Exclusive: Why ChiPs may be as important as Oil in the Future
Energy, money, and control all wrapped into one
Hi:
Two of our Founders are involved in this industry. It is because of occasional dinners with them that the following education was pursued, researched, combined with other work1 and subsequently shared right here with GoldFix subscribers. So Thank You to them.
Backdrop
Between ChatGPT, the increased chatter about computer chips, the infrastructure bill emphasizing them, the defense of Taiwan as key to technology.. etc. as well as our own opinion catalogued2,sharing some reports saved as part of our own learning process was in order.
There’s a lot that can go wrong with this stuff. It is real but very early in the game. But it ticks a lot of boxes in the overlapping areas between Energy, money, geopolitics, climate, and national pride. So it’s on our radar
It Started With Gold
For us the very broad strokes coming into this were strangely enough closely related to Gold and the Eastern push against the dollar while the West demonized Oil:
Geopolitical/Economic: The west (we feel) wants to replace oil to save the dollar status- they can’t make everyone use the dollar anymore, so they must reduce western Oil use to weaken the East economically. The renewed interest in Cold fusion and use of Chips would reduce energy costs3
Technological: industrial revolutions increase efficiencies of production and accompany boom times— robots lower costs and increase productivity like the assembly line did.
Ideological: dovetails nicely both with their ESG and their desire to make everything free for everyone— a computer chip replaces workers, reduces oil dependency and is therefore economic energy etc
Incumbent Self-Interest: those in power want to stay in power and believe this is a good time to wind some capitalism4 down—WEF, Davos etc
There are positive and negative implications of course to all this. We’re not saying we agree with the reasons. This post is about recognizing trends and deciding if they are worth investing in.5
The potential positives are self-evident to us. However, most utopian ideals end up being dystopian in practice. But humanity must keep trying.
Chips can therefore be viewed in that light as:
Economic Energy: rivaling oil in that they reduce operating costs, use of oil, and keep the economic power in the hands of western creators
Money: a programmed chip can power an assembly line. What is that worth?
Traded: They already trade more globally than oil ( see below) … that makes them liquid, a medium of exchange, and a unit of accountancy like money… but not a store of value.
The technology occupies the intersection between: economies of scale, MMT, and Net-Zero Energy. Anyone can and will project their opinion on it favorably. It ticks all the boxes… E.G.- are you against space travel? Are you against stopping poverty? Are you against jobs?…etc etc
To the extent they are wrong or early.. That is why Oil is needed to be owned. Long oil is a hedge for Western arrogance. Long dollars is a bet on Western innovation. Long gold is both.
Western Innovation versus Eastern Traditionalism
Regarding Silver & Gold: it will be decades before the world rejects gold as a store of value again.. and if they do, it will be a mistake. Why? Because while CHIPS may be money/currency, they are technology, and cheapen in value every day they exist as new ones will replace them. So unless they learn how to create Gold with them, Chips and nuclear fusion are no threat.
Gold and silver will be the only things left on earth that can be trusted to remain stable over time. What will that be worth?
The West in our opinion aims to juxtapose their new improved economic power with the East’s and give the world a choice. The west’s Innovative Chips —potential successor to the assembly line, the gas engine, and the printing press all rolled into one— versus the East’s use of current Industrial methods.
Anyway… it made sense to get down and dirty and learn the particulars. Enjoy