Bridgewater Associates Co-Chief Investment Officer Karen Karniol-Tambour and Gavekal CEO Louis-Vincent Gave said deglobalization is driving a commodity bull market. The two financial leaders presented their analysis at the Sohn Montreal Conference, arguing that the world is moving away from decades of globalization toward an era defined by geopolitical competition, strategic resource hoarding, and structurally higher inflation. Karniol-Tambour described the shift as "modern mercantilism," where nations prioritize national resilience and security over economic efficiency, while Gave said deteriorating demographics, rising fiscal deficits, and growing government spending are additional inflation drivers. The transition has profound implications for investors accustomed to the disinflationary environment that dominated markets for much of the past 30 years, according to the panelists.
Modern Mercantilism Drives Resource Competition
Karniol-Tambour said nations are increasingly prioritizing national resilience and security over economic efficiency in the current environment. "It's really a grab for stuff," Karniol-Tambour said. "You need to get all the commodities you need, the rare earths that you need. You need defense to work. You need a lot of things." She said the risk in this environment is that "any vulnerability that you have in any topic can be weaponized." The result is a global effort by governments to secure critical supply chains, industrial capacity, energy infrastructure, and strategic commodities, according to Karniol-Tambour.
The scramble for resources is occurring simultaneously with the massive buildout of artificial intelligence infrastructure, which is creating unprecedented demand for energy, electricity transmission, and industrial metals. "It's a much more inflationary world where you need lots of physical things as quickly as possible," Karniol-Tambour said.
Inflation Pressures Reshape Investment Landscape
Gave said inflationary pressures extend beyond geopolitics and technology. He explained that deteriorating demographics across developed economies, rising fiscal deficits, and growing government spending commitments are additional drivers of long-term inflation. "The reality is we now live in a more inflationary world," Gave said.
According to Gave, the shift is undermining one of the foundational assumptions of modern portfolio construction: that government bonds provide reliable protection during market stress. "For thirty years we could accept that bonds were the natural diversification for equities," Gave said. "It no longer is." He noted that in recent market shocks, including inflation-driven selloffs, both stocks and bonds have declined together, leaving investors without the traditional protection offered by fixed income.
Bond Markets Face Structural Challenges
Karniol-Tambour said governments face enormous spending requirements as they attempt to rebuild supply chains, expand domestic manufacturing, secure strategic resources, and fund defense initiatives. "The structural cost of capital just has to go up," Karniol-Tambour said. "How could the cost of capital not be rising in a world where we need to do not efficiency, but where government has to spend, in a world we have to build all these things?" The panelists acknowledged that rising inflation risks and growing fiscal demands are placing pressure on global bond markets.
Commodities Replace Treasuries as Strategic Reserves
Gave said the changing geopolitical landscape is altering how countries think about reserves and financial security. For decades, governments accumulated U.S. Treasuries because they were viewed as the ultimate liquid asset that could be converted into whatever commodity or resource a country needed during a crisis, according to Gave. However, the freezing of Russian reserves following the invasion of Ukraine caused many governments to reassess that assumption, he said.
Gave said U.S. hegemony is broken and that nations are trading their U.S. Treasuries for commodities. "We are rapidly shifting into a world where the U.S. Treasury was the very backbone against which everything was built, to now we're going to move to where it's commodities," Gave said. Rather than relying solely on financial assets, countries are increasingly seeking strategic reserves of oil, fertilizer, agricultural products, and industrial materials. That trend will absorb global liquidity and reinforce inflationary pressures across commodity markets, Gave added.
AI Boom Creates Power Infrastructure Bottlenecks
Gave said investors may be focusing on the wrong bottlenecks when looking at opportunities created by the AI boom. While much of the market's attention has been directed toward semiconductors, Gave said the more durable shortages will emerge in power generation and electrical infrastructure. "The shortages will be in the electricity, in the generation, in our ability to feed all these data centers," Gave said. "That means copper, that means aluminum, that means silver, and that means more solar panels." As a result, Gave said he would rather own commodities than semiconductor stocks at current valuations.
Gold and Copper Lead Investment Recommendations
Karniol-Tambour singled out gold as her preferred commodity holding in the panel's closing discussion on highest-conviction investment ideas for the next three years. "It just feels that there's so much uncertainty," Karniol-Tambour said. "There's just structurally more demand for gold." She said geopolitical fragmentation and concerns over reserve security are forcing governments, institutions, and investors to reconsider where they store wealth.
Gave largely agreed with the bullish case for gold but identified copper as his highest-conviction commodity trade, citing the enormous investment required to expand electricity grids and energy infrastructure. "I still think copper goes a lot higher," Gave said. "Everybody's saying, 'I need to rebuild my electricity grid. I need to put in more solar panels. I need to become more resilient.' A lot of that is very hard to do without copper."
For more than 30 years, the Sohn Conference Foundation has raised money for pediatric healthcare and cancer research. This was the foundation's second annual conference in Canada, and the one-day event raised $1.4 million for the Montreal Children's Hospital and Sainte-Justine Hospital.
FAQ
What did Karen Karniol-Tambour and Louis-Vincent Gave say about deglobalization at the Sohn Montreal Conference?
Karniol-Tambour and Gave said deglobalization is triggering a global race for physical resources and creating conditions for a sustained commodity bull market. Karniol-Tambour described the shift as "modern mercantilism," where nations prioritize national resilience and security over economic efficiency, while Gave said the world now lives in a more inflationary environment driven by deteriorating demographics, rising fiscal deficits, and growing government spending.
Why did Louis-Vincent Gave recommend copper as his highest-conviction commodity trade?
Gave identified copper as his highest-conviction commodity trade, citing the enormous investment required to expand electricity grids and energy infrastructure. "I still think copper goes a lot higher," Gave said. "Everybody's saying, 'I need to rebuild my electricity grid. I need to put in more solar panels. I need to become more resilient.' A lot of that is very hard to do without copper."
