🤖 Napoleon ate off aluminium

Good morning to everyone watching the token price charts.

Last month a line on a Bloomberg terminal told investors the AI trade was breaking.

That line ran once before. It was drawn on aluminium.

Today, the one number that decides this trade.

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Token prices are falling, and the market called it a warning.

A token is the unit AI models bill by, roughly three quarters of a word.

The Silicon Data index tracks what the market pays per million.

Bloomberg reported it down almost 20% from its May peak, and it sat near $1.02 by late August.

The read from the street: falling prices mean thinning demand.

Aluminium ran this play before.

In 1852 it sold for $1,200 a kilo. Gold sold for $600.

Napoleon III served his best guests on aluminium plates and gave everyone else the gold ones.

In 1886, two chemists learned to separate it using electricity.

By 1954 the price reached $0.48 a kilo, a drop of more than 99.9%.

Here is the part the bears skip.

The market grew the entire way down, from roughly $500,000 of aluminium sold in 1895 to $640 million by 1954.

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A collapsing price is what a working technology looks like from the outside.

Every aluminium price step closed one category and opened a bigger one.

At $4.40 a kilo it replaced copper pots.

At $0.72 it replaced copper cable.

In 1909 a new alloy made it strong enough to build with, and it became the aeroplane.

Nobody got rich selling jewellery.

Tokens are on the same staircase, ten times faster.

Google processed 3.2 quadrillion tokens in a single month this year, 330 times its volume two years ago.

Goldman expects 120 quadrillion a month by 2030, with AI agents driving 84% of it.

Every bigger buyer aluminium ever found was human.

Kitchens, drinks, passengers.

Human demand has a ceiling, so aluminium glutted after a century.

Chat sits under that ceiling too, capped by reading speed times population. Agents are the first buyer that is a machine.

So what does this mean for your portfolio?

Alcoa held its monopoly for 57 years by owning three things. Score $NVDA ( ▲ 2.19% ) on the same three.

The process, owned. CUDA is two decades of software every AI developer already builds on.

The ore, rented.

Nvidia books roughly 60% of the $TSM ( ▲ 1.78% ) packaging lines every AI chip must pass through, and its suppliers charge for it.

$SKHY ( ▲ 2.68% ) printed a 76% operating margin last quarter.

The power, absent.

Its four biggest customers have contracted 9.8 GW of nuclear and now design their own chips.

Alcoa had three moats. Nvidia has one. So track token volume, and watch who sells what those tokens make possible.

Aluminium's price fell 99.9%.

The market it built grew a thousandfold.

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