Energy and Commodities Market Outlook: Insights from John Polomny
Energy and commodities expert John Polomny shared his perspectives on the current state of the economy, stock market trends, and investment opportunities in energy and commodities.

Economic and Market Outlook: Chaos and Speculative Bubbles
Polomny described the current economic environment as "chaotic," citing policy uncertainties under the current administration, including shifting priorities around tariffs and fiscal spending. He noted that the original plan of cutting spending to lower interest rates and boost energy production ("drill baby drill") has been sidelined, creating market uncertainty. This uncertainty is compounded by the U.S. Federal Reserve's delayed response to global rate-cutting trends among OECD countries, leading to higher U.S. interest rates that have frozen sectors like housing, where mortgage rates hover around 8% while many homeowners seek rates below 4%.
Despite these challenges, equity markets continue to hit new highs, resembling the speculative fervor of the early 2000s internet bubble. Polomny cautioned that overvalued stocks, such as Palantir trading at 700 P/E and 100 times sales, reflect speculative rather than fundamental investing. He emphasized that historical data shows overpaying for securities leads to lower returns over five to ten years. Drawing parallels to the dot-com era, he referenced Sun Microsystems’ former CEO Scott McNealy, who warned shareholders about unsustainable valuations during the bubble.
Polomny remains cautious about chasing overvalued assets, advocating for a contrarian approach focused on undervalued securities. He highlighted the unsustainable fiscal trajectory, with deficits at 6-8% of GDP, which he believes will have long-term negative consequences but could benefit certain asset classes in the interim.

Central Bank Policies and Their Impact on Commodities
Polomny discussed the correlation between central bank policies, currency dynamics, and commodity prices. As global central banks cut rates, weakening their currencies, and the U.S. potentially follows with rate cuts, the U.S. dollar could weaken, acting as a tailwind for commodities. He noted that rising Purchasing Managers' Indexes (PMIs) and increased fiscal spending globally are driving commodity demand. The emerging middle class in the Global South and East, coupled with underinvestment in new commodity supply, further supports a bullish outlook for commodities over the next decade.
While hesitant to label it a "super cycle," Polomny sees a confluence of factors—fiscal spending, currency devaluation, and supply constraints—driving higher commodity prices. Gold, in particular, stands out as it undergoes "re-monetization," benefiting from a weakening dollar and global economic shifts.

Top Undervalued Commodities
Polomny identified five undervalued commodities with strong investment potential:
1. Oil: Despite perceptions of oversupply, global oil demand grows by 1-1.5 million barrels per day annually, reaching 104-105 million barrels daily. Depletion rates of 6-7% per year require constant new supply, equivalent to a new Saudi Arabia annually, which is not being met due to underinvestment. At current Brent prices (~$70/barrel), oil remains undervalued relative to inflation-adjusted historical prices.
2. Platinum Group Metals (PGMs): Platinum, palladium, and rhodium have faced underinvestment, leading to supply deficits. Recent price breakouts signal growing market recognition of their value.
3. Potash: Recently breaking out, potash benefits from limited market players and rising agricultural demand, yet it remains under the radar for many investors.
4. Copper: Driven by steady industrial demand from emerging markets and infrastructure needs, copper’s fundamentals remain strong, even without factoring in AI or electric vehicle (EV) growth.
5. Uranium: Described as the "biggest layup of all time," uranium faces a supply-demand imbalance due to a decade of underinvestment and rising nuclear reactor demand. However, Polomny noted challenges in finding investable vehicles, as major players like Cameco are overvalued, and junior miners require careful selection.

Uranium: The Next Bull Market Catalyst
Polomny is particularly bullish on uranium, citing a structural supply deficit and growing demand from new reactor projects. In the U.S. alone, reactivations like Duane Arnold, Three Mile Island, and Palisades will add 1-1.5 million pounds of annual demand. Globally, reactor announcements are frequent, yet uranium production lags, with the U.S. producing only 400,000 pounds annually against a 40-million-pound demand for its reactors. Geopolitical factors and long lead times (10-20 years) for new mines exacerbate the supply crunch. Polomny warned of a "musical chairs moment" where utilities may face shortages, as many assume supply will materialize without securing long-term contracts.

Oil Market Dynamics
Addressing concerns about Iran dumping 100 million barrels of oil, Polomny downplayed its impact, suggesting the market is more focused on OPEC’s potential return of "phantom barrels." He highlighted the Permian Basin’s peak production at current prices, driven by geological and economic constraints. Major producers like Diamondback Energy have signaled reduced drilling due to low returns, shifting focus to cash flow, debt reduction, and shareholder returns. Polomny remains optimistic about oil’s long-term demand, given its ubiquity and the lack of sufficient investment to replace depleting reserves. He highlighted Canadian oil sands as a compelling opportunity, with established infrastructure generating strong cash flows even at current prices.

Natural Gas and Coal: Overlooked Opportunities
Natural gas remains challenging due to its volatility, often dubbed the "widow maker." While LNG infrastructure is expanding, Polomny prefers pipeline companies over producers for their stability. He sees untapped potential in coal, particularly thermal coal, which hit record usage last year and is expected to grow in emerging markets. Existing coal assets are cash-flow positive, and limited new investment creates a supply-constrained environment, benefiting companies like Glencore.

Investment Recommendations for Retail Investors
For retail investors with limited capital seeking long-term holds, Polomny recommended:
• Canadian Oil Sands: Companies like Canadian Natural Resources, Suncor, and Strathcona offer low-risk, high-reward opportunities due to long reserve lives (40-50 years) and minimal reinvestment needs. Consolidation in the sector could drive significant returns over five years.
• Gold and Silver Miners: Senior gold producers are generating substantial cash flows, with disciplined management focusing on shareholder returns. Mid-tier and junior miners, particularly in silver, offer higher-risk, higher-reward opportunities, with potential for 10-20x returns if precious metal prices rise as expected.
For investors seeking a conservative 2x return, Polomny suggested mid-cap and smaller-cap gold and silver mining stocks, which are poised to benefit from rising metal prices and potential mergers and acquisitions.

Common Mistakes and Contrarian Investing
Polomny cautioned retail investors against relying on overly optimistic forecasts from agencies like the IEA and EIA, which have consistently underestimated oil demand and overhyped green energy transitions. He emphasized the importance of contrarian thinking, echoing Rick Rule’s adage: “You’re either a contrarian or a victim.” Investors must avoid chasing trends after the move has happened, as seen in uranium and platinum markets, where early positioning was key to capturing gains.

Conclusion
John Polomny’s insights underscore a market environment ripe with opportunities for contrarian investors in undervalued commodities like oil, uranium, PGMs, potash, and copper. While economic uncertainty and speculative bubbles dominate equities, disciplined investment in cash-flowing energy and mining assets could yield significant returns over the next 3-5 years. Retail investors are advised to focus on fundamentally strong companies, avoid overhyped narratives, and adopt a contrarian mindset to capitalize on mispriced opportunities.
For more insights, John Polomny can be followed on his Actionable Intelligence Alert Substack and YouTube channel, where he provides weekly updates and detailed investment recommendations.

See the interview with John here:https://youtu.be/0z6X9-I6f7g?si=K-wFFuNxIG5jTSsB

Disclaimer: This article/interview is not a recommendation to buy or sell any shares, products, or services. Always conduct your own due diligence and consult a financial advisor.