Author: Stjepan Kalinic

Owning stocks while collecting a fat monthly income sounds like financial alchemy. Yet, that’s the premise behind the market’s latest darling – covered call ETFs.

Two popular funds, like JPMorgan Equity Premium Income ETF (NYSE:JEPI) and Global X NASDAQ 100 Covered Call ETF (NASDAQ:QYLD) have swelled to over $53 billion in assets as investors chase yields that can look bond-like or better, but arrive with the gloss of equity exposure.

The problem is timing. If buyers use these products while also betting that the bull market has further to run, it is a contradiction, since these funds trade away part of tomorrow’s upside for cash today.

Capping the Growth

A covered call fund holds equities, then sells call options against them. The premium collected becomes the income that gets distributed to shareholders. In return, the fund hands the option buyer the right to the gains above a set strike price.

In flat or choppy markets, a covered call might be a smart way to harvest yield from a stagnant portfolio. Yet, in a rally it becomes a self-inflicted wound. When an underlying index decisively moves higher, the upside is clipped. Shareholders pocket the distribution but surrender a large share of capital appreciation.

For that reason, tech-heavy covered call funds can dramatically lag their benchmarks during strong advances. A fund writing calls on Nasdaq-100 exposure may advertise a double-digit distribution yield, yet still trail the Invesco QQQ Trust (NASDAQ:QQQ) by a wide margin when megacap technology stocks are ripping higher.

The gap doesn’t always feel like a fee because it isn’t deducted from the expense ratio. But economically, it can behave like one – an invisible cost paid in foregone gains.

These costs add up because total return, not yield, is what builds wealth. A 10% distribution is not a 10% profit if the fund’s price stagnates, declines, or fails to keep pace with the market. Investors who reinvest those payouts may still compound, but they are compounding from a strategy that deliberately sells off the most explosive part of equity returns.

Taxation and Compounding

The income these funds provide often derives from option premiums, and much of it is taxed less favorably than investors assume. According to SoFi, funds that write options on individual equities typically generate distributions taxed at ordinary income rates, which may reach up to 37% for higher earners — whereas funds using broad-based index options may qualify for more favorable Section 1256 treatment.

That situation rewrites the arithmetic. A yield that looks irresistible on screen can shrink dramatically once the IRS is paid. And because the tax hits every month or quarter, it repeatedly interrupts compounding — instead of letting gains ride untaxed inside an index fund until you sell, you are forced to recognize income the whole way up.

None of this makes covered call ETFs bad products. They can serve a purpose for investors who need current cash flow, want lower volatility, or expect sideways markets.

But they are poor substitutes for growth funds in a bull market. The trap is that investors might think they can collect high income while participating in a rally. In reality, free lunches in any market are exceptionally rare.

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Tech startup I-Pulse has secured a $250 million research and development grant from the U.S. Department of Commerce’s CHIPS office. It is one of the largest federal investments in a company developing semiconductor technologies.

The funding should accelerate the development of I-Pulse’s proprietary silicon-carbide semiconductor components, strengthening U.S. efforts to boost domestic chip manufacturing and reduce dependence on foreign supply chains.

“This award supports the development of world-leading critical components in the pulsed power technology stack, with profound implications for energy security and national defense,” I-Pulse co-founder and CEO Robert Friedland said in an announcement.

According to Bloomberg, the deal is the latest sign of billionaire mining entrepreneur Robert Friedland’s growing collaboration with the Trump administration on efforts to strengthen U.S. critical mineral and supply-chain security.

Bloomberg noted that Friedland’s Ivanhoe Electric Inc. (AMEX:IE) is also working with the U.S. Export-Import Bank on financing for an Arizona copper project, and that he attended the White House unveiling of a critical minerals stockpiling initiative in February.

Unlocking Clean Energy

The Albuquerque-based firm, located near Sandia National Laboratories and the U.S. Air Force Research Laboratory, will partner with national laboratories, universities, and specialized manufacturers to develop high-temperature, high-current silicon-carbide semiconductor switches.

The firm’s technology uses high-voltage solid-state switches to deliver electrical pulses into rock formations. These pulses then fracture and soften the rock ahead of mechanical drilling, dramatically speeding up the process, increasing the drill bit life, and lowering the drilling costs.

With this technology, I-Pulse aims to unlock large-scale geothermal resources. Geothermal power would provide continuous 24-hour electricity, a growing priority for artificial intelligence infrastructure.

“The limiting factor in artificial intelligence is clean energy, and you can’t do AI with solar or wind. The best answer is geothermal,” Friedland said.

The Underlying Connection

Beyond geothermal energy, the same semiconductor platform has applications in underground mining, tunneling, rock crushing, manufacturing, and defense systems, broadening the technology’s commercial opportunities.

The company has attracted backing from several of the world’s largest mining companies, including BHP Group Limited (NYSE:BHP), Rio Tinto Plc (NYSE:RIO), Newmont Corp. (NYSE:NEM), and Teck Resources Limited (NYSE:TECK). Chile’s state-owned copper producer Codelco also invested about $50 million.

Copper, a commodity which Friedland, a mining veteran, deems crucial, is the connecting point between global interest in this technology. Despite commodity turbulence in the first half of 2026, Global X Copper Miners ETF (NYSE:COPX) is up 4.68% year-to-date.

Declining ore grades mean miners must process significantly more rock to produce the same amount of copper, increasing energy consumption and operating costs. I-Pulse’s technology aims to replace conventional crushing and grinding with electrical rock fracturing, reducing emissions, lowering costs, and improving metal recovery.

“We’re consuming 30 million tons of copper per year, only 4 million tons of which is recycled. That means, to maintain 3% GDP growth, with no electrification, we have to mine the same amount of copper in the next 18 years as we mined in the last 10,000 years,” Friedland said at a recent conference.

“You people have no idea whatsoever what we’re facing. You’re dreaming. Since 1900, the energy to produce copper, the energy you need to make copper is 16-fold up,” he noted, warning about the large disconnect between economic growth, energy expenditure, and affordable mining.

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Gold’s spectacular rally, which made it one of the best-performing assets in 2025, has been undergoing an equally dramatic correction. Prices have tumbled around 29% from January’s record high of around $5,600 an ounce to below $4,000.

The most popular ETF benchmark, SPDR Gold Trust (NYSE:GLD), has gone deeply into the red, down 8.12% year-to-date.

The main catalyst has been an inflationary energy shock from the U.S.-Iran war. Inflation concerns forced a prompt revision of lower-interest-rate expectations that had driven the precious metals bull market of 2025. Instead, investors encountered tightening monetary policy and rapidly shifting sentiment.

Pricing the Fed

Under the new Fed Chair, Kevin Warsh, policymakers have pivoted away from rate cuts and toward fighting energy inflation. According to the CME FedWatch, markets now imply roughly a 70% probability of a rate increase by September and a near-certainty of another move by December.

The implications for a non-yielding asset like gold are straightforward. Opportunity costs rise, while a stronger U.S. dollar delivers a double whammy. Both dynamics have pressured bullion prices and encouraged investors to reduce exposure through exchange-traded funds.

“The shift away from inflationary cuts toward tighter policy is a headwind for gold,” Bank of America analysts wrote in the latest note.

The bank is among the institutions revising the near-term outlook. Its previous forecast was $6,000 an ounce by next spring – a target that now appears unlikely under current monetary conditions. Analysts argue that gold must first “price out” the expected rate hikes before investment demand can recover.

Deutsche Bank has likewise turned more cautious. According to Bloomberg, the bank cut its third-quarter gold forecast by 22% to $4,300 an ounce, though that still sits above the current spot price of around $4,000.

“Fed repricing, together with resilient U.S. macro data, has played the primary role in pushing gold lower,” analyst Michael Hsueh wrote in the Tuesday note.

The bank expects a rebound toward $4,800 in the fourth quarter if the Fed pauses after its initial tightening moves. However, if three or four hikes materialize, the bank says it could drive the price to $3,800 an ounce.

A Hidden Opportunity

Yet beneath the short-term pessimism, metal’s long-term outlook remains constructive. Central bank demand continues to provide a critical foundation for prices.

A recent survey showed that nearly three-quarters of reserve managers expect moderate or significant reductions in U.S. dollar holdings over the next five years, reinforcing the broader de-dollarization trend that has been driving official-sector purchases.

The opportunity may be even more pronounced in mining equities. Bank of America’s price-to-net-asset-value analysis suggests gold producers are valuing bullion at an average implied price of just $3,354 an ounce, roughly 19% below prevailing spot levels.

However, investors must take an extraordinary price dispersion into account. Wheaton Precious Metals Corp. (NYSE:WPM) carries the highest implied gold price at $4,395 an ounce, while Franco-Nevada Corp. (NYSE:FNV) reflects a far more conservative $2,416.

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For more than two decades, passive investing has been a humble idea successfully marketed to the retail audience. It was a set-and-forget approach – not trying to outsmart the market but simply owning it.

Now, according to a growing camp of market critics, passive funds have become something far more consequential—they are the market.

The scale is difficult to ignore. Data compiled by Apollo Global Management Chief Economist Torsten Slok shows that the three largest S&P 500 index funds now control more than $2.6 trillion in combined assets. Vanguard’s flagship S&P 500 ETF (NYSE:VOO) recently crossed the $1 trillion mark on its own.

The trend means that an increasing share of investment decisions no longer belongs to analysts weighing earnings prospects or debating valuations. Instead, the capital flows mechanically through index-tracking vehicles that buy stocks simply because they are in an index.

“It’s a systematic algorithm that operates off of the world’s simplest algorithm: Did you give me cash? If so, then buy. Did you ask for cash? If so, then sell,” said Mike Green, Chief Investment Strategist at Simplify Asset Management.

The Structural Limit of Price Discovery

The argument challenges a foundational assumption of modern finance. Traditional theory, popularized by Nobel laureate William F. Sharpe, treats passive investors as essentially non-participants in price discovery. Green says that description no longer fits reality.

Index funds constantly trade to accommodate daily inflows and outflows, as well as periodic index reconstitutions. As passive ownership expands, those transactions increasingly dictate market prices.

The result, Green argues, is a market that has become highly inelastic, where each new dollar entering index funds has an outsized effect on valuations. His estimate puts passive ownership at roughly 54% of the market today (growing at around 4% annually), but the more provocative part of his thesis is what comes next.

Green believes markets have an outer structural limit somewhere between 75% and 83% passive ownership. Beyond that point, he argues, volatility would break the price discovery.

“If we get to that level of passive, effectively the market becomes so impossibly volatile that it becomes an inevitable event that it will eventually cause its closure,” Green said.

A Bifurcated Market

Whether that prediction proves alarmist or prescient, there is little debate that passive flows increasingly favor the market’s largest companies. Because index funds allocate capital according to market capitalization, the biggest stocks receive the biggest inflows regardless of whether their fundamentals are accelerating or slowing.

That dynamic has helped fuel extraordinary concentration in a handful of mega-cap technology companies, even as many active managers continue losing assets.

According to billionaire investor Bill Ackman, that distortion is increasingly visible.

“I think it is hard to make a statement on the overall market because it is really a bifurcated market,” Ackman said in a recent interview. “We’re finding a lot of really cheap stocks in a market that’s hitting new highs.”

He pointed out how investors’ attention remains fixated on semiconductors, artificial intelligence infrastructure, and the next wave of highly anticipated IPOs. Meanwhile, companies that would once have been considered growth darlings have become oddly unfashionable.

“Meta Platforms, Inc. (NASDAQ:META) is an old-fashioned company today, Microsoft Corporation (NASDAQ:MSFT) is an old-fashioned company today,” Ackman said. “Therefore, they’re less interesting, and the result is that those stocks are cheap.”

Ironically, passive investing removed emotion from investing. But when trillions of dollars flow automatically into the largest stocks, momentum can begin to masquerade as value.

For now, the machine continues to work. Every paycheck contribution, every retirement allocation, and every ETF inflow adds another brick to the structure.

But if capital continues chasing index weight rather than corporate value, the biggest risk may not be an incoming crash but rather a market that gradually forgets how to price anything at all.

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One of Wall Street’s favorite commodity narratives is the link between copper and AI demand.

The demand logic flow is simple: AI requires enormous data centers; data centers require enormous amounts of copper; therefore, copper demand will keep rising.

On the other hand, rising capex, lower grades, and a lack of new large discoveries are hurting the supply side. It looks like a double whammy that guarantees success, yet reality is far more complicated.

While forecasts from S&P Global suggest copper demand from data centers and related infrastructure could rise from 1.1 million metric tons in 2025 to 2.5 million by 2040, those projections often assume a relatively static technological environment. In practice, AI infrastructure is evolving rapidly, shifting toward less copper-intensive solutions.

Two Key Narrative Flaws

The bullish argument begins with a valid observation of how metal-intensive AI facilities are. According to S&P Global, a crypto data center requires roughly 21 metric tons of copper per megawatt of installed capacity, while an AI training center can require as much as 47 metric tons. The difference reflects denser wiring, larger cooling systems, and dramatically higher power requirements. 

However, the difference between the announcements and actual deployment is considerable. The concept of “bragawatts” is increasingly present in 2026, as capacity figures look impressive in investor presentations yet face a substantial reality check in practice.

Reuters reported that Ireland imposed a de facto moratorium on new data centers after the sector ballooned to more than 20% of the national electricity demand. Policy interference and infrastructure constraints also limit the thesis of exponential expansion for copper.

The second flaw in the copper supercycle narrative is that engineers are actively trying to reduce metal usage. AI economics reward efficiency. NVIDIA Corp. (NASDAQ:NVDA) and other industry leaders are redesigning power architectures to move more energy with less material.

NVIDIA’s solution is a transition to 800 volts, where the same wire gauge can transmit around 157% more power. With fewer conductors, smaller connectors, and simpler designs, performance would be better even with less copper per rack.

Huang’s Pragmatic Transition

“You use optics wherever you must, [and] you use copper wherever you can,” NVIDIA’s CEO Jensen Huang said at a trade show in Taipei, according to the WSJ.

Contrary to claims that copper will suddenly become obsolete, Huang argues for a hybrid model. Copper remains a practical, inexpensive, and proven technology within certain distance and bandwidth limits. Existing infrastructure will continue relying heavily on it for years.

He noted that copper will continue to play an important role in infrastructure, even as the use of optical devices expands rapidly in the coming years.

This coexistence model creates opportunities for firms positioned across both ecosystems. Huang has repeatedly highlighted Marvell Technology, Inc. (NASDAQ:MRVL) as a key beneficiary because it supplies networking technologies that bridge traditional copper-based systems and advanced optical interconnects.

The Copper Wall at 400 Gbps

Copper’s transmission distance is inversely proportional to bandwidth. Today’s leading 200 Gbps-per-channel copper systems start to lose signal after only about 2.5 meters. Since modern server racks are about 2 meters tall, the margin is already becoming rather small.

Matt Murphy, CEO of Marvell, said copper cables will be unable to support complete rack connectivity as systems migrate to 400 Gbps speeds.

As bandwidth requirements continue climbing, electrical signals weaken faster and generate more heat. At some point, physics overwhelms economics.

Fiber optics and silicon photonics have become necessary rather than optional because they enable the transmission of data over far greater distances with minimal degradation.

Eventually, it doesn’t mean that the copper thesis is dead. One way or another, AI will increase copper demand. Still, the assumption of an unlimited copper supercycle ignores the realities of grid constraints, deployment delays, and relentless engineering innovation. 

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On Friday, Anglo American plc (OTCQX:AAUKF) posted a $3.7 billion loss after booking a $2.3 billion writedown on its De Beers diamonds business. The crisis of the global diamond industry arrived at a volatile period for the firm, as it restructured and negotiated a merger of equals with Teck Resources Ltd. (NYSE:TECK).

The latest impairment at De Beers brought total writedowns to $6.8 billion over the past year. Despite 2% higher earnings from operations, the non-cash charge pushed the group into the red and forced a reset of shareholder returns.

Anglo declared a dividend of 23 cents per share, roughly $200 million, down 64% from 64 cents per share, or about $800 million, a year earlier. The cut reflects both weaker diamond prices and management’s desire to preserve balance sheet strength as it reshapes the portfolio. Net debt fell to $8.6 billion, but the dividend reduction highlights how severely De Beers has weighed on group performance.

Losing Luster

Anglo has struggled with the diamond business ever since it accelerated a strategic overhaul after fending off a $49 billion takeover bid from BHP Group Ltd. (NYSE:BHP) nearly two years ago. The miner sought to simplify its structure and focus on copper and iron ore, announcing plans to exit diamonds, coal, and platinum.

As part of that pivot, Anglo agreed to a transformative merger with Teck to create one of the world’s largest copper producers. Shareholders have approved the deal, and regulatory clearances are being sought, with completion targeted once final approvals are secured.

The proposed Anglo-Teck combination would cement the group’s shift toward future-facing commodities. Headquartered in Vancouver, the enlarged company would bring together major copper assets, including Teck’s Quebrada Blanca operation in Chile and Anglo’s portfolio.

Regional Ownership

The former portfolio crown jewel, De Beers, remains on the books but under intense pressure. Production has fallen for three consecutive years, and the company has cut its 2026 output forecast.

“There is at the moment a plentiful supply of rough diamonds in the market,” chief executive Duncan Wanblad said, according to Reuters. He noted the market was swamped by inventory and weakened by slowing luxury demand and the rapid rise of lab-grown stones.

Anglo has put De Beers up for sale and says the process is at an advanced stage, with final binding bids expected this year. Botswana, which owns 15% of De Beers and supplies about 70% of its rough diamonds, has signaled it wants to increase its stake. Angola is also seeking a significant position.

“Taking the majority stake within luxury commodities is very dangerous because it depends on the market,” Paulo Tanganha, Angola’s national director of mineral resources, told Reuters. “So to de-risk that, we have to have a portion that is sustainable for our economy. And that range (is) between 20% and 30%, we are happy about that.”

He added that Angola and neighboring producers were holding closed-door talks to find a common position.

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