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Transcript: Goldman’s Jeff Currie On the ‘Vol Trap” In Commodities

A pumpjack in the town of Ebano, San Luis Potosi state, Mexico, on Tuesday, March 8, 2022.

A pumpjack in the town of Ebano, San Luis Potosi state, Mexico, on Tuesday, March 8, 2022.

Photographer: Mauricio Palos/Bloomberg

Commodity prices are booming. And in theory the way it’s supposed to work is that higher prices incentivize more mining and production. And then the increased supply brings the prices down. But according to Goldman’s top commodity strategist Jeff Currie, that investment isn’t materializing yet. On this episode of the Odd Lots podcast, he characterizes the current environment as a “vol trap” that will keep the supercycle going for a long time to come. The below transcript has been lightly edited for clarity. 

Key moments in the pod: 
What is the volatility trap? (3:43)
Similarities between now and the 70s (4:57)
What banks have to do with it (10:00)
Why finding commodity financing is so challenging (14:57)
The economics of natural gas (26:30)
Can changing commodity trade patterns undermine the dollar (38:54)
Why the copper market is so crucial to watch (45:04)

Joe Weisenthal: (01:11)
Hello, and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal.