Simon Hunt: China’s Gold and Digital Currency Reset
Tom welcomes a new guest Simon Hunt to discuss the global economy and the copper industry.
Simon expects a significant correction in copper prices this summer. Copper is now part of the speculative money game, and it’s not industry driving the price. There is a substantial need for copper and aluminum in energy and electrification. However, higher prices lead to innovation, and if copper prices are here to stay, you will see serious substitution. Copper used to act as an economic barometer, but since 2011, this has not been the case. The most significant factor driving copper prices is the future world economy.
Inflation will burn off a lot of the fiscal and monetary stimulus. Personal income has declined when factored for inflation. We are experiencing stagflation.
He believes that by 2024 we will be in a crisis since debt is growing faster than GDP. Western Central banks are deliberately blowing up the system so they can introduce a different structure. It probably will involve digital currencies and a world system based on equity, not debt. China and Russia are in the lead, preparing themselves by reducing dollars and a far further along in introducing digital currencies. China holds vast quantities of gold, which will become part of China’s future monetary system.
Simon believes that China has no interest in being a reserve currency; instead, they want a multi-polar system. China’s focus is no longer on growth but on preparing for difficult times. They are now pursuing orthodox monetary policies.
He expects a bounce in the dollar but an eventual halving of the dollar index. Fewer and fewer want to hold dollars due to the enormous fiscal and monetary stimulus programs.
We will move into a new commodity supercycle around 2027, and the financial community is not taking note of the short-term cycles. The real commodity supercycle won’t begin until after a major crash.
Time Stamp References:
0:00 – Introduction
0:32 – Copper Prices/Supply
4:57 – Copper Barometer
5:28 – Price and China
7:38 – Muted 2Q Recovery
8:28 – 2024 Crisis Catalysts
10:53 – A Digital Renmimbi
12:17 – China’s Strategy
14:20 – America’s Policy
17:45 – Commodity Correction
20:22 – Cycle Positioning
21:05 – Think-Tank Report
22:16 – Credit Impulse Cycle
24:14 – Copper Production
25:47 – 100th Anniversary
27:04 – Summary & Coming Crash
28:46 – Wrap Up
Talking Points From This Episode
- Copper demand, price, and alternatives.
- China’s economic policies and plans.
- America’s policy and world opinion.
- Commodity Corrections and Cycles.
Simon Hunt began his career in 1956 in Central Africa as a PA to the Chairman of Rhodesian Selection Trust, one of the two large copper companies in what was then Northern Rhodesia, now Zambia.
In 1961 he came back to London and joined Anglo American Corporation of South Africa as a PA to one of the Board Directors, followed by being part of a small sales and marketing team for copper. From there, he helped start up a new copper development organisation, CIDEC, financed by copper producers, which he then joined, focusing on conducting end-use studies of copper in Europe.
He then went into the City to gain financial experience and founded Brook Hunt in 1975. He was instrumental in setting up the company’s cost studies and end-use analyses. He appeared as material witness and consultant in two ITC anti-dumping cases in 1978 and 1984, winning both at the commission level.
He has spent 2-4 months every year in China since 1993 and until a few years ago would be visiting some 80 wire and cable and brass mill factories across the country every year. He now restricts these factory visits to a smaller number, all of which he has known for many years. He also spends many weeks each year traveling around Asia.
The focus of the company’s services is on the global economy, including the changing geopolitical and financial structures, China’s economy and its copper sector, and then the global copper industry as each part is interconnected.
Simon is the author of the “Frontline China Report Service,” which is marketed by the TIS Group. The Service provides regular reports on China’s economy, politics, and financial outlook.
Simon established this company in January 1996.