Demand shocks

There seems to be another dislocation created in the market by AI. The demand for chips, particularly for DRAM, has been so strong and so fast, that inventories are now able to keep the pace. In the chart below you can see how invetories have been depleted, pushing prices up on the chips. On top of that, some of the components in those chips might be in short supply, affecting production. Demand shocks like this, are not only affecting the stock market, they can affect economies around the world. And more. For instance, it is estimated that there are 10-40 milligrams of silver on each DRAM chip, and the global production of DRAM is about 18 billion chips per year. That doesn’t take into account the demand for silver from solar panels or jewelry . The AI revolution by itself is cornering several commodities markets, among them, precious metals, which are also being demanded by central banks to build hard money reserves. To that we need to add rare earth minerals, copper, uranium, etc. perhaps we are assisting to a new commodities cycle.

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