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Time to spend on GPU futures?

Inflation is hitting everyone in the wallet, with prices soaring and incomes remaining fairly static.

Anyone seeking a way to protect their money is probably looking hard for some kind of iron-clad investment that will at least keep pace with the rate of inflation. Although deposit rates are also climbing, leaving your money in the bank is certainly going to cost a pretty penny over the next year or two in terms of its purchasing power.

So what are the options for those who want to protect the value of their wealth?

How about investing in GPUs?

GPUs (Graphics Processing Units) are the video cards we find in most modern computers.

Although originally created to provide co-processing capabilites in your average desktop or laptop computer in order to speed up graphics-oriented operations, GPUs are now used for a whole host of other things. In fact, the GPU in your desktop PC may be even more powerful than the CPU.

The best and most recognisable example of the non-graphics capabilities of modern GPUs is cryptomining. There have been periods in recent times when GPUs were hard to get, simply because crypto-miners were buying up all the cards they could find in order to calculate the hashes needed to mine some forms of crypto-currency. This pushed the price of GPUs through the roof and during the height of the crypto-boom, most reasonably powerful cards were selling for twice the RRP or more.

This clearly proves that the laws of supply and demand are very powerful in the GPU marketplace and that's something savvy investors should take note of.

Why?

Well the vast majority of GPU die manufacturing takes place in Taiwan. TSMC is the king of the GPU chip-making world and although other countries are doing their best to build similar fabrication facilities, most of these are quite a few years away from completion. This leaves the world very dependent on Taiwan's output.

So what happens if/when China decides to implement its reunification plans for Taiwan?

At the very least, this would see the tiny island nation surrounded by Chinese warships and its airspace closed down. This would make it impossible for Taiwan to export the very valuable chips that comprise the heart of modern-day graphics cards.

In effect, the supply would be all but cut-off.

Now, even though demand is at a very low level right now (due to the fact that many people already updated their systems during/after the pandemic), that demand continues and will probably only grow larger over the next few years -- especially as AI becomes an integral part of so many applications.

If demand grows and supply is drastically reduced or even halted, this will send prices through the roof and anyone who's lucky enough to have warehouses filled with the latest generation of GPUs will probably be able to double, tripple or even quadruple their investment in a few short months.

The big problem is: timing.

Buy up too early and you run the risk that a new generation of GPU tech will already be on the market before the supply is constrained by China's reunification moves.

Leave it too late and there simply may be no stock to buy because supply will have already been halted.

They say that many a fortune is made in time of war and I expect that this is how a few mercenary souls will boost their wealth in the coming years.

It could also mean that all those crypto-miners who are currently sitting on hundreds of GPUs that no longer turn a profit may be able to cash-out for a huge return on their initial investment.

Forget gold, silver or oil futures... silicon may be the real earner.

Carpe Diem folks!

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