 12% of its shares, which is being done at 11x earnings.
The branded checkout, the yellow button, is the high-margin heart of the whole company, and it has been losing market share, although still growing.

The frame which is presented suggests that if this keeps going, no amount of financial engineering saves you. You’re just buying back the shares of something that’s shrinking.

But the thing is, PayPal throws off more than six billion dollars of cash a year, and it’s spending about six billion a year buying its own stock, retiring the share count out from under a price that assumes the thing is dying.

That’s about 12% of the shares being retired a year.

There’s a new CEO and a $1.5bn of cost cuts incoming. And it still has a beautiful network: more than 400 million accounts, consumers on one side and merchants on the other. Apple can build a better checkout option. In fact I use Apple pay so much, if it’s there that’s what I want by default because it’s native to my hardware. Both can exist.

I had mostly forgotten about Paypal to be honest. I don’t think I looked at the price chart since the pandemic when I decided it wasn’t for me.
But recently, I was getting a watch serviced by an independent watchmaker, and he suggested I pay him by Paypal.

I thought PAYPAL?? And looked up the stock, and saw this beautiful chart:

On the daily chart, you can see it gapping up to and blasting through it’s downwards wedge on the latest news of Stripe and Advent making an offer for $60.5 per share which management suggested was inadequate given their execution plan.

This has brought speculation that Paypal might see a bidding war and others making offers, which could drive the price higher. If I were management, I definitely wouldn’t sell a business that is still growing, although slowly, which I can just engineer through a 12% stock buyback at 11x earnings.

Maybe Paypal gets another takeover bid, maybe its self-help story is enough. Either way I’m in and I got a stop at $50 if it comes back down.

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That’s just off the lowest the sector has been in thirty years.

The sectors weight is lower than it was at the top of the dot-com bubble, back when everyone with a pulse was buying pets.com and nobody wanted to own a drug company.

The weight has halved since 2022. It’s been through 12 straight months of outflows.

This is in large part because its gains simply haven’t kept up with the hotshot stocks crowding it out.

And there has been some ugly price action. UnitedHealth is down about 40%, one of its worst runs since the 1980s. Pfizer has been in the doldrums for a while.

The headlines have been taking care of the rest: drug prices pegged to overseas levels, tariff threats on pharma running as high as 200%, and the ongoing noise about Medicare and Medicaid.

And feeling may come from the top and spread down, handicapping an entire sector, revenue moves the other way. It arrives bottom-up, one company at a time, one quarter at a time.

It is a sector where there are amazing fundamentals sitting at discounted rates, and that are showing price charts which have nothing to envy of some of the market's more popular stocks.

We have seen this movie in the past, which is why playing it again today makes everything quite clear.

When the dot-com bubble broke in March 2000, the money went to the place it had ignored during the mania.

Over the two years that followed, the S&P Healthcare index rose about 30% while the S&P 500 fell about 16%.

When the line goes up on the chart, healthcare is doing better than the rest of the index. When the line goes down, it’s doing worse.

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It was the same setup exactly: a market crowded into one story until the valuations snapped, and a defensive sector left for dead that became the hiding place thereafter.

Authors note: We are already at hundreds (!!) of paying members of Babylon Burns, the turnout has been wonderful and we’re just getting started.

This report includes 5 amazing healthcare stocks, including one which could seriously re-rate which very few people are taking seriously.

If you join Babylon Burns today, you get to enjoy our $299 discounted price instead of the $399 full price which you’ll have to pay if you wait until after our launch period is over.

If the pick above pays off, a small investment in the stock alone would more than pay for your subscription. If for whatever reason this one doesn’t work out, we have you covered with plenty of ideas.

We initiated these 5 positions in the Babylon Burns portfolio on Monday, and they are all trending this week.

These and all the portfolio are yours when you join today. Monday we published our energy picks, Tuesday our senior housing picks, Wednesday our rearmament picks, and tomorrow will be the oddballs that fit nowhere.

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In June 2025 every NATO member except Spain signed up and committed to that goal

The market loved the idea, even though, as we all know, spending pledges get overdone. Governments make them to sound good, but then seem to forget quite what they pledged.

This commitment is going to be harder to walk back, because of the geopolitical environment we moved to in the past few years. Europe has spent thirty years spending its “peace dividend”.

Those days are over.

I’ve whittled down the entire rearmament and military aerospace industries to identify what I believe are the 4 best opportunities today:

We’re still in the launch week of Babylon Burns, which means that for the special price of $399 $299 today, you can get access to:

• All of my equity and macro reports. (we have 2 more coming out this week!)

• Access to the Babylon Burns portfolio with live trade alerts

• A helping hand in a very difficult market.

And if you don’t like it, Substack gives you a 7 day refund policy, I’ll never even know why you left.

Now this is a trade which has been well trodden for the past two years. Market participants have bid up the primes, to a level which I have trouble getting excited.

The trouble with a prime is that its revenue is function of a delivery schedule. And while that schedule can have a bigger order book, there is not massive torque on margins due to the increase in demand.

The contract was priced years ago, the book is full, and when demand jumps the prime has trouble charging more for it.

The bottleneck sits a tier down, and that’s where the money is made: forgings, composites, radar parts, the small engines that fly something once.

The 2026 US-Iran war ran emptied stockpiles faster than anyone predicted. Interceptors that cost more than the drone they kill are a bad trade which governments make anyway, again and again.

So it becomes clear that in conflicted environments like this one, the consumables of war have value, especially when we’re behind on actually making these things!

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The first boomer turns 80 years old in 2026.

At 65 years old it was golf. 80 is assisted living, home health, memory care.

Nobody moves into one of these buildings because they want to. They move in after a fall, after an incident, or when they are sadly losing their marbles. I have been witnessing this with my late grandfather and my now quite old and frail grandmother.

After 80, trouble accelerates.

The aging trade has been the most telegraphed idea in finance for thirty years and it has lost money for most of them.

The buildings went up ahead of the residents and owners spent a decade discounting rent against each other.

We’re now reaching an interesting fork in the road where demand is speeding up and supply is not going to match.

The population aged 80 and over goes from 14.6 million this year to 22.8 million in 2036, a 56% increase. The country’s population will grow 3.6% over the same ten years.

Against that: senior housing inventory grew 0.4% last year, the lowest since NIC started tracking supply in 2006.

There are fewer than 16,000 units under construction nationwide, down from nearly 50,000 in late 2019.

These take about two and a half years to open, so nothing that isn’t already in the works can possibly open before 2029 at the earliest.

Here is the arithmetic:

There are about 711,000 senior housing units in the markets the National Investment Center (NIC) tracks, and 639,650 of them are occupied.

If the share of over-80s who live in one remains constant, if you hold occupancy at 90%, then the industry has to add roughly 39,600 units a year until 2036.

The best year it ever had was 21,440 units, in 2018.

So the requirement is nearly double the all-time record, sustained for a decade, against a current run rate under 3,000 units. We need 13x what is being built.

That gap won’t close. There’s no version of this decade where these buildings aren’t full.

One of the Babylon Burns picks is a senior housing landlord which could seriously re-rate as we witness an interesting self-help story in it ramping up its occupancy towards market averages in coming quarters.

This rerating could drive it up 40-60% in coming years.

If you join today, you’ll get my 2 picks in this theme, and you can enjoy our launch discount which gets you an annual price of $299 instead of $399.

You’ll also unlock yesterday’s note in whcih I unveiled 13 energy picks in what I’m calling : THE BIG LONG.

Now is the absolute best time to join Babylon Burns

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People hate to think about bad things happening, so they always underestimate their likelihood.

The Strait of Hormuz used to see 1/5th of the world’s crude oil and liquified natural gas move through it.

As we all know, since the end of February, that’s not been the case.

The strait is on fire daily, and Bab el Mandab is under stress since the conflict has expanded to the Red Sea with the Houthis harassing the Saudis, which has reversed the temporary increase in BAM crossings we saw in April.

Libya oil depots are catching fire. Ukraine is blowing up loading docks in Russia. A tanker a day is catching fire in the strait.

The world as it is, is in fact, very, very concerning.

But the market is not trading the world as it is. It’s trading a LaLa-Land version of the world which looks something like this: It has decided the war ends soon, the strait reopens, and the price of oil goes back to where it was last autumn.

You can see that straight from the forward curve.

If you ask the EIA, they’ll tell you it’s going back to $65 once the Strait goes back to normal in September. It seems, to me at least, there is no world in which that happens.

Everybody is asleep at the wheel.

Long crude was the trade for about a week in March. Brent ran to $138, and then the reversion trade took the wheel.

I was long through the whole thing, and I gritted my teeth as I had to give back a lot of the gains. The jawboning, the media manipulation, the constant messaging from the administration and their pawns caused me to doubt the data that I was seeing right in front of my eyes.

I nearly got shook out of the position and had to endure a few sleepless nights where I flipped mentally from taking the long to the short side of the trade to consider what I might have gotten wrong.

The obvious move came and it went. Since the MoU broke down, I’ve been focusing on the physical, logical chain of events which do not need a $150 oil to do extremely well.

Because from now, what lasts is what I and a handful of others have been saying: This conflict continues, inventories draw down further, and you cannot print molecules.

Sooner or later the music stops, and we burnt all the chairs ‘cause we were out of heating oil.

You’ve watched the movie “The Big Short” (maybe you even read the book!). Well ladies and gentlemen, this, is “THE BIG LONG”.

By the way, I just launched the Babylon Burns portfolio which is included with the paid version of this newsletter. We’re running a launch special where you can join us for just $299 instead of $399 per year. You can learn more about the launch by clicking here. You can also skip ahead and sign up using the button below.

Refined products are tighter than they ever have been.

The 3-2-1 crack, which is the spread a refiner earns turning one barrel of crude into gasoline and diesel, is at record levels.

Think about what that spread is telling you.

A refiner doesn’t really care about the price of crude oil, it does care about the spread between what it pays for the barrel and what it sells the fuels for.

When the spread 3x and stays that high, it means that fuels are tight, and there is no denying it.

Products cannot lie about how tight the market is. There is no strategic reserve of diesel that a government can drain to push the price down.

Crude is different. The price can be suppressed. I explained exactly how in this report.

They are verbally, physically, and possibly through flows, manipulating the price of crude oil.

A consequence of this has been draining the Strategic Petroleum Reserve to keep the crude flowing, and the SPR is currently at 305 million barrels, the lowest level since 1983.

Crude is held artificially low by policy and jawboning, and products are clearing at a record because the physical market cannot be talked down.

Some say that it is because with all the refineries going offline, there is a glut of crude.

This doesn’t add up. As tight as products are, global supply of oil is tighter.

The speculative bid has just been beaten out of crude. Longs are nowhere to be seen.

The refiners are at record highs. Marathon, Valero, Phillips 66 have performed wonderfully.

They are those who capture the spread directly, have amazing businesses, and that is the obvious version of the trade. It’s the version with the worst risk-reward today, as it has been priced and the rallies have extended.

Not saying it can’t run a little more, I just don’t like the risk reward on these names. We’ll get to my picks in just a bit.

The biggest argument against all of this is demand. China, the story goes, is buying less oil, the world is slowing, and a slowing world does not need a war premium.

The Chinese import number that everybody quoted as a collapse was mostly inventory draws and refinery discipline, and it has already turned, with imports climbing back between June and July.

There isn’t a demand problem. The reduced demand in Japan was mostly its chemical industry being rationed because oil was not available and Japan preferring to supply them to its citizens instead.

The bears also say that “way more oil is slipping through Hormuz”, because vessels are turning off their transponders and going dark.

Yes, there is some of this, but since it is unfalsifiable, the bears get to inflate the numbers to match their narratives.

But it’s not just oil…

The market has spent a lot of time focused on oil, but LNG and the whole chemical complex are potentially MORE impaired.

Natural Gas prices adjusted dramatically to the war, and have since given back some tightness, although we’ll be entering European winter at all time low inventories.

American gas is around $3. European gas is near $15. Asian gas has run to $17 and even spiked above $20 during the peak.

Natural gas is in the primary input of half the chemical industry.

The US has a 5-6x cost advantage, vs a 3x differential before the conflict.

Anyone who turns cheap American gas into something the world needs has seen their margin get structurally better. The market has ignored this nearly entirely.

The trade exists because it’s grim.

Making the case I’m making today isn’t popular for one reason: the trade is distasteful.

My motto is to Find Alpha or die trying, and I will do that for you if you subscribe to Babylon Burns. If you enjoy this research, I strongly advise you to consider joining while we have our launch price of $299 going. (Goes up to $399 if you miss it).

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To own this trade you have to be comfortable betting that the war does not resolve quickly or cleanly, that the Middle East stays dangerous. You need to take the view that the world stays fractured and that the global equilibrium which we took for granted is now a thing of the past.

That is a bet against progress, and most portfolio managers do not want to make this bet even when they think it is right, because it looks bad in a quarterly letter and it feels bad to hold.

The speculative net longs are extremely low given the current setup. Nobody wants to be in this trade.

You’re betting against Donald Trump, against Scott Bessent, against the USA being able to finish a war it started.

And that’s not for everyone. It bursts their Lala-land fantasy.

The disruption is real, and the clock is running

Tankers are getting bombed on a daily basis.

The June reopening produced a small bump and then we were straight back to trouble. The conflict has expanded. The IRGC has hardened. The conflict is setting up for a gargantuan, dragged out war.

You do not take a fifth of world supply off the water for six months and call it a slowdown. oil on the water is now back to where it was just before the MoU was signed. We’re in big trouble if there is no resolution.

We’re draining inventories and hoping for the best. But even this has second order consequences that nobody is talking about.

Some estimates suggest we are likely to see a 1mb/d of excess demand for 2-3 years when this thing is said and done as countries build back their strategic reserves beyond what they were before the conflict.

Reserve draws are not an unlimited tool.

There is an operational floor, below which you can’t get any more out. Every barrel closer to your floors gives your enemies more leverage: you eventually get to a tipping point.

The only thing that kills this trade is reopening the strait, or a global recession coming before it pays off. Nothing is pointing that way.

If I were you though, I wouldn’t play this through Brent futures or options.

It is much better to get a working picture of the flows, the chokepoints, the logical next steps. Of course we do this with imperfect information, but it allows us to make educated directional bets on the market.

One of my favorite picks is trading at 4.5x cash flows on a superior business with catalysts. a rerating to its peer average alone would bring it up 43%, with oil simply staying where it is. It returns all of its free cashflow to shareholders, and we likely get a windfall.

Below i will reveal it to you along with 12 (!) other names that make up our “THE BIG LONG” book.

Of course I cannot do full deep dives of 13 names in one article and be expected to publish the same again on tomorrow’s “The Boomers strike back” piece, and again on Wednesday, and Thursday, and Friday.

So I’ll be giving you the quick thesis and positioning, with alarm bells and stop losses, and we’ll double down with some in depth reports in the coming weeks.

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Exactly 55 years ago, on August 15th 1971, Richard Nixon went on television and told the country he was closing the gold window. There would be no more turning dollars into gold.

He called it temporary. It wasn’t.

Gold was $35 an ounce that night. It’s north of $4,300 now.

Your dollars have lost more than 99% of their value against the one asset the government can’t print.

In fact, real wages just haven’t held a candle to assets, and everyone has been left behind.

If you’re running as fast as the other guy, you’re on a treadmill and going nowhere.

The opportunity set is getting concentrated at the top. Working hard, being disciplined and hoping for the best just doesn’t cut it anymore.

So as promised when I started writing on Substack a couple months ago:

Today we are launching the Babylon Burns Portfolio and the premium content.

I built it around the world I think we live in right now:

Governments have promised their citizens far more than they can afford. They can’t seem to tax or grow their way out of their hole, so they’ll inflate the gap away. It’s what I call the fiscal endgame.

At the same time, the global order is splintering into blocs that no longer trust each other. Just look at what is happening in the Middle East. I call this multipolar fracture.

So we’re in a very difficult environment where the fiscal endgame meets multipolar fracture.

We are tasked to do better in a tough, tough environment.

The job is to find alpha wherever it hides in global equities and drag it into the light, Leave no rock unturned.

Find alpha or die trying…

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Why you should care what I think

If you haven’t come across me, here’s my mini bio:

I have successfully called the collapse of currencies, Brexit, the V-shaped recovery post pandemic, The 2021-2022 oil bull, the market bottom in 2023 (within a week), the AI trade and more.

I was born in England, grew up in France, did my undergrad in Montreal. While I was getting my Masters in Economics at Sciences Po Paris, I launched my first investment newsletter on SeekingAlpha, helping individual investors beat the S&P 500 with less volatility while building reliable income they can retire on.

I’ve beaten the market for years, at the retail level and the institutional level, across a few different strategies. I’ve been the CIO for Havelet Bay Capital, a macro hedge fund.

I’ve traveled the world, lived in 10+ countries, visited dozens more, and advised sovereigns on economic policy, most recently in Sao Tome & Principe.

I’ve made a bunch of mistakes along the way too. We all do. I’ve made some investments that didn’t work out in public and in private markets.

But as George Soros once said:

And that’s what I seek to deliver with Babylon Burns: a relentless system of generating alpha by leaving no rock unturned, and implementing strong discipline in managing the portfolio.

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This subscription has already paid for itself.

There are some substacks you read for entertainment, some you read maybe for education or general knowledge.

And then there are the substacks that you read because they will MAKE YOU MONEY.

While I fully expect to have my share of bad stock picks (and I already explained in one of the previous articles how that is part of the design, and that the best way to have a great idea is to have many ideas), my aim is to find alpha (or die tryin’).

I wrote a report on July 26th with a bullish call on Aveanna Health ($AVAH). The stock is up more than 30% since.

So even someone making the smallest of investments of $1,000 in this stock, would already have paid for a full year of my work, before I even asked for a single dollar.

I’ve got a lot of interesting stock picks for you, and they’re all coming next week.

What’s coming next week?

To commemorate Nixon’s 55 years of unpegging gold, I’m giving Babylon Burns subscribers my favorite gold miner below.

Then next week will be a busy week. On Monday you’ll get the full portfolio in the web application at market open.

I will be writing one report per day to cover the whole portfolio, this is what you can look forward to next week:

• Monday: The Big Long. The oil disruption the market is sure is temporary, and the bet that it isn’t.

• Tuesday: The Boomers Strike Back. The demographic trade sitting in plain sight.

• Wednesday: The Only Bull Market Politicians Guarantee.

• Thursday: Left for Dead. Buying healthcare while everyone else runs for the exit.

• Friday: The Island of Misfit Longs. The oddballs that fit no theme and make money anyway.

If you don’t sign up, unfortunately you won’t be getting the stock picks, their sizing in the portfolio. You’ll still get a little taster of the ideas. But it’s not the ideas, it never was the ideas, it’s what you do with them.

Subscribe today and all of it opens for you, starting with the gold miner in a minute.

The offer

To be clear this isn’t just a newsletter. I’m offering you the chance to build a portfolio alongside me, to see when and how I build positions, to see my thinking on the micro, and on the macro.

You can pay month by month for $49, and that will give you all the write-ups on Substack. That’s fine if you want to hang around and decide if this is right for you.

Annual is $299 for the year. With that you get the web-app thrown in, which will evolve into a mobile application within short order, and gets you all my charts, the live portfolio, the trade notifications and so on.

I think the math should make the choice for you.

Twelve months at $49 is $588. If you’re serious about this, you take the annual.

Also, after Labor Day the annual goes to $399. So that’s $100 in your pocket to take the decision today.

I don’t even have to tell you this, but one good idea, out of everything landing this week and everything after, pays for the year many, many times over.

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My favorite gold miner: Buy a mine get one free!

A few weeks ago I wrote a piece explaining why I wouldn’t touch gold miners with a ten foot pole (yet).

The main idea was that I was waiting for some confirmation of a breakout.

I don’t need to pick the bottom, I need to enter a trade when the risk reward is maximized.

On August 4th I posted this.

And then on August 5th, we got the breakout, so at market open, I started building my position.

It’s up 12% so far, and counting (the graphic above says 14.1% as I prepared this chart a couple days ago, it has given a couple points back over the past two days).

A miner is a geared bet on the gold price with a management team and a jurisdiction stapled on, and most of the time that cuts the wrong way.

Costs run. Grades disappoint. Governments rewrite the rules mid-game.

You take all the operational pain to get an exposure you could have had cleaner just owning the metal.

But if you’re willing to do the work, you can find a gem which is mispriced due to risks which are misunderstood by the general market, and I believe we have found this today.

Why gold, one more time

Read more

I’m a bit upset, because I can come up with an investment idea and build personal exposure faster than I can write up a full report and build charts, which as you can guess, is a long and laborious process.

It’s a labor of love, and for the past 2 months I’ve been publishing reports weekly for free, with no paywall.

Which also means for the past 2 months, everything I've published for free has reached you after I already had the position on. That's the honest reality of a weekly newsletter.

But that changes on Saturday.

The premium version of Babylon Burns launches this weekend. My macro analysis stays in front of the paywall. Everything that actually makes money (the stock picks, the timing, the sizing, the positioning) goes behind it including numerous exclusive features.

Annual members get:

• Live trade alerts. You'll know when I put a position on, as I put it on, rather than waiting for the write-up.

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Monthly members get the full research, every premium write-up as it publishes. But the live portfolio, the trade alerts and the app are annual only. These letters aren't built to be followed month to month, and the pricing reflects that.

Now’s the best time to subscribe before we put the paywall up. Get started today.

I’ll be wrong quite a bit, and I’ll be right quite a bit, and being able to turn those insights into alpha is something that will require the annual membership.

The pitch:

In the autumn of 2025, one hundred and sixty six people took part in a study that would decide the fate of a drug.

Their task was simple: Open a small foil pouch, take out a strip of film about the size of a postage stamp, and place it under the tongue.

Nineteen of them put it on top of their tongue instead

That was enough for the FDA to reject the drug on January 30 of this year. Now, you should note that the agency raised no question about efficacy, none about safety, none about how the product is made.

The rejection was based on the fact that the pouch that took seventeen seconds to open and that 11% of people put the film on top of their tongue rather than underneath it.

Within three weeks the company behind it had lost roughly half its market value, because a rejection is a rejection in a headline.

Often with these small names, the market can’t always tell the difference between a drug that failed and a simple packaging problem.

Thankfully, I could.

The company is Aquestive Therapeutics, ($AQST), and I tweeted the call on July 29 at $3.60.

The stock has gained 20% since. I expect another 50% upside, a move to at least $6.50, by next spring, when I expect the drug to be approved.

And just this Monday, we got the first hard evidence that it’s on track: the redesigned pouch now opens in three seconds, the placement errors are down by more than 80%, and the study everyone feared came back very, very clean.

I’m laying out the full case in this report.

A good drug is one people actually use

Anaphylaxis is a sudden, severe, and potentially life-threatening allergic reaction.

It can be caused by peanuts, shellfish, a bee sting, and within minutes the person’s airway swells, blood pressure collapses, and without treatment… people die.

There is just one drug that reverses it: epinephrine.

It also goes by the better known name of adrenaline. It has no substitute.

The entire question in this market is one of delivery: how do you get this drug into a terrified human being rapidly. Self-administration, or a parent helping a child are the two common scenarios.

For half a century the answer has been an injectable needle. The EpiPen and its generics from Viatris and Teva own the prescribing habit; Auvi-Q is a talking auto-injector; Symjepi is a prefilled syringe.

They all work, and they all share the same flaw, which is that people don’t use them.

Patients delay because they’re frightened of the needle. Worse, they don’t carry the thing at all, because an auto-injector is a bulky plastic tube that doesn’t fit in a pocket.

Study after study shows the same pattern: fatal and near-fatal reactions where the device simply wasn’t within reach, or wasn’t used in time.

In August 2024, ARS Pharmaceuticals broke the needle barrier with neffy, an epinephrine nasal spray.

It proved the point the whole industry suspected: give people a needle-free option and prescriptions follow. neffy did $72 million of US revenue in its first full year, and CVS Caremark, one of the three big pharmacy gatekeepers, added it to formulary this July.

Anaphylm, which is AQST’s drug, is the next step in that logic, and I think it’s a step change in convenience and usability.

It is delivered on a film the size of a postage stamp that dissolves on contact under the tongue.

It weighs less than an ounce and you can pop it in your phone case or your wallet, which makes forgetting it less likely.

If the category’s core failure mode is that the medicine gets left at home, the small stamp is the best solution for that problem so far.

It would be the first and only oral epinephrine, and the FDA’s own review didn’t question any of its pharmacology.

Needless to say, this is a multi billion dollar market which AQST would be chipping away.

The company behind it

Aquestive isn’t a story stock invented for this product, which is refreshing, as it gives us a floor under the share price which is a setup which is easier to get behind.

It’s a twenty year old drug delivery manufacturer in, New Jersey, whose specialty is exactly one thing: turning drugs into stamp sized films.

Its base business makes Suboxone film, the opioid dependence treatment, for Indivior, along with a handful of smaller licensed products. That business did $44.5 million of revenue in 2025 and runs from a plant which the company owns.

This business is probably worth about $1.50 per share without Anaphylm.

Add in the option of eventual approval through a third or fourth submission, and failure from here looks like a $2 to a $2.50 stock.

What the FDA said, and the case against this idea.

A Complete Response Letter is the FDA’s formal no: the application won’t be approved in its present form, and here’s why.

Aquestive’s letter, received January 30, basically said that the label needed to be improved to address the film placement, the pouch was difficult to open, and asked for one supportive pharmacokinetic study.

According to the company, there were no clinical deficiencies, no safety deficiencies, and no manufacturing deficiencies. The drug’s core data, the head to head pharmacology against auto-injectors across eleven studies and 967 administrations, went unchallenged.

This was the whole case for it which got me interested, but before we go deeper, there are some clear counterpoints which I think it would be best to consider before we go down this road.

First, we haven’t read the letter. Nobody outside the company and the agency has.

Everything above is management’s characterization, and the FDA’s researchers once compared 61 of these letters against the press releases describing them: only 14% of the statements matched, and sponsors omitted roughly 85% of the agency’s safety and efficacy concerns.

Aquestive’s framing has been consistent for six months and is corroborated by the specifics it volunteered, but let’s not forget that we are asked to trust the party with the most to lose.

Second, Aquestive is second in its category. neffy is approved, funded, eighteen months ahead, and defended by a sales machine which Aquestive won’t have the resources to match.

And finally there is about $95mn of committed capital from Oaktree and RXT, which only comes through if the drug is approved.

So this isn’t an obvious layup operationally. I’m more interested in the binary nature of the approval though.

From here, I paused, and asked: what happened in other cases when companies got a rejection similar to this one?

This is where my detective work started.

Twenty one rejections like this one

There’s no published approval rate for rejections of this type, and the academic work that classifies rejection letters is too generic to be of use.

So I built the dataset myself, by hand, from FDA review documents and two decades of SEC filings, and then ran the entire EDGAR full text corpus across over 4,500 filings, to make sure I hadn’t missed cases.

I found 21 original applications since 2010 where the FDA’s objection was substantially about human factors, usability, device performance, packaging, instructions, or labelling.

Let’s look at some of the case studies, as it will give us a better feel for what we’re dealing with. You can speed read this bit if you need to.

First the good ones:

In November 2014, Avanir’s Onzetra Xsail, a migraine drug delivered through a novel breath powered nasal device, was rejected. The FDA’s summary review says the letter was issued “because of human factors deficiencies”: in the usability study, only a fraction of patients delivered a full dose correctly. There were no clinical questions, nor manufacturing questions. Avanir fixed the device, reran the study, and the same reviewer wrote that the sponsor “has adequately addressed the device usability issues” and approved it.

It took 14 months from the letter of refusal to the approval.

Kloxxado, an emergency nasal spray for opioid overdose, drew a 2020 letter in which human factors was one deficiency among twenty; the agency found “insufficient information to support the design of your proposed user interface.” There was one resubmission, and after 14 months, it was also approved.

Gimoti, a nasal spray, took a letter on device quality and clinical pharmacology with no new clinical data demanded: it was approved in 15 months.

Kynmobi, an apomorphine film for Parkinson’s is worth reading closely because its letter was worse than Anaphylm’s. The FDA cited human factors and inadequate bridging to the reference drug and inadequate characterization of adverse events, a mixed rejection that reached clinical ground. It still cleared on a single resubmission in 16 months.

MydCombi, an ophthalmic spray whose only sin was device documentation, took 18 months.

Now, the not so good ones:

Adamis’s Symjepi, an epinephrine prefilled syringe, is the case that shows us what the FDA sounds like when it doesn’t approve of the device: the agency wrote that the device as designed “could fail in the hands of the intended users,” and that in an anaphylaxis emergency, delivery of epinephrine could not be assured.

It took the company two rejections, a redesign and 27 months to approval.

Primatene Mist spent 54 months and two letters proving that ordinary consumers could read its label.

scPharmaceuticals’ Furoscix, a wearable furosemide pump, took 52 months and three review cycles even though the FDA twice said explicitly that no new clinical trials were needed, because the fix required modifying hardware.

Amphastar’s naloxone nasal spray, took 72 months, because the human factors remedy forced a device change, the device change altered the delivered dose, and the altered dose demanded new pharmacokinetic studies.

Teva’s generic EpiPen needed 30 months. Mannkind’s Afrezza inhaler, 52, after the agency demanded two new clinical trials to bridge a redesigned inhaler.

And 5 never made it at all.

20 of the 21 are resolved. 15 were approved, 5 died. 75% made it eventually, against a baseline historical base rate of about 73% for rejected applications and a 50% first try rate, from a decade worth of studies.

But the aggregates aren’t so interesting to me, it’s more the structure of the letters which gave us insight into when it would go

Every case that cleared on a single resubmission was approved in 12 to 18 months, with a median of 14.

Every case that needed more than one resubmission took 26 to 72 months, with a median of 44 .

There is a massive fork in the road which lies between the group that tried on the first fix, and those that didn.t

It’s whether the first fix works. When the remedy is packaging, instructions, and one repeat study, you get 14 months and done. When the remedy turns out to require changing the product, you get years, or never.

Where it gets interesting, in six of the resolved cases, human factors or packaging was the only problem, with clinical and manufacturing untouched. All six were approved. Anaphylm, per everything disclosed, is the seventh member of that group.

Plot Anaphylm on this distribution and the projection writes itself. The letter is dated January 30, 2026.

The single resubmission median of 14 months lands in April 2027, and the mechanics agree: a 3rd quarter resubmission plus the FDA’s standard six month clock for this class of response puts the decision between late March and June.

That’s the spring I’m pointing at, and everything now rests on one question, whether Anaphylm’s first fix works. Hold that question, it was mostly answered on Monday.

On Monday morning, August 10, Aquestive published the results of the redesigned program, and they read like the fast lane of the reference class.

The pouch that took a median 17 seconds to open now takes 3. Incorrect film placement, the error that triggered the entire rejection, fell by more than 80% against the failed study. Self administered pharmacokinetics matched clinician administered. And the study I flagged as the single biggest risk in this situation, the deliberate misuse arm testing what happens when the film is placed on top of the tongue anyway, showed clinically meaningful pharmacodynamic response.

That last result means even the residual error mode, now down to roughly one user in fifty, has acceptable pharmacology behind it. The fix, if we believe the evidence, works.

The resubmission stays on track for this quarter, and Canada, the UK and Europe are advancing in parallel, with European regulators already on record that no further trials are needed to file.

Back of the napkin valuation

If approved, I expect the stock around $6.50. It could be $7, it could be $8, it could be higher. Let’s be conservative and call it $6.50.

From September 2025 through January, while the market treated approval as likely, this stock traded between $6.00 and $7.55, on a weaker balance sheet than it will have at approval, with every revenue encumbrance already disclosed.

I see no reason the market stops short of a price it already paid when the question was still open, so I think I’m being very conservative here.

If rejected again, we’re probably looking at $2.25, as I suggested earlier. That’s the manufacturing business, the optionality of resubmission, and the remaining cash, net of debt, and it’s consistent with the $2.93 panic print in February, with now extra newfound negativity.

I put approval chances at 80 %. It has all the hallmarks of the fast to fix drug category which I just dissected, and it seems, none of the curve balls which delay it.

At 80 % the expected value is $5.65 using my conservative upside scenario.

Yet the stock today at $4.29 is basically still pricing this as a slightly below 50% chance of success.

AQST is a $540mn market cap. It’s quite frequent in these cases for the market to ignore the situation, and leave some free money on the table. I already picked up some, but there is still plenty, and it now more free than ever.

neffy’s expensive lesson, and who paid for it

The strongest objection to the investment case isn’t regulatory, it’s commercial: the main competitor, neffy, has had a launch with brutal economics.

ARS spent roughly $230 million on selling and administration in 2025 to book $72 million of neffy revenue, $3 out for every buck coming in, with a team of 148 reps, a national ad campaign, and a pediatric co-promotion reaching 20,000 clinicians.

If that’s what this market costs, a company Aquestive’s size just can’t afford it, and the billion dollar product management likes to talk about isn’t anywhere close.

But here’s the thing: neffy wasn’t just selling a spray, it was building a category.

Those dollars went to convincing allergists that needle-free rescue epinephrine is legitimate medicine, convincing patients it exists, and forcing the pharmacy gatekeepers to create a formulary lane that didn’t exist, which finally opened at Caremark this July.

That work is done, and it doesn’t have to be done twice.

Aquestive launches into the category neffy paid to create, with the more radical convenience story in a market whose core failure is that people don’t carry the product, a concentrated team of 50 to 75 reps aimed at the allergists who write most of the scripts, and its own film plant, so every strip is made at commodity cost in a factory it runs itself.

Conclusion

You’ll come to find that my work at Babylon Burns will span many asset classes and industries.

There will be macro opportunities and micro opportunities, like this one.

AQST could be worth $6.5 or $8. I can’t honestly tell you what the number is upon approval. What I can tell you, is that all of the fundamental work done on it suggests that approval is much more likely than the market is crediting.

The risk reward is very attractive.

On August 15th, this Saturday, to celebrate 55 years of Nixon debasing the US dollar and forcing me into a position where I have to go into the weeds to find opportunities for us to stay ahead, I will be launching the paid version of Babylon Burns.

For the past 2 months, I’ve given everyone a free ride to demonstrate the breadth of my work.

Saturday that changes.

If you pledge today, you’ll get access to:

• All of the stock ideas like this one, which will go behind the paywall.

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So use the button below to join us now, on what will invariably be an amazing adventure.

As Babylon Burns, we’ll light the cigars

PS: Joining now, means getting the discounted price. Post launch, the price of the annual subscription is going up, so now is the best time to get in on the action.