Goehring & Rozencwajg Natural Resource Market Q3 2025 Commentary

2025-11-26 08:00:00 ET

Table of Contents

• Moving from Carry to Anti Carry
• Gold vs. Oil: A Changing of the Guard
• 3Q2025 Natural Resource Market Commentary
• Is the IEA Quietly Turning Bullish?
• Natural Gas: A Research Odyssey
• Precious Metals: Bright Days Lie Ahead
• Problems Developing With Uranium Supply
• Murky Waters in Global Copper

Moving from Carry to Anti Carry

In our fourth-quarter 2024 letter, we introduced a framework that has since shaped much of our thinking about commodity cycles—the “Carry Bubble.” Drawing heavily on The Rise of Carry by Lee, Lee, and Coldiron, we argued that the four major commodity cycles of the last 125 years fit neatly within a broader and more predictable carry cycle. It is worth returning to that idea now, and examining how such a regime ultimately ends and what may greet investors once it does.

The authors describe with careful precision the mechanisms that produce and extend a carry regime. The standard example involves borrowing in a chronically low-yielding currency, such as the yen, and investing in a higher-yielding asset, often in Australia. Provided exchange rates remain calm, the trader simply earns the spread between borrowing costs and asset returns.

Lee, Lee, and Coldiron argue that this is only one instance of a much larger class of trades.

What they share is straightforward: each relies on leverage, and each depends on a world that does not change too abruptly. They are, in effect, short-volatility trades that do well when conditions stay steady.

In theory, such trades should not survive. Arbitrage should eliminate any persistent yield difference, either by pushing up asset prices or shifting exchange or funding rates. Yet the historical record shows that carry trades not only exist, but often produce durable positive expected returns....

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