Bizarro World Podcast,
with Nick and Gerardo
March 7, 2022
Gold, silver, copper, wheat, and many other commodities are surging higher as inflation and war tighten their grip on markets.
Gold is nearing $2,000.
The stock market continues to be exceedingly volatile and is negative for the year as we look to start closing out Q1. A recession is likely in the next couple of quarters as growth slows and those high commodity prices stifle demand.
People are fleeing Russia.
There is a migrant crisis. There is an energy crisis.
The West is getting a taste of what real leadership looks like from Ukrainian President Volodymyr Zelenskyy.
Plus: there needs to be accountability and transparency to help clear the fog of war.
Table of Contents
0:47 Gold & Volatility
5:32 Martial Law in Russia?
21:06 The Real Leadership of Ukrainian President Volodymyr Zelenskyy
27:45 Who's Accountable When Governments Seize Bank Accounts and Assets?
40:12 Stocks We're Watching
Gerardo Del Real: Gold is back at $1940. It's not just Ukrainians fleeing. Russians are fleeing as well. We'll talk about why Russians are rushing to get out of Russia. Oil is surging. Palladium's surging. Biden's "Biden-ing" as always. It's a bizarro world out there. I am Gerardo Del Real along with my co-host Mr. Nick Hodge. This is episode 159 of our weekly therapy session otherwise known as Bizarro World. Nick, how go's it?
Nick Hodge: It's a whole lot of rushin' Gerardo. I'm a fan of the white Russians. Also a fan of The Big Lebowski. How's it going?
Gold & Volatility
Gerardo Del Real: We're safe. We're healthy. It's sunny. Family's healthy. Business is good. Life is great. Cannot complain. Things are good. Let's get right into the markets. We talked last week about expecting $50 to $100 swings in the gold price because of what we identified as capital looking to position itself that maybe wasn't hedged. And then capital that's looking to liquidate to cover positions that are blowing up. A lot of hedge funds got caught with their hand in the cookie jar and are having to shut down. This past week played out exactly how we thought it would play out with gold pushing back down close to the high $1800s, low $1900s. And here we are on Thursday, March the third, and closed right at $1,940. I suspect we'll continue to see that volatile trading, but I do see the trend to the upside. How do you see it, Mr. Hodge?
Nick Hodge: For sure the trend in gold, and gold equities finally, is to the upside. I bought myself some GDXJ today. And so it's not just other people that weren't positioned, I certainly knew gold was a place to be. But when you see prolonged volatility and when you see a prolonged downside in the S&P it only makes sense to get more exposure to the things that are going up. And so I probably don't have to tell you, I own plenty of gold stocks, but I'm still increasing my exposure, at least on the macro side of things, right? That's not in there buying a penny stock or doing a private placement. I'm getting the GDXJ because it's liquid, it's I think an important point. So you talk about $50 swings. If that is going to be the case I can get in and out of a GDX or a GDXJ and I can't get out of a pick your flavor junior minor, right?
And so one of the reasons I was doing that is because volatility is still very high. So I haven't written my Family Office Advantage issue today, but I was starting to, and if you look at volatility ever since we knew about the virus and the world was going to end, and the S&P collapsed... Ever since then, the S&P volatility was generally making its way down. And so you could buy the dip in equities as volatility was trending down, but ever since really late last year, the volatility's now trending up and the war doesn't make that any better.
And so I guess the analogy, or what I was trying to say is that it's not a buy the dip thing when the volatility is going up. So you need more exposure to those defensive things, which we've been talking about now for a couple of months. And it has been, we must say that 100% correct call. I mean, the S&P is still down 8% of the year. You mentioned hedge funds. Some are going to have to close their doors. Some have 30 or 40% for the year. And so, yeah, gold has been ...
Gerardo Del Real: And they don't know to allocate capital, right? That's the thing. They were fooled by a bull market. I didn't mean to cut you off, but I think it's an important point to make. There are a lot of traders and a lot of funds that have only traded and allocated capital in a bull market since 2008 with very few hiccups along the way. And I think it's starting to show.
Nick Hodge: Yeah. I mean, there's a lot of young traders out there. There are a lot of people who haven't seen a rate rising or a hawkish environment. There are a lot of people that haven't seen escalating conflict. And so there's a lot going on. There's still a lot that has to be remedied. The market hasn't figured everything out itself yet, which is one of the reasons volatility remains high. Bond yields pulled back a little bit, but everyone's still waiting for the Federal Reserve, I think. And I don't know if we'll expand on it or not, but they had, as you said, and as we've discussed a little bit, they're a little out, right? Jerome's out there this week saying "we're still going to raise rates, but we're keeping an eye on the situation in Ukraine because we got to be sensitive to that," right?
Gerardo Del Real: And he told the market, "we're just going to raise just a bit, we're just going to give you the tip on a rate hike. It's just going to be the tip, just a little bit, just a little 25 basis point." So they already telegraphed what to expect, right? And I think if this is the way that it's going to go now when inflation is red hot when inflation is likely peaking in a lot of sectors, not that I believe it's transitory, but I do think in a lot of areas, it's peaked. And I think in other areas it's not, but that's a separate conversation. But as far as Jerome goes, if 25 basis points are all he's going to recommend, this go-round, maybe he gets off another one, I keep saying this almost every week. After that, I don't think the market's going to give him the opportunity to raise anymore.
Nick Hodge: What do you mean by that? Do you think that we're in for more downside in the equities?
Martial Law in Russia?
Gerardo Del Real: Well look, let's talk about why Russians are fleeing Russia, right? There are rumors of martial law being implemented in Russia. And so we now have Russians rushing, pun intended, to get out of Russia. They've shut down two of the major networks in Russia, the independent ones. Vladimir's urging, the way former KGB agents urge, people to only listen and watch trusted sources, is how they're framing it for the news, right? And so people are worried that there's going to be a martial law declaration where you wake up and that's it, everything's frozen, and you're stuck. Russia is not going to continue to allow the seizing and freezing of assets, whether it's legal or illegal. And I do want to get into that a little bit later on because I have issues with some of the ways that are being done by the US and other countries as well, but we're not going to continue to do that without cyberattacks, serious cyber attacks.
And look, it may sound a little bit tin foil hat-ish. You may take some pictures of those bank accounts that you have. You may want to withdraw a little bit of extra money and make sure you have a month or two under the mattress. You may want to invest in a little bit of extra food because it wouldn't surprise me to see the electrical grid taken down for an undetermined period of time. It wouldn't surprise me to see major institutions, the Wells Fargo's, the JP Morgan's, the Schwab's of the world down for three to five days. There has to be retaliation from Russia. There's no way whether he's saying or not that this continues on with just Ukraine as the main event, the main entree.
And so when you game theory it out and you look at where Russia is nimble enough to attack in an effective manner, that seems like the obvious spot for me. And again, tin foil hat and all, right? Maybe it's nothing, but man, I sure would hate to wake up and servers are down and accounts are erased and we don't know that you had your million or 2 million or 3 million or 10 million dollars in the bank. Prove it.
Nick Hodge: Yeah, that's interesting. I mean, it's interesting you mentioned the effectiveness. He said that there was going to be retaliation for anyone that intervened, "the likes of which we have never seen before," I think was the quote. But so far the invasion of Ukraine itself hasn't seemed so effective. And I think that's maybe affecting his decision-making a little bit. First of all, it's been well over a week and they haven't toppled Ukraine, right? Ukraine put up more of a fight than I think Russia thought or than Putin thought they were going to put up. And then there've just been some inefficiencies, right? Like ill-preparedness, I guess. I was seeing pictures today of trucks stuck in the mud, for example. And I'm no history buff and certainly no war buff, but I was reading other people who were saying some of the clear lessons from the World Wars were the fucking Eastern Front gets muddy in the spring. I mean, it's like a thing I guess.
And so I think he might be reeling in fact, a little bit and wanting to lash out. I think it was Medvedev the other day who was tweeting some things sort of like his hype man, right? Like you all better watch out for what you wish for. And so it wouldn't surprise me for him to lash out. I don't know what his capacity is or how much more efficient they are with digital weapons or hacking than they are with the true military. But we'll see. And you and I were talking about this last week, it's one of those things that we harped on. At least I did for a while, right? Have the things, right? Have the pantry stocked, the water, the generator, and fortunate we do. And then we'll see if any consequences like that come. Hopefully not.
Gerardo Del Real: And where I was going with my point to finish answering your question, Nick, in regards to Powell in the market, not letting him enforce a third or the fourth hike of substance is, it has been a relatively inept invasion up until now on Russia's behalf. And thankfully, although it's been horrendous to see the images and the pictures of apartment buildings hit and people fleeing with their pets and their belongings and in the street and some deaths, it hasn't been as gruesome as I think it can be and likely will be if Putin continues to be ineffective. I don't think it remains this way forever. And so what happens when we do get hit with that first cyberattack, that second cyberattack? What happens when it's not 100 people dead, it's 1,000 people dead on either side? What happens if he is unstable, and we end up with something that nobody can imagine right now?
One human toll, but two, there's no way that Powell's going to raise into that. He's going to have all the cover that he needs to avoid doing so. And I think gold's sniffing that out. And I think, look, palladium just hit a seven-month high, silver just broke $25, oil's at $110. I could continue on, aluminum, talk about tin foil hats. Do you want to have fun? Go look at an aluminum chart you all. Ping! I mean, it's ridiculous, right?
And so again, despite the volatility, it has been relatively predictable up until now. I mean, look, when you mentioned last week, you mentioned you watching and observing the invasion on CNN with Applebee's commercials in between, right? Because that's the world we live in now. We didn't know, I certainly did not know how deadly it was going to be initially, the order of things, how aggressive it was going to be.
It seems like now, here we are a week later and this may just be getting acclimated to knowing that the war is happening and desensitizing a bit. It seems like it feels a little bit more predictable right now, which is exactly when things usually happen, right? Just when you start thinking you have the ebb and the flow of whatever it is, could be the markets, it could be war, it could be anything, life, that's usually when you get caught off guard. And I worry a little bit more, I think than the average person that we're going to get caught off guard, not just in Ukraine and not just in Russia, but here in the US. And we haven't even talked about China, right? We haven't even mentioned China getting in the mix, and Taiwan and how that situation can escalate. Because if you're ever going to do that, now's a perfect time.
Nick Hodge: I was just going to bring that up. I mean, go on, yeah.
Gerardo Del Real: I think everything that's happening in Ukraine... China's already drawn the line in the sand and we already know who they're backing, right? And so if they've already picked their fighter and the world's already condemning their buddy Russia, then why not just go after Taiwan and go wrap that one up since they've been wanting to anyway?
Nick Hodge: Well, right. That's the thinking that's out there among people that think about things. I don't know, I have no expertise, but just from a common-sense standpoint, it does seem like if they were going to do something, then that would be the time. And it's not like that hasn't also been simultaneously escalating with the threats in the China Sea and things like that. So hope for the best, prepare for the worst is where we are. And it's so interesting that we haven't mentioned COVID, right? It's like, where's the virus talk now? That's right. Well, that's sort of what I was getting at, right? I mean, it just disappears. Poof! Gone. Vaccine mandates gone, mask mandates gone. They're even advancing, or making the deadline earlier for taking the masks off. I mean, it's absolutely incredible relative to what we saw, the posturing about the misinformation and things like that. So it was the biggest deal in the world until there was actually a big deal.
Gerardo Del Real: Yeah. Back to the markets, copper's rating again, $4.73, as we speak. I mentioned palladium earlier, I mentioned lithium, platinum looks solid. I mean, all across the commodity space it looks good. We have to talk about uranium. We have to talk Germany getting a dose of reality, the same way America's getting a dose of reality when it comes to their critical metal supply and the legislation that seems to be advancing at a snail's pace here in this country in regards to establishing a supply chain of critical metals and everything that goes into those things. But Germany now appears ready to backtrack on shutting down its nuclear capacity, and quite possibly looks to be bringing demand online, which I don't think is anything anybody had on the bingo card. But again, the writers in 2022 are getting very creative. It's only March and buddy, are they busy.
Nick Hodge: Germany to those who are new to the energy scene or just coming to this story now we should lay a little bit of background, right? They've been one of the countries who has tried to shy away from nuclear. And those of us that are pro nuclear or bullish on uranium have been saying that was a mistake for a while now. I mean, I've heard Germany slides and talks for several years. And it didn't make sense even before this war, because what happened, and this is fact, this isn't conjecture, is their emissions went up when they took the nukes offline because they ended up having to make up the gap and you can't make up the gap with things that don't emit carbon, you have to make it up with something that burns.
And so they weren't even burning clean shit. They were burning fucking lignite to make up the gap in Germany. And so everybody was already saying that's pretty dumb, man. You have these fleets of reactors and you have them offline and your emissions are going up. So one of the thoughts in the uranium space was that countries like that were making a mistake and others would realize that nuclear was a green technology. And that has been starting to happen over the past couple of even years. But certainly in the past, I would say six to 12 months, we've seen environmentalists acclimate to the fact that nuclear's simply a key part of the mix and that's accepted now. It's interesting how these catalysts expedite things, right? We talked in the past two years, how COVID expedited a lot of things, social change and things like that.
Well, here you have a war expediting the energy change or at least the reverberation back to nuclear, right? And so, I see a lot of apologies as well. I talk to people in the nuclear space and they always lead with, we hate that it's like this, and we're sorry about the thing in Ukraine. But fucking uranium's through the roof, is the next sentence out of their mouth, right? And it's like, it's obviously a horrible thing, but we've always said that you're going to see catalysts. I mean you talk about jurisdictional risks, right? I mean, one of the prime bullish cases for uranium is that you were reliant on Russian states for your primary supply, right? And so when something happens that takes the primary supply from the Russian states offline, no fucking shit, I mean, the price of uranium is going to go up and it's precisely what we prepared for.
And so there's a lot of people out there I think who should realize if they didn't already and who should quell their arguments and change their positioning. And just from a pure investment standpoint, I mean, the catalysts are unfolding rapidly. You mentioned oil above $110, uranium over $50 and still not really to the place it needs to be to incent production to come online. And gosh, I could talk about a lot of things, like if Russia is going to be sanctioned, I mean, their utilities are going to have to think about reducing their dependence, long term dependence, on contracting from Kazak and Russian supply. And so then you still got the whole climate thing going on. COP26 was just in November. And they finalized Article 6, which is how countries and companies can work together to generate carbon credits because they've been fighting about it for six years. I covered COP13, Gerardo, it's fucking COP26. And so now with the carbon markets are getting [crosstalk 00:18:00]
Gerardo Del Real: We're gonna be 90 years old talking about this.
Nick Hodge: I know. Other people are writing about this. Marin's got a deal. He's been writing a lot about carbon and we're seeing some other carbon deals coming back into the fore. Everything is cyclical. I was writing about carbon markets in 2010 and '11, right? And they failed because there was never a good framework. So anyway, there's still this whole race to zero thing is what I was going to say, and people are going to need carbon-free sources of energy. So all the things are, not all the things, but many of the catalysts are coming together and some of them are positive and some of them are unfortunately negative, but all of them were part of the bull case for uranium.
Gerardo Del Real: And look, whether it's lithium, whether it's rare earths, whether it's uranium, whether it's copper, these are all themes that we've been writing about for years, jurisdictional risk aside, just based on supply-demand fundamentals. And I have news for everyone. The risk has always been on the supply side, not the demand side, the supply-demand fundamentals were already robust. If everything went along smoothly, no strikes in Chile, no strikes in Peru, no mine closures, no war, if none of that ever happened, we still were looking at deficits for at least a couple of years, at the very least in the lithium space, the uranium space, and a couple of other sectors, right? Copper. War, and everything that's going on simultaneously just amplify the urgent need for safe supply.
And look, it takes time to permit these things. It takes time to develop mines. It takes time to build them and ensuring that takes a lot of time to get them into production. So the silver lining in all this is, as a capitalist if you've been positioned right, you've done very well. If you haven't been positioned right, there's still years of what you call inflation profits, Nick, years of inflation profits to make and to take and to book and to hedge against what's going to be a more costly landscape for everything. The target here, saw an article the other day, they're raising the minimum wage to $25 an hour. That's substantial. I remember four years ago if you wanted to raise in New York for McDonald's workers to $15 an hour, you were called a socialist, right? You're going to kill business. You're going to kill small businesses as if McDonald's was a small business, right?
And yes, I understand that most of the locations are franchises and I get that debate and I get that argument, but the bottom line is your business model has to account for increasing cost and quality of life. And you can't just continue to pay people $3.00 an hour, because that's what they made 100 years ago, right? You have to adjust, and so companies that have adjusted are hiring, we're still hiring. Companies that haven't, you know the rest. So a long-winded way of saying we have tailwinds in the commodity sector that I think bodes very well for at least the next two to three years. And yeah, everything that comes with that.
The Real Leadership of Ukrainian President Volodymyr Zelenskyy
Have to take a moment to say it was really refreshing to see the Ukrainian president in the streets with his soldiers suited up, giving conferences. I wish politicians here at home on either side had that type of leadership. I watched the Biden speech. I watched the two little gals that decided to throw a fit in the midst of the speech. And I'm sitting there shaking my head at both, right? Biden is better at reciting Republican talking points than some Republicans are. The other two little ladies that decided to throw a fit multiple times during the speech and use the troops invoke 13 dead soldiers in Afghanistan as the reason for their fit was shameful, because we both know that wasn't why they got out there and threw a tantrum. It wasn't because they were just randomly, suddenly just overwhelmed with passion for the families of those 13 soldiers.
But I look at that and I look at the Ukrainian president and I see the way he stepped up in their leadership. And look there's a whole different conversation to have about Ukraine's role in the diplomatic negotiations prior to the invasion. That's another conversation for another day. It's a beautiful thing to see this man out there in the streets with his soldiers. It's a beautiful thing to see the athletic community, the professional sports community, specifically the boxing community, which I love boxing, right? To see them postpone fights and give up million-dollar paychecks because what's happening at home is more urgent, and a day later, they're in the field with assault rifles and tactical gear and camouflaged up and ready to go.
It's been several, Vasiliy Lomachenko, the Klitschko brothers, I could go on, the boxing community has stepped up beautifully. The professional sports community has stepped up beautifully. The people of Ukraine stepped up beautifully. So yeah, I just wanted to highlight that, there is a lot of negative little moments and it's kind of tragic in a way. And it leaves a hollow feeling inside knowing that this doesn't end well at the end of the day for anyone. But man, I tell you what? If you got to pick a way to go, that's a hell of a way.
Nick Hodge: I got a lot to say. I was taking notes. Not just Biden and our leaders, our elected officials, right? But Putin is nowhere near the front lines, right? As his opponent is out there on the front lines. And so that's the first thing. I guess a little bit of background, again, not an expert, but he was a comedian, I think people are starting to learn this at this point, he's got a Netflix special. Some of which was very on the nose. Like there's a scene in the Netflix special where he gets a call from the EU and he thinks he's getting accepted to the European Union, and then they got the wrong leader. They were accepting some other country and not Ukraine, I mean, just right on the nose, right? And so that's one thing.
I mean, he's of the people, right? He's like a comedian. And so he's also young, I think is a point that I wanted to make. We talked about the Fourth Turning a lot. And so he's 44 years old. Born in 1978. If you were to classify that under the current generational framework, he's like a late Gen X. You can't quite put him in an old millennial, but he's damn close, right? If he were three years younger, he would be one of the oldest millennials. And so you're starting to see that literal turning of the leadership, right? Which is what it's all about. And then you see, yeah, all the whatever, drooping plastic in the Chamber of Congress during the State of the Union, or propped up plastic in some cases. And I see people, one of the tweets I saw was, it's just so staged.
I tuned in for 15 minutes and I just couldn't. But I did see some people tweet. I know. I did see some people tweeting, like why do all our leaders look like they're on their death bed like they're dying? And I just wanted to shout through the Twittersphere, because it's a fucking Fourth Turning. You've got all the previous two generations taking all the leadership positions, right? Literally, the boomers were born in the late 1930s, 1940s, right? And so they will start to be replaced. And that's the reason you see all these old literal geezers in Congress. And that's the answer to that question. And on both sides too. When the camera cut to Mitch McConnell, I thought it was a waxed figure of a man. It's like, I mean, these people just have no life in them. Yeah, and then you see Zelensky, right? Full of life out there engaging. I mean literally putting his life on the line. He's not some stodgy guy who doesn't relate and is a total facade, which is what all politicians have become, right?
Gerardo Del Real: Yeah. He's clipped up, and he's got the coffee in his hand, and the trauma plate inside the vest. He ain't doing it for dress up.
Nick Hodge: It's exactly right. And I guess the last thing I was going to say is that we offered to evacuate him, and he was like, "No, I'm not going. I don't need a ride. I need ammunition." So in that way, he's inspired the people, which I think a lot of politicians outside of Bernie Sanders in the US have failed to do. I mean, you got people out there cutting up styrofoam to put in Molotov cocktails, man. I mean, some of the videos are insane.
Gerardo Del Real: Hey, it's nothing but love and good vibes and good energy to the people in the Ukraine. And look, and on the Russian side too, people in Russia that are out there protesting against the war. Because don't underestimate the pressure that Putin and his group are under from a lot of pro-Ukrainian Russians in Russia that are out there at the risk of being arrested, and they are. There's been nearly 1,000 arrests in the past several days. As new stations are being taken off the network, people are out there literally risking their liberty for their neighbor, standing in solidarity saying we don't want or need this war, leave them the fuck alone and get out and come take care of business at home. And again, they should be commended.
Who's Accountable When Governments Seize Bank Accounts and Assets?
I want to talk about something that I don't think, I sure in the heck haven't seen it in the media. Martin Armstrong mentioned it briefly in one of his blogs. The way that the world is going about seizing Russian assets. I haven't seen how we're qualifying and I'm no expert in this, but how we're qualifying whose assets are eligible to be seized. Is it just that you're a wealthy Russian in the hundreds of millions and billions and then it must be ill-gotten gains so it can just be taken, or is there a better vetting process for this? Because be careful what you wish for people. I talk about slippery slopes all the time and how precedents sometimes forecast the future.
And we talk about civil forfeiture here in the US where the government could just, you're driving around, pull you out of your truck. You got a lot of cash in hand because maybe you fear that we're going to get hacked and you want some cash on hand, just in case of an emergency. The government thinks it's suspicious, they can take your stuff and keep it until they decide they want to give it back to you, or you're wealthy enough or rich enough or connected enough to have a lawyer go represent you and get your stuff back. And in this country, it's taken years sometimes to get substantial amounts of money and property back from the government when no crime was ever committed and nobody was ever accused of a crime.
So if that's where we're at now in this country, and now internationally, I see, the cheering of wealthy Russian yachts and assets being frozen. Do you have an idea on how they're qualifying this, Nick? Am I a little tin foil hattish to think this may not be the precedent that we want to set, shouldn't there be something explained where yes, this is being seized because of this, not just rich Russian, let's take it.
Nick Hodge: Yeah. I know. I don't know whatever qualifications are being taken to, or being used to seize those assets. I haven't seen, and probably because I haven't looked, but any specific cases of assets being frozen. Though the point you raised is obviously a valid one. I mean, you would want there to be some sort of due process or qualification to why the assets were being seized. I guess I would think about the other sanctions we've seen, like some of the preventing of payments and stuff I think is different than seizing assets, right? And so I'd want to parse that out, right? Because when you're stopping transactions, taking them out of banking systems, pausing SWIFT, or taking them out SWIFT, you're stopping the country and its constituents and its companies from doing business, which is meant to squeeze the noose, or tighten the grip, right? So they feel the pressure.
And I agree with those. Those are frozen. And again, not an expert, and I haven't read a lot, but I have seen that the SWIFT thing, last week they were talking and they didn't include them in SWIFT and now everybody is wanting to include them in SWIFT, but still not all SWIFT payments is what I'm reading. There are certain things that ... Anyway, so there's always a loophole, right? Which is another thing I would say is worth keeping an eye on. But blanket seizures of wealth is no, it's a dangerous precedent. Although given the nature of who these people are and who they're known to associate with, I can't imagine, let me not say can't, I wouldn't think it would be too difficult to tie it off. Right, so this is where I'm getting, I guess, right? You were telling me about somebody who donated 20 bucks to the, or 60 bucks or something to the Canadian truckers convoy, right? It ended up having some implications from that.
Gerardo Del Real: Yeah, CEO that knew somebody, correct. Yeah.
Nick Hodge: And this is a wider discussion about crypto, so let me take another note. But they knew where the money came from, right? I mean, it was $60 and they knew where it came from and who it went to. So you think they don't know whose assets these are? I mean, it would be nice if there were some sort of transparency, but I have to imagine that they know whose assets they're freezing, and why they are doing so. What I want is the transparency, right? You got to put it out in the public realm to say, this is why this account is frozen or this person's assets are frozen, and this is why. Not just we've frozen the accounts. Because otherwise if there's no transparency, there's no accountability, right?
And then I was going to pivot to crypto because, and this is a little bit off topic, but one of the things I see people worried about, and not just recently, but even a year or two ago, is the Fed going to do some digital currency? Is the US going to have this digital currency? And then somebody sent me something today, a text about Europe or England doing a digital currency, and they were conflating it with a social credit system, right? They were saying that they're going to use that to have a Chinese social credit system. And I cited the exact example I just gave here. I was like, technically it's already quasi implemented. It's just, there's no score tied to it, right? Because if you donate $60 to someone they don't like they can find you and seize it and knock on your door, right? Without any government digital currency implemented.
What I was saying is there's already a digital currency. I mean, you don't pay for everything with paper dollars or coins, you swipe your card, right? And so there's already a trail, a literal digital trail of where those dollars are going.
And I guess what I'm building up here is a bull case for crypto, because, in a couple of fronts. One, we already talked about this. If you donated via a DeFi Wallet, and you did not get that seized, and you did not get a knock at the door. To tie it to the Ukraine thing, I mean, you're seeing people getting the airdrops like fucking video game wars funded by crypto funds, right? And that's all theoretically untraceable. So long answer sorry. I'm going to take it all the way to decentralized organisms, which Chris has been writing about a little bit and I've mentioned here and there. But when you think about direct democracy and you think about these people who are elected to be your leaders who don't effect the will of the people and you think, well, why can't we just vote on every issue like a true democracy just like they talk about for elections, right?
Like the security of it. And we can't have digital elections. Why can't you have digital elections if all my money is stored electronically and whatever? I can get educated electronically, why can't I vote electronically? And one of the things that a decentralized autonomous organism does is allows you to build those platforms in conjunction with assets, right? So not only can you vote about where you want assets to go in the case of the Assange DAO that Chris Curl was writing about. It's leaderless, right? It's like a hive. And you can vote. Do we want this money to pay for this legal defense fund for Assange and you can vote? And there's a transparent, that's what kicked me off on this thing, a transparent record of the vote, right? On the blockchain.
And so I think that's where things are headed, right? Because think about it, you could use it to vote for anything, even in the United States, to vote on issues that your elected leaders aren't giving you the results you want on. And so I think that's the big fear with crypto and decentralization even more so than the dollar and the tracking. I mean, fuck, they're already tracking your dollars. It's the control and the limiting of them being able to hide and keep things in the, what you would call cigar smoke-filled rooms. And in that respect, it's one of the bigger facets of the turning, right? It's like if you have this accountability, all that oligarch stuff is out there anyway. And so a lot of the problems that cause the things that we talk about as a bizarro world start to go away.
Gerardo Del Real: A lot there. Well said. Again, I wrote earlier this week and we've been writing, we've both written about it for years on end, but the trend of governments seeking to limit your liberties, whether it's voting, whether it's your reproductive options, health, whether it's who you can sleep with or marry, whether it's how you can spend your money and how much and where, I don't know. Reagan's got that old, great line that he used during his reelection campaign. Are you better off, right? Then you were four years ago? And that's what got him elected the first go round to the presidency. I would ask people that listen to this and that read our stuff, do you feel freer than you did, I don't know, four years ago, eight years ago, 15 years ago?
I sure in the hell don't. And I grew up broke where we're like, I'm not supposed to feel free, right? I grew up in a low-income community, son of immigrants, parents didn't have citizenship or residency till I was eight, nine years old. Came about because of Reagan, I've talked about my story often. But when you come from that kind of background and you come from another country and you're working your way up, it's not the freest of environments, whether it's your education options or the options as it relates to employment or upward mobility, but in true productive immigrant fashion, you make it work for yourself, right?
Now that I have a little bit, right? I should feel a whole heck of a lot freer. And sure I can buy more stuff, can buy more homes, you can buy more cars, you can buy better meals, but as it relates to government and how much of what I do really is private, I sure in the heck don't feel a lot freer than I did 10 or 15, 20 years ago. I feel a lot less free in that sense.
Nick Hodge: Much harder to cross borders. And you just saw a very authoritarian period where in some cases you weren't allowed to leave your home in developed Western nations. And if I were not to take the back stairwell when I leave today and walk through the lobby of my building, I'd still have to put a mask on to go to my car. And so there are ways to control you. You just saw it two years.
Gerardo Del Real: Here in Texas, Governor Abbott and his little buddy, Attorney General, Ken Paxton want to investigate parents of trans kids that are receiving care to facilitate a transition for child abuse, a felony child abuse.
Nick Hodge: They got sued. They are being sued.
Gerardo Del Real: They did. Think that the ACLU sued.
Nick Hodge: What I asked you last week was, did this go through Congress? The state legislature? Did they pass it? And you said, no. It was like a stroke of a pen from Ken Paxton.
Gerardo Del Real: Ken Paxton gave a legal opinion. He said he thought it constituted child abuse. And Abbott said, okay, there's a law in the books that says, child abuse is already against the law.
Nick Hodge: And the lawsuit says exactly that. This wasn't passed legislation. This is edict or whatever. So interesting, we'll see.
Gerardo Del Real: The same people that want to make it harder to vote. Same people that don't want you to take three or more people in a car, because it'll be a misdemeanor if you're driving them to go vote.
Nick Hodge: You really want to say the same people. We were out to dinner this past weekend and I had a couple of cocktails and we got talking about some of this stuff and I was telling people about my libertarian view basically. I was like, why would you take orders from anyone? Why would you, I mean, I just brought it all the way to Epstein. I was like, you just saw prime ministers and the highest ranking officials and bankers in the world get away with a child pedophilia ring. Why would you listen to anything they fucking say, right? And I think that's where a lot of people are going.
Stocks We're Watching
Gerardo Del Real: I agree. Let's pivot back to the markets before we go, Nick. What are you liking out there?
Nick Hodge: What did I tell you I bought? I bought more gold stocks. I haven't been buying a lot. I bought more bonds. So we had been talking that the bond yield was going to pull back, that pulled back a little bit.
Gerardo Del Real: Twos and 10s, and recession's coming.
Nick Hodge: Yeah. Well we know the recession's coming. The GDP is going to slow. I mean, that's not a fucking secret unless you want it to be. Unless you got advertising to sell on CNBC or something. Yeah. There's a recession coming. The S&P's going to go down more. So, well, that's the answer to your question. It's why I was buying more bonds, why I was buying more gold. Crypto didn't, Bitcoin didn't want to hold $45,000. So a bit of caution there, it can go back below $40,000 very fast, because it didn't hold $45,000. I mentioned volatility already. It's elevated such that there's not a lot to do. Wait. Hold cash, dollar's strong. So I mean, I'm where I want to be and just selectively buying real quality stuff like, of course adding copper miners, for example, in the past couple of days, just like pecking away.
But no, we have Labrador Uranium enlist today. We've mentioned that a couple of times. Hopefully we get a couple more private deals starting to list here. And no, those would be my thoughts. Again, if you have money with an advisor or you otherwise have put money in a retirement account, look at your allocations, especially if they're not picked by you, see how you've done in the past couple of months, because it's not going to be great. And so there's a better way to do it without having to stress about it a lot. And it starts with taking control of it and doing it yourself. So I guess those would be my thoughts.
Gerardo Del Real: I know, obviously we've both written checks recently on similar deals. I think we both added to some copper and base metal exposure, right? Avrupa Minerals. I'll give you all a freebie. Avrupa Minerals (TSX-V: AVU) is a company that I know I wrote a check for. Wasn't the biggest of checks, but at seven and a half cents with the full warrant at 12 and 12 and a half, doesn't take a huge check for that to actually matter one day, right? Good team. Good assets.
What else? Yeah. You turned me on to a good uranium deal. Wrote a check and increased a little bit of uranium exposure there. And yeah, Labrador Uranium (CSE: LUR), again, you want another freebie I gave you all Patriot Battery Metals (CSE: PMET) for the past month and a half. And that's about to make brand new all time high, is flirting with that 80 cent level. I think it'll trade at a dollar very soon. Funded that at 16 cents with a 25 cent warrant. Think it's got a lot of room to run. I think Labrador Uranium is another one that's got a lot of room to run. You and I ran some coms and we could probably justify a market cap twice where it's at right now out easily. And that's without a rip and roaring uranium market that I think is in the cards. So, yeah, get your money's worth folks.
Nick Hodge: Yeah. Well now you got me thinking about stocks. The Aztec Minerals (TSX-V: AZT) press releases have been catching my eye. I'm not a shareholder, but the results they've been delivering are pretty impressive. I need to dig in better on that for fear of missing out on something. And then Playboy (NASDAQ: PLBY), which I've mentioned a couple times. But they reported earnings this week and they're doing what I said, it's just not the environment for the stock to go up. So their year over year earnings were up to like 70% to over $200 million bucks.
And they're executing, it's just what the broader equities are doing. So I continue to be a long term accumulator of Playboy as a Metaverse play. I mean, they got the Rabbitars, they got the Centerfold, which we talked about while you were out Gerardo, you didn't get a chance to weigh in on that. They got Nicki Minaj as the director, and they signed up Mia Khalifa, and they've got a couple of other porn stars signed up to Centerfold that's like OnlyFans for porn stars is the best way to describe it.
Gerardo Del Real: Cardi B by the way, don't start brat beef. It was Cardi, not Nicki.
Nick Hodge: I'm sorry. See, I'm so bad at that stuff.
Gerardo Del Real: You knew those two have a history. You'll have the Nicki Minaj fans on your ass, you'll have the Cardi B fans on your ass.
Nick Hodge: I probably got it wrong before then. I'm sorry. Because I'm not hip on all the names.
Gerardo Del Real: No, but I did see that and I did listen. And as I mentioned, I thought it was a great episode. And look, with Cardi B's following, with her influence and don't underestimate that women's intelligence. Don't mistake the fact that she used to dance and talks about her WAP and all of that, for a lack of intellect. That's a smart businesswoman who's done extremely well for herself. I think it's a good hire. You mentioned Aztec. I got to highlight the numbers because while we're at it, we helped finance Aztec Minerals here recently.
Nick Hodge: Yeah, I know. I didn't write a check and that's why I keep looking at the press releases.
Gerardo Del Real: Well, I didn't either. I'm kicking myself in the ass a little bit now, though, again, I still think it's early days and in the gold market we're getting into, I think this is headed towards a couple of million gold ounce assets. Let's talk about the Cervantes Project in Sonora, Mexico. They intersected 1.49 grams per tonne gold over 136.8 meters, including 3.42 grams per tonne over 51.7 meters from surface. And mind you, it wasn't a one-off, there was another hole there that also was pretty substantial, 100.32 meters of 0.75 grams per ton gold from 16 meters. Keep an eye on Aztec everyone. That's one that I, again, it's not just one project, it's two that I really like, and they're hitting on both, Tombstone and the Cervantes Project.
Nick Hodge: I'm getting old Gerardo, my hair's starting to go gray. So I just notice things because your brain identifies patterns after it sees things multiple times, right? It's just like a human thing. And so I don't know, numbers aside obviously those are fantastic hits. But even before these results, Simon just carries himself like other CEOs I've seen carry themselves that know what they have and are quietly confident about it.
Gerardo Del Real: I agree. Good work, Simon, keep up the hits there. Still like Patriot. Really like Labrador. Wrote a check for Avrupa. Couple of other private ones coming to market. Yeah. A lot to like right now. That's all I got. Mr. Hodge anything else you want to get off your mind?
Nick Hodge: No, that's it. Next week I'm talking to a group of realtors who sell large ranches, many thousands of acres, I guess, primarily to corporations, because not a lot of people can buy tens of millions of dollar ranches. And so it's interesting why they contacted me and I'll have to report back to see how it was received, but they wanted to know about the commoditization of real estate. They wanted to know about the potential-
Gerardo Del Real: We've been talking about it for a year here.
Nick Hodge: ... to use their properties for various carbon offset projects and how to market them too. Well, they didn't ask this specifically, but I think they would be smart to do it, to market it to companies who need to generate the credits, right? Like insurers who are requiring it of projects that they insure for them to be carbon neutral. Because all these big insurance companies have signed up to be carbon neutral. And the only way to do that is to ensure that the people that you're insuring are carbon neutral. And so one of the lines of thinking is that to get insurance in the future, you're going to have to be carbon neutral or buy carbon credits to make whatever you're doing carbon neutral. Well, if you're an insurance company, why wouldn't you just make the carbon credit business too and say, you want insurance? You got to sign up to this fucking carbon credit scheme, thing too, right?
So why wouldn't they sell properties to, or at least start investigating it, like how can we provide carbon credits to these sort of entities? And so anyway, that was the second thing. And then minerals, they wanted to know about, how can we market the potential for mineral development in these lands? Because they're not all cattle ranches, some of them are just rustic land in wherever, Wyoming or Montana or Colorado. And so interesting, I thought that's what they wanted to know about and that they found little me to talk about it. Hopefully, I can tell them something they don't know. We'll see.
Gerardo Del Real: I look forward to you sharing the presentation. You're speaking alongside one of my favorite public faces and I haven't met her in person yet. We've been at conferences before, but never had the pleasure of bumping into her. But Danielle DiMartino Booth is a former Fed insider, an extremely intelligent woman who really knows her stuff. So should be an insightful and intelligent dialogue there.
Nick Hodge: We're going to see.
Gerardo Del Real: I like it. That's all I got. Quick shout out to Mr. Elon Musk, because I know he watches. Got the Starlink happening in Ukraine, assented that immediately. He gets a lot of shit from a lot of sides, for a lot of the bozo shit that he does on Twitter because he is, I always call him the best billionaire troll on Twitter. Really need to see him step up in that way and go deliver truckloads of that Starlink satellite service for people that really need it during a time of need. Quit arguing with people over stupid you all, let's find more stuff to agree with. Be kind to each other. If we don't agree on something, sometimes it's better to leave it alone. Sometimes you got to hit somebody, but that's a whole another conversation. I am Gerardo Del Real along with my co-host Mr. Nick Hodge. This was episode 159 of Bizarro World. Mr. Hodge, say goodbye to us.
Nick Hodge: See you.
This transcript is unedited. Please excuse grammatical errors and run-on sentences.