We’re Definitely in a Bubble

Publisher’s Note: We often use our connections to bring you info directly from strategic investors so you can get a firsthand look at what the smart money is doing. Jeff Phillips is definitely part of the smart money. He’s helped put together and finance several well-known natural resource deals in both oil and metals. And he’s also a collector of rare coins, art, and sports memorabilia. His insights are especially poignant right now, given the inflated prices we’re seeing across many asset classes.


Nick Hodge
Editor, Daily Profit Cycle


Gerardo Del Real
Gerardo Del Real: This is Gerardo Del Real with Daily Profit Cycle. Joining me today is one of the most respected voices in the resource space, a friend and fellow contrarian, Mr. Jeff Phillips. Jeff, how are you today?
nick hodge
Jeff Phillips:

I'm great, Gerardo. Thank you for having me.

Gerardo Del Real
Gerardo Del Real: Thanks for coming back on. I'm really looking forward to this conversation. I've learned a few things from you. I've learned to be a contrarian and to buy when no one is looking. I've learned about the importance of vetting a share structure.

But we are in a time right now, where I just heard Chairman Powell basically get up on a stage and announce that everything is awesome and it will continue to be awesome, and easy money and liquidity will be injected into the system like never before.

And so at a time where it appears that we are in a bubble, I mean, we have NFTs selling for $69 million, we have Bitcoin at $59,000 thousand… How do you play it? You, personally? You've made a fortune, not just in the resource space but with collectibles, and vehicles, and real estate. What are you looking at? What are your thoughts about the time that we're living in?

nick hodge
Jeff Phillips: I think that you have excess right now. Using a pendulum as something to look at, the pendulum swings both ways, and I don't think it's ever swung this far, as far as incredible value being placed on all kinds of different assets and many new assets that have no track record of having value. The stock market, which has a track record, is in excess. The valuations you're seeing don't make sense when you look at traditional measures of value, so we're definitely in a bubble.

That doesn't mean it ends tomorrow, we'll just have to wait and see. But my focus is on preserving capital when this does end and getting to play along while it's going on.

Gerardo Del Real
Gerardo Del Real: You've been in the resource space for over three decades. You've done incredibly well for yourself and everyone around you. How does this compare? How does this bubble compare with bubbles from the past?
nick hodge

Jeff Phillips: I've seen several bubbles. As far as the resource space goes, since I came into the business, when I was very young, in the mid 90s, that was after the ‘92 recession. They printed money and made money easier and it led to a boom in the resource sector. In the dot-com bubble, NASDAQ bubble in 2000, it led to a raging bull market in the natural resource sector from 2003 to 2007. Then you had the real estate bubble, so to speak, or crash, and that led to one of the best resource markets in 2009, 2010, and a part of 2011 that I've ever seen.

I fully expect the resources... And that's a whole conversation for another day because there's physical metals, there's producing assets, copper producers, gold producers, zinc producers. There's people trying to develop an advanced-stage project and there's explorers. And a lot of those explorers don't have any metals, so you kind of have to divide that up. But I fully expect that hard assets will continue to do well.
And in these times it's good to have the old third, third and a third rule:

  • one third in real estate;
  • one third in hard assets or gold and metals; and
  • one third in art

That's what people have done since the beginning of time, all of them have done very well. But everybody's different from what they want to do. Anyway, we have excess everywhere in the market, everywhere we look.

Gerardo Del Real
Gerardo Del Real: Historically speaking, I've always said that the resource space, especially the junior resource space, is one of the highest-risk, highest-reward sectors that exist. It's why I speculate there. It's why I'm attracted to it. But I got to say, Jeff, just personally, given the bubbles everywhere, the junior resource space looks pretty compelling to me right now.

How do you compare that across asset classes right now on a risk factor, considering the consolidation that we've had since last August, where most of the junior equities, even the quality ones, have pulled back 30, 40, 50 percent?

nick hodge

Jeff Phillips: Well, I think that's because traditionally, like you said, it's been a very volatile sector, where you can make 10 times your money in the right market. I always joke about every seven years that makes a difference for me. It can be a boring market. What you've seen though is where traditional things of value get a little bit out of whack and people speculate, but they always come back. And again, the resource market, there's always something happening, but the resource markets traditionally have been a great area to speculate in at the right times, and things get out of whack very quickly in the resource space, where stuff goes from ridiculously undervalued to ridiculously overvalued.

The difference right now is that normally there's only a few classes of assets that have booms and busts like that. You pretty much have that in every asset class right now. So the resource market is seeing all kinds of different areas, whether it's new NFTs, or Bitcoin, or just traditional biotech small-cap equities, and they've all been 10-for-1 type returns. It's hard to make the case for the resource sector right now. And that's why I believe that because you've seen it in many other sectors, you're about to see a boom in the resource sector.

I don't think this bubble is ending in the next month or two. I think this year is going to be very good for the resource sector. I think as we look out further, we know this bubble is going to end. But I think you're going to see money start to speculate in the resource sector not based on value, but based on what we've seen in every other sector, which is the greater fool theory.

Gerardo Del Real
Gerardo Del Real: The greater fool theory. I'd love to have you on next week, Jeff, if you'll come back on for you to share a couple of the names maybe and commodity types that you're speculating in right now. But before I let you go, I have to ask you, I referenced your car collection, your collectibles collection, your art collection. I know you've done very well for decades on end with those. Is there a go-to person for you that you would recommend and vouch for to someone that may be looking for collectibles, or a rare piece of art, or something along those lines?    
nick hodge
Jeff Phillips: Yeah. Basically, there's different experts in every one of those fields that you've named. I collect things not just because they're a hard asset to me that I can see no matter what it's worth at any given time. If I don't have to sell it. There are collectible cars that are rare, usually going to go up in value over time. Same goes for known artists that have a track record. When I say artists, usually people that have passed away and have a limited amount of art, we're not talking the NFT-type artists. Traditionally, that's been a great store of value and you can enjoy that. I have quite a rare coin collection. Really cars, and art, and coins are some of the things I get enjoyment out of.

One of the most knowledgeable people that I buy a lot of my rare coins from — but they're knowledgeable in everything from art to Indian artifacts. In fact, I think he's collected more of everything and is a great person to talk to, specifically if you're interested in rare coins, but in almost any area, is Van Simmons at David Hall Rare Coins, who I think advertises on your website. I've known Van for 25 years, just a great guy and steered me into things when it's contrarian or no one has decided that they're valuable yet, and I've gotten the things quite early and watched them take off. 

Gerardo Del Real
Gerardo Del Real: I'll make sure to put a link up. He does advertise on the site. It's the only complimentary banner we have on the site because of the quality and expertise that Van and his team provide. Definitely a worthwhile link to have for the audience. Jeff, anything else you'd like to add?
And then, hopefully, we can do this again next week and get into a couple of specific names.


nick hodge
Jeff Phillips: Nope. We can talk about some of the stuff I'm speculating on as far as the equities go in the resource sector and why I'm speculating on those. So I look forward to that talk.
Gerardo Del Real
Gerardo Del Real: Fantastic. Thanks for your time, Jeff. Always appreciated.
nick hodge
Jeff Phillips: Thank you, Gerardo.



Nick Hodge is the co-owner and publisher of Daily Profit Cycle and Resource Stock Digest. He's also the founder of Hodge Family Office, the umbrella organization for his three premium services: Hodge Family OfficeFamily Office Advantage, and Foundational Profits. He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.

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