Azuria's Tavi Costa: The AI 'build phase' is an inflation trap - here is the metals playbook the market is missing

• Critical metal supplies are stagnating - zinc supply remains at 2012 levels while new mines require 15-year development timelines, creating severe bottlenecks as AI infrastructure demands surge
• Gold now comprises 27% of global official reserves versus U.S. Treasuries at 22%, with central banks adding 863 metric tons in 2025 amid concerns over U.S. debt sustainability
• Costa expects rate cuts rather than hikes despite inflation, citing unsustainable U.S. interest-to-GDP ratios and predicting eventual yield-curve control similar to the 1940s

Market Summary: AI Infrastructure Boom Signals Inflation Risk and Metals Shortage

Key Thesis

Azuria Capital's Tavi Costa warns that the AI infrastructure "build phase" is creating immediate inflationary pressures that markets are overlooking. While AI may eventually be deflationary, the current massive capital expenditure on data centers and electrical grid upgrades is colliding with severe mining supply constraints.

Critical Supply Bottlenecks

• Copper has entered a volatile "price-discovery phase"
• Zinc prices need significant upward adjustment, with new supply stalled at 2012 levels
• Silver faces its sixth consecutive annual deficit, projected at 46.3 million ounces in 2026; 70% is mined as a byproduct, limiting supply response
• Mine development requires 15-year timelines, creating structural shortages

Sovereign Debt Crisis

Costa identifies a looming "emerging markets moment" in U.S. Treasury markets. Interest payments to GDP are reaching levels above any developed economy globally. He expects rate cuts rather than hikes, potentially including 1940s-style yield curve control, despite new Fed Chair Kevin Warsh's hawkish positioning (sworn in May 22).

Gold's Historic Shift

Gold now represents 27% of global official reserves versus 22% for U.S. Treasuries, per the European Central Bank. Central banks added 863 metric tons in 2025, led by Poland, Kazakhstan, Brazil, China, and Turkey.

M&A and Regional Focus

The $18.5 billion Equinox-Orla Mining merger reflects industry preference for consolidation over greenfield development. Costa highlights Latin America, particularly Argentina under President Milei, as the key investment opportunity despite jurisdictional risks, including Orla's June 1 operational halt at Camino Rojo due to labor disputes.

Investment Implication

Costa advocates owning hard assets during this inflationary build phase but warns he will liquidate once AI infrastructure is complete and deflation arrives.