Forty-two chapters. Almost a year of posts. Stories spanning from 1637 to 2018, from Amsterdam flower auctions to cryptocurrency exchanges. And here I am, writing the last post in this series.
Forty-two chapters. Almost a year of posts. Stories spanning from 1637 to 2018, from Amsterdam flower auctions to cryptocurrency exchanges. And here I am, writing the last post in this series.
After 42 chapters of booms, busts, manias, and crashes, Torsten Dennin does something unexpected in the Outlook and Epilogue of “From Tulips to Bitcoins.” He looks forward. And what he sees is a setup for the next big commodity cycle. The numbers he puts on the table are brutal enough to explain why.
After 42 chapters of booms, busts, manias, and crashes, Torsten Dennin does something unexpected in the Outlook and Epilogue of “From Tulips to Bitcoins.” He looks forward. And what he sees is a setup for the next big commodity cycle. The numbers he puts on the table are brutal enough to explain why.
In 2017, cobalt went from $25,000 to $100,000 per ton. Quadrupled in a single year. Not because someone cornered the market or because a mine collapsed. It happened because the world suddenly realized that electric cars need batteries, and batteries need metals. Lots of metals. Chapter 41 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of how Tesla, Elon Musk, and the EV boom turned obscure industrial metals into the hottest commodities on the planet.
In 2017, cobalt went from $25,000 to $100,000 per ton. Quadrupled in a single year. Not because someone cornered the market or because a mine collapsed. It happened because the world suddenly realized that electric cars need batteries, and batteries need metals. Lots of metals. Chapter 41 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of how Tesla, Elon Musk, and the EV boom turned obscure industrial metals into the hottest commodities on the planet.
In February 2016, a barrel of WTI crude oil cost less than $26. That was the lowest price since 2003. Just 18 months earlier, the same barrel was selling for $110. A 76% drop. Chapter 40 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of how the world literally ran out of places to store all the oil it was pumping, and what happened when OPEC and Russia finally decided to do something about it.
In February 2016, a barrel of WTI crude oil cost less than $26. That was the lowest price since 2003. Just 18 months earlier, the same barrel was selling for $110. A 76% drop. Chapter 40 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of how the world literally ran out of places to store all the oil it was pumping, and what happened when OPEC and Russia finally decided to do something about it.
Your phone has rare earths in it. Your laptop has them. If you drive a hybrid or electric car, it is full of them. Wind turbines need them. Flat screens need them. Pretty much every piece of modern technology needs a tiny bit of these 17 metals that most people have never heard of. Chapter 39 of Torsten Dennin’s “From Tulips to Bitcoins” (ISBN: 978-1-63299-227-7) tells the story of what happened when one country controlled almost all of the supply and decided to squeeze.
Your phone has rare earths in it. Your laptop has them. If you drive a hybrid or electric car, it is full of them. Wind turbines need them. Flat screens need them. Pretty much every piece of modern technology needs a tiny bit of these 17 metals that most people have never heard of. Chapter 39 of Torsten Dennin’s “From Tulips to Bitcoins” (ISBN: 978-1-63299-227-7) tells the story of what happened when one country controlled almost all of the supply and decided to squeeze.
For decades, the world’s largest commodity trading company operated in near-total secrecy. No public filings. No shareholders to answer to. No journalists poking around. Then on May 19, 2011, Glencore listed on the London Stock Exchange and raised $12 billion in one of the biggest IPOs in history. Chapter 38 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of how a fugitive’s private empire became a public company. And how the insiders who sold their shares at the top never saw that price again.
For decades, the world’s largest commodity trading company operated in near-total secrecy. No public filings. No shareholders to answer to. No journalists poking around. Then on May 19, 2011, Glencore listed on the London Stock Exchange and raised $12 billion in one of the biggest IPOs in history. Chapter 38 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of how a fugitive’s private empire became a public company. And how the insiders who sold their shares at the top never saw that price again.
In March 2011, cotton hit $2.15 per pound. That was the highest price since cotton trading began on the New York Cotton Exchange in 1870. The last time cotton was anywhere near that expensive, the American Civil War was raging and the South’s plantations had stopped producing. It took 150 years for cotton to reach those levels again. Chapter 37 of Torsten Dennin’s “From Tulips to Bitcoins” explains how a combination of floods, export bans, hoarding, and panic buying made it happen.
In March 2011, cotton hit $2.15 per pound. That was the highest price since cotton trading began on the New York Cotton Exchange in 1870. The last time cotton was anywhere near that expensive, the American Civil War was raging and the South’s plantations had stopped producing. It took 150 years for cotton to reach those levels again. Chapter 37 of Torsten Dennin’s “From Tulips to Bitcoins” explains how a combination of floods, export bans, hoarding, and panic buying made it happen.
Some chapters in this book are about money. Some are about greed. This one is about what happens when you mix both with a deadline and a drill hole four kilometers under the ocean. Chapter 36 of Torsten Dennin’s “From Tulips to Bitcoins” (ISBN: 978-1-63299-227-7) tells the story of the Deepwater Horizon disaster. The biggest oil spill in American history. Eleven dead. 780 million liters of crude in the Gulf of Mexico. And a final bill of $65 billion.
Some chapters in this book are about money. Some are about greed. This one is about what happens when you mix both with a deadline and a drill hole four kilometers under the ocean. Chapter 36 of Torsten Dennin’s “From Tulips to Bitcoins” (ISBN: 978-1-63299-227-7) tells the story of the Deepwater Horizon disaster. The biggest oil spill in American history. Eleven dead. 780 million liters of crude in the Gulf of Mexico. And a final bill of $65 billion.
The Democratic Republic of Congo is the third largest country in Africa. It sits on top of enormous reserves of cobalt, diamonds, copper, gold, and rare minerals. By any logic, this should be one of the wealthiest nations on the continent. Instead, it is one of the poorest countries on Earth. Only Zimbabwe has a lower per capita GDP. Chapter 35 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of how Kazakh oligarchs ended up controlling Congo’s copper riches through a chain of shady deals, corrupt middlemen, and a government that treated its country’s resources like personal property.
The Democratic Republic of Congo is the third largest country in Africa. It sits on top of enormous reserves of cobalt, diamonds, copper, gold, and rare minerals. By any logic, this should be one of the wealthiest nations on the continent. Instead, it is one of the poorest countries on Earth. Only Zimbabwe has a lower per capita GDP. Chapter 35 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of how Kazakh oligarchs ended up controlling Congo’s copper riches through a chain of shady deals, corrupt middlemen, and a government that treated its country’s resources like personal property.
In July 2010, a 50-year-old hedge fund manager quietly bought 240,000 tons of cocoa beans. That was 7% of the entire world’s production. The majority of all available supply on the market. His bet was worth a billion dollars. The press called him “Chocolate Finger.” Chapter 34 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Anthony Ward and his massive cocoa gamble.
In July 2010, a 50-year-old hedge fund manager quietly bought 240,000 tons of cocoa beans. That was 7% of the entire world’s production. The majority of all available supply on the market. His bet was worth a billion dollars. The press called him “Chocolate Finger.” Chapter 34 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Anthony Ward and his massive cocoa gamble.
Sugar is one of those things you never think about. You put it in your coffee, you eat it in everything, it is just there. Then one summer in India the rain does not come, and suddenly sugar is front page news. Chapter 33 of Torsten Dennin’s “From Tulips to Bitcoins” (ISBN: 978-1-63299-227-7) tells the story of what happened in 2009 and 2010, when the world’s second-largest sugar producer ran out of sugar and had to start buying it from everyone else.
Sugar is one of those things you never think about. You put it in your coffee, you eat it in everything, it is just there. Then one summer in India the rain does not come, and suddenly sugar is front page news. Chapter 33 of Torsten Dennin’s “From Tulips to Bitcoins” (ISBN: 978-1-63299-227-7) tells the story of what happened in 2009 and 2010, when the world’s second-largest sugar producer ran out of sugar and had to start buying it from everyone else.
There is a tiny town in Oklahoma called Cushing. Fewer than 10,000 people. It has a Walmart. A few fast food places. And somehow, this place is the center of the global oil market. Chapter 32 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of what happened when oil prices collapsed and the biggest banks in the world started renting supertankers just to have somewhere to put the stuff.
There is a tiny town in Oklahoma called Cushing. Fewer than 10,000 people. It has a Walmart. A few fast food places. And somehow, this place is the center of the global oil market. Chapter 32 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of what happened when oil prices collapsed and the biggest banks in the world started renting supertankers just to have somewhere to put the stuff.
Less than a month after Jerome Kerviel blew a $5 billion hole in Societe Generale, another rogue trader popped up on the other side of the Atlantic. This one was not at a fancy French bank in Paris. He was sitting in Memphis, Tennessee, betting on wheat. Chapter 31 of Torsten Dennin’s “From Tulips to Bitcoins” tells how one guy at MF Global secretly built a $1 billion position against wheat, got absolutely crushed, and brought his entire firm to its knees.
Less than a month after Jerome Kerviel blew a $5 billion hole in Societe Generale, another rogue trader popped up on the other side of the Atlantic. This one was not at a fancy French bank in Paris. He was sitting in Memphis, Tennessee, betting on wheat. Chapter 31 of Torsten Dennin’s “From Tulips to Bitcoins” tells how one guy at MF Global secretly built a $1 billion position against wheat, got absolutely crushed, and brought his entire firm to its knees.
In 2007, a 65-year-old Thai rice exporter stood up and told everyone that rice prices would go from $300 per ton to $1,000. People laughed at him. Not politely. They actually laughed. Chapter 30 of Torsten Dennin’s “From Tulips to Bitcoins” tells what happened next. Spoiler: nobody was laughing by spring 2008.
In 2007, a 65-year-old Thai rice exporter stood up and told everyone that rice prices would go from $300 per ton to $1,000. People laughed at him. Not politely. They actually laughed. Chapter 30 of Torsten Dennin’s “From Tulips to Bitcoins” tells what happened next. Spoiler: nobody was laughing by spring 2008.
Imagine you control 80% of the world’s supply of a precious metal. And then one day your electricity just stops working. Chapter 29 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of South Africa’s platinum industry getting hit by the most basic problem imaginable: no power.
Imagine you control 80% of the world’s supply of a precious metal. And then one day your electricity just stops working. Chapter 29 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of South Africa’s platinum industry getting hit by the most basic problem imaginable: no power.
You would think that after Amaranth blew up and lost $6 billion on natural gas, every bank and fund on the planet would have gotten the message. Natural gas is dangerous. Do not bet the house on it. But no. Just six months later, one of Canada’s oldest and biggest banks walked straight into the same wall. Chapter 28 of Torsten Dennin’s “From Tulips to Bitcoins” tells how the Bank of Montreal lost $850 million on natural gas trades and tried to cover it up.
You would think that after Amaranth blew up and lost $6 billion on natural gas, every bank and fund on the planet would have gotten the message. Natural gas is dangerous. Do not bet the house on it. But no. Just six months later, one of Canada’s oldest and biggest banks walked straight into the same wall. Chapter 28 of Torsten Dennin’s “From Tulips to Bitcoins” tells how the Bank of Montreal lost $850 million on natural gas trades and tried to cover it up.
Wheat is boring. It just sits there in a field, grows, gets harvested, becomes bread. Nobody thinks about wheat until the price of bread doubles and suddenly everyone is an agricultural expert. Chapter 27 of Torsten Dennin’s “From Tulips to Bitcoins” tells what happened when Australia, one of the biggest wheat exporters on the planet, stopped producing wheat. Not by choice. Because the rain stopped coming.
Wheat is boring. It just sits there in a field, grows, gets harvested, becomes bread. Nobody thinks about wheat until the price of bread doubles and suddenly everyone is an agricultural expert. Chapter 27 of Torsten Dennin’s “From Tulips to Bitcoins” tells what happened when Australia, one of the biggest wheat exporters on the planet, stopped producing wheat. Not by choice. Because the rain stopped coming.
For most of the twentieth century, seven Western companies ran the global oil business like it was their private club. They decided how much oil was pumped, where it went, and what it cost. Then, country by country, the club got kicked out. Chapter 26 of Torsten Dennin’s “From Tulips to Bitcoins” tells how the old Seven Sisters lost their grip and a new set of state-owned giants took over.
For most of the twentieth century, seven Western companies ran the global oil business like it was their private club. They decided how much oil was pumped, where it went, and what it cost. Then, country by country, the club got kicked out. Chapter 26 of Torsten Dennin’s “From Tulips to Bitcoins” tells how the old Seven Sisters lost their grip and a new set of state-owned giants took over.
Some people trade commodities. Some people build entire industries. Chapter 25 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Lakshmi Mittal, a man who spent three decades buying steel plants that nobody wanted and turned them into the largest steel company the world has ever seen.
Some people trade commodities. Some people build entire industries. Chapter 25 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Lakshmi Mittal, a man who spent three decades buying steel plants that nobody wanted and turned them into the largest steel company the world has ever seen.
If you have seen the 1983 movie Trading Places with Eddie Murphy and Dan Aykroyd, you remember the final scene. The trading floor of the New York commodity exchange. Two old millionaires trying to corner the frozen orange juice market. Total chaos. People yelling, waving paper, sweat everywhere. That scene was fiction, but the commodity was real. Frozen concentrated orange juice is traded on NYMEX, and the price can move violently when nature decides to get involved. Chapter 23 of Torsten Dennin’s “From Tulips to Bitcoins” tells what happened when the most destructive hurricane seasons in recorded history hit the real orange juice market. The price quadrupled. And unlike the movie, nobody was laughing.
If you have seen the 1983 movie Trading Places with Eddie Murphy and Dan Aykroyd, you remember the final scene. The trading floor of the New York commodity exchange. Two old millionaires trying to corner the frozen orange juice market. Total chaos. People yelling, waving paper, sweat everywhere. That scene was fiction, but the commodity was real. Frozen concentrated orange juice is traded on NYMEX, and the price can move violently when nature decides to get involved. Chapter 23 of Torsten Dennin’s “From Tulips to Bitcoins” tells what happened when the most destructive hurricane seasons in recorded history hit the real orange juice market. The price quadrupled. And unlike the movie, nobody was laughing.
Most of the stories in this book are about people. Traders who got greedy. Governments that miscalculated. Speculators who cornered a market and then lost control. Chapter 21 of Torsten Dennin’s “From Tulips to Bitcoins” is different. The main character is a hurricane. And the commodity it moved is one that most people have never thought about: zinc.
Most of the stories in this book are about people. Traders who got greedy. Governments that miscalculated. Speculators who cornered a market and then lost control. Chapter 21 of Torsten Dennin’s “From Tulips to Bitcoins” is different. The main character is a hurricane. And the commodity it moved is one that most people have never thought about: zinc.
In the summer of 1972, the Soviet Union pulled off one of the most audacious trades in the history of commodity markets. They bought almost a third of America’s wheat supply. And almost nobody noticed until it was too late.
In the summer of 1972, the Soviet Union pulled off one of the most audacious trades in the history of commodity markets. They bought almost a third of America’s wheat supply. And almost nobody noticed until it was too late.
Picture this. A 30-year-old guy from Massachusetts moves to Chicago with no connections and no fortune. Within a few decades, he becomes the most feared trader on the floor of the Chicago Board of Trade. They called him “Old Hutch.” And he figured out how to squeeze money from wheat like nobody had done before.
Picture this. A 30-year-old guy from Massachusetts moves to Chicago with no connections and no fortune. Within a few decades, he becomes the most feared trader on the floor of the Chicago Board of Trade. They called him “Old Hutch.” And he figured out how to squeeze money from wheat like nobody had done before.
Here is a question that bothers me. We have thousands of years of recorded history. We have examples of every possible financial mistake. We have libraries full of books about market crashes. And yet people keep doing the same thing over and over.
Here is a question that bothers me. We have thousands of years of recorded history. We have examples of every possible financial mistake. We have libraries full of books about market crashes. And yet people keep doing the same thing over and over.
I just finished reading “From Tulips to Bitcoins” by Torsten Dennin, and I have to say - this book is a wild ride through 400 years of people losing (and making) fortunes on commodities and crypto.
I just finished reading “From Tulips to Bitcoins” by Torsten Dennin, and I have to say - this book is a wild ride through 400 years of people losing (and making) fortunes on commodities and crypto.