Founder’s Note: Senior Analyst Jason Perz is a consummate seeker. He seeks knowledge… he seeks understanding… he seeks profits.
Here’s Jason with insights on AI you won’t find anywhere else. – JC
By Jason Perz
- We see AI stocks driving headlines and flows, but we don’t see the massive energy and metals demand required to power them.
- Coal, oil, natural gas, and metals aren’t relics of the past; they’re the backbone of the AI revolution.
- Bastiat is right: Surface stories excite investors, but second-order effects create real opportunities.
Frédéric Bastiat wrote in the mid-1800s that in economics, there is always what is seen and what is unseen.
The “seen” is the immediate effect – the headline, the surface-level story.
The “unseen” is the ripple effect – the costs, the dependencies, the second- and third-order consequences that actually drive outcomes.
In today’s markets, the “seen” is obvious: artificial intelligence (AI).
AI dominates headlines. It’s the narrative powering stock market flows. Every financial news outlet hails it as another industrial revolution.
And, to be clear, they’re not wrong.
But the unseen is what it takes to power AI.
Behind every ChatGPT response, every Nvidia data center, every robot training set, lies one unavoidable truth: Energy consumption is about to go vertical.
And this is where Bastiat’s lesson bites: The unseen story is where the real opportunity lies.
Coal: The Dirty Truth That Won’t Go Away
Coal is the fuel no one wants to talk about. Politicians denounce it, ESG funds avoid it, activists campaign against it. Yet coal still generates about 35% of the world’s electricity (IEA, 2024).
- China consumes more coal than the rest of the world combined.
- India continues building coal plants to keep up with demand.
- Europe leaned back on coal after the Russia-Ukraine war disrupted natural gas flows.
Investors who ignored the stigma and simply followed price action have been rewarded:
Look at the chart above.
For years, coal stocks bumped up against resistance, stuck in a long sideways grind. Every attempt higher was met with selling.
But, now, the ceiling has cracked – price has broken out to multi-year highs. That’s not a dead-cat bounce.
That’s demand speaking through price.
The “seen” is AI.
The “unseen” is that every AI server farm, every data center, every EV charging station is ultimately powered by electricity – much of which still comes from coal.
Oil: Still the Lifeblood
For decades, analysts have predicted peak oil demand “within five years.” Somehow, it’s always five years away.
The reality: Oil still makes up about 31% of global energy consumption, according to the Energy Information Administration.
In 2024, demand hit a record 102 million barrels per day, and it’s set to rise again in 2025.
Notice how the Energy Select Sector SPDR Fund (XLE) chart has been coiling just under a major breakout level.
Each test chips away at resistance. A clean move above 101 would open the door to a secular rally in energy stocks.
That’s price action telling you the “peak oil” narrative doesn’t match reality.
And the macro backdrop makes this combustible: Global yields are rising, central banks are under pressure to cut, and inflation expectations are creeping higher.
Oil loves that setup.
Natural Gas: The Wild Child
Natural gas is infamous for volatility. Traders either love it or hate it. But the demand story is relentless – power generation, heating, fertilizer, and LNG exports.
The chart doesn’t lie:
After a brutal downtrend, natural gas futures are looking like a buy after a false breakdown signal. Historically, that’s where big reversals begin.
The unseen here: AI data centers don’t just need power, they need baseload power – reliable, flexible energy that can run 24/7.
That’s natural gas.
Metals: The Foundation of AI
If AI is the revolution, metals are the bricks and steel that build it. No chips, EVs, or data centers can exist without them.
Copper is wiring the electrification wave.
Silver is critical for solar, electronics, and computing.
Rare earths are the stuff of magnets for turbines, motors, and chips.
Uranium is literally the fuel for nuclear’s comeback story.
Here’s the kicker: Metals are now outpacing tech.
Tech is up about 24% year to date – not bad.
Precious metal miners are up more than 110%.
Copper miners are ripping to new highs.
That relative performance chart is the canary in the coal mine. Capital is rotating out of narratives and into raw materials.
And here’s where Bastiat ties it together. He wrote:
Between a good and a bad economist, this constitutes the whole difference – the one takes account of the visible effect; the other takes account both of the effects which are seen and of those which it is necessary to foresee.
The “seen” is AI stocks – the obvious, visible effect.
The “unseen” is metals – the essential inputs that make AI possible, and the sector already sending signals through price.
In other words, the story isn’t in the shine of semiconductors.
It’s in the copper wiring, the silver conductors, the uranium reactors. The “seen” excites investors.
The “unseen” rewards them.
Save the bees,
Jason Perz
Senior Analyst, TrendLabs